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 Discussion on Land bank of the state of 
 
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 LAND BAI^^^XXX 
 
 of the State of New York "^4*0 % %^ ^♦^ 
 
 
 Convention of ^>v '^ 
 
 New York State League of Savings ^^"^ 
 AND Loan Associations 
 
 "k 
 
 BUFFALO, N.Y. 
 
 June 11th, 1914 
 
 INTRODUCTION 
 
 The Savings and Loan Associations enjoy great privileges 
 under their charters from the State of New York. They are 
 safeguarded by the Banking Department, certified as worthy 
 of public confidence, protected from unfair and unworthy 
 competition, and fostered by every proper device of law. 
 
 In return the State of New York now asks the Savings 
 and Loan Associations to make their business state-wide,? 
 to include within the area of their activities the rural, as 
 well as the suburban and urban fields. To do this it ts i 
 necessary that the source from which your funds are obr 
 tained shall have the widest possible range, without alteririg 
 in any manner the scope and area and conditions for making 
 your investments. The plan does, however, increase the 
 facilities of every association which affiliates with the cen- 
 tral body. 
 
 To enable you to do this the State has opened a way for 
 the Savings and Loan Associations to reach the great stores 
 of ■sjrealth that are looking for investment, by permitting you 
 to issue debenture bonds, secured by your own first mort- 
 
gages, and to market them, through the medium of a Central 
 Savings and Loan Institution, called the "Land Bank of the 
 State of New York." 
 
 This addition to your powers and privileges may be ob- 
 tained by the associations by means of the passing of a new 
 by-law. The Banking Department has sent you this by-law, 
 and it is your duty to the State, as well as your own great 
 privilege and to your profit, that you adopt this by-law and 
 affiliate with the Land Bank of the State of New York, which 
 will work solely for the benefit of its member associations. 
 
 The Banking Law provides that the shares of this central 
 institution can be subscribed and owned only by Savings 
 and Loan Associations. Its minimum capital is $100,000, 
 and at least ten associations, whose aggregate resources are 
 more than $5,000,000 must become its incorporators. 
 
 Information will be readily secured by communicating 
 with E. F. Howell, acting secretary of the Organization 
 Committee, 253 Broadway, New York, or 
 
 Hon. G. I. Skinner, 
 
 Chairman. 
 
 Address by Edwin F. Howell 
 
 Membership in the Land Bank, said Mr. Howell, will not 
 interfere with the present manner of doing business in the Sav- 
 ings and Loan associations, and they will not be called upon 
 to change a single feature of their business methods. It will, 
 however, give greater power and prestige to the associations. 
 It will bring to them a portion of their funds at a lower 
 rate of dividend than is now paid, and will secure that por- 
 tion for a long definite period, whereas now all our funds are 
 payable on demand. 
 
 In the United States the co-operative institutions in mak- 
 ing long time mortgage loans depend entirely upon money 
 deposited by saving members. On the other hand, Europeans 
 depend upon funds gathered from non-members secured by 
 bonds issued by the spcieties and running for long terms. 
 
While the Europeans use investment funds, we in the United 
 States use savings.' We now propose to use both saving and 
 investment money. 
 
 The Savings and Loan Associations of New York State are 
 about to organize the first Central Land Bank in America. 
 
 These associations are the fit and proper institutions to con- 
 duct the special business of a land bank. We are engaged 
 exclusively in lending money on the first mortgage of land. 
 For forty-six years this business of the co-operative purchase 
 and clear ownership of land has been carried on in New York^ 
 and has been constantly growing. Since 1892 it has been: 
 recognized as a legitimate branch of banking, been included! 
 in the provisions of the banking law, and been under the 
 supervision of the banking department. Its progress has been 
 steady, without any particular exploitation that might bring 
 it into prominent public notice. Today we have 350 societies 
 in this State, 152,000 members and $65,000,000 of capital in- 
 vested in co-operative land mortgages. 
 
 It has been said that these societies have not the necessary 
 breadth of character to handle the new phase of our business 
 which has been entrusted to us. If I read the new law aright, 
 provision has been made so that our land bank might be 
 organized with an authorized capital of $6,500,000. But we 
 are aiming to build up this central institution upon the most 
 conservative lines, and by the most approved and prudent 
 methods. The first consideration that appeals to us is that 
 we shall not inaugurate a movement of inflation. Our in- 
 terests and those of our clients and our prospective clients 
 are solidly against land speculation or inflation. We propose 
 to proceed cautiously. The Land Bank will be organized 
 with an initial capital of $100,000, but we expect and believe 
 that by the time we begin business, that is, by the first day 
 of November, we shall have 100 member associations and a 
 paid-in capital of $200,000, which will be an ample basis for 
 all the legitimate work of the Land Bank for its first year's 
 business. I want to emphasize the fact that the provision for 
 capital in this institution is upon the co-operative plan, that is, 
 as the business grows legitimately the capital will increase 
 automatically. 
 
The Land Bank is not a bank of deposit. It will not take 
 deposits, even from its own member associations. Its single 
 purpose is to make mortgage investments liquid. It will re- 
 ceive from its member associations their first mortgages of 
 land, and using these mortgages as a basis of security, will 
 issue bonds and sell those bonds to the investing public, and 
 deliver the proceeds to the member association, whose mort- 
 gages have been made the basis for the bonds. The member 
 associations will use this money for further investment in 
 mortgages in their own locality. 
 
 The Land Bank will not deal with individual borrowers. It 
 will handle only such mortgages as its member associations 
 bring to it. All the mortgages that the Land Bank will deal 
 in, therefore, must come to it with the approval of the com- 
 munity in which the land is located, through the medium of 
 a savings and loan association, which itself is a banking insti- 
 tution. 
 
 The Land Bank restores the business of the saving and 
 loan associations to its original sound and economically true 
 position. It swings us away from our apparent approach to 
 the proper field of the savings bank. We are not, and never 
 were, intended to be savings banks, such as they are known 
 in New York, yet we must have money, and great sums of 
 money, to carry on our business of promoting the industries 
 of and ownership of land, including especially that of home- 
 owning. Land mortgages are primarily investments, and it 
 is, therefore, the soundest and truest economy that we should 
 use investment money. 
 
 Mr. Chairman, it is a difficult matter to prepare a 
 paper on a subject of this character that would answer all 
 the objections and the questions that might be put on this 
 subject. 
 
 When I had reached that portion of the work, I recalled 
 those difficulties and decided instead to give answers that 
 would so far as possible meet the views of this large mixed 
 audience. 
 
 A delegate has handed me a number of these questions and 
 the first is : "How does it benefit our association ?" 
 
There are two principal benefits, and unless an association 
 can see its way clear to profit by either one of them, it won't 
 use the Land Bank. The first is that the Land Bank will se- 
 cure for it investment money, at a lower rate of dividend or 
 interest, than you are paying now to your members. 
 
 In the second place, instead of having your entire liability 
 to members payable on demand, as it is now, while you have it 
 invested in long-term mortgages, you will have what you re- 
 ceive by the sale of bonds, placed for long, definite periods. 
 
 These are the two financial benefits to be obtained by the 
 associations. 
 
 Another question is: "What is the by-law and when must 
 it be adopted ?" 
 
 The by-law, as sent out by the Banking Department, is one 
 which must be passed by your shareholders, and its object is 
 to place in ybur board of directors the power to consider the 
 question of your association becoming a member of the Land 
 Bank. It must be adopted before your board of directors 
 can take any decisive action on the subject. 
 
 The next question is: "Does it require a special meeting of 
 the association?" 
 
 That answers itself. If you wish to take that action now — 
 that is, at any time between now and your annual meeting 
 in January — you will have to call a special meeting. You can 
 defer the submission of your by-law until the annual meet- 
 ing. In that case, you will take no part in incorporating and 
 organizing the Land Bank. 
 
 Another question is: "Can it be done by the written vote 
 of the members ?" 
 
 No, because that method is not provided in the laws of the 
 State as the manner for amending your by-laws. 
 
 The next question is: "Can we use our surplus funds to 
 subscribe for shares?" 
 
 If the association subscribes for shares, it takes the money 
 necessary for that purpose from its general funds. As a mat- 
 ter of bookkeeping it will be charged as an investment. The 
 shares that it purchases will be carried as an asset of the asso- 
 ciation. 
 
The next question is : "Do we get bonds for the amount sub- 
 scribed ?" 
 
 For the amount you subscribe to the capital stock of the 
 Land Bank, you will receive a certificate of shares in the Land 
 Bank. There is no such relation between the capital of the 
 Land Bank and its bond issues. 
 
 Another question is: "What interest is it expected will be 
 paid on stock or bonds?" 
 
 This question is rather indefinite. On the shares which an 
 association may own in the Land Bank, it will receive what- 
 ever dividend the Land Bank pays upon those shares nothing 
 more, nothing less. The dividend that the Land Bank will 
 pay should equal the income of your own present investments. 
 
 As to bonds, this is a separate question: "What interest is 
 it expected will be paid on bonds ?" 
 
 I take it that that means on the bonds that the Land Bank 
 sells, what will be the rate of interest. That is a question that 
 no one can answer until we are ready to negotiate the sale of 
 bonds. Interest is what is paid for the use of money. The 
 tendency of the rate of interest is constantly and forever down- 
 ward. It fluctuates but does not permanently fall in a day 
 or a year, but during the long lapse of time, the rate of interest 
 is positively and certainly downward, for this incontrovertible 
 reason : that we are continually increasing the ease with which 
 wealth is produced; therefore, the amount of our surplus 
 product, which is our wealth, our stored-up wealth is contin- 
 ually growing; as that surplus product is continually increas- 
 ing, and increasing also by the introduction of improved means 
 of production at a greater rate than our population grows, for 
 the purpose of using it, the law of supply and demand will 
 positively regulate that rate of interest, and regulate it down- 
 ward. It fluctuates with certain artificial laws. A few years 
 ago the rate of interest, the natural rate of interest, was some- 
 where between two and two and one-half per cent. That 
 was what you could get money for in the open market; that 
 is, money that you only held from day to day. That was 
 the real rate of interest. At the present time it is about three 
 per cent. 
 
 Now, there are two factors that modify that natural rate 
 
of interest. One is the security that is given to the person 
 who lends the money, and the other is its availability to the 
 owner of the money. When the United States Goverrtment, 
 whose security is absolute, borrows money, it gets it prac- 
 tically at the regular market rate, for any period of time it 
 may choose to use it. 
 
 The bonds of the Land Bank, being based on about fifty 
 per cent, of the value of the land and improvements which 
 are mortgaged to secure them, will be the safest investment 
 that we have in this country next to the government issues, 
 and the money that will be paid the Land Bank for these bonds 
 will be had at the lowest possible rate that money can be 
 obtained for in the money market. There are companies al- 
 ready asking us for the privilege of handling our bonds. 
 
 The next question is: "How can an association withdraw, 
 if it finds that the Land Bank is not beneficial to it?" 
 
 An association, which becomes a member of the Land Bank, 
 but does not make itself liable for any obligation of the Land 
 Bank by issuing bonds through that medium, and providing 
 that the capital of the Land Bank is more than one hundred 
 thousand dollars, can withdraw by giving one year's notice. 
 The Land Bank would upon the expiration of that tinie return 
 its capital to the withdrawing association, and its connection 
 with the Land Bank would cease. 
 
 The next question is: "How will the officers be elected and 
 what salary is it proposed to pay them?" 
 
 These two questions can only be answered upon the adoption 
 of by-laws. I might say that I believe it is the concensus of 
 opinion of the gentlemen who are engaged in considering that 
 subject, that a system of electing directors will be provided, 
 that will make them positively representative of every section 
 of the State territorially. The officers will all be elected by 
 the Board of Directors. 
 
