The Grenada sentinel., 1915-07-16

Regional reserve banks are authorized
by law to lend country banks, who are
stockholders, upon notes secured by
certain class or kind of collateral. Amend
the law and provide that all country
banks who are stockholders OF II reglona
reserve bank may borrow OF 1t and hy-
puthecate real estate loans as collateral
at face value. provided such real estate
louns shall be made at not more than
per cent. interest The amendment
should read about thi, way: Country
bank, " hich are stockholders in regional
reserve banks may lend OF their funds
in an amount equal to the total OF four
times their capital if local demand be
greater. local bank could increase capi-
tab upon the security OF farm land, used
aud operated for farm purposes and To-
Gated in the county of the domicile OF
the bank making the loan this restric-
ton would insure that loans would come
through banks having some knowledge
of the land offered as security. such
loans to be secured by first mortgage on
not less than twenty acres of farm land;
at least twenty acres shall be in cultiva-
tion. and provided the owner shall re-
side thereon during the life OF the loan.
No loan to be made for less sum than
100000 nor for more than 10 per cent.
of the capital stock of the bank making
same, and not to exceed 80 per cent. OF
a fair value of land accepted as secur-
ity: may run for period not to exceed
ten years and bear Il rate OF not more
than 6 per cent. of course, tins would
not restrict all real estate loans to
per cent, hut slrh Il, would bear "A
greater rate would not be subject to re-
discount as herein provided The prln-
cipal to be repaid in annual installments.
or the entire amount at maturity, to
suit the borrower. When notes secured
bv mortgage and at rate fixed, taken
by any bank (member OF regional reserve
bank shall aggregate the sum of So
10000. such bank shall have the right to
hypot hecate the same with the regional
bank and borrow thercfrom the face
value thereof at Il rate not to eXced ,
per cent. Such loans shall be made in
sums of not less than FIVE thousand dol
lars, or multiples thereof, and the sum
OF the total shall not exceed four times
the capital stock of any stockholder
bank offering the discount (if this not
sufficient to supply demand, local bank
could increase its capitab. Provided. the
regional bank shall have the privilege to
inspect the land given rs security for any
loan offered. and the right to refuse to
accept any loan as collateral which it
may consider inadequately secured.
Loan, made by the regional bank shall
mature not later than matur'y OF notes
given a. collateral fright to substitute
collateral could be arranged.
Th, plan, | believe. would give the
farmer ample opportunity and "er\
facility necessary to secure money on
long time and at low rates of interest.
And as there i, Il bank in almost every
village. and certainly one in each county
OF every State. there would he lust 50
many arteries to the source of supply,
In this way the farmer would he enabled
to deal direct with his home bank and
thus prevent much OF the red tape
methods frequently irksofne aud oblec-
tionahle to one not -chooled III business
routine. The plan would avoid the enor-
mou, expense OF organizing and equip
ping land loan banks, a. we'll a. the
rreat expense necessary to operate. them.
BY this plan there could hardly be a
chance of loss to the regional If@~'rN g
bank. a. the original loan would not he
for more than 50 per ce'at. OF value OF
land and the responsibility OF the BANK
making the loan would he ample. since 1t
could only discount four times it, re-
sponsiblity in capital. to say nothing OF
surplus. While difference I'll rate charged
per cent. and that paid per cent.
presume both would lessen in tlmel
would not give much profit to- the ee'in
try bank. vet advantages would aeerus
indirectly. a. all well-informed banks
understand.
1t j. my opinion that before any grea
demand could BE- made upon regIona
banks. loans Of this class wouid la II
demand bv investors. such az life iasui
ancr rompanies. saving. baaks and md
vidual.. and at no time would the dc
mand become a burden to reserve banks
am firmly convinced thai this plarr
practical and feasible and all that
necessary tn put in operation is a
amendment to our federal reserve banl
inp law. Banks are alrcady organize