Evening star., 1927-04-17
BY I. A. FLEMING.


small fly In their McFadden act oint-
ment and, what Is even worse, they
have small hope of eliminating 1t.
even though they admit 1t will offset
some Of their opportunities enjoyed
before the enactment of the much
talked-of measure.
They hope that the regulations re-
garding investments by national
banks, upon which the controller OF
the currency is even now working,
will clear the situation, and yet the
very clarity of the law makes them
very dubious.
National bankers in this city no
less than elsewhere where building
bonds and notes are marketed with
any freedom, have been doing good
business in buying notes and bonds
having one year in force to matur-
ity and bearing anywhere from 10
per cent interest. The old law per-
mitted this one.year investment IN
this class Of securities.
One to Five Years.
In the amended act, under the regu.
lations referred to, national bankers
may buy notes and bonds having
maturity of one to five years, put
they must make purchase of entire
issue Of bonds or notes, all or none;
further, 1t must be a first mortgage
issue only. on improved and free prop
erty and under no circumstances
shall the loan be for more than bO per
cent of it's actual Yalua-up to 70 per
cent OF its paid-in capital and surplus,
or so per cent of its savings deposits,
but must elect whether real estate
- ,ls.f ~ Il TEf kf
funds. capital and surplus, or out of
funds belonging to savings depositors.
No single loan can be for more than
10 per cent of capital and surplus
combined.
Commercial deposits, whether time
or demand cannot be used for this in
vestnlent purpose. Banks having no
savings deposits will be restricted in
such purchases to an amount equal
TO % per cent Of it's capital and sur
plus.
Loans as indicated :.:2y be made
or purchased by all national banks,
both in and out of central reserve
cities, limited to property within their
regional district or within 100 miles Of
their home site.
Fills Long Felt Need.
Even with the small fly in It, this
section of the McFadden law fills,
and most satisfactorily. q long-felt
want. and removes one of the chief
causes of complaint on the part of
wise investors, that their bankers
could not buy long-term real estate
investments for them, 1t also Will
be the means of spiking the opera
tions of many crooked bond statesmen.
When the new regulations Gov.
ha Tl41rnhGCQ
sale of real estate mortgages and
trusts are ready your banker viii be
at your service and give you invest
ments that are so good that he has
invested either the banks own money
or the money of his savings deposit
tors in their acquisition
When the itinerant bond salesman
pays his respects, either in person
or via the phone, to the intended vic
tim, he can be turned away with the
assurance that my bankers look after
my investments-se them, please" 1t
win be a safety valve and trouble
saver at one and the same time.
Bankers may find considerable
trouble in obtaining desirable offer
ings of mortgages limited to so per
cent of actual value, the usual limit
being 60 per cent.
Work for Savings Deposits.
The amended law will no doubt in
fiuence bankers to work for increased
savings deposits. Offered such an ex-
cellent means of employing funds,
they may use efforts to divert time
money and certificates of deposits to
the savings section. It may require
q higher rate of interest to do this
than bankers are willing to pay on
savings. but If the returns warrant
even that will be good business.
1t may be that time deposits may
be considered in the forthcoming reg
ulations as savings and so be avail
able for the purpose mentioned.
1t has come to the time when in
terest is just as big a factor to de.
positors as are deposits to the
bankers. Recent statistics demon
strated the fact that one-third of the
actual cost of banking was for in
terest paid on deposits. The McFad-
den law limits the rate that national
banks may pay to the highest legal
rate allowed for State banks.
Plenty of Money.
In the face of the general activity
in merchandising, the long-continued
squirt of strength and great activity
on Wall Street and large industrial
movement, money is in large supply.
1t is very generally believed that tight
money, the scourge of earlier days,
has gone forever, and 1t is also fact
that the merchants are still adhering
strictly to their relatively new policy
of modest stocks and limited borrow
ings.
The McFadden law has given prac-
ticaI assurance to national banks that
they will be enabled to keep their
funds we'll employed practically MI of
the time as the real estate mortgage
demand for cash seems Unsuitable, just
as building operations seem likely to
continue, unless checked by labor.
New York Bankers Coming.
The New York State Bankers AS
sociation will hold it's annual conVen-
ton June 9-12 in this city. These are
the exact dates of the annual gather
ing at the Hot Springs of the District
Bankers Association. AS our home
delegates and their guests leave for
their convention the New York con-
tingent will start for Washington.
Local financial interests did not
extend an invitation to the sister
State organization; ineed no hint
that one was desired was dropped.
1t is rather unfortunate that the
same dates were chosen for both con-
ventions, for there will be many who
will feel it their duty to be at the Hot
Springs who under other conditions
would gladly have availed themselves
of the opportunity of attending the
New York session, as we'll as of show
ing some courtesies to New York
friends.
Home guards during convention
week may be trusted to welcome
callers and make the financial men
feel that they are not without friends.
Washington welcomes all conventions.
Welcome to an Old Friend.
larinrn of friends will he dalirhtad