Chicago Special Correspondence INDISCRIMINATE ISSUE OF REAL ESTATE BONDS The local market is being flooded with real estate bonds bearing most attractive interest rates, which, because of lack of proper safeguards in regard to valuation of property and appraisals, constitute a menace to the investment public. The situation here is in many respects similar to that in New York described in the last issue of TRUST COMPANIES. While there are investment houses in this city as well as in New York and elsewhere which observe all proper and due requirements in protecting investors in real estate mortgage securities an increasing number of issuing companies have embarked upon the field with securities that face the possibility of foreclosure as soon as valuations, costs and rentals return to a more normal basis. Loans in many cases are placed upon properties ranging as high as from 80 to 100 per cent. of the cost and in some cases even above the cost. Under existing conditions two-thirds or one-half of the valuations by expert appraisers must be regarded as meeting the requirements of safety. The Cook County Real Estate Board of valuation has taken cognizance of the situation by passing a resolution which recommends to members of the Board that they do not deal in bonds secured by Cook County real estate unless the property given as security is approved or valued by an official board of valuation. The bonds in question are for the most part based upon contemplated construction of fireproof apartment houses, hotels, office buildings, etc. The investor has no way of ascertaining the cost of the land or of construction, much less the means of knowing what the future value may be. Frequently the investor supplies the money before building operations are commenced. To make matters worse fees of from 10 to 25 per cent. are exacted by issuing houses in making loans, such commissions or fees being payable out of the initial proceeds of the sale of the bonds. The First National Bank of Chicago has issued an authorized translation of a scholarly treatise on the "Stabilization of the Mark," by Prof. M. J. Bonn, Ph. D., of the University of Berlin, originally published in April, 1922, by authority of the German Ministry of Finance. Developed through the growth and experience of more than half a century The First National Bank of Chicago James B. Forgan, Chairman of the Board - Frank O. Wetmore, President and the First Trust and Savings Bank Melvin A. Traylor, President James B. Forgan, Chairman of the Board offer a complete financial service, organized and maintained at a marked degree of efficiency. Calls and correspondence are invited relative to the application of this service to local, national and to international requirements. Combined resources over $300,000,000 F. O. BIRNEY HEADS FIRST ENGLEWOOD Recent announcement of the election of Mr. Frank O. Birney, vice-president of the Chicago Trust Company, to the office of president of the First Englewood State Bank, was received most favorably in local banking circles. Mr. Birney is one of the most popular members of the Chicago banking fraternity. His progress has been due to diligence, conscientious devotion to his duties and the personal qualities that distinguished the successful man in business and banking. Entering the operating and traffic department of the Pennsylvania Railroad at Pittsburgh, when 21, Mr. Birney was advanced to the position of special passenger agent for that road in Chicago in 1908. In August, 1911, he left the Pennsylvania to become assistant secretary of the Chicago Trust Company of which Lucius Teter is president. He later served as assistant cashier, being advanced to vice-president, January 1, 1919. On the same day, Mr. Birney was elected president of the Englewood bank, Frank F. Porter, president of F. F. Porter Co., hardware dealers, and for 37 years a resident of Englewood, was elected a member of its board of directors. FRANK O. BIRNEY NEW DEVICE FOR SAFE DEPOSIT DEPARTMENT A new device has been installed in the safe deposit vaults of the Continental and Commercial Safe Deposit Company of Chicago, which was constructed according to specifications developed by Trigg Waller, manager of the department. This machine stamps a ticket for every person entering the vault and no one is allowed inside the gate unless possessing such a ticket. The ticket gives the serial number, tells whether recipient is a man or woman, gives the time of entering vault, and the key number. All this is stamped out in a few seconds of time. The Continental & Commercial was obliged to work out some sort of machine through the need for speed and accuracy. Sometimes as many as 1,600 persons a day use the vaults, which is an average of one every three minutes of the working time. The company has about 16,000 safe deposit boxes in use. ELECTED TREASURER OF GREAT LAKES ASSOCIATION At a recent meeting of the directors of the Great Lakes-St. Lawrence Tidewater Association, M. A. Traylor, president of the First Trust & Savings Bank of Chicago, who had previously been elected vice-president, was shouldered with the additional duties of treasurer of the association. The association was formed to finance and otherwise extend its influence in developing the opening of a waterway from Chicago through the Great Lakes and the St. Lawrence River to the Atlantic Ocean and the seaports of the world. Bank clearings in Chicago for the month of November totaled $2,365,113,176, coutrasted