Rock Island Argus. (Rock Island, Ill.) 1893-1920, 1919-04-04
RANKS STUDY AMORTIZATION OF LOANS
From the SU. S. Department o
Labor, Information and Edu-
cation Seryice.)

(From the ~. S. Department Of
Labor, Information and Edu-
cation Service.)
! Periods of reconstruction are In
tensely satisfactory from the poln'
| of view of those who advocate meth
DDS as opposed to the inertia OF Gus
tom, The diviion of public WORKS
and construction development again
| has an opportunity to discuss new
methods for temporary building
loans and long term real estate
mortgages in connection with our
campaign to stimulate activity IN
the building industry. For this rea-
son much satisfaction is expressed
for the progress that the American
Bankers association is making to
advance the methods of institution
al investors in real estate loans as
opposed TO custom.
Amortization of loans is the
principle upon which emphasis
is placed as a method which will:
"a Make available a greater turn
over of funds for reinvestment in
the renewed activities of the
building industry.
(2) Remove that element OF Specu-
lation from the risk of investment
that so often relies in vain upon
an appreciation in the value or
land to Offset depreciation in the
value of structures.
go Replenish the reservoirs OF nm
ancial capital, by encouraging
thrift in the borrower, so that the
supply of investment funds will
flow uninterruptedly in response
to requirements of the building of
national wealth.
OF marked significance is the fact
that the American Bankers assocla-
ton committee in charge of the
campaign for mortization includes
among it's members a prominent
representative from the United
States League of Building and Loan
associations. This is as it should De,
for the reason that the funds for
investment in real estate loans pro-
yided by the Building and Loan as
sociations of the United States, both
in respect to the amount of capital
contributed, and in respect to Its
direct effect upon the prosperity of
the building industry, is relatively
as important as the amount con-
tributed by the state banks and
trust companies combined, or the
insurance companies alone.
Rapid changes are developing,
not only in methods of banking
technic that touch the public.
Changes within the banking system
itself due to the tendency for banks
of all types gradually to merge
their activities into the style of the
federal reserve system, gives rise
to the belief that funds destined for
investment in mortgages no longer
will follow old channels in their
customary volume. These changes
are said to be the cause of reduced
investment by new member institu-
tions Unreal estate loans.
Suggestions already have been
advanced from more than one quar-
ter, that the country needs to de-
veIop a new medium, similar to the
federal farm loan board, that
should devote its special attention
to temporary building loans and
long time real estate mortgages in
our cities. This clearly is the func-
ton of a mortgage bank. Why then
make the commendable step in ad-
vance, of applying the principles of
amortization to city real estate
loans and omit providing an ade-
quately broad market for such
desirable form of investment We
have our federal farm loan system,
why then discriminate against the
real estate loans of city origin by
allowing them to be crowded out
from the old channels and arteries
of the new member banks. simply
because these arteries are becom-
ing adapted go rapidly TO the eie-
ments of commercial circulation,
without substituting some new ma