THE 03IAHA" SUNDAY BEE: MAY 1 1912.
The Present Status of the Mortgage Loan in the West
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Br Clyde K. Elliott
. NLT recently en ot th prominent
O financial Journal of thli country
I mad th lUUDint that reel estate
1 mortgages now oommiad the prater
ence of Investors a they have never
don before In the history ot the
United Bute. The tenant unrest
prevailing everywhere, coupled with the relentleaa
attacks of the federal government, nut inr me
oat active Investment In real aetata loan aver re
corded. ' So It le of particular Intereat Just now to deUU
hero a few facia about real aetata mortgag a Invest
mesu and to abed a little light on an Omaha instl
tntioa that hat recently been organised that an out
let nay he provided In the weat for real estate
loana and aaf Investment! of aurplu tunda af
forded. There la no question about the wladom of land
Inveatmenu. A young man seeking a plac to In
vest bla money so that It will bring a aaf return
la advised by the dlelntereated to "place hi money
In lands." For centuries land baa been the "safety
vault ot fortunes," for nothing Is so stable, and.
In the final analysis, nothing I so aafs. The -''
sentlal requirement of an Investment Is to place
money where It will secure the principal and a
euro a aafe and juat rot urn. No other field of In
vestment does this so aatlafactorlly eo well and
so fullyas real estate.
Not Necessary to Boy
Some sre under the Impression that In order to
secure all the safe and Juat advantages of real es
tate It la neceaaary to buy land outright No, this
la no more the caae than It la a tact that In order
to secure Inveatmenu In the United States govern
ment bond or In the Union Pacific railroad It la
necessary to buy these Institutions. A mortgage will
furnish the necesssry contact between the Investor
and the real property in queatlon. "The mortgage
on real aetata Is the oldeat form of financial obli
gation known to man, and the very fact that It
baa survived for four or five thousand year la
proof ot its soundness." ,
A quotation from a recent article by France
H. Bleson, written for Leslie's Weekly, Is pertinent
at this point:
"Briefly ststsd, a mortgsg la Issued aa col
lateral for a not or bond covering tbe obligation
ot the real estate owner to the money lender, which
merely provide that In event of default ot pay
ment of the note or bond the real aetata shall be
come the property of tbe creditor. While this baa
long been the accepted form of Investment for
conservative Institutions and Individuals, particu
larly aavlngs banks, life Insurance companies, trust
companies and estates, it baa been popularised and
put within reach ot the general Investing das
within tbe last few year.
"The popularisation baa been brought about
simply by splitting up the whole Into small units.
Tbe underlying security la the seme, but there are
Issued bonds or certificates for bonds' la small and
varying amounts, equaling In face value the amount
ot tbe mortgage or mortgages against to mort
gage beld In trust aa collateral. Thus mortgage
for 110, 00, which would be available only tor
persona ot considerable means, can be divided Into
titty or ve a hundred bonds based upon It and
so placed wltbtn reach ot a large number ot small
Investors.
Important Economically.
The bond are Having a very Important
economic affect They enable tbe amall Investor to
participate la the best ot Inveatmenu otherwise
available In Urge amonnu and fixed turns, and
said from tbe temporal beneflu conferred, they
bring to legitimate enterprises a new market, with
an absorptive power which hardly can be estimated.
This meant tbe diverting Into sound baelaes chan
nel of many millions of dollara from fak mine
aa4 oil walla, mythical induatrlal concerns and all
, joru of fraud which hold out their bait to per
v argg of small means."
Mortgage or mortgage bonds are swell en t
foundation stone for present peace and future hap
piness. W are all familiar with Insunees In which
apparently large estate have ahrunk to slender
proportion when tbe nature of the Inveatmenu
carried was mad known. Many time tbe testator
ha Invested heavily la stocks and bonds which
were bought with the best possible Intention, but
which sever paid a cent ot return and whose face
value were purely fictitious.