 In regard to salaries I believe it is also — I think I voice 
 the opinion of all the gentlemen who are engaged in consid- 
 ering this subject — it is provided that the directors and officers 
 will serve the Land Bank without pay until the business de- 
 mands and does of itself pay for the full service of its officers ; 
 and that in the employment of clerks the same terms will be 
 
observed as those of any association. This institution is being 
 created for service to the associations, nothing else. 
 
 The next question is: "Can we borrow from the Reserve 
 Bank?" 
 
 Ordinarily, no. The Land Bank will not do a business of 
 lending money. It is not a bank of deposit or discount and 
 will not lend on notes. 
 
 Another question is: "Where do they get funds to loan to 
 us?" 
 
 The funds coming to the Land Bank will be received from 
 the sale of their bonds. Money is one of those things that 
 we can get almost anywhere. When we have the bonds to 
 sell, it will be up to the Board of Directors to find a place where 
 they can get the money and deliver the bonds. 
 
 The next question is : "What security do we put up ?" 
 
 Your first mortgages of land must be deposited with the 
 Comptroller of the State of New York in the proportion of 
 one hundred dollars worth of mortgage for every eighty dol- 
 lars of bonds that the Land Bank will issue and sell on your 
 account. 
 
 Gentlemen, if I am not making this clear as I go along, I 
 would like you to interrupt me. I am anxious to make it 
 clear. 
 
 Mr. J. H. White (Schenectady) — The land you mentioned 
 in your argument, do you include the buildings, etc., on that 
 land? 
 
 Mr. Howell — ^Every mortgage pf land includes the improve- 
 ments on it, without being specifically named in the mortgage ; 
 and I did not believe it was necessary to specifically name it 
 in this discussion. A mortgage of land includes, always, the 
 improvements upon that land. 
 
 Mr. White — In other words, then, you will not take land 
 as security without improvements. You will not take vacant 
 farms, you might say, or an adjacent farm that might be vacant 
 and operated by an adjacent owner of the property? 
 
 Mr. Howell — The Land Bank will not make an individual 
 mortgage at all. It will receive mortgages only from savings 
 and loan associations. It will take nothing from a savings 
 and loan association that that savings and loan association is 
 
 8 
 
not authorized by its by-laws and the law, and which it does 
 take itself in the regular course of business. The Land Bank 
 will only deal with its member associations so far as that side of 
 the business is concerned. All the mortgages that will come 
 to the Land Bank will be made by a savings and loan asso- 
 ciation. There is no material change in the law in regard to 
 the character of the loans which the savings and loan associa- 
 tions are permitted to make. Neither will any savings and 
 loan association be asked to make a loan by the Land Bank. 
 They will do their own business in precisely the same way 
 that they do it now. 
 
 I may mention here that there is a change in the law, in this 
 new law, in regard to the mortgages which every association 
 is permitted to take. The old law required that loans made 
 on the security of vacant land could not exceed the rate of 
 fifty per cent, of the value of that land; and that improved 
 land, where the improvements were greater in value than the 
 value of the land, could be made up to the figure of eighty 
 per cent. The new law requires that loans secured by vacant 
 land shall still be at the rate of fifty per cent, of the value 
 of that land. Improved land, however, where the land is worth 
 more than the improvements upon it, may be accepted as secur- 
 ity by the association for a loan of sixty per cent, of the 
 value of the property. The rate of eighty per cent, remains 
 as it was before, in cases where the value of the improvements 
 exceeds the value of the land. 
 
 There is one other requirement in the law in respect to 
 the Land Bank. It is that every mortgage you turn over to 
 the Land Bank mMi^^ot- exceed seventy-five per cent, of the 
 value of the property it covers. The associations are still 
 permitted to loan eighty per cent, of the value of improved 
 property, but they cannot turn over to the Land Bank any 
 mortgages that are of a greater percentage than seventy-five. 
 
 Mr. White — In asking you this question, I had in mind the 
 affairs of the Industrial Association, which are being now ad- 
 justed by the Banking Department of the State of New York ; 
 and as you asked for questions, I merely put that question 
 to bring out that thought and your idea of the matter. 
 
 We do not care to have associations connected with this 
 
League, or any association, put in the position of the Indus- 
 trial Association, and of having its affairs straightened up 
 by the State of New York, lands advertised for sale, etc., be- 
 cause of errors that have been made by that association. 
 
 Mr. W. A. Ernst (Brooklyn) — ^Have you any idea as to 
 where this Land Bank is to be located, at Albany, or New 
 York, or Rochester, or Buffalo, or where? Have you got a 
 memorandum of that? 
 
 Mr. Howell — The statute itself specifically states that it is 
 to be in New York County. 
 
 There is another question: "Will the Bank loan money to 
 us?" 
 
 It will not loan money. The associations will do the lend- 
 ing. The business of the Land Bank is to find money for the 
 associations at the lowest possible market rates. 
 
 The next question is : "What evidence do they furnish ?" 
 
 You will receive money from the Land Bank, which it will 
 receive from the purchasers of its bonds. Those bonds will be 
 placed upon the market by the Land Bank and secured by 
 your mortgages. If you want a temporary loan from the 
 Land Bank, that can be arranged in several ways by the use 
 of the bonds of the Land Bank, but the Land Bank will have 
 no money of its own to lend. One way will be to own some 
 bonds and borrow money on them temporarily. The business 
 of the Land Bank will be to deal in bonds for the benefit and 
 account of its member associations. It will be in a measure 
 the trustee and agent for the associations in selling bonds 
 secured by their mortgages. 
 
 "What evidence do they furnish of having such funds?" 
 
 The I^nd Bank will be a banking institution. It will be 
 under the control of the Superintendent of Banks. It will 
 make reports the same as you do, and will furnish you with 
 just the same evidence that it is qualified to handle money 
 that you now furnish to the borrowers who come to you 
 looking for loans. It will have a definite business to do for the 
 savings and loan associations. A business that no association 
 can do for itself. You never ask a man what evidence he 
 has that he has money. You ask him for it, if he has it you 
 do business ; if he hasn't, he will tell you so. 
 
 10 
 
The next question is: "How about the fifty-mile limit of 
 territory ?" 
 
 There is no change in the fifty-mile limit of ter"- 
 ritory. Every local association in the State is now bound by 
 its fifty-mile radius, and the Land Bank will only do business 
 with associations. It is limited to that business and to the 
 fifty-mile radius of its member associations. If an 
 association, for instance, in Buffalo, desires to do business 
 with the Land Bank, the business of the Buffalo association 
 is confined to its own radius of fifty miles, and the Land Bank 
 can do no business with that association in Buffalo except 
 within its fifty-mile radius. There is no change, absolutely no 
 change, in the business methods of associations. 
 
 A Voice — Does it loan only on the straight mortgage plan, 
 or are both acceptable? 
 
 Mr. Howell — I take it, Mr. Chairman, that the first busi- 
 ness of a savings and loan association is to do an installment 
 mortgage business. Now, it is true that some associations take 
 permanent mortgages, and I see no reason why the Land 
 Bank should not do business with an association that will put 
 up a permanent mortgage. I see the possibility, though, Mr. 
 Chairman, that the Land Bank will be loath to do business in 
 bonds secured by permanent mortgages. They will prefer to 
 do business principally on the installment mortgages of the 
 regular building and loan associations. 
 
 A Voice — In case it should become necessary for the asso- 
 ciation to foreclose one of the mortgages which it shall have 
 assigned to the Land Bank, who takes the work in hand, the 
 association or the Land Bank? Does the Land Bank do the 
 foreclosing ? 
 
 Mr. Howell — No sir. The association would be compelled 
 to substitute a good mortgage for the bad one, and would be 
 compelled to do that in any event, because it must guarantee 
 every mortgage it assigns to the Land Bank. Every associa- 
 tion itself is primarily responsible for the business it brings to 
 the central institution. The Land Bank is not going to take 
 any cats and dogs off any association. 
 
 Mr. Stratemeier (Hamburg) — Suppose there are thirty 
 thousand dollars of mortgages with the Land Bank, is it under- 
 
 11 
 
stood that the savings and loan association continues to re- 
 ceive interest on those mortgages and account, in turn, to the 
 Land Bank. 
 
 Mr. Howell — Yes. The association will become the agent 
 of the Land Bank and will collect the money just the same as 
 it did before it made the assignment, but it will have to ac- 
 count to the Land Bank for those collections. 
 
 Mr. Henry G. EckhoflE (New York) — The question of with- 
 drawal from the association, on condition that the capital be 
 one hundred thousand dollars. How is that capital going to 
 be obtained ? • 
 
 Mr. Howell — I will assume that the Land Bank begins with 
 a capital of one hundred thousand dollars, and after it has 
 been in business a year it has transacted no bond business and 
 has not increased its capital beyond one hundred thousand 
 dollars by the incoming of more associations, it will be a fail- 
 ure and we will all want to close it. 
 
 The capital of the Land Bank, as I said before, must in- 
 crease automatically with the business that it does, for this 
 reason : The issue of its bonds is limited by the amount of the 
 capital of the Land Bank, at the ratio of twenty dollars of 
 bonds issued by the Land Bank, for every one dollar of its 
 capital. Now if, upon the original capital, the Land Bank 
 should issue twenty times that, or two million dollars of bonds, 
 that, in itself, would mean that every member association in 
 the Land Bank had issued twenty dollars in bonds for its pro- 
 portion of the capital. 
 
 Mr. Eckhoff — Would that increase the capital of the Land 
 Bank? 
 
 Mr. Howell — No, but that would be the limit of bonds that 
 the Land Bank could issue. Before they could issue another 
 dollar's worth of bonds, they would have to have an addition 
 to their capital. In order to issue four million dollars' worth 
 of bonds, they would need to have a capital of two hundred 
 thousand dollars. By the time they issued twenty million dol- 
 lars' worth of bonds they would have one million dollars cap- 
 ital. 
 
 Every, association that becomes a member of the Land Bank 
 must put up towards the capital of the Land Bank one thou- 
 
sand dollars for every twenty thousand dollars' worth of bonds 
 that the Land Bank would issue on account of such associa- 
 tion. 
 
 Mr. B. G. Parker (Gouverneur) — I wish to ask, Mr. Howell, 
 if the association should issue twenty thousand dollars' worth 
 of bonds and desired to make another issue of twenty thou- 
 sand dollars, before we could make that second issue we would 
 have to again subscribe for one thousand dollars' worth of 
 stock in the Land Bank ? 
 Mr. Howell — ^Yes sir. 
 
 Mr. Parker — And that would apply to every association? 
 In other words, an association would be obliged to own a one- 
 thousand-dollar share in the Land Bank for every twenty thou- 
 sand dollars of money that it secured through that source? 
 Mr. Howell — Yes sir. 
 
 Mr. Piper — Do I understand that the monies invested by 
 the companies in the shares in the Land Bank are to be in- 
 vested by the Land Bank in gilt-edge securities and held, and 
 that no part of the money invested in the shares by the asso- 
 ciations is going to be used for the expenses of the Land Bank ; 
 that the expenses have got to be provided for in some other 
 way? 
 
 Mr. Howell — Yes sir. 
 
 Mr. Piper — So that the investments of the companies in the 
 Land Bank, whether the Land Bank is a success or not, are 
 absolutely secured; so there is no reason for fear, on the part 
 of the associations, in investing in the shares of the Land 
 Bank? 
 
 Mr. Howell — To my mind, Mr. Chairman, there is no risk 
 anywhere. At no point is there any greater risk in the busi- 
 ness of the Land Bank than there is in the Federal Reserve. 
 The Federal Reserve deals with the national banks, and every 
 national bank that takes a dollar in paper to the Federal Re- 
 serve is responsible for it, and the only possible loss that can 
 happen to the Federal Reserve is the failure of the national 
 bank that puts the paper -up. It is the same way with the 
 Land Bank. There is absolutely no risk. The capital that a 
 savings and loan association subscribes to the capital of the 
 Land Bank is specifically by law invested in savings bank se- 
 
 13 
 
curities. It is not used in the business of the Land Bank at 
 all. There is no reason for using it in the business of the 
 Land Bank. It is simply the basis of the credit of the Land 
 Bank and the means of limiting the amount of bonds that go 
 on the market. 
 
