Evening star., 1926-10-03
BY I. A. FLEMING.

BY A. FLEMING.
Despite the enormous building oper
ations of the last few years, the al
most Unsuitable demand for mortgage
money continues unabated.
So great is this demand that many
national banks in various parts OF lhe
country. including nearly all OF the
larger institutions in New YORK CltE'
have formed securities corporations
as adiuncts of their banks. after tne
plan adopted by the Commerclal Nj
tiOnal of this city, owned by the STOCK,
holders of the banks and yet operated
by the banks. while others haEe ;
formed separate organizations IKE
that organized by the Federal-Amerl-
can National of this city,
Immense profits have been MADE by
builders in Washington no less than
elsewhere, and there are unmlStakaple
signs. patent to the average observer
and to the student of the advertising
sections of the daily press, that there
is no longer any housing shortage, nor
yet lack of office room with modern
facilities, yet the only realization OF
this fact, so far as bullderS are COM
cerned. if one may judge from ac-
tions. was the slight shiver of reac-
ton to the suggestion that Govern
ment emploves should be housed IN
rooms at $3.50 room.
National banks are prevented ny
law from making loans for more tnah
one wear on real estate. Hence theN
have been unable to take advantage
of the going rates on mortgages pluS
commission.
Prevailing low rates on mortgage
money are always for very lalSe
amounts and on basis of strenuous
inc assessed.
Six Plus Tax Is General.
The general rate of loans on modest
amounts is per cent plus the intangl-
BILE taX-that is. In the D1strlct-pet
the borrower does not obtain the net
rate. but is generally called upon to
nav a commission to the party OBJ
tanning the money.
SO it is that mortgage companies,
the finance corporations that engage
in mortgage loans and the securities
corporations are enabled to get 612
and 9 per cent commission. and in
same cases even a larger rate Oh
commission.
Ranks are satisfied with per cent
On their commercial loans, ana truSI
companies and savings banks, which
are allowed to make mortgage loans,
generally with 612. But the demand
is so great the money commands high
rates, especially when the loan is
stretched a little, while selected sec
ond mortgages command up to ana
10 per cent. and less attractive loans
even higher.
High Cost of Building.
With the high cost of construction
material. wages and financing, it is
difficult to secure a general scale re
duction in rents, although many of
the older apartment buildings have to
make concessions. and the very latest
in construction are offering some IN
duCements to secure tenants.
Desiring to keep a list of we'll occu-
pied apartments has led apartment
builders to construct buildings with
many one and two room suites with
bath and occasionally kitchenettes,
with three roms the largest available
| in many buildings, this leading to in
a-door beds and other space-Saving
restrictions, which Americans do not
like, even though they have to make
their expenses meet their incomes.
Forms Committee COmplimented.
The forms committee of the District
Bankers Association has been the re-
cipient of many compliments on the
result of it's efforts as presented to
D. B. A. at Hot Springs by f. j.
McQuade, chairman.
1t will be recalled that there We're
forms suggested for use in banks for
every purpose for which forms are
used, and that they attracted much
attention from delegates.
Judge Patton, general counsel of the
American Bankers Association, for
warded a request for copies of the
e f,,lo fAI M
McQuade on the excellent work per-
formed.
Bankers from all over the country
have written asking for copies. An
especially complimentary letter was
received from the manager of the
banking department of Rand, McNally
& Co, publishers, after inspection.
President Moran has continued the
committee, and another report will be
submitted at the next convention. In
the meantime many banks are adopt
ing the new forms as fast as it be-
| comes necessary to replace exhausted
supplies.
The suggestion of community buy
ing by the banks in city of their
stationery. forms and other blank sup
plies, made in the report of the COM
mittee, has been highly recommended
as a money-saving movement.
Have No Responsibility.
Banks having trust company privi-
leges and trust companies acting as
registrars of corporations are in no.
way responsible for the actions of
corporation, for it's dividends or earn
ings. The only responsibility that
attaches to a registrar Is the correct
keeping of the stock books of the cor
poratiOn.
COmpensating Balances Working.
Compensating balances are not con-
fined to the interior of watches, by
| any means. They are a decidedly i'm
portant part of the real business of
banking. 1t is a fact that a small
percentage of depositors. numerically,
are directly responsible for a very
large part of the banks deposits
An estimate of 33 per cent of de-
positors being responsible for the
heavy deposits, and the 67 per cent
remaining are the chief borrowers of
! banking funds.
Bankers see to it that they maintain
| fair balances when they borrow,
checking up their accounts frequently
Likewise national banks clearing
daily through the Clearing House AS
sociation, of which they alone, with
one exception, are members, must
have large enough balances to the
credit of the banks they clear for to
| compensate them for the large cleri-
| cal service required.
1t requires many additional clerks
and much time, as the trust compa-
nies all have large deposits, as we'll
as some of the savings and State
banks, and their daily checks are in