with $2,626,000,000 in October. REAL ESTATE LOANS PLACED BY CHICAGO TRUST COMPANY The Chicago Trust Company, through its Real Estate Loan Department, has thus far placed loans on 796 houses and 225 apartment buildings in Chicago and vicinity. These buildings shelter over 1,150 families and total $3,750,000. During the entire year of 1921, 596 loans for the construction of houses were placed and 98 for apartments, sheltering of a total families, with a total 882 of $2,866,000 loaned. A total of $6,505,815 has been placed in the Chicago territory from Metropolitan funds in the past two years. This money aided in financing homes and apartments sheltering 2,007 families. Thus it will be seen that in this territory this one organization alone has so far this year injected over a million dollars more into building construction and refinancing loans than during the entire year of 1921. In spite of the coming of colder weather the Chicago Trust Company is continuing its good work at the rate of approximately $1,000,000 a month. These loans are placed both direct and through the agency of eighty associated banks in this territory The most popular and helpful form of loan for the average home builder has been the three to fifteen year first mortgage placed with the Metropolitan Life Insurance Company. These loans cost the borrower but $9.00 per month per $1,000, borrowed, paying off both principal and interest. The Chicago Trust Company in the past two years has placed more than $6,000,000 on this unusual plan of financing homes. The Central Trust Company of Illinois dinner at the La Salle Hotel was attended by 550 employees and guests. General Dawes presided and announced a 10 per cent. increase in wages instead of the customary bonus of war times. Where Business Concentrates St. Louis, the gateway and clearing house of a great Out-of-town banks will need now more than ever accu- The National Bank of Commerce in St. Louis, with Corrected by F. M. Zeiler & Co., members Chicago Stock Exchange, 929 Rookery Bldg., Chicago. St. Louis Special Correspondence ALERT TO IMPORTANCE OF FOREIGN TRADE The impression prevails in certain circles that the farmers, business men, manufacturers and even bankers of the Middle West and interior States, because of their remoteness from the seaboards, are not fully alive to the important part which foreign trade: plays in their own prosperity. They are supposed to be absorbed with the fluctuations of their own immediate markets and the opportunities for increasing domestic consumption. Likewise, there is supposed to be a state of mental and moral lethargy in regard to international economic and political factors. Such impressions reveal an absolute lack of familiarity with the progressive business, banking and agricultural mind of this section of the country. There are doubtless many farmers who cannot see the effect of foreign trade on the primary market price of his crops. But that type of farmer is way in the minority. There are manufacturers and producers who seek only local or domestic markets. But they are growing less in number. There are also bankers whose horizon is limited to loans and discounts and reaching after deposits. But their number is small compared to the increasing ranks of bankers who are preaching enlightened foreign trade doctrine; who have created credit, acceptance and other machinery to facilitate the development of foreign trade. Chambers of Commerce and other business men's organizations of this and other cities are sending delegations to foreign countries to look into foreign market requirements. Factories are giving active attention to export departments and foreign sales. The new spirit that is sweeping over this section of the country is best expressed by such quotations as follow: "Business men and bankers through study, investigation and foresight must show this horizon of foreign trade possibilities to the country," says John G. Lonsdale, president of the National Bank of Commerce in St. Louis. "The truism that international trade activity is the one outstanding condition of prosperity must be driven home. That this is America's hour of decision must be impressed upon business people of every walk of life. The question, bluntly, is this: Shall these United States fulfil their ulti mate destiny of world leadership; shall we gather to ourselves and to posterity the golden harvest of commerce, or shall we drift in a stalemate of satisfaction, too cautious, or too visionless to see the greatness Providence has provided, if we'll only work it out? I think we are arising to this demand. I never sold the United States short yet, and the fellow who does loses." Says W. F. Gephart, vice-president of the First National Bank of St. Louis: "It is most important for the people of the Middle West to realize how it is increasingly to the interest of the whole country that we healthfully maintain international trade. We shall never be able in the future to found general prosperity on the mere production and disposal of food and raw materials-the great extractive industries whose products have in past years sold themselves in the markets of the world. Our future is bound up with adequate markets for manufactured goods. The Rip Van Winkle slumberers must awaken and realize how much this country has grown since 1880. The economic policies of our fathers, no matter how well considered and adequate they were for the days of our fathers, are not sufficient for today." |