Evening star., 1925-10-25
BY CHAS. =. SHAEFFER,

determined reason, feels more kaenlv
than does any other class the injury
dealt out to all investments by the ap-
parently unendng volume of worth
less securities
History and current experience
readily file the answer to the query
Are first mortgage securities safe"
but the very fact that they are safe
makes the responsibility of convincing
the public Of this safety and enhanc-
ing their appeal to the investor moot
issues indeed
These issues are vital to a continued
and increasing flow of money into the
real estate field. And bearing init
mately on this point are conditions
which are Withholding as liberal Il
flow as might be desired.
The well esta ablished mortgage firm
is vitality interested in helping the
public to develop and hold confidence
In investment as one means of Great
ing income. II these firms play a
leading part in helping the public in
Festnent in their securities. with Ger
tainty of income and safety of in
Nestment, then they are assured of re-
ward by increased public patronage.
Serious Situation Faced.
But the fact remains that mortgage
companies face a condition which not
only undermineS confidence in invest
ment, but which also depriVes their
particular field of possible sources of
revenue; that is. q condition raised by
worthless securities. 1t is the mis-
fortune OF every worthwhile invest
ment that security" is applied TO
good and bad alike. the good suffering
when the bad is disclosed. Even in
this late age banks suffer TO d degree
because of the misfortunes that at
tended bank operations in the early
days OF the nineteenth century.
safe and legitimate securities are
not in the demand they merit today
because much So-called security" vol
ufne has been unsafe and illegitimate.
Millions have been diverted to the
pockets OF sharpers, and, as Sescretary
Mellon has said The pitiful fact is
that these millions have been wrung
from those who can least afford to lose
them; from sales people, small shop
owners, small farmers, workers and
laborerS whose savings, gGr by hard
work and sacrifice. have been swept
away and lost TO them forever
1t Is an indisputable fact that Il
real estate security, when sponsored
by reputable firm. Is safe. But the
gigantic losses incurred by the failure
of the Commonwealth Hotel Co. the
home building trusts, the K. l.. Doll
ings bubble, to quote just IL few. have
put large question mark on all real
estate securities which only time and
much effort on the part of refined
houses can efface. That this efface-
ment Is q meritorious project IS
proved by the intinitesimal average of
3100, 900 OF per cent that repre-
sents the percentage OF losses out OF
more than q billion dollars loaned
upon first mortgages negotiated
through the various real estate boards
of the United States, as reported by
them at a national convention a few
months ago.
Flood OF Worthless Paper.
Some mortgage companies in Wash
ington deny that they are hurt by
the ceaseless food of worthless secur-
tiles: others readily admit that such
is the case. but refuse to be outgen-
eraled by the purveyors of scrap
paper" An official Of the Mortgage
Bond and Guaranty Co., dealing only
in approved first mortgages. said:
I'VE realize these interruptions firms
are enterprisinG and dynamic in pro-
noting their interests, but we, with
what We know to be the foremost Sc
curity known TO the financial world,
are equally forceful in making known
and capitalizing the facts of mort
gage safety. This serves Il dual pur-
pose-conyincinE the public and, more
important. directing its money into
productive channels instead of into
the pockets of the unscrupulous."
If a mortgage company he organ
lied by lenders of care, skill and eX-
perience and managed with full in
e., - 70 III
tate values, and with a willingness to
refuse the large fees which accom-
pany excessive loans, then their lives
should he permanent, a large Eastern
trust company recently said.
Fortunately for Washington, this
class is practically unanimous here,
according to report by the District
Bankers Association.
VIII Stick to Bank Act.
Representative Louis T. McFadden,
chairman of the House committee on
banking and currency, telegraphed to
the American Bankers Association on
the first day of the recent convention
at Atlantic City that he would center
his attention during the coming ses-
sion of Congress on his proposed
measure, II. r. sSS1, popularity known
as the McFadden bill. which would
amend the national bank act III sew
eral instances, and that he would
abandon his efforts on II. r. 12453
to amend the Federal reserve act
with respect to legal reserves and de-
posits of gold by member banks with
the Federal Reserve banks until the
McF'adden bill is definitely disposed
of This latter bill passed the House
at the last session OF Congress. Mr..
McFadden says that he IS taking this
stand because it is evident that OPP
ponents of H. r. SSST are attempting
TO confuse the two bills for the pur-
pose of defeating the latter bill.
McFadden Explains Views.
Congressman McFadden's telegram
read: Press notices indicate posi-
bility of discussions taking place IN
the several meetings of the annual
convention of the American Bankers
Association. now in session, on the
two bills which I introduced in the
last session of Congress amending in
certain particulars sections of the
Federal Reserve and national bank
acts. Recognizing the fact that much
misunderstanding and confusion have
arisen regarding H. r. 12453. affecting
legal reserves and deposits of gold
with Federal Reserve Banks in eN-
cnanSe Tor federdl RESERVE noteS' etc.
have definitely decided not to in
troduce this bill at the coming ses-
sion of Congress until after Fl. r.
SSS7 has been passed and finally dis
posed of, as 1t Is evident that op-
ponents of II. r. 1887 are attempting
to confuse the two bills for the pur-
pose of defeating the latter bill
This should not be done. and l
thought it was made plain in a state
ment which l made during the closing
DAYS of the last session of Congress
wherein 1t was stated definitely that
H. r. 12453 was being introduced for