Evening star., 1924-10-18
BY ROGER w. BABsON.

Special Dispatch to The Star.
WELLESLEY HILLS, Mass, Octo-
ber 1S.-Bank accounts are the safest
OF all investments. Most bonds are
good and many stocks are fair in
vestments.
People should remember. however,
that there are other forms of invest
cases preferable. The local real
estate mortgage should not be for
gotten. This is especially true in
these days when ''the field farthest
away looks the greenest" to most peo-
pie. The real estate mortgage under
certain circumstances also has addi-
tional advantages in the matter of
return. margin of safety and the ef-
feet of the investment on local busi-
ness conditions.
Mortgage Yield High.
Just now, when call loans are being
made in New York at from 2 per cent
to per cent and commercial paper
is selling in all our large cities at
around 3k per cent. good mortgages
are still yielding per cent or better
I say 'or better" because in certain
sections of the South and West abso
lutely safe mortgages can be secured
to yield z per cent and even per
cent. The farm loan and the joint
stock banks have changed the farm
mortgage situation somewhat, but
good loans at 6 per cent are still
available on small houses in the cities
and in the country. These houses,
when occupied by the owner, are usu-
ally first-class security.
In loaning money on mortgages
very important factor enters into the
transaction which Is often overlooked.
For the want of a better name we
call it the ethical" factor. The value
of any mortgage depends not only
upon the real property behind it but
also to large extent upon the
character of the borrower.
do not know where you will find
a better security for your money
than that offered by a young man of
ing to build his own home, provided
that such a loan is protected by
life insurance policy on the borrower
Investor Has Advantage.
A private investor has a distinct
advantage over the bank in this
matter. The bank must loan more
or less mechanically-say 60 per cent
of the valuation-irrespec of the
character of the borrower. Some
times a bank will loan too much TO
a man who lacks integrity. and as
often the bank loses chance OF
loaning to an honest individual be-
cause Of this arbitrary 60 per cent
limit. The banks often fool them
selves by thinking that "a house is
a house" whoever the owner. They
forget Il is not the number of people
in a city which makes value, but the
character Of the people in that city
which makes value. An undesirable
citizen moving into a locality actual
ly lowers the value of the adjacent
real estate. Generally, man of good
character coming into neighbor-
hood tends to increase that value.
When the combination of deslr-
able property and borrower of good
character is found. good investment
opportunity exists. Under such cir
cumstances recommend a loan of
money for the building Of home or
for store that is to be used by the
borrower never advise loaning
young man, an old man, or any other
kind of a man money with which to
speculate or money to invest in d
business which he does not control.
Keeps Money at Home.
In buying local mortgages you also
perform an additional service to your
community. The money stays in your
own city instead of going to New
York or some other financial center,