 Mr. Piper — Will you kindly explain how the profits are to 
 be made by the Land Bank, to pay the dividends on the shares 
 of the stock held by the associations? 
 
 Mr. Howell — There is some question among the gentlemen 
 who are considering this subject, on that particular point; and 
 although we had a meeting this morning, that matter did not 
 come under discussion. My own opinion is that the Land 
 Bank should be conducted purely on a co-operative basis : that 
 is, that the income derived from the capital of the Land Bank 
 shall first pay its proportionate contribution to the guarantee 
 fund of the Land Bank, provided in the law, and that the 
 entire remainder of that income shall be divided among its 
 member associations ; that the expenses of the Land Bank 
 when in full working operation will be provided by an assess- 
 ment on the associations that use it for floating bonds. The 
 member associations themselves will control every dollar of 
 the expense of the Land Bank, and will be, themselves, to 
 blame if the expenses are more than they should be. 
 
 Mr. LeGrand W. Pellett (Newburgh)— Will the Land Bank 
 be exempt from the Income Tax? 
 
 Mr. Howell — I am afraid that the State of New York does 
 not control the Federal government, and it is not within our 
 power to make such an exemption. It is not within the power 
 of the State of New York to legislate an exemption from the 
 Income Tax. 
 
 Mr. B. G. Parker (Gouverneur) — There is one point that 
 has not been made clear, I think, to all of us. The question 
 has been asked as to how the Land Bank is to receive the 
 money to pay its clerks and pay for the necessary taxes and 
 other expenses. Now, we all know that the Land Bank starts 
 oflf with one hundred thousand dollars capital, and that is in- 
 vested in savings securities, and that the returns from that 
 one hundred thousand dollars will probably not be more than 
 forty-five hundred dollars per year. Now, if that forty-five 
 
 14 
 
hundred dollars is used, as someone said, to meet these ex- 
 penses, then we cannot expect any dividends on our stock. 
 
 I do not know what has been in the minds of some of 
 those who have been instrumental in this thing and done 
 most of the work; but I have been in this conference with 
 some of them and I have felt that we ought to get away 
 from the idea that we are going to assess the local associa- 
 tions directly for the expenses. These expenses of the Land 
 Bank, that is, the expense of four or five thousand dollars 
 a year, that money should be raised by assessments on each 
 association that is a member. 
 
 We know full well that if the Land Bank, through its 
 organization, can obtain money for us at a low rate of in- 
 terest, that that is worth something. If they can go into 
 the market and get money on the basis of four and one-quar- 
 ter per cent., and turn it over to the association on a basis 
 of four and one-half per cent., leaving them that little differ- 
 ence in margin to pay expenses; if they can work out some 
 such idea as that and get a commission on that, and furnish 
 us money as we want it, and when we want it, and for a 
 lower rate of interest than we can get anywhere else, cer- 
 tainly, those who go to the bank for it should be willing to 
 pay the one-quarter or one-half per cent. It seems to me the 
 expenses of the bank should be taken care of in that way. 
 
 On the other hand, if the associations can obtain money 
 from the Land Bank on the basis of four and one-quarter 
 per cent., they can very well afford to pay a little assessment, 
 because the savings of one and one-half per cent, on a loan 
 of twenty thousand dollars would be quite a little item ; but 
 I for one would like to see the business handled by the Land 
 Bank done on a commission, on a small commission, to those 
 who get the money, and do away with any idea that the asso- 
 ciation is going to be assessed for those expenses. 
 
 Most of us have borrowed money for the first time since 
 our association has been established — we borrowed twenty 
 thousand dollars at four per cent, in New York. We 
 put up New York City bonds. Most of the asso- 
 ciations go to their local bank and pay five and one- 
 half or six per cent, for the money they desire to borrow. It 
 
 15 
 
is not the intention, I think, of the Land Bank, to charge 
 any more than four and one-half per cent, for that money. 
 Those bonds ought to be floated so they could furnish the 
 money to the associations at four and one-half to four and 
 three-quarters per cent., and, therefore, would make money 
 for every man who has to borrow, and we, in turn, could 
 afford to pay a slight commission to pay the expense. 
 
 Mr. Seward Hakes (Ilion) — A member association, which 
 deposited twenty-five thousand dollars in mortgages, with 
 the Land Bank, and received in return twenty thousand dol- 
 lars in money, now the principal of those mortgages will be 
 paid down at the rate of one per cent, per month, or what- 
 ever it may be. By what contract is the security to the 
 Land Bank from the member associations fixed? How is it' 
 arranged to have that security remain intact at twenty-five 
 thousand dollars? 
 
 Mr. Howell — Mr. Chairman, the mortgages held by the 
 Comptroller of the State must always remain value for the 
 bonds that are issued against them, so when the local asso- 
 ciation collects payments that are applicable to the redemp- 
 tion of that mortgage, so far as the mortgagor is concerned, 
 payments that should in equity reduce the value of that mort- 
 gage, those collections must be sent to the Land Bank and 
 put in a redemption fund for the purpose of redeeming the 
 bonds. The mortgages outstanding must in equity always 
 stand as security for the bonds outstanding at the rate of 
 one hundred dollars of mortgages to eighty dollars of bonds. 
 If the mortgages suffer a reduction in equity, the outstand- 
 ing bonds must be reduced or provision made for their re- 
 duction. 
 
 Mr. Hakes — In what manner will this one hundred thou- 
 sand dollars Land Bank capital be invested, and in what 
 manner will this reserve fund that Mr. Howell mentioned be 
 invested, and in what part of the state? 
 
 Mr. Howell — Mr. Chairman, the investment of the capital 
 of the Land Bank has absolutely no relation whatever to this 
 issue of bonds. There is no relation except what I have 
 previously explained between the investment of the capital 
 stock of the Land Bank and the business that it does in bonds. 
 
 16 
 
Mr. Durack — I think Mr. Howell did not catch the ques- 
 tion. It would be invested in the same securities provided 
 for savings banks. 
 
 Mr. Howell — I was about to say that. The question fol- 
 lowed one in relation to bonds. 
 
 Mr. Hakes — I simply wanted to know how this reserve 
 fund was to be invested, if there was any restriction as to 
 what part of the State, whether that same fifty-mile radius 
 applied to the Land Bank as it does to member associations. 
 
 Mr. Howell — No. It does not. A savings bank can in- 
 vest its funds in mortgages in any part of the State of New 
 York, and the Land Bank has the privilege of investing its 
 capital in savings bank securities. That privilege may be 
 curtailed by the by-laws of the Land Bank, but in the law 
 it has the full privilege of investing in any security that is 
 authorized for a savings bank. 
 
 Now, I would like to answer the question, also, of Mr. 
 Parker, by reading the law which governs the expenses of 
 the Land Bank, so you will not receive opinions, but have 
 exactly what the Land Bank may actually do in regard to 
 expenses: "The Land Bank may charge each member an an- 
 nual commission of not to exceed one-half of one per cent, 
 upon the outstanding debenture bonds issued in its behalf, 
 provided, however, that the rate of commission in any year 
 shall be the same on all outstanding bonds; or in lieu of 
 charging such commission, the expenses incurred on account 
 of any debenture bond issue may be charged to the associa- 
 tion on whose behalf such bonds are issued, and the general 
 expenses of the Land Bank assessed against the members in 
 proportion to the bonds issued for them." 
 
 The entire expenses of the Land Bank, under the statute, 
 are borne by the associations who do business with it in the 
 issuing of bonds. 
 
 Mr. Elmer E. Stanton (Troy) — If payments should be 
 made to the Land Bank to take care of the amounts paid off 
 on mortgages to the association, cannot that be overcome 
 by the association pledging? For instance, if they wanted 
 to borrow fifty thousand dollars, . couldn't they pledge one 
 hundred thousand dollars' worth of mortgages and keep the 
 
 17 
 
amount pledged to the Land Bank always above the fifty 
 thousand and not be paying on each mortgage every year until 
 it was paid off ? 
 
 Mr. Howell — Mr. Chairman, that is a reasonable business 
 requirement, and I have no doubt can be easily adjusted. 
 
 Mr. Qay W. Holmes (Elmira) — It does not seem to me 
 that the point stated by Mr. Howell is well taken. If we 
 issue, or take a mortgage on a piece of property, if that mort- 
 gage value is one thousand dollars on its face, the payment 
 which the mortgagor gives to the association on its dues 
 has no relation whatever to that mortgage. It is recorded 
 against the property as of the value of one thousand dollars, 
 and it holds against the property as of one thousand dollars 
 until the dues paid by the member equal the same amount. 
 I can make that clear to you in this way: I go to the bank 
 and have a bank account. It don't make any difference 
 whether it is ten dollars or ten thousand dollars. I go to 
 the bank and give my note for one thousand dollars and get 
 one thousand dollars. It don't make any difference whether 
 I deposit it or take it out and spend it. That note for one 
 thousand dollars has no relation to my bank account. Now, 
 I might, on the back of that note, write that you have author- 
 ity, when this note becomes due, to charge it to my account, 
 provided there is enough money there to pay it. That would 
 not lessen the value of that note, and it would be a com- 
 mercial transaction for the face of the note when it is ma- 
 tured ; and so it is with the mortgage. If there is money 
 enough in my account when it becomes due, they can pay 
 it, or they can come on me for one thousand dollars and 
 collect it. 
 
 Now, the face of the mortgage is fifty or sixty per cent, of 
 the value of the property; so the Comptroller of the State, 
 when he has that mortgage for one thousand dollars, has 
 full security against our debenture bonds until the moment 
 we ask for the mortgage. When it comes to that time, we 
 settle with the man and he sends up another mortgage and 
 we get that mortgage back. 
 
 This idea of having to pay every month on whatever is 
 paid on the dues is not an important proposition. A mort- 
 
 18 
 
gage does not lessen in value, and I think the gentleman is 
 mistaken in his plans on that part of it, because I do not 
 think there is any institution which expects to remit to the 
 Land Bank every month all it collects on those mortgages 
 in prinicipal and interest. They are responsible for those 
 mortgages, and when the interest on those mortgages be- 
 comes due, they have got to remit to the Land Bank the 
 interest, but not the principal. 
 
 Mr. Howell — That question is one, Mr. Chairman, that is 
 not open to argument at all. Section 402 of the Banking Law 
 states: "Any loan made by a savings and loan association to 
 a member may be repaid at any time, provided the member 
 shall pay the principal due thereon, less the withdrawal value 
 of the shares transferred as security therefor." 
 
 Now, no technicality can wipe out the fact that the equity 
 is being reduced constantly by payments on the shares, 
 and when you send a mortgage to the Comptroller of the 
 State and make that statement, that it is worth two thou- 
 sand dollars, it cannot remain at two thousand dollars if 
 you are taking in dues continually which are applicable to 
 the repa)rment of that mortgage at any time that the mort- 
 gagor may see fit to call for its being paid. 
 
 Mr. Gilbert S. Barnes (Tottenville) — I beg leave to dissent 
 decidedly from that view. While the law gives that privi- 
 lage to the members, it does not lessen the face of the mort- 
 gage until he decides to avail himself of that privilege. As 
 long as the mortgage stands without his taking that privilege, 
 the mortgage stands at its full face. 
 
 Mr. Thomas F. Larkin — But, Mr. Barnes, suppose you de- 
 posit an original mortgage of five thousand dollars and the 
 member pays in one thousand dollars, has the Land Bank 
 five thousand dollars' security; He has paid it in. Suppose 
 he wants to pay off his loan, don't you give him credit for 
 what he has paid? 
 