Mortgages do not bring tbe greweom discov
eries. The widow and children do not require high
priced legal talent to determine the value of the
mortage, nor are they required to follow the re
port In the daily paper to discover how much,
they are wcyth. Such a legacy pay It Interest and
matures It principal., The careful investor cannot
do better for his survivors thaa to lev wsli
' placed mortgage or tbe equally desirable mort
gage bonds.
Mortgage Advantage.
An advantage that ths mortgage possesses In
contrast to that ot other forma of Investment I
that of being simple, so almpl that tbe man who
know tittle about financial affair may readily
understand rust what be la going into and Juat
what be is gettirg. Most forms of Investment to
day tend toward the complicated. None there are
who will aay that present investments are tending
towsrd the simple. Somehow or other vendors try
to complicate inveatmenu. and therefore lb aver
age man who baa money to invest Is rather doubt
ful rt-oat where he shall place his confidence.
Yat m laxities are not restricted to ltf or.
f.t? a..tr-L5e ixs.raus, but are to ce. round in
7
"i-- i . various forms ot corporation, bank, ai
financing and la
the management
of railroad enter
prises. As against th
complex cut ot
affairs found In
thss varies
forms, It I a
pleasure to point
to tbe simplicity
of the farm and
real sstate mortgag and to know bow It stand out
In bold rsllef In Its many virtue. Investors who
hav any doubt about Hbe afety ot investment In
"good, old mortgage" can readily aatlsfy any sus
picions by making an Investigation. Thsy can con
trast and compare the mortgage Investment with
other forms and thsy wilt clearly see which It th
belter line for them.
In the mortgage tbe Inveator baa a security th
vslus of which does not depend In the leaat upon
what th bucket-shop gambler doe or upon what
th power of Wall street do. In real tsuti mort
gage every bit ot dangeroua or tempting voting .
trust la don away with, and the man who placet
hit money in tblt line It certain that he know
just what be la going to gtt
"Tbe Investor In tbe real sstats mortgag rest
peacefully, knowing that th growing up and de
velopment ot th country U conaUntly enhancing
th value of hi curlty and that ther It aa ever
Increasing demsnd for th product ot the toll
which la th basl of hi trust
Bat at All Time.
"He knows that fir Insurance eompanie tome
time tall and that possibly building on th land
mortgaged to blm may all be destroyed, yst ther
never has been a fire hot enough to burn the land.
Ha is, so long aa his loan Is In force, squar and
plump agalnat hi security at all times. Thieve
cannot break through and ateal It;' neither can It
be gambled away from him in any way, shape or
manner. HI simply and directly drawn paper fol
lows the owner ot the security without sny lessen
ing of its vain. No msn can threaten him and dic
tate what course he shall take In managing hit
loan."
If tbe time ot maturity come around and b
wishes to see th color of hi money he make th
demand, and If he baa exercised wisdom and Judg
ment at th outset, hi syes behold th
money. The simplest possible act will
reveal to him. any and all possible liens
on his security that can in the least dis
turb blm, which It tale. All else fol
lows. There is no fighting for prece
dence In tbe foreclosure suits the first
mortgage takes and holds 1U place de
terminedly, and without fear of moles
tation, knowing that the nrst product ot
tbe realisation fall to him without ef
fort Some featuree ot real eeut loans
sre often undeveloped. When a fanner
wanta to borrow money he baa a almpl
court to follow. He muat clear hi
land from any and all Incumbrance,
satisfying the lender that he hold a
good title to it; execute r. tingle docu
ment that deeda tbe property to th
lender, conditional only on hi refusal to
pay the loan when It mature. Nothing
could be more almpl or direct.
"Ksow the Mem."
But even la dealing with so almple
and time-honored a thing aa a mort
gage Investment, it Is necessary to mak
searching Inquiry and give careful at
tention to the security offered. Th
amount ot th anortgage or th face
value ot the bond may b so large that
there I not auftldent margin ot aafety;
or the mortgaged property may be
valued too highly. It may be ot such
character that It will decrease or It
may be located no that It U subject to
thla am depreciation In value. Then,
too, It may not be a real mortgage at
all, but merely a paper certifying that
certain mortgage hav been deposited
la trust aa collateral under a loosely
drawn Indenture which constitute little.
