Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1921-06-03
so DEATHS IN TULSA RIOTS
MILLION AND HALF DAMAGE
AUTHORITIES ARE RAPED
LOCKWOOD PROBE.
BARES METHODS or
INSURANCE cos

4NcW 1Olh, S-oOlllc VI tic
largest saving banks and fire and life
insurance companies in America, the
Lockwood legislative committee learn
ed today, have frequently compelled
borrowers who wanted to erect build
ings to purchase undesirable real eS-
tate held by these institutions before
they would grant the request for
loans.
The real estate unloaded in this
way came into the possession of these
corporations through foreclosures and
they were anxious to be rid of it.
Among the corporations accused by
witnesses of having done business in
this way were the Prudential Life In
surance Company, New York Savings
Bank, Manhattan Life Insurance
Company, Mutual Life Insurance
Company, Empire City Savings Bank,
Brooklyn Savings Bank, Dime Saw
ings Bank of Brooklyn and others.
In some of the transactions the
lending corporations also compelled
borrowers to accept Liberty bonds 1T
par, witnesses said, although these
securities frequently were worth 10
per cent below par and less.
Brokers acting as a go-between in
the deals often took commissions
from the banks and insurance COM
panies for finding buyers for their
undesirable real estate, and then turn
ed around and collected from the
borrowers, because they helped pro-
cure the loan. Yet it was all enc
transaction and the loans were coz
ditional on the purchase of other
property. one of these brokers, s. ID
rey H. Hughes, admitted to the CON-
mittee.
He denied. however, that MS firm
made a business of looking for com
panies that had real estate they want
ed to unload and then finding hdilc-
er who desired to borrow some money
and could not find any oth.r way to
get it.
Mr.. Hughes described many such
transactions in which he had been IN
charge of arrangements. In one or
them. Ephraim Levy, head of Il real
~ business was required TO pTrchas,
at s670,0 some real estate owr I'd by
the Mutual Life Insurance Company
in order to obtain loan of $1,000, 900
at six per cent on property appraised
at 100000.
In similar fashion, he described how
rany unloaded an old fashioned frame
hotel for $4,000 on a borrower of
S650,00
Dealers in real estate mortgages
likewise drew the committees inter-
est. Abel King. one such buyer, ad-
mitted he had paid an average OF ~
per cent less than the face value OF
81 mortgages aggregating si,7oo,oOO. In
some instances the face value of the
mortgage-the amount upon when
the borrower paid him interest-was
80 per cent higher than what nc pald
for it. The borrower paid interest on
The entire amount, however. THIS, as
ne paid off the principal in quarterly
jnstallments and continued to pay SIX
per cent. on the face value the actu-
al interest rate rose higher and high
er.
In one of Mr.. Kings transactions,
It reached l26 per cent. or the 'elghta
pavment and in another 125 per cent,
lit was testified by F. Fl. Parson, a
certified accountant, who examined
the books.
Samuel Untermeyer. counsel for the
committee. inquired of Mr. King now
lie thought building construction ev-
er could go on with proper speed in
New York. when men like MIN carried
on such practices.
Mr. King defended the practices.
He contended that builders would he
unable to carry on construction WocK
if he and others similarly engaged
did not provide additional working
capital by buying their mortgages.