 Mr. Barnes — Yes. 
 
 Mr. Henry M. Qark (Elmira) — Mr. Chairman, I simply 
 want to feel certain that I am beginning to grasp this propo- 
 sition. 
 
 Down our way, the banker handling the money of the com- 
 
 19 
 
munity gets it all into a bunch of notes, and he finds that he 
 hasn't any more money to carry on the business of that com- 
 munity; so he bundles up that package of notes and sends 
 them to New York and gets for them seventy-five per cent, 
 of the face value of those notes, and then he has money for 
 the community. Now, is that Land Bank proposition akin to 
 that? 
 
 Mr. Howell — ^Akin to that, yes. 
 
 Mr. Clark — It is to furnish additional capital for those 
 fellows who cannot secure additional capital? 
 
 Mr. Howell — Yes. 
 
 Mr. Clark — Now, this discussion which has been going 
 on among some of the gentlemen, and not addressed to the 
 Chair, should be so addressed. When a loan is made, it is 
 on real estate or shares. At no time is that mortgage that is 
 taken inviolate. Every time a member makes a payment on 
 his shares, the integrity of that mortgage is reduced by law. 
 In other words, the borrower is protected, and consequently, 
 the questions asked Mr. Howell are very pertinent. 
 
 Let us assume this association has made loans of ten thou- 
 sand dollars, and they take those mortgages to the Land Bank 
 and are allowed whatever they will allow them. There go 
 with those mortgages fifty shares of stock, upon which the 
 members make pajonents, which, in a year, would amount 
 to six hundred dollars. Now, you cannot figure out that the 
 integrity of that ten-thousand-dollar bunch of mortgages has 
 been maintained. It has been modified by the value of the 
 shares, because those members have a right to walk in at 
 any time and pay the difference between the value of the 
 mortgages and their shares. 
 
 Let us assume it is paid in, that and the interest. Now, 
 what becomes of that money? Does that go to the Land 
 Bank? 
 
 Mr. Howell — The Land Bank maintains its redemption 
 fund. 
 
 Mr. Qark — To maintain the integrity of the face of 
 the mortgage? 
 
 Mr, Howell — ^Yes. 
 
 Mr. Clark — So the association receiving the money on the 
 
 30 
 
shares, the interest, would immediately begin to get a return. 
 If we turn it over to the Land Bank, what do we get? Do 
 we get any interest from the Land Bank? 
 
 Mr. Howell — That is a mere matter of bookkeeping. You 
 do not suppose you would turn thousands of dollars into the 
 Land Bank and get no credit for it. The Land Bank, as I 
 said before, is not operated for profit, and the associations 
 get all the benefit. 
 
 Mr. J. W. Dooley (Buffalo) — ^What is the real value they 
 get? 
 
 Mr. Howell — ^The benefits they get are, first, that they will 
 get money at a less cost than they do at the present time; 
 or, at least, they will get all the money that they receive 
 through the Land Bank at a less cost for dividend, or interest, 
 than it costs them now; and in the second place, they would 
 receive that money for definite periods, whatever period the 
 bonds run for, whether they be for five years, or ten years, 
 or 15 years ; but as the security that is supporting these bonds 
 decreases, one of two things must be done by the associa- 
 tion, either they must put up more mortgages, as my friend 
 Stanton says, so they will maintain the security by additional 
 mortgages; or they must turn in the cash. It is up to the 
 association to do whatever they see fit to do, and whatever 
 is most profitable to the association, not to the Land Bank. 
 
 Mr. Dooley — Is that the only benefit of the Land Bank? 
 
 Mr. Howell — That is the only financial benefit of the Land 
 Bank. 
 
 Mr. Dooley — Is it compulsory for a savings and loan asso- 
 ciation to become a member of the Land Bank? 
 
 Mr. Howell — No sir, it is optional with the association. 
 
 Mr. Dooley — What benefit does the Land Bank get outside 
 of this particular phase? 
 
 Mr. Howell — ^What benefit does your association do in your 
 community, Mr. Dooley? If you are a savings institution, 
 you are simply receiving money from your members and pay- 
 ing them the rate of dividends and investing that money in 
 mortgages. I would like to know what benefit you do your 
 community other than keeping that money safe and giving 
 them a good rate of interest; and if the Land Bank gives you 
 
 21 
 
that money at a less rate of interest and for more stable 
 terms, I cannot see what more a savings and loan association 
 can expect. 
 
 Mr. Dooley — I cannot see how they can do it. 
 
 Mr. Howell — That is another matter. I want to say that 
 outside of these two financial benefits, there is a moral bene- 
 fit. That moral benefit is the same moral benefit that comes 
 from combination in any business, greater strength and 
 greater prestige; they will have the greater strength and 
 the greater prestige of being connected with this institution, 
 because I want to say, gentlemen, that it is my firm belief 
 that this institution will, in a few years, be greater than 
 all the building and loan associations put together. 
 
 Mr. H. J. Sharrett (Port Richmond) — This section says: 
 "To receive, by assignment, from its members, and to de- 
 posit in trust with the Comptroller of the State of New 
 York." That is what becomes of those mortgages that are 
 assigned by these several associations to the Land Bank? 
 
 Mr. Howell — Yes sir. 
 
 Mr. Sharrett — Now, the savings and loan associations are 
 powerless to receive that, and how can a borrower pay off 
 a loan? 
 
 Mr. Howell — By your association bringing another mort- 
 gage of equal value to take its place. 
 
 Mr. F. A. Garnjost (Yonkers) — It seems to me that the 
 only way that you are going to get the members of the Land 
 Bank is by getting the savings and loan associations with you. 
 The first thing they will ask everybody is : "What profits 
 are we going to get from the money we invest in these 
 shares?" Up to the present time, I cannot see where tliere 
 is any profit greater than that made on their own investment. 
 
 The second proposition which is mighty hard for a local 
 community — it might not apply to New York or Brooklyn, 
 but it would to Yonkers — when we would put up mortgages 
 for increased money, they would say: "What is the matter 
 with your association? Why can't you get money in town?" 
 We have no trouble in getting money in Yonkers at five per 
 cent., and I dare say if the proper methods were taken, all 
 
 33 
 
the associations in the State would be able to get money at 
 five per cent. 
 
 Mr. Durack — Mr. Chairman and gentlemen: Answering 
 Mr. Garnjost, or attempting to answer him, you will pardon 
 me if I get a little away from the mark at first. This is a 
 very, very big question. It is a very great opportunity. This 
 is a great privilege that these savings and loan associations 
 of the State of New York have had conferred upon them by 
 the enactment of this law. 
 
 I think it was eleven years ago we met in Watertown, and 
 on my journey up to Watertown, I read a most interesting 
 article written by a financier of Brooklyn, who has attained 
 considerable distinction in the financial world, and the sub- 
 ject treated was "The Credit Foncier of France." I was 
 greatly interested in that article and called the attention of 
 the Convention to it, and called the attention of the Conven- 
 tion to its effectiveness in the handling of money. 
 
 Within the last ten years, the chief Executive of this nation 
 had his attention directed to what was claimed to be the 
 unequal distribution of money and the difficulty for people 
 with good security to get money at a reasonable rate of 
 interest. The consideration of that question passed from 
 former President Roosevelt to former President Taft. A 
 Commission was appointed, some of whom were members 
 from the State of New York. They went to Europe for the 
 purpose of investigating and examining the various plans of 
 co-operative financiering, or the providing of a method by 
 which people in remote communities should be able to get 
 money, on good security, at reasonable interest, where hith- 
 erto they had been paying a high rate, a condition of things 
 said to exist to a considerable extent in this country. 
 
 Now, in matters of finance, I do not pretented to be pro- 
 found, and a great deal of what I say to you in respect to 
 this is what I have learned by investigation, reading and 
 contact. 
 
 That Commission came back from Europe, and the mem- 
 bers appointed from the State of New York, said they had 
 investigated The Credit Foncier, of France, and the Land- 
 schafften of Germany, and similar institutions in Germany 
 
 33 
 
and Italy, and said the societies had been accomplishing good 
 in the manner stated, and that is, in loaning money on good 
 security at reasonable interest. The script of The Credit Fon- 
 cier, of France, passes like the coin of the realm. You can 
 go into a shop and get cash for your certificate. That is the de- 
 gree of confidence the people have in The Credit Foncier, in 
 their country. 
 
 Now, the men from New York came back to New York 
 and said: "The evil is here, but it can be remedied by some 
 such method as that followed in Europe, and, we are pleased 
 -to say, that we have now, already formed, existing and in 
 being, in the State of New York, all the machinery neces- 
 sary, and we feel that we can meet that condition, wherever 
 it may exist in the State of New York, by simply adapting 
 some new phase to the savings and loan associations of this 
 State." 
 
 I want to say to you, gentlemen, that I think no higher com- 
 pliment has ever been paid to the savings and loan associa- 
 tions of this State than the conclusions of those bankers in 
 regard to the savings and loan men. They are not idealists, 
 but hard-headed bankers, who went to Europe to find out 
 about co-operative financiering, and discovered that the sav- 
 ings and loan associations furnish the best and most available 
 means of adapting that valuable measure for the State of 
 New York. 
 
 Fortunately, we have, at the present time, a Chief Exec- 
 utive in this State who is, to some extent, a student of its 
 affairs, a sociologist, in a way; and it was owing to his ef- 
 forts, his special message to the legislature, that the Land 
 Bank Act was passed. 
 
 It was also owing to the agitation of the organized agri- 
 cultural societies of the State of New York stating that they 
 had reason to believe — I know nothing about it — that some 
 conditions existed in this State respecting the farming com- 
 munities, that needed relief of this character, and they urged 
 that. 
 
 The Commissioner of Agriculture subscribed to the Land 
 Bank as a measure designed to promote the interests of this 
 great commonwealth ; and lastly, the Acting Superintendent of 
 
 U 
 
Banks, Mr. Skinner, whom we have been acquainted with for 
 many years, and the incoming superintendent — ^the concensus 
 of all that opinion and judgment was that the Land Bank, 
 as provided now and as enacted, furnished a splendid, simple, 
 safe and easy method of doing what in reality supplanted, 
 almost, the savings bank of the State ; in reality, in time, elim- 
 inating the title company and the capitalist as a capitalist be- 
 cause it is designed to furnish a means whereby money, other- 
 wise idle or otherwise unsatisfactorily invested, can be in- 
 vested, even at a low rate of interest, in the very best secur- 
 ity that you can offer to any man, even as good as this organ- 
 ized government of ours. 
 
 The plan is this, very simply: We should not 
 quarrel about details. The matter of expense is raised. What 
 is the expense when you consider the possibilities of this 
 thing? What is the mere question of routine and detail; 
 Why, gentlemen, we have had offered to us — and when I 
 say "us," I mean only these men that have been acting in 
 this association — we have had offered to us identity with a 
 trust company of excellent reputation, and splendid resources. 
 We have had a room set apart down there on the main floor 
 of a building on Broadway, New York City, and the handling 
 of our debenture bonds free, for associations in the Land Bank 
 of the State of New York. 
 
 There is one element of expense that is entirely eliminated 
 merely by our existence. Every man sitting here now will 
 recall the struggle that was carried on, surreptitiously, not 
 openly, against the passage of this Act, which provides that 
 the Land Bank of the State of New York should be organ- 
 ized by you men and by nobody else. Why, the title alone 
 is worth — I would not dare to appraise the ethical and moral 
 effect of that title, "The Land Bank of the State of New 
 York." 
 
 Now, the operation of it is very simple. It does not make 
 any difference what the capital of the Land Bank is. The 
 Land Bank is a mere agency. That is all it is. It must have 
 $100,000 subscribed before it can do business. The associa- 
 tions subscribing must own at least $5,000,000 of resources 
 
 25 
 
themselves. They subscribe $1,000 for each share and take 
 as many shares as they wish. 
 