It ny. real security.
Bo thee are torn of the pitfalls Into
which th Investor with vn th most
conservative ideas may -tall. Therefor,
It U of particular Interest to people ot
Nebraska and the middle west to know
that Omaha la now tbe home of a mort
gage loan company which waa recently
organised by some of th beet banker
and other cttixen of this state. It I th
Banker Mortgag Loan company, with
office In th Bee building. IU presldsnt
Is Thorns B. McPherson, who also U
president of the South Omaha Uve -Stock
Exchange, a director ot the Union
' Stock Yards company, and ot the Cora
Exchange National tank. He orgtalaed
and successfully operated tor more than
fifteen year the Union Stock Yard
National Bank of South Omaha. F. Me
Olverin, vice president, is president of
the Commercial National bank of Fre
mont Neb., and he is also president ot
the Nebraska Banker association.
Other members of the company are:
George N. 6eymour of Elgin, Neb.; H.
A. Peters of Hsy Sprlnfce-Neb.. and W.
E. Farlow of New tT. Mr. Sey
mour la preside lElgin 8tate
tkj y at r.eugu
Nsb. Ha It former president of th Nebraska
Banker association. Mr. Pstera It A banker and
liv stock man of Hay Springs.
Men In tbe Company,
It I ot unusual interest to not that there ar
connected with this nterprlss three former preel
denu of th Nebraska Banker association
Messrs. J. P. A. Black, presldsnt German National
bank, Hastings, Neb.; J. W. Welpton, presldsnt
Exchange bank, Ogallala, Nsb., and George N. Sey
mour, president ot th Elgin btate bank. A number
of other leading banker have taken a financial in
terest In th company, among whom ar T. F.
Blrmlngam, O'Neill; Levi Miller, Stanton; 8. A.
Bnlder and A. F. Neuquiet, Oaceola; Elmer Wll
llama. Grand Island; John T. Brassier. Warn;
Ed. U Brook. Wlnnstoon; Thorns B. Thompson,
Herman Koch, A. F. Walla, West Point; Edward
Ranard, Bloomfleld; C. E. Reynolds, Rising City;
H. O. Meyer, Hooper; George E. Brigham, D. a
Cole. Shelby; F. W. Woods, Spencer; E. F. Dworek,
David City; W. F. FlUey, Allen; W. A. Wlulgman,
Norfolk; D. A. Paul, Concord; Leroy Hall, Craw
ford; Colonel C. F. Coffee, Chtdron; A. G. Collins,
Hebron; Oeorge E. Salladln, Mllford; D. C Lea
rner, Charle S. Bee be, Eph Anderson, Wakefield;
E. M. Bras. Grand lalaad. In all mor tbsn fifty
Nabraska bankers have given their financial and
moral support to mak this Institution a success.
Character ot the Highest
The character of the men In the office ot this
company U the best Investigation prove that
these otlcera and director stand at th top among
th reliable banker and business men ot Nebraska
and th west They csa be gone to by Investor
with a feeling of confidence in th permanency
and stability of th value behind th securities.
'The possibilities tor blunders, mistake and
fraud are fewer
in number In the
mortgage loan
business than In
almoat any other
line of Investment
For this reason
moat investors ar
going to the com- ,
pany that can
how th b t
character among
Its officers, a company that has a clean financial
statement, a clean record and a aatlafactory man
agement in all thing. Th peraonnel of th Bank
er Loan company make thla corporation on In
which Investor srs permitted to place all their con
fidence. Tbey need only to study the character ot
the men and then they know Juat what kind of
a company they ar dealing with.
