Evening star. [volume] (Washington, D.C.) 1854-1972, 1913-10-28

rest. Ills great C6utTdI UcHh via oo
trolled by the government, and Will pc
vested with every function that can aoo
to it's efficiency as the great national
clearing house Of rural credits
Each local bank shall have not less than
200 shares at SO per share, and each
share shall be en-
No Dividend Over titled to one vote
except t b at no
Fifteen Per Cent. one stockholder
can vote more than 10 per cent Of the
stock of the bank; nor can any one per-
son own more than 20 per cent Of q banks
stock. Dividends shall in no case exceed
Is per cent per year. Every stockholder
will be liable for twice his holdings IN
stock and surplus until such time az the
bank shall have earned surplus equal to
the amount Of its stock and patd-in sur
plus. This paid-in surplus must amount
to at least SIS per share. From this II
will be seen that the bank must have as
sets of at least $50 per share before the
liability of the stakeholder for double the
amount of capital and paid-in surplus
shall cease.
Each local bank is to be managed by
board of not less than seven members,
and each director shall be personally
liable jointly and severally, both to the
bank and to its creditors, for excess loans
and for loans made contrary to law. NO
ninety days shall be made without the
approval of the board, while real estate
loans running for more than year must
bear the approval Of a majority of the
board, each member signing his name IN
the record book to attest his approval.
ho once
a month, and meantime the banks al
fairs will be presided over by two COM
mittees-one on administration and one
on appraisements, the one looking after
the work of the bank and the other plac-
ing value upon property upon winch
loans are to be based.
The banks are to try to avoid CONNER
cial business as much as possible, al
though they will be allowed to DO saw
ings bank business. They Will make
speciality of time deposits. receiving as
low as 10 cents, and paying interest from
the date of deposit on all sums OF q dol
lar and upward. Checking accounts may
be received, but no interest can be paid
on them.
In the matter of loans there are a
number of classes. The short-term real
estate loan can be made upon first mort
cages upon unincumbered property Tor
a period Of not exceeding three years.
and the interest must not be more than
for time deposits Long-term real estate
loans may be handled by these banks.
When a patron wants such a loan he Will
draw q mortgage therefor. and the bank
will write its guarantee thereon, both as
to principal and interest, its recompense
for this service being fixed at not to ex-
coed l per cent per annum upon the
loan, which may run for any nufnebr of
years agreed upon, up to fifty.
After guaranteeing the loan. the loca,
bank may sell it direct. or it may for
ward it to the
Loan Guarantees state bank for It's
May Be National. bank sa nav in turn
sell it direct. or it may have it guaranteed
by the national bank. Neither the ma
tional bank nor the state bank can guar
antee a loan until it has first been guar
anteed by a local bank, and the guarantee
Of state bank is essential before the ma
tional bank can guarantee 1t. No rea
estate loan may be for an amount greater
than 80 per cent OF the assessed value OF
the property upon which it is based.
Real estate loans cannot be made In
states without the simplest methods OF
foreclosure. or that have laws perm.ttins
any other lines. other than taxes, to take
precedence over a first mortgage. Every
long-term real estate loan must carry
with 1t a provision for a small periodic
payment on the principal. large enough
to wipe out the debt at the expiration of
the term of the loan, but this will not
preclude the borrower from paying as
much more from time to time as he finds
himself able. These payments are to
constitute a sinking fund for meeting
the bonds when they are due Loans of
this nature are to be made, so far as
practicable, only for permanent improve
ments or for purchase money on farm.
The local banks also will be permitted
to lend money on farm products for
term not exceeding one year. when the
dorser Short time loans may also be
made on commercial paper or other
easily convertible collateral.
Each bank will be required to hold as
reserve an amount equal to Is er cent OF
its check deposits and s per cent Of its
time deposits, one-third of the former and
three-eighths of the latter being required
to be held in actual cash in its banking
house The remainder can be kept in
other approved banks
If the earnings of local bank shall
exceed Is per cent a year, one-half shall
go to the surplus and the other half
shall be used for the reduction Of in
terest on loans.
After the total surplus reaches $50 per
share, making the total value $75 per
share, then the entire stock shall be
bought in and cancelled, and the bank
thereafter shall be operated as a mutual
bank without capital stock and with in
terest charges only high enough to main
tain the sound status of the bank Any
surplus of net earnings shall be re-
funded to the borrowers In the shape Of
still further reductions OF interest
charges.
Immediately after its organization each
local bank will be required to invest one.
tenth OF its
Investments In state capital and
and National Banks. palo-n SUI