The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1916-07-28
Mortgage Companies COntem-
plate Organization Here.
Subsidiary Institutions Under
Rural Credits Law.
MILLIONS IN Topeka ALONE
Interests for Eastern and Local
Capitalists Are Heavy.
Business of Lending Directly to
Farm Borrowers.

Large mortgage companies in KAN
sas are contemplating the establish
ment of joint stock land banks au-
thorized under the rural credits law
recently signed by President Wilson.
A well known banking authority in
Topeka today admitted that he had
been consulted by representatives of
certain large mortgage companies In
Kansas and had been asked an opin-
ion, upon the advisability of certain
companies in the state. organizing the
subsidiary banks.
companies that by resolving them
selves into banks of this description
they are free from taxation on mort
cages, which at this time amounts to
per cent in Topeka. and leaves a
margin of only per cent on per cent
loans. Likewise, in establishing banks
they get the prestige of the governors
guarantee on loans and it is believed
under certain circumstances they will
have the right to accept deposits on
money ultimately to be used in paying
off mortgages.
Investigation Under Way.
IF the opportunity for safety and
thorough investigation of the bill pro-
viding for the establishment of the
joint stock land banks as it does on
the surface, there is no doubt that
some we'll known mortgage companies
will establish banks of this nature"
said a well known banking expert in
Topeka today.
1t is estimated that the Farm Mort
gage company, the Merriam Mort
gage company, and the Pioneer Mort
gage company of Topeka have, during
the last twelve or fifteen years, han
died mortgages and interest for east
ern and local capitalists amounting to
Ia Ill
All of this has been taxable, and it is
understood that operation under the
rural credits bill will eliminate this
taxation.
Loan Direct to Borrower.
The bill authorizes the joint-stock
land banks to carry on the business
of lending directly to the borrowers on
farm mortgage security and issuing
farm loan bonds. These banks must
have a capital of not less than $780,,
900. They are under the supervision
of the federal farm loan board, but
the government does not lend them
any financial assistance.
The joint-stock land bank is free
from many of the conditions imposed
on the federal land banks. Subject
to the so and 20 per cent value limita-
ton and the limitation as to territory,
the joint-stock land bank may lend
more than $4,000 to a single indivi-
dual. and it is not restricted to max
ing loans for purposes specified in the
case Of the federal land bank.
Per Cent is Limit.
The joint-stock bank, like the fed
eral land banks, cannot charge an in
terest rate, on farm mortgages, in ex-
cess of per cent, nor shall such in
terest rate exceed by more than l per
cent the rate of interest paid by the
bank upon it's last issue of bonds. A
joint-stock bank is limited in it's bond
issue to fifteen times its capital and
surplus.
Among the restrictions placed on
these banks under the act are:
That their mortgages must provide
for an amortization system of repay
ment such as is prescribed in the
case of loans through the federal land
banks
That they shall in no case demand
or receive under any form or pre-
tense any commission or charge not
specifically authorized by the act and
approved by the farm loan board.
The bonds of the joint-stock land
banks are exempted from taxation.
Their capital stock, however, is not
exempted.