For many yar bankers of this state have
recognised th need for such a company as haa
been formed. Prealdent Mcpherson said in
an interview on this point: "I hav advocated tbe
organisation of this kind of a company for years;
on large enough to supply the country banker
with capital to develop the natural resources of the
state, thn doing away with th uncertain and un
aatlafactory condition existing, or rather our de
pendence upon eastern eompanie for thla kind of
capital." i
Banker of Nabraska and th west retllz the
Immense- value of thla new loan company, for aa
President McPherson tersely put It, "CaplUl is
needed to develop th resource of th state." Tbe
Nebraska farmer often haa need for money need
tor It In a hurry and be wanta to go to th place
where he can gat It without any trouble, assured
that th term will be right and that all he doea
will be treated In a proper manner. Therefore, the
farmer who wanU money can go to the Banker
Mortgag Loan company, knowing that the men
at the head of this corporation ar th kind with
which h can deal and get th fairest kind ot term.
At preaent It 1 vary hard to aecur loans on
farms throughout th west owing to th fact that
capital I being employed for other purpose. The
new Omaha Institution, consequently. Is said to be
supplying Just the long-felt need of tbe farmer, who
now can borrow money, all the money that they
need tor the development ot their farms. So
through this naw company, it la ex
pected, win come a nigner einciency
among our farmer. The land of the
Nebraska and other western farmer
will be highly developed and lmprove
mnta of a high order ?tll be made
everywhere. When the farmer can se
cure money to buy machinery and make
other ImprovemenU there is a rapid and
healthy growth among the rural com
munities. This haa been hlatory all over
the country. Bo. la thla new company -.
many of tbe men who are Interested in
farm and farmer see the opportunity
that hss been awaited for years th
chance for farmer and other to get
loana at reasonable figures and to,
thereby, make tbe progress that th
west needs, and that th west must
make within th next tew years.
. It was aa a result ot this feeling for
a strong mortgag loan company that
th Banker Mortgage Loan company,
with an authorised capital of $1,900,000.
was organised, with an object of mak
ing It a factor In the development of
the west, and a source of profit to tta
shareholders.
Purpose of Corporatioa.
Arrangementa are' being perfected
which will enable the company to han
dle good loana by real estate mortgage
in almost any amount, thereby making
It a most desirable connection for all
banker who become interested aa
stock bolder. Th company is managed
by local directors, all of whom hare
been suceessfuly engaged In tbe loan
ing of money, aa bankers. In the west
tor many year.
In a prospectus Issued by th Bank
er Mortgage Loan company the follow
ing Interesting facta ar detailed:
"Tbe most conservative Investors,
comprising savings bank, trust com
panies. Insurance eompanie. etc., Inveet
their fund largely In farm mortgages,
a class of security hardly second to the
government bead, having the very desir
able advantage ot paying double in- -terest
Few Investor In farm mortgage
have opportunity or Inclination to losu
their money direct to the farmer, but
buy their securities from farm mortgage
eompanie which hav facilities for tak
ing the choicest loana offered all over
the United States. The mortgage com
pany loana iu money at rates much In
excess ot whst it sells these mortgages
to net the buyer, and turns lu capital
many time each year.
"One will readily see why these
companies earn lsrge dividends for
their stockholders, as their money, in
vested ia mortgages, is always earning
a Urge rate of interest, and often a
they turn their loaca ther Is an extra
profit of 8 per cent, or more. Estab
lished eompanie should turn their
capital at least twelve timet g year, earning
per cent or more on their capital stock, th stock
holders at all timet having their money invested
in high, clean farm mortgages, but earning much
more than the direct Investor, who only, gets C or
per cant.
Large Capital Stock.
"Th Banker Mortgage Loan company, no
thorlsed capital stock 12,000,000, par value
twenty dollar (120.00) per share and non-assessable,
was organised by Tbomaa B. McPherson and
hla associates for th purpose ot buying and selling
farm mortgage. Mr. McPherson, president of the
new company, baa carefully selected for 1U man
agement men ot the highest integrity, with wide ex
perience In the mortgage business."