 The Land Bank is required by law to invest the money that 
 coines into their possession as capital in the same securities 
 as provided for savings bank funds; and if you know of any 
 better or safer, I do not. 
 
 Now, an association being a stockholder and desiring to 
 borrow money, can borrow through the Land Bank. The 
 Land Bank has no money. It has no funds except its cap- 
 ital, invested in interest-bearing securities. You go to the 
 Land Bank and say: "We want $30,000." Now, an issue 
 must be at least $50,000. A debenture bond in printed. You 
 get $20,000 worth of those bonds, of varying denominations, 
 sent to your association, and you sign them and bring down 
 $25,000 worth of securities and deposit them, but — and this is 
 something Mr. Howell overlooked, and is very significant — 
 the Land Bank does not hold your security five minutes, and 
 your debenture bond, signed by your association. The Comp- 
 troller of the State of New York takes your bonds and mort- 
 gages and signs as Comptroller of the State of New York 
 that debenture bond, which is then put on the market. I 
 am told by men who claim to know conditions that a bond of 
 that character could be readily sold at four per cent. — and 
 the people who have given me that information should know 
 — when people come to realize how absolutely secure that 
 debenture bond is. 
 
 In the first place, you produce $25,000 worth of your se- 
 curities. Now, you must give a statement showing exactly 
 how much money is due on each one of these mortgages. We 
 know, to begin with, that operating under the law, you do 
 not loan over eighty per cent, on a given mortgage. The 
 State Comptroller wants so much security. The Banking De- 
 partment has a list of those mortgages, and it knows, and it 
 says: "Yes." 
 
 Now, you are putting up only eighty per cent. ; conse- 
 quently, your debenture bond is secured on a sixty-per cent.- 
 basis at least. It is further security for that debenture bond 
 they are putting on the market and selling to the general 
 public, made for five, or ten, or fifteen, or twenty, or twenty- 
 
 26 
 
five years, as the case may be. Then you have the capital 
 of the Land Bank all the time invested in good securities, 
 and furthermore, all the assets and all the resources of 
 every association that signs a debenture bond becomes liable 
 for the payment of that bond. Do you know any better se- 
 curity than that? Do you know a single railroad bond in the 
 whole United States that has a security like that, as invar- 
 iable, as fixed, as determinate, as final in the form of secur- 
 ity, as that bond has ? I do not. I do not know of any bond 
 that is so secured. And that security, with that firmness, that 
 solidity, which you pass into the market, we will sell to the 
 ordinary investor, and it is going to make a low rate of in- 
 terest prevail for associations. 
 
 Now, the advantage to you will be two-fold, if you want 
 it. It promises to afford to you an unlimited supply of 
 money at a rate lower than you can get money for under 
 ordinary circumstances. It is going to raise the standard of 
 the associations, every association, whether identified with it 
 or not; but particularly those whose papers, whose reports, 
 whose front window signs, will read: "Member of the Land 
 Bank of the State of New York." It is going to raise every 
 association to a position of dignity, importance and standing 
 that it has never before occupied, never in all its career. 
 
 Why, you know the financiers look upon us as kind of soft, 
 a kind of people that believe in ourselves, because no one else 
 believes in us. That is what the financier has considered us 
 all these years. We are now getting into a position where, 
 if this proposition meets anything like what it is designed to 
 meet, and is capable of meeting, it is capable of diverting to 
 itself the employment of all the passive money of the State 
 of New York. That is for you men here. Nobody can own 
 a share of stock in it except the associations. Nobody else. 
 Nobody has anything to do with it except the associations. 
 If it rises and flourishes and meets the situation, with these 
 splendid facilities which this Act affords, it will be making 
 the associations a financial factor such as its greatest advocates 
 and warmest lovers never dreamed for. 
 
 Now, as for details, such as how are we going to invest 
 our thousands ? Great goodness alive ! They are going to be 
 
 37 
 
invested in the same investments as savings banks' money is 
 invested in. 
 
 How are you going to conduct this thing? The Act pro- 
 vides for that. 
 
 Now, the savings and loan associations are the only share- 
 holders. They are the only stockholders. By law, each asso- 
 ciation selects a representative who will vote for it and meet 
 in the annual meeting of the stockholders held in January 
 of each year. The directors will be selected in the usual man- 
 ner in which directors are selected by the stockholders, and 
 the stockholder is the representative from every association, 
 meeting once a year for that purpose. 
 
 You select the representatives at this stockholders' meeting. 
 They select the directors, and it all comes out of yourself, 
 out of nobody but you. Nobody else can come into it but 
 yourselves. Mr. Howell has explained to you very clearly that 
 the expense of this thing can be regulated by you men who 
 own it. Nobody owns it but you, and you can make it or mar 
 it. You can take it or leave it. But there are institutions 
 and there is capital in the State of New York to-day that 
 would give valuable, valuable money for the privileges that are 
 given to you because you are what you are. 
 
 Now, if there are any particular questions concerning this 
 thing, that anybody here would like to ask me, and I have not 
 touched on and Mr. Howell has not touched on, if I am able 
 to answer, I will; but do not be troubled by details. All the 
 details will be arranged by your representative. Mr. Howell 
 don't know what they will be and I don't; but the method of 
 finally agreeing on those things and conducting this business 
 is in the hands of the men who will own the stock. The 
 Land Bank, let me say once again, is not a bank of deposit 
 and not a bank of discount. The Land Bank takes your bonds 
 and mortgages, the same as I take this here and hand it over 
 there (indicating). That is all that the Land Bank does. 
 The Comptroller of the State of New York has those securi- 
 ties, and it almost would appear — do not misquote me — it al- 
 most would appear that when that debenture bond goes out 
 to the public that the State of New York was behind it. 
 That is not the fact but just as good securities and just as 
 
 38 
 
good resources for the obligation are behind that bond; but 
 it is to give it a quasi value to the community, to invest that 
 piece of paper with all the sacredness that goes with a national 
 movement, that that was provided ; and I do not believe for 
 a moment but that the debentures subscribed by the State of 
 New York will be sold at as low a rate as any security I know 
 of, except the bonds of the United States. 
 
 Mr. Gilbert S. Barnes (Tottenville)— Mr. Chairman, I de- 
 sire, before I sit down, to ask a question, touching upon a 
 point which has not been touched upon, but before doing so, 
 I would like to beg the indulgence of the delegates one mo- 
 ment, and refer to what has been called a detail, but which 
 I think the minds of our association will consider a detail 
 of so much importance and invested with so much irksome- 
 ness in following the provisions of the statute as to be an 
 obstacle in following this plan, and I refer to the apparent 
 disposition to construe the value of the mortgage as con- 
 stantly diminishing by the payment of the installments. It 
 seems to me that the association which collects on the mort- 
 gage until it is actually satisfied, that it would be hard to 
 defend the justice of this. You are collecting interest. It is 
 not applied on the principal. The bank examiners, when they 
 report the assets, they do not take cognizance of any such 
 thing. They report the face value and it is so carried by the 
 banks, and while it is true they may be diminished, until it 
 is applied, they are not diminished. In my mind, it is the 
 same as a call loan at the bank. 
 
 Mr. Durack — What is the question? 
 
 Mr. Barnes — I will come to that. Now, the question is: 
 What particular advantage does this Land Bank offer to an 
 association in a community where there are many investors 
 but very few borrowers, like Manhattan and Brooklyn, where 
 the demand for loans is small, and where there is a large 
 surplus accumulating drawing interest at two per cent., and 
 which they want to invest; Does this Land Bank offer any 
 opportunity except to take this stock, the dividends on which 
 are uncertain? 
 
 Mr. Durack — No, sir. If you have more money than meets 
 your demands, then there is no benefit flowing to you from 
 
the Land Bank. There is only the benefit of supporting an 
 institution which is recognized by law as consecrated — if I 
 may use that word — savings and loan association. But if 
 you have all the resources you desire and cannot use any 
 more money, there is no advantage flowing to you. 
 
 Mr. David B. Hutton (South Brooklyn) — Their limit of 
 earning power would be three per cent, and they could buy the 
 bonds and get four. Can you beat it? No, you bet you 
 can't. 
 
 Mr. Durack — Anybody can buy the bonds. 
 
 Mr. Hutton — ^And if you need the money, you can sell them 
 again. 
 
 Mr. John C. Pratt (Batavia) — If I was a member of this 
 Land Bank and wanted money in an emergency, how soon 
 could I get it after my mortgages were presented? I have 
 a reason for asking that, which I will explain. 
 
 Mr. Howell — Mr. Chairman, while that question is, of 
 course, entitled to a fair answer, it has to be answered in two 
 ways. If the Land Bank is organized and you are the first 
 member association to come and ask for an issue of bonds, 
 it would be necessary that your bonds first should be sold 
 upon the market and the proceeds brought to you, the Land 
 Bank acting as your agent in the matter, as explained by 
 Judge Durack; but when the Land Bank has been fully es- 
 tablished and has been in business several years, as it will 
 be, and has a large redemption fund on hand, which it also 
 must invest at the proper rate of interest, in mortgages or any 
 other securities, holding that redemption fund for the time 
 it can purchase back outstanding bonds ; then the Land Bank 
 will have money to cash your bonds at once and afterwards 
 sell them on the market. 
 
 Mr. Pratt — That is just the point I wanted to bring out. 
 We had an extreme case in our association three years ago. 
 Three years ago we had a bank fail in our town for quite a 
 large amount, not a national, a State bank. Soon after that, 
 everybody got fearful of banks. We had a run started on 
 our association. We had three banks in that town. Did they 
 offer us any assistance or any money? Not a word said. I 
 did not know where to turn. We have now about half a mil- 
 
 30 
 
lion assets. We had then about $400,000. I was Treasurer 
 of that association. I knew we had gilt-edge securities, but 
 where were we going to get money? I said we would pay 
 them one hundred cents on the dollar. We had an attorney 
 that had $40,000 in cash in the Marine Bank of Buffalo, and 
 he gave us that and said: "Give us your security when you 
 get ready." Our best friends deserted us. We went to other 
 banks. They said: "We will give you cash to pay your de- 
 positors when you get through." If we had had to ask them 
 to start with, we would have been in the hole and our asso- 
 ciation would have gone down. 
 
 Now, that is the point with this Land Bank. When it has 
 been in business two or three years, and if we have $100,000 
 in securities and want to get $75,000 in cash, we want some- 
 body with whom we can do business. 
 
 Mr. Howell — You are talking now about what the Land 
 Bank could do for you in an emergency? 
 
 Mr. Pratt — Yes, sir. 
 
 Mr. Howell — That is another matter. That will depend 
 upon the power of the Land Bank itself in the financial world, 
 and I venture to say, based upon the statement of Judge 
 Durack and upon my own knowledge and that of other gen- 
 tlemen who have been connected with the inception of this 
 institution, that from the very beginning the Land Bank will 
 have such credit among the financial institutions of New York 
 City, so far exceeding anything that any single association has, 
 that it would have no difficulty, whatever, from the very be- 
 ginning, in helping an association out of an emergency of 
 that kind. (Applause.) 
 
 Hon. George I. Skinner — I think that depends also upon 
 the question as to whether you are going to make the Land 
 Bank of the State of New York a mere agency or an insti- 
 tution. If you are going to make it an institution, it can do 
 things; if it is a mere agency, it is limited to the power of 
 its principals to a very large extent. 
 
 I discovered yesterday morning that I was scheduled here 
 for an address, and I hope to talk to you later. I have asked 
 the Secretary for the address which I was to deliver, and he 
 refuses to give it to me, or even the subject; and I have not 
 
 31 
 
one with which I can take up the time of the meeting at this 
 time. I do not wish to take up your time by discussing some 
 slight differences of opinion between myself and the various 
 speakers, but I do think this is a good time to criticize one 
 difference of opinion, whether you are creating an institution 
 — and this is for you all to think over — whether you want 
 to make it just an agency or an institution. 
 
