New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1916-09-07

offers the investor one new type OF
security after the other. each Of them
paving a higher return, their modesty
is creditable. Their envy Of German
finance, which can do without such
means, is easily accounted for. Organl-
zstion undoubtedly exists in Germany
II is quite natural that it is called over
organization by people who dislike its
results.
The War Loan Banks.
The worst instance Of German organ
ization. which is always harped upon,
are the so-caled loan banks. War loan
banks are banking institutions, organ
lied by the government with the object
Of lending money on good collateral
securities. Their organization in Ger
many is due to experience in former
wars. II seemed desirable to protect
the Imperial Bank and the other banks
against the onrush of people who want
ed TO borrow money on perfectly good
securities which they could not sell, as
the Stock Exchange was closed, and
which, in any case, they could have
sold only at loss. And it was neces-
sary to provide people with opportu-
mites for modelling their assets.
These war loan banks issue certificates
/ (Darlehnskassensche which are le-
gal tender like the British currency
notes; in fact, they are currency notes
The issue is limited to 100000, 200
marks about 75O,OOO,OOO dollars
there is no such limit to the British
currency notes. The war loan banks
certificates are an obligation of the gov
eminent. They are secured by the spe-
cial assets. against which they are is
sued. and by the personal liability OF
tho borrowing owner Of the pledged Sc
curitv. whose liability is unlimited
Rehind these doubly secured ooligs-
tions stands the guaranty of the I'M
perial government. The law states very
carefully which classes of property can
be admitted as security. Perisnaole
goods are excluded. Very large mar
Gins are insisted upon; the lowest
margin is IS per cent. 1t is very
sound and safe manner OF moolIizihg
crsd;ts far safer than the method OF
the British government at the begin
ming of the war in guaranteeing dis
counts by the Bank of England, and
providing money for acceptors, who
were unable to pay bills when matured,
bv which a great loss might occur. To
lend money up to so per cent of the
original value of a cargo OF dyestuns
is certainly good banking. II 1t was
worth $4,000 when the loan was made
II would be worth at least $4,000 now.
The margin has risen from 40 per cent
to $40 per cent, or more than sra times
And to lend s4O0 on q Chicago-Milwau-
kee bond is certainly not bad business,
from the point Of view Of the bank,
which gets first class security. The
debtor must pay the ordinary discount
rates plus an additional percentage. To
him it is good business only if he can
make more profit by using the money
than by paying the interest. On ac-
count Of this heavy charge the business
of the loan banks is very intermittent.
At different times Of the year (the
great paydays of German business life
are the last days of each quarter the
number of loans increase. At no time
has the total amount been higher than
2.3OO, 0O0,0 900 marks (about s550000, 000).
On three or four days only the $780,
100000 mark has been passed. On one
day they fell as low as sl60,OOo,OOo.
Liquidation Assisted.
The loan banks enable people to
liauidate their assets instead Of part
ing with them at loss. They free the
regular banks of the necessity of lock-
ing up their money. In England the
Joint stock banks extended their loans
IL -. u. fl 81 o