Pike County press. (Milford, Pa.) 1895-1925, 1909-07-16
no LOAN Oh
REAL ESTATE

Representative A. Mitchell Palmer
uf Pennsylsauis has introduced in
Congress Bill to permit nstional
banks to lend money on real estate
"when securel by mortgage. judy
ment or otl;ey form Of certificate Of
indebtedness which may be made
lien on real estate, under the laws of
the state in which such loan shall be
made; provided. that no sach asso-
ciaiion (uaiional bank shall have
tho right to loan on the security of
real estate more than one half the
amount Of the combined capital and
surplus # such association, nor more
than one half the amount-of money!
deposited with such association oD
which said association pays interest
to its depOsitors, and with respect 10
which it requires, or may by lie
regulations require, at least eixiy
days notice before withdrawl."
Congressman Palmer. according 20
an Associated Press Dispatch has
given his views as follows .-"Mod
ern methods of banking mako it at
solntely necessary that national
banks, to properly perform their
functions, should have the privilege
Of lending money on real estate.
Wnen the National Bank Act was
passed in 1854, the universal custom
Of bankers WAS to lend money un
personal security. Nowadays bank
ers look askance upon loans secured
by personal endorsement, and re-
quire some kind of collateral, prefer
ably listed stock Or bond. Former
ly, when a bank wss approached to
lead money the first question put to
lhe borrower vas. Who will endorse
your note?' Now. it is, 'What COL
lateral can you put up to secure the
loana'
A large proportlon,of the savings
accounts in our national banks, es-
perialiy in the country districts,
comes from class OF people who.
when they desire to borrow money,
have no other security TO offer than
their real estate. Because these per
SONS, who furnish most of the money
to the banks, can not borrow from
their local institutions, we find coun-
try banks ever ywhese sending their
money away from home to invest in
ths large cities, where listed siocss
and bonds ara available as collateral.
Tho dslnapd Of bankers for listed St
suriiiss as collateral is largely respon
>ibie for the imitation of the prices Of
these securities, and borrowers are,
therefore, compelled to go into
market. inflated 10y the use of their
own funds in speculation, to get col
lateral ss substitute for that which
they have but which the law does
not permit them TO use. A national
bank is a quasi-public Institution,
aud ought to serve the needs of tie
public in Its Immediate vicinity. 1t
can never properly do this until it is
permitted To lend money on the &C.
clrity which its local patrons DO
sess.
Real estate is the most stable Sc
cnuty which can be- accepted for
loans, but the objection to permit.
ting banks to accept it, heretofore.
has been that it is not quick asset.
This was serious objection when
banks received all their deposits sub
iect to call. or late years, however,
nsarly every national hank in the
cOuntry has established savings
department in which the deposits
are subjeot to withdEawi only on not
ice. No harm could possibly result
if the banks were permitted TO loan,
say, one halt OF such time deposits
on mortgages and other forms of
real security. Such a change in the
National Bank Act would aceommo-
date the people in their home com
munities, would keep their money
at home where it belongs, and would
tend TO strengthen the banks in that
there wonld bo no longer tenpta-
tion, which now prevails amongst
the country banks, to send their
money to the large cities. where it
may be loaned on collateral of which
country bankers have little accurate