 If you are going to ask men to come into this co-operative 
 institution as you ask investors to come into your associa- 
 tion, you have got to produce some profit for the investor 
 as well as for the borrower; and simply wishing to criticize 
 that point and to let you know that at a later time I wish to 
 present it, I thought I would rise to my feet. It did seem 
 an opportune time to bring that up for your consideration, 
 when this institution is yet to be created. It is a good thing, 
 that, in the law, it is not so closely restricted but what you 
 can make it what you ought to be, whatever your conclusion 
 is in that respect. (Applause.) 
 
 Mr. Durack — Mr. Chairman, I would move you, sir, that 
 this portion of the report of the Commission to Revise the 
 Banking Law, covering the matter we have under considera- 
 tion, be made a part of the minutes. From the report of the 
 Commission that revised the banking law, of which Mr. A. 
 Barton Hepburn was chairman : 
 
 "The savings and loan association system of this State has 
 through many trials and under adverse conditions been de- 
 veloped to such an extent that it has been believed by the 
 same students of European systems that it embodies a better 
 co-operative system of land credits than any of the European 
 systems to which attention has been called. . Its great defect 
 in so far as obtaining money at a low rate of interest is con- 
 cerned has been the lack of a central institution. This defect 
 has now been provided for by authorizing the establishment 
 of a Land Bank of the State of New York, which may be 
 organized by savings and loan associations having not less 
 than five million dollars of resources. The savings and loan 
 associations of the State have been making very rapid progress 
 in recent years and now have aggregate resources of ap- 
 proximately $65,000,000, and, if the system can be extended 
 
 33 
 
to agricultural sections of the State, it is believed that, through 
 co-operation, sections where farms are now being abandoned 
 may be again more fully populated and the whole State profit 
 from the development of those sections and the consequent 
 decrease in the cost of living." 
 
 The motion was carried. 
 
 Mr. Newell — I move that the thanks of this audience be 
 given to the Hon. Edwin F. Howell and Judge Walter L. 
 Durack, for their clear explanation of the Land Bank system. 
 
 The motion was carried. 
 
 Mr. M. V. Dorney (Nassau) — I have listened to the dis- 
 cussion this afternoon, and while I do not want to express 
 myself as being in favor of the Land Bank, because I will 
 admit very frankly that I do not know enough about the 
 matter, and I particularly do not want to be held as expressing 
 the opinion of the Nassau Association of Kings County, which 
 I represent; but I think it is fair to assume two things, one 
 is that the Land Bank proposition is a feasible, practical and 
 a desirable plan, and I think it is still more fair to assume 
 that the men who will be the direct officers of that organiza- 
 tion, if organized, will be capable, as I know they will be. 
 But it seems to me there is one matter, or one factor neces- 
 sary for the success of this plan, that ought to be considered 
 now. 
 
 You gentlemen have heard a very interesting discussion 
 this afternoon, and I want to call your attention to this par- 
 ticular fact: that although the men sitting in this convention 
 are — and I say it without any attempt to throw compliments — 
 they are the men who have managed the building and loan 
 movement in this State for many years, the Presidents and 
 Secretaries of these associations, and these men must know 
 more about the movement than the average man, and yet 
 they have asked question after question of Mr. Howell. 
 
 The Land Bank question is an entirely new one in this 
 country, although similar movements have been successful 
 in Europe; but if the men who instituted it, who have been, 
 in many cases, working for it for a quarter of a century or 
 more, if you men have to ask all these questions of Mr. Howell 
 and Mr. Durack, what about the men who do not give it the 
 
 33 
 
study which you have? These men know absolutely nothing 
 about it. 
 
 Now, in order to make this movement, this Land Bank, a 
 success, you must convince these men who control you, and 
 are in the majority, that the Land Bank is a good proposition 
 for the building and loan movement ; and you will not be able 
 to do it unless they know what you know. You have heard 
 the discussion this afternoon. They have not, and if you are 
 going to wait until, in the ordinary course of events, the 
 proceedings of this Convention are printed and sent around 
 to the various associations, you will wait a long time for the 
 information contained in the debate this afternoon to be of 
 any practical use. 
 
 1, therefore, suggest to you, sir, the advisibility that if we 
 cannot get the full report of these proceedings printed very, 
 very promptly, that we ought at least to have a printed report 
 of the proceedings of this afternoon, commencing with the 
 explanation of Mr. Howell and all the questions and answers 
 and explanations that have been made, that they should be 
 sent to the boards of directors of the various associations in 
 this State, at the earliest possible moment. It will be an 
 extra expense, but it may mean the difference between the 
 success and non-success of the Land Bank of the State of 
 New York. (Applause.) 
 
 Mr. A. Hertz (New York) — I move you that this sug- 
 gestion just made be changed into a motion, that sufficient 
 copies of this report should be printed and several copies dis- 
 tributed to each association, each savings and loan association, 
 in the State of New York. 
 
 The motion was carried. 
 
 Mr. George J. Beyer (Brooklyn) — Mr. Chairman, before 
 I came to the Convention, I had some misgivings about this 
 Land Bank, and, of course, while the members here and the 
 representatives of the various associations are not all pledged 
 to be able to get every association sufficiently interested to be- 
 come members, I would like to have a test vote taken as to 
 how the members that are represented here, how they stand 
 on the matter. I would like to hear that they are as en- 
 
 34 
 
thusiastic as they ought to be. I would Hke to ask those in 
 favor of it to rise. 
 
 A Voice: Would it be fair for the delegates to vote? 
 
 President Scott — I do not think it would be fair to the dele- 
 gates here, because they do not know what their constituents 
 at home will do. 
 
 A Voice — I think the question is a very proper one. I 
 cannot pledge my association, and I do not think any man 
 who represents an association can pledge his association. I 
 think we ought to feel enthusiastic enough, however, to show 
 our hands in the matter. I am frank to say that I am. I do 
 not see that there is any harm in that. 
 
 Mr. A. J. Reibling — I feel that the proposition that has 
 just been offered to the Convention ought to be delayed until 
 after we hear from Mr. Skinner. I feel that he will explain 
 that matter and will make it so clear to all the members 
 here, that after his address, we will ask the members here 
 to rise, and state their opinion, and they will all be in favor 
 of it, while now there would be a good many doubts. 
 
 I urge the Chairman not to press the members until after- 
 Mr. Skinner's address. 
 
 Mr. Thomas F. Larkin (Model) — I suppose there are some 
 here who might be opposed to the Land Bank. I have a 
 great deal of respect for the judgment of Mr. Holmes and 
 Mr. Barnes, but they made an error in regard to depositing 
 securities. For instance, Mr. Barnes- stated that the Bank- 
 ing Department did not take any cognizance of anything 
 paid off on a mortgage; but I would like to ask him does it 
 not consider the dues paid in as a liability? Of course, that 
 is an offset against the mortgage. 
 
 Now, another phase of this that has not been touched upon 
 is this: That in borrowing money from the Land Bank and 
 depositing your securities — well, I will give you a practical 
 illustration: Suppose an association was a borrower of ten 
 thousand dollars from the Land Bank, and deposited ten 
 thousand dollars in securities. They take your mortgages 
 for ten to thirty years, to make the payment smaller to the 
 borrower and make his burden less. Let us take, for sim- 
 plicity's sake, that your bonds are issued on a twenty-year 
 
 35 
 
basis, that you would have a twenty-year mortgage, and the 
 money you got from the Land Bank, you would immediately 
 put into those new securities and get back your old ones, you 
 would not be touching a cent of your capital up to that point ; 
 but you would be doing new business on new capital, pure 
 and simple new capital; and the mortgages deposited with 
 the Comptroller or the Land Bank, would be the money you 
 got from the Land Bank ind loaned out. 
 
 I only want to point out that point to show that after your 
 first deposit is made, it is that way. 
 
 Now, if it has been deposited with the Comptroller and 
 the Association notified that the person wanted to pay off 
 his mortgage, that is simplicity itself. It simply involves the 
 transposition of another mortgage and sending it to the Comp- 
 troller and getting that back by return mail. 
 
 I only hope that the members here will not be prejudiced 
 against this thing because it happens to be new, and because 
 they have not given as much thought to it, possibly, as Mr. 
 Judge, and Mr. Howell, and Mr. Durack and others who have 
 followed this thing up with the Commission and with the 
 Banking Department and with the people in Albany. The 
 matter of detail must be left entirely to be managed by the 
 Board of Directors. And let me tell you this, in answer to 
 Mr. Eckhoff: that if you start an association and you go to 
 presuming right away that you are not going to pay divi- 
 dends the first year, and you are not going to get any capital 
 unless you pay dividends, you are never going to help a 
 savings and loan association; and if, at the end of the first 
 year, you determine to close up your business, the result 
 would be that, if your expenses were ten per cent., everybody 
 would be taxed ten per cent. That is a matter of detail. 
 
 Now, the earning capacity of the Bank would only be the 
 capital invested, of, say, one-half of one per cent, on the total 
 bond issue. Now, that may seem small, but your first fifty 
 thousand dollars would be a test case whether those bonds 
 were marketable or not. Why, down in the Metropolitan 
 district, and I think Mr. Hutton and some others will bear 
 me out, that the associations down there themselves have idle 
 money, at times, and would take that whole fifty thousand 
 
 36 
 
dollars, and you need not go outside of the market for it. We 
 have faith in our own institutions, so why let us quibble with 
 those details? 
 
 The great trouble with savings and loan associations is this, 
 in my opinion: They have been so penurious; they were or- 
 ganized so economically; they are afraid to go back to the 
 board of directors to talk about the losing of a dollar. They 
 said: "How is our money protected and how much interest 
 are we going to get on our one thousand dollars ?" 
 
 Now, don't think of your profits right away. There are 
 no profits until you earn profits. So, of necessity, it must be 
 with the Land Bank, that for the first year it must be taken 
 on faith, and get on a sound financial basis, as intended in the 
 law. 
 
 Mr. B. G. Parker (Gouverneur) — There is just one thing 
 that occurred to my mind when the suggestion was made 
 that we take an expression, and some gentlemen said: "I 
 don't want to bind my association." 
 
 I was asked by my association to come over here and to 
 represent them at this meeting; to look over this matter re- 
 garding the Land Bank. Now, I feel, that with due respect 
 to the board of directors and due respect to every- 
 one interested, I feel justified in saying that our asso- 
 ciation will take stock and be a member of that Land Bank, 
 and when I go home and say that, the board of directors 
 have not had the opportunity of listening to what you gentle- 
 men have listened to to-day; and when you go home, your 
 opinion is worth more than that of all the rest put together. 
 That is what you are here for. If it sounds good to you and 
 has the right ring, you, who have been entrusted with the 
 responsibility of representing your association, should say: 
 "We want to join and are going to join," and that is all there 
 is of it. That is what we are sent here for. If I go back 
 and say: "I want to go in," that ends it; and if I say: "I 
 do not think it is a good thing," they will not go in. 
 
 Mr. Clay W. Holmes (Elmira) — The point I want to make 
 is this : The questions we have discussed should be dropped 
 entirely, and we should think of but one thing. Is the Land 
 Bank going to raise the standard of the building and loan 
 
 37 
 
associations here in the State of New York? If it is — and 
 we have good authority from other countries to believe it is — 
 we should drop any idea of whether it is going to be a good 
 thing for me or for some other man, and take up the idea as 
 to whether it is going to be good for the building and loan 
 movement. If it should be so, we should all take stock and 
 try to make it good. If it is not good, then we had better 
 drop it. I confess that so far as my own original opinion 
 was concerned, I could not see anything in it. I was trying 
 very hard to look through it. I think they made two mis- 
 takes in making the law. In the first place, one was they 
 did not make a provision for taking care of the farmers, and 
 the other was they did not make it obligatory for every asso- 
 ciation to come into the movement. 
 
