The rate on call loans in New York City ranges ordinarily from 1% upward, depending upon the amount of money held by the banks and their willingness to accept offered collateral. "Collateral loans" differ from "discounts" in that the full amount of the note is generally advanced, interest being paid at maturity or on call; and little dependence is placed on personal credit ratings. They are quite alike in the methods followed for making, recording and collecting the loan, as explained elsewhere. Collateral loans are generally made against diversified collateral, more especially if the loans are for large amounts. Banks prefer securities which are actively traded in, and are more willing to accept units of lower priced securities than very valuable ones, as the fluctuations in value are not liable to be so great. It is the duty of the holder of collateral to protect it. A bank must exercise ordinary care and diligence in keeping bonds deposited as collateral. Reasonable diligence is required when notes are held, to protect them from becoming outlawed. After the loan is approved, the securities are verified and listed, and the details of the loan are entered upon the register and also upon the collateral ledger (according to owners). After the borrower receives the proceeds of the loan, the collateral is filed away in envelopes arranged alphabetically according to owners. This permits ready comparison with the collateral ledger, which is of the loose-leaf variety. The person that is responsible for watching the collateral loans in order to avoid depreciation in the collateral deposited, must keep informed upon values of collateral and also have the bank's holdings of each kind of collateral recorded in a form convenient for ready reference and location of owners, in order that they may be notified to strengthen their accounts by a part payment or by an addition to the collateral deposited. This is a most important duty, as the bank should always have a comfortable margin of collateral, say 20%, over the amount loaned. Substitutions of collateral are always permitted if the newer securities are acceptable to all parties concerned. Part payments and partial release of securities are very common.

Daily Statement Of Loans And Discounts

Loans and Discounts.......................................................

Loss Of Notes

If a note is lost or stolen the maker must still pay when it becomes due. A person buying a lost or stolen note has a right to collect on it if he is an "innocent purchaser," and if the note is so indorsed as to be negotiable. The purchaser must not be aware that the note had been lost or stolen and really belonged to some one else. If A gives his note to B and the note is lost by B or stolen from B, then A must pay B if the latter gives him what is known as a "bond of indemnity" - an instru-A is required to pay on it, then B will return the money ment which states that if the paper turns up later and he has received.