Quote of the Day
Lest we fool ourselves into thinking that excessive lending on assets with inflated values is something new, here’s Allan Bogue on the western land boom of the 1880s:
During 1886 and 1887 the flow of eastern and foreign capital into the western mortgage business was at its flood. Companies competed strenuously for agents. Greater powers of discretion were placed in the hands of these men than ever before. Greater opportunities for lending unhealthily large sums of money on inadequate security were also present. Although the mortgage companies had inspectors who checked the work of these local agents, it was impossible for them to examine the seucrity behind every loan.
If the traveling inspectors were too strict, the local representative could easily find other companies with funds to loan, and the original sponsor would see its flow of applications diminish. That Stanton and Sprankle [of the JB Watkins Company] endeavored to keep their agents in line is undoubted; that they unconsciously were stampeded into some of the excesses of their competitors is probable. Sprankle argued in February 1888, “One year ago sub-agents and borrowers run [sic] the loaning business in this state to suit themselves.”