El Paso herald. (El Paso, Tex.) 1901-1931, 1913-10-28

as low as 10 cents, and paying interest
from the date of deposit on all sums OF
a dollar and upward. Checking ac-
counts may be received, but no interest
can be paid on them
In the matter of loans there are
number of classes The short term
real estate loan can be made upon first
mortgages upon unincumbered proper
ey for a period of not exceeding three
years, and the interest must not De
more than ! per cent higher than the
bank pays for time deposits. Long term
real estate loans may be handled D.
these banks When a patron wants
such a loan he will draw a 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 exceed
/ per cent per annum upon the loan,
which may run for any number OF
years agreed upon, up to fifty
May Sell Loans.
After guaranteeing the loan, the To-
cal bank may sell It direct, or it may
forward it to the state bank for It's
guarantee of state bank is essential be-
it direct, OF it may have it guaranteed
by the national bank. Neither the
national bank nor the state bank can
guarantee a loan until it has first been
guaranteed by a local bank, and the
guarantee of state bnk is essential be-
fore the national bank can guarantee
il. No real estate loan may be for an
amount greater than so 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 permit
ting any other liens, other than taxes,
to take precedence over a first mort
gage Every long term real estate loan
must carry with it a provision for
small periodic payment on the princi-
pal, large enough to wipe out the debt
a 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 cOnstI-
tute a sinking fund for meeting the
bonds when they are due. Loans of this
nature are to he made, so far as prac-
ticable, only for permanent improve
mentS or for purchase money on a farm.
May Lend on Farm Products.
The local bank also viii be permitted
to lend money on farm products for
term of not exceeding one year, when
the borrower is able to produce a Sol
vent endorser. Short time loans may
also be made on commercial paper or
other easily convertible collateral
Each bank viii be required to hold as
reserve an amount equal to Is per cent
of its check deposits and eight per
cent of its time deposits. One-third OF
the former and three-eights of the lat
ter being required to be held in actual
cash in its banking house The re-
mainder can be kept in other approved
banks
If the earnings of a local bank shall
exceed Is per cent a year, One-halt
shall go to the surplus and the other
half shall be used for the reduction of
interest on loans After the total sur
plus reaches $50 per share. making the
total value SIS per share, then the en-
tire stock shall be bought in and can
celled, and the bank thereafter shall
be operated as mutual bank without
capital stock and with interest charges
only high enough to maintain the
sound status Of the bank. Any sur
plus of net earnings shall be refunded
10 the borrowers in the shape Of still
further reductions of interest charges
Immediately after its organiza ton ;
each local bank VIII be required to in |
vest One-tenth of its capital and paid J
n surplus in the stock of the national |
bank, and one-fifth in the stock of the ]
state bank, and these holdings shall be I
as the surplus of the local 1
bank increases
Under the system of local banks !
which is proposed for the United States !
here will be carried out the same ideas |
IF national finance that have been in /
in the pending currency !
There viii be that decentraI- |
cation that comes from the regional /
oank system and that government 1
domination and control that is provided |
through the appointment by the presi-
lent OF a sufficient number of the Of
icials of the central institution.
The simple effect of the whole sys- (
EN- will be to create in the United j
states two parallel and analogous
banking systems, the one a system for .
general commercial business and the
,ther essentially for the farmer.
The small amount of capital that viii |
)e required to start local bank under !
he proposed law will make it inevita-
lie that there will be many times more !
'ural banks than national banks. Every |
title community of farmers can or
sanize one and conduct it in Their own !
interest as users of money as well as
n the interest of other borrowers and /
enders. The aim of the local bank IS
simply to provide a connecting link
between the man who wants interest |
md the man who needs money.
Tomorrow: State and National Rural
Banks.