 We have got the Federal Reserve Bank. We were not told 
 we had to go into it, but if we did not — well, we did not dis- 
 cuss whether it was a profit or a loss, we simply did it. The 
 result was that the Federal Reserve movement was a good 
 one. Now, if we had been told the same thing about this, it 
 would have been a success. We have the law on the books. I 
 would feel ashamed that we had a law on the books, and that 
 it would be a discredit to the building and loan associations, 
 and it will be a discredit to the building and loan associations, 
 if we fail to take it on for a little while. 
 
 This morning I happened to walk in where the committee 
 was meeting. I was not a member of the committee. I was 
 against it. I heard some things said, and one was that the 
 men who conducted this movement as directors and officers 
 should do it the same as we are doing our work in the asso- 
 ciations until such time as their money will enable them to 
 give them a reasonable stipend. That puts a different phase 
 on the matter. I would be glad to do that if anything of that 
 kind should come my way. 
 
 Now, if we can get down to that basis. It cannot be a 
 success unless we all go into it with the same spirit and for- 
 get the details, which will work themselves out when the 
 board of directors is created, and if they make a rule and it 
 does not work, they will make another one. 
 
 On that phase, my director said to me : "What do you think 
 
 38 
 
of it?" I said: "I don't know until we go to the meeting. In 
 the meantime, let us get the by-laws and look at them." 
 
 We got the by-laws and read them, and I confess right now 
 that I shall be one to tell my board of directors, when I get 
 home, that I think we should try one share and go into the 
 movement and give it our moral support, and that we think 
 it will be a success even if we do not make a profit the first 
 year. 
 
 In view of the fact that these gentlemen have given so much 
 time to it and other countries have made a success of it, why 
 should we not make a success of it in this country? 
 
 Mr. David B. Hutton (Brooklyn) — I have endeavored to 
 speak to you several times, but most of the speeches were 
 made by other gentlemen, particularly by Mr. Dorney and 
 Mr. Parker; but I want to say a word on what Mr. Dorney 
 has told you this afternoon, and in doing so, I am taking a 
 retrospect of a quarter of a century. Mr. Dorney has told 
 you it was a difficult matter to explain those matters to the 
 directors. It is. However, it gets easier year by year, as 
 directors find out that they have greater confidence in you 
 than you yourself thought you deserved. 
 
 When they send the delegates to this League, do they not 
 select the men whose minds and whose judgment can be 
 depended on to bring back to them a correct report of what 
 has taken place in the convention, and they cannot reason- 
 ably expect that they will give many details of the proposition 
 which is not even understood by the men who are supposed 
 to know it. 
 
 I was extremely busy when I was called in on this propo- 
 sition, and it did not appeal to me at all until Mr. Howell ex- 
 plained it to me. You have got to start off on the principle 
 that whatever Mr. Howell says, he absolutely believes, and he 
 would not endorse anything unless he thought it was all right. 
 I think some of those questions that Mr. Howell put were 
 some of them I asked, because they sounded the same. You 
 must go into a subject that way, if you ever expect to know 
 anything about it. 
 
 There is one other thing I want to say to you, and that 
 is whether we are Scandinavians, Polish, German, Scotch, 
 
 39 
 
Hindoo or Hottentots, our residence here makes us all what 
 we ought to be, true Americans. (Applause.) We had the 
 pleasure of listening to an address by Governor Glynn. Judge 
 Durack has explained to you that Governor Glynn is some- 
 what of a sociologist, and he gave us a historical review of 
 The Credit Fonder, of France, and the Landschaflften of 
 Germany ; and he told us about this Land Bank scheme being 
 evolved, in the eighteenth century, before the war, near Phila- 
 delphia; and during the revolution, it was lost, but a little 
 musty document got from Philadelphia to Germany, and 
 financiers took it up there, and on the strength of that scheme 
 they built up The Credit Foncier and the Landschaflten, so 
 it is not a foreign institution you are going into. (Applause.) 
 We are doing something to revise and develop what was 
 planned before the revolution. 
 
 I trust you will all be enthusiastic about it and that you 
 will go back to your associations and stir them up with your 
 enthusiasm. 
 
 Hon. George I. Skinner, First Deputy Superintendent of 
 Banks — Mr. Chairman, Ladies and Gentlemen : Speaking here 
 in the City of Buffalo, I feel it a duty, for various reasons, 
 to speak to you as briefly as I may with reference to the revi- 
 sion of the Banking Law of the State, as a whole. One reason 
 is because it is the home of Mr. McDougal, the President of 
 the Bank of Buflfalo, who is one of the efficient working mem- 
 bers of the Commission, and whom I believe to be one of the 
 most careful and conservative bankers in the State of New 
 York. Another reason for my wishing to speak to you of the 
 revision as a whole is because I am rather proud of it, and 
 because, to some extent at least, it is the result of my personal 
 eflForts along certain lines. 
 
 Do not think I have so much egotism in the matter as to be 
 vain over what I did do, but I always feel inclined to report 
 to you what I have done since I last saw you ; and, to a certain 
 extent, anything that I have done, you have done, for the 
 reason that if I have helped you to create a law for your 
 associations; if I have helped you to eliminate the evils that 
 used to exist, in another sense, you have aided me, and what 
 
 40 
 
I did, you have done. Since my first connection with the 
 Department, my association with you and our various efforts 
 have been an education and in the line of development. 
 
 Third : You are becoming more and more an influential part 
 in a great system, and I do not believe you appreciate the great- 
 ness of the system nor the part, that, if all things go well, 
 you are destined to bear in it. 
 
 It is hardly the place here to speak of the Land Bank, and 
 its possibilities, nor what might have been if you had, twenty- 
 five years ago, the law that stands upon the statute books of 
 the State of New York today. People sometimes say that the 
 law does not matter, that you cannot make people honest by 
 legislation. That is true in a way, yet if we had had, upon the 
 statute books of this State, twenty-five years ago, the law that 
 you and I have finally builded, instead of being proud of 
 sixty-five millions of resources, you would today have re- 
 sources by the hundreds of millions, in my judgment; and I 
 am not enthusiastic to such an extent that I usually overstate. 
 
 I think few of you realize that, in New York State, there are 
 institutions under the supervision of the Superintendent of 
 Banks, having resources that dwarf the national banks of the 
 State. You are a part of that system. I think the more you 
 study it, as days go on, the more you will be proud of it and 
 recognize its strength. In it your interests have always been 
 looked after; your deposits in the State institutions are pre- 
 ferred; so that no matter what happens, you will lose noth- 
 ing through a State institution. 
 
 Then, there is still another reason : We fought together so 
 long for righteousness, for what we believed to be the right, 
 that I have become accustomed, in any legislative fight, whether 
 it interested you particularly or not, to call upon your Legis- 
 lative Committee and ask them to help us out; and I want 
 to say that I have never asked in vain, and that in the enact- 
 ment of this revision your representatives bore a worthy and 
 a prominent part. 
 
 To speak briefly upon revision itself: It has done for 
 most of the other institutions of the State what you have done 
 for your own. It has clarified the statute. We have elimi- 
 
 41 
 
nated the obsolete provisions. We have made each article, 
 with a few exception, as nearly a perfect article as your own. 
 
 There is another thing that will interest the lawyers, and 
 that is it is a new departure in statutory revision, and the de- 
 parture was made with the consent and under the advice of 
 Professor Collins, who has been connected with every statutory 
 revision commission in this State within my recollection. 
 
 In previous statutes relating to a number of classes of in- 
 stitutions, you have had a separate article containing the spe- 
 cial provision relating to those institutions. You have had to 
 begin with, however, a general article, in which were placed 
 all the provisions of the statute which related to two or more 
 corporations. 
 
 We adopted, in drafting the new law, a new principle, in 
 which each article is complete in itself; so that reading the 
 article upon banks, a banker can ascertain everything that he 
 is required to do with reference to his institution from the 
 organization up to the transaction of business, limitations up- 
 on loans, qualifications of directors and everything of that 
 kind. 
 
 In making this arrangement of the law — this re-arrange- 
 ment — the general provisions of the previous statute have been 
 carried forward and embodied in each article to which they 
 were applicable, and the result is this : that many of you have 
 supposed that there were great changes in the savings and 
 loan article, and officers of banks and trust companies have 
 been almost staggered when they have read in the law, for 
 the first time, the provisions that have existed there for many 
 years. 
 
 Except for this re-arrangement, this clarifying of the statute 
 and the addition of certain desirable powers for banks and 
 trust companies, the establishment of a guarantee fund for 
 the savings banks of the State, there have been no great 
 changes in connection with the ordinary institutions. 
 
 Outside of this revision, perhaps the most essential thing 
 that was inserted in the statute was a provision making the 
 law applicable not only to the corporations and individuals 
 
 42 
 
that voluntarily came under supervision, but to those who 
 violated its provisions. 
 
 Heretofore the fake investments company organized under 
 the Business Corporations Laws, were not in any way subject 
 to the laws; but now the Superintendent of Banks has been 
 given power to go out and investigate fraudulent transactions 
 by private bankers and by fake investment companies, and 
 prosecute and take evidence. He is made a protector and 
 given the power that heretofore he was merely assumed to 
 have. 
 
 Not only is the Banking Department a means of supervis- 
 ing and controlling, to a certain extent, financial institutions; 
 it is being made, not by our friends, but by the demands of the 
 public, and, I imagine, by some of the work we have done, 
 more and more a protecting institution. 
 
 The Credit Union article, first inserted in the law last win- 
 ter, is not only designed to enable farmers to obtain loans on 
 attractive properties, but on personal credit, where character 
 is to be taken into consideration. It is also designed to assist 
 just such philanthropic efforts in a different way, as that 
 undertaken by the Edison Company in organizing and main- 
 taining the Edison Loan Association. It is designed to help 
 the laborer in cities, the indigent borrower, and eliminate the 
 loan sharks. Another article relating to personal loan brokers 
 was designed especially for that purpose. 
 
 The first statute with reference to that particular matter 
 was prepared by Ansley Wilcox of Buffalo, in the year 1895 ; 
 and as your law has grown since then, so has this statute; 
 and the Russell Sage Foundation is devoting a portion of its 
 funds to remedial work along those lines, to save the poor 
 from the exactions of the usurer. We are not as fully rec- 
 ognized in some respects, in some matters of financial opera- 
 tions; but I am glad to speak of them to you in a spirit of 
 altruism, feeling that I am willing, outside of the things I 
 am called upon to do as a matter of official duty, to make 
 some sacrifices to help out those things which I have derived 
 quite largely from men who have at one time or another been 
 connected with this association. 
 
 43 
 
Coming down to the article relative to savings and loan 
 associations, and not troubling you further with this general 
 talk, I can say that there have not been many essential changes 
 in the article relating to savings and loan associations from 
 what it was before, as originally prepared by you and myself 
 and enacted in 1910, with the exception of the creation of the 
 Land Bank of the State of New York. 
 
 I was very much pleased yesterday to find not only the 
 general interest in this subject in this convention, but the 
 tendency to question, to examine, to weigh well all of the 
 slight details. If we have done what we think we have done 
 in reference to the Savings and Loan Law, we have done it in 
 just that way. I was glad to see you counting the expense, 
 and the cost and the profit, because it is in our hands and 
 nobody else's to make the Land Bank of the State of New 
 York a success or a failure. It is not a question as to whether 
 the experiment is to be tried. It is to be tried. There is no 
 question about that. The only question is as to whether it is 
 to be a success, and if it is to be a success, if there is anything 
 in this co-operative system of finance, it has got to be con- 
 ducted economically. Every movement in its developrtient has 
 got to be carefully and cautiously taken. 
 