State Treasurer Walter A. Oeorge write ot th
eompany aa follows:
"After having Investigated to my thorough sat
isfaction th incorporation of th Banker Mort
gag Loan eompany I was convinced that It waa
ate, and that th leading financial men of th
state being th Incorporator th stock should
prov an Al investment Th capital stock ot
$2,000,000, together with a surplus, certainly
would start ths company out In th best possible
' condition and would be strong enough to handle
the large Increasing business ot this country.
"I have thought ot, and have advocated, thl
kind ot a company for a long time, and to my mind
there 1 no reason why a home company, organised
a Is this ons, with headquarter at Omaha, should
not start right In at tbe beginning with a big busi
ness. Th main trouble heretofore with th loan
eompanie haa been that they were too tar away
from u and wot too limited in capital. I am
glad to have th privilege of Joining In thl work."
Colonel O. F. Coffee ot Chadron write ot th
company aa follow:
"I hav given th loan business a good deal ot
thought for several years, wishing that a company
ot thla kind would turn up. I honestly think the
Bankers Mortgage Loan company will be a benefit
to the country as well as to the stockholder. There
1 a great demand for such a company. Your plan
seems to be all right and will be a winner and div
idend payer."
The Best Investment
"The farm mortgage, with IU simple security
basis and the positive assurance that with th
growing ot th nation ther will be a solid valu to
reality, probably Increasing with the year, has a
strong hold on this class ot Investors. It is neces
sary that they be Informed on the method of se
curing these Investments, of course, for, strange
aa it may seem, there are many who are unfamiliar
with the buying ot mortgages. Tbe probability is
that this business quiet will continue for several
months and more than likely that it will not be
materially changed for more than a year. Then
It there Is nothing in national legislation to pre
vent we shall see a gradual starting up of businssa
and greater confidence on the part of the men
with money to make inveatmenu. He will be
willing to place hU money In such undertakings
aa are more speculative but In the meanwhile it
U a good time to interest him in the farm loan."
Tbe Bankers Mortgage Loan company begin
business under the moot favorable ot condition
and with th support ot th best banker and finan
cial man of th state. It is recognised aa Just th
eompany that U needed for Nebraska and the west,
so th bankers ar enthusiastic about it Tbe men
at the head ot the company are the best; they ar
recognised by all western financial men at being
highly bonest and thoroughly capable.
The field which thU eompany ha selected U
Ideal. On this point W. T. Auld, president of the
Corn Exchange National bank, asya th following!
No Better Field
"In my opinion there la no better field for the
operation ot a large farm loan company than
Omaha, located a it I In th center ot on of th
greatest farm-producing eountrlea in th world
There U at thl time, and there ha been tor ev
era! year, a very heavy demand for farm loans,
and, in my opinion, it will continue. Tbe trouble
with the loan agencies In the sute in the paat la
the fact that they hav been unable to get the
proper outlet for their paper, and get th money
promptly, which la on of th most important,
things in th farm loan business."
With all conditions favorable and with th
western country strongly demanding such a com
pany through th banks and through tbe farmers
it is regarded as certain that the Banker Mort
gag Loan company will prosper rapidly and glv
Omaha and th west one of the largest corporations
of 1U kind in the country. This cannot but help
to swell the clearings of our Omaha bank very
perceptibly on account of the vast sums of money
that will be attracted to our state, and will also
give employment to a Urge number of our people.
In thU way the company will be a great help to
Omaha, the state of Nebraska and the entire north
west It deserves, and undoubtedly will receive,
the financial and moral support ot the best citizens.
Everywhere the officers and directors of the
new eompany are receiving the most enthusiastic
encouragement They regard the favors and tbe
interest of outsiders aa an indication that they will
fill a long felt want and fill it well. The kind
ot men, it is said, that conduct a business bare the
making ot the future of that bueinesa. So, with
such a fact established, bankers are certain that
the Bankers Mortgage Loan company will do great
things for the farmers and other investors of Ne
braska and the weat It haa everything in lu
favor, and all are agreed that It should progress
rapidly, taking along to success ail its stockholders
and all th investor.