 You have been the custodians of the people's money in a 
 sense in which no other institution in this State has been its 
 custodian, in the sense that you have attended to the savings 
 of the people and employed it for their benefit. 
 
 I am proud of the savings bank system of this State. It 
 is almost as perfect now as legislation can make it, but the 
 moneys collected by the savings bank are invested in large 
 undertakings. The investors of New York State are financ- 
 ing the railroads of the country through its savings banks, and 
 anything that injures the railroads of the country injures the 
 widows and the orphans of New York State. 
 
 The money is being used in the erection of great buildings 
 in the metropolis and other cities. It is doing its share of the 
 work of the world, but it is not going back to the people from 
 whence it came. It is different from the work that you are 
 doing. The farmers of the State have felt that their interests 
 
 44 
 
were being neglected. The national banks, which are more 
 common in the country than the State banks, cannot even 
 make loans on real estate at all, much less upon farm land; 
 and for years the farmers, feeling what they believed to be 
 an injustice, have been studying co-operative systems. Our am- 
 bassadors abroad have been telling our people about the 
 great co-operative systems of Germany and Italy and all the 
 European countries, and they came home, and upon their at- 
 tention being called to the savings and loan system of New 
 York State, they said: "That. is better than anything we have 
 discovered abroad." Really rather wonderful, is it not, in a 
 way? 
 
 And this is true. While, owing to circumstances, national 
 scandals and worse, the savings and loan associations of New 
 York State can never point to the resources of those institu- 
 tions, they are heavy in ideas. In so far as the development 
 of the movement is concerned, they have furnished brains. 
 
 Now, I am making myself one of you. I think I have the 
 right to. It may seem that just when we are getting every- 
 thing moving nicely, we have an admirable law, people are 
 just beginning to believe in us; but you undertake some new 
 thing, that we do not absolutely need for the development 
 of our local institution, but may reflect on us if we do not 
 make it a success, and it is asking altogether too much, and I 
 would be disappointed if my hard-headed friends, men who 
 have carried the burden of the battle in preserving for the 
 people the peoples' institutions against the attacks that were 
 made upon them, if they did not weigh it well. 
 
 I do not want you to accept it through any enthusiasm of 
 our friends, who are especially altruistic. I do not want you 
 to accept it because I have gotten so that I believe and think 
 the possibilities are sufficient so that we really ought to take 
 the risk that goes with it. Think it out for yourself. 
 
 In so far as the matter goes at present, you will obtain more 
 of an advertisement from the enactment of the statute than you 
 ever have had before in any way. Attention has been called 
 to the fact that the savings and loan association of today is a 
 distinct type of institution, and that the old national building 
 
 45 
 
and loan association could not even get started. From 
 Oregon, from Kansas, from almost every State in the Union, 
 they are writing today with reference to the Land Bank and 
 our Savings and Loan Association Law. That is one thing 
 you have had already. You have had the advertisement. 
 
 Now, with the attitude of the farmers, with the advertise- 
 ment of the co-operative principle coming from the study of the 
 co-operative systems of Europe, you were bound to have the 
 efforts made in this State, whether you would or not. 
 
 Should there be two separate co-operative systems of finance 
 in New York State ? That is a question that came to me here, 
 and I think I ought to recite a brief history of how this 
 has all come about. 
 
 You know our friends down in the metropolitan district. A 
 year ago this last fall, they sent for me. I guess they wrote 
 the Superintendent of Banks, but I think they knew who would 
 respond. They asked that I go down there and consider with 
 them some new ideas that had been aroused by the study 
 of the co-operative systems of Europe. 
 
 I went down and talked them over, and between us we sifted 
 out what we thought would be a proper basis for a standard 
 institution, and that it would not be best to have an agricul- 
 tural system of co-operative finance in the State of New York, 
 running along paralleling ours ; not strengthening it, detract- 
 ing from it. 
 
 They started with those ideas as a basis, that we had dis- 
 cussed at that time. Within two months from that time, Mr. 
 Dillon, the publisher of the Rural New Yorker, prominent in 
 the State Agricultural Society, came to the department and 
 was referred to me ; and he wanted to know whether the Bank- 
 ing Department was not in rather close contact with the money 
 devils. He did not express it just that way, but that it would 
 help the farmers to create a system by which they could get 
 the benefit, by which they could get the development of the 
 farms of this State, for the benefit of every man in the State 
 who eats, and most of us do. 
 
 I told Mr. Dillon that I had some friends in New York 
 City who had been giving this matter consideration. They 
 
 46 
 
went abroad and studied the systems of Germany and France 
 and Italy. I believe we have a pretty good system here. It 
 is established. I am proud of it. I wish you would go down 
 and talk things over with them and see if you cannot work 
 together. There is more prospect of ultimate success. There 
 is more of a prospect of getting through the Legislature desir- 
 able legislation if you work together. 
 
 He accepted the situation in good faith. I think he and the 
 men of the Agricultural Society, whom he represented, on 
 investigation were astonished to find we had so good a system. 
 From that time on, the representatives of the farmers and your 
 representatives have worked together. They have helped 
 you pass this legislation. They have not endeavored to set 
 up a separate system. They have not endeavored to establish 
 a Land Bank that should help the farmers only. This Land 
 Bank idea, if carried through, helps not only the farmer, but 
 the artisan and laborer, everybody in the State, if it is a suc- 
 cess, because your local associations, whether formed by 
 farmers, by laborers or by clerks, by merchant clerks or bank 
 clerks, will put their money into this great big system, and it 
 will be coming back to them for their purposes. It would not 
 be building railroads, which are fine things. It would not be 
 erecting big apartment houses ; but I am calling your attention 
 to the assistance in passing this law, which many of you desired, 
 that you have had from the agrictdtural interests, and to the fact 
 that the Land Bank of the State of New York presents not only 
 the opportunity, but a duty, in a sense. If we are to have its 
 advantages, we have got to be helpful to the others and rec- 
 ognize the fact that it was a matter of joint efforts. 
 
 I am sorry to talk so long when you are hurried, but as I 
 promised yesterday, I feel that I should dwell for just a mo- 
 ment at least upon the conception of the Land Bank of the 
 State of New York, which we should have. 
 
 To my mind, it is to be a great central institution. I haven't 
 any idea that all the extravagant hopes that have been builded 
 upon it will eventuate in the near future. It has got to be 
 a matter of slow growth. I think it should be a profit-making 
 institution to the extent that it should make a fair return to 
 
 47 
 
those who are investors. That is, it should not be a mere 
 instrument for borrowing money for those comparatively few 
 associations that cannot get what they need on fair terms. 
 
 I think it should be able to make loans to member associa- 
 tions, temporary loans. I do not think the power is given to it 
 today, under the present statutes, and in speaking of this Land 
 Bank, I am not going to be confined as to what it is as a part 
 of the statute on the books today, but as to what it should be, 
 because it is so new a thing, and the safeguards that have 
 been thrown around it are so few in some senses and so great 
 in others, and the idea is, as yet, so little developed, that we 
 can make it what it should be, and it can be very largely done 
 by the by-laws, and if any slight amendment to the law is 
 necessary, it can very easily be obtained now. 
 
 I stated yesterday that I differed in some respects with the 
 speakers of yesterday. I think that I should qualify that state- 
 ment, perhaps. I do not know that my ideas differ from them, 
 but I should have expressed them differently. I think, per- 
 haps, they gave, once in a while, an impression which they 
 did not intend to convey. So far as knowledge of the phrase- 
 ology of the statute is concerned, I have no doubt they are 
 more apt to be correct than I am, because they have studied 
 that especially, while my study has gone to other things ; but 
 if it be correct that the expenses of the Land Bank should be 
 entirely paid by those associations that borrow, it does not 
 matter whether it be done by commission— that is one of the 
 ways of collecting the expenses — or by an assessment. 
 
 If all the expenses are paid by the members who obtain 
 bonds, then surely all the profits will necessarily go to the 
 investing member; and you start an institution with one, two, 
 three or four hundred thousand dollars of capital, which can 
 be invested at five or five and one-half per cent., and possibly 
 six per cent., and you have immediately got an income. 
 
 I do not believe that the Land Bank can loan its funds upon 
 the security of real estate all over the State. If it can, I do 
 not believe that it should. While it is true that it is author- 
 ized to invest in savings bank securities, so far as mortgage 
 
 48 
 
loans are concerned, I think it would be prevented from loan- 
 ing all over the State by the provision that they should not 
 accept or take a mortgage loan upon the security of real estate 
 outside of the loaning zone of a member association ; but, as I 
 say, if it has that power, it should not ; and I have men writ- 
 ing to me who have been asking how they can obtain loans, 
 and have told them that if there was no association already 
 organized in their vicinity, in order to obtain any advantage 
 under the acts, it would be necessary for them to organize a 
 local association, that would become a member of the bank, 
 because otherwise, unless there was a savings and loan asso- 
 ciation within fifty miles, they would be entirely bereft of its 
 privileges. 
 
 But you not only have the five or five and one-half per cent., 
 or six per cent — I know the Savings Bank of Utica is loaning 
 at five and one-half — and in some cases have been charging 
 them a premium, it would be half paid down, and they would 
 be content to stay with you. You would be glad to turn them 
 over to the Land Bank rather than have them go to some other 
 institution. But call it five per cent. Suppose it be an institu- 
 tion of two hundred thousand dollars capital. You have got 
 a five per cent, return on your two hundred thousand dol- 
 lars. Then, when you have those mortgages, you have a 
 little over three times sixty thousand dollars, and sixty thou- 
 sand dollars of bonds and mortgages can be made the basis of 
 the issue of bonds to the amount of fifty thousand dollars. 
 You can sell your bonds at four and one-half per cent., we will 
 say — four and one-quarter ought to be a fair basis — and then 
 put your money out again, and you are making on the basis 
 of the re-issue the difference between four and a quarter and 
 five and a half, or one and one-quarter per cent, extra. 
 
 Now, my idea of the way to start this institution is not to 
 have any bond issue for the first year, perhaps, except for the 
 benefit of the central institution. Let it get strong. Let it 
 accumulate enough income so that it is strong, if necessary. 
 If it has an office, let it be with some of the savings and loan 
 associations, and pay part of the rent. I would not put it 
 
 49 
 
under the protection of any trust company, I do not care how 
 big, at first. 
 
 If it is done, it must be started economically. Some of you 
 men must give your services, making it a matter of public 
 service, of personal sacrifice, for the public benefit. It is not 
 a new thing for some of you to do that. Some of you men 
 have given much time out of your own business to the develop- 
 ment of this new idea, and it will not be any new thing for 
 you to do it. 
 
 President Scott — I am confident that I voice the sentiment of 
 every member of the convention in sincerely thanking Mr. 
 Skinner for this instructive address. 
 
 Mr. Thomas F. Larkin (Brooklyn) — I move you, sir, that 
 the thanks of this convention be extended to the Superin- 
 tendent of Banks, for his kindness in allowing his deputy to 
 come here and address us, and also our thanks, personally, to 
 Mr. Skinner, for his very able, interesting and instructive 
 address this morning. 
 
 Adopted. 
 
 Manner of Enrolling in the Land Bank. 
 
 1. The Board of Directors should first vote that their 
 association be a member of the Land Bank and agree to sub- 
 mit the by-law for that purpose to their shareholders. 
 
 2. Notify the Superintendent of Banks, giving a copy of 
 the by-law to be adopted. Please also notify the organiza- 
 tion committee through its acting secretary. 
 
 3. The by-law should be submitted to the shareholders in 
 accordance with section 410 of the Banking Law. 
 
 4. Upon the adoption of the by-law give formal notice to 
 the Superintendent of Banks, who will supply credentials and 
 call a meeting for the purpose of incorporating the Land 
 Bank during the month of September. 
 
 50 
 

 
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