Show THE COMMUNITY ILU AND ITS BANU by ROME C stephenson president Amir american rican bankers association while upon the individual bankers there rests resta without qualification the direct responsibility tor for the prudent hon ban cst conduct ot of their institutions nevertheless the soundness of 0 banking as a p ao ac ma matter tt er ot of fact la in a community problem in which the pul ilc has haa a part to play as aa well as bankord and government officials charged with the surer of banks n R CL a stephenson in the first place the assets of a bank outside it its is gov government bonds consist mainly of loans loana to business men and of investments t in securities created by corgo cordo rate enterprises the deposits of a bank tire are not kept in the vaults as idle cash but are employed in loans and investments to earn the money to pay the expenses expenses of the bank so BO that it can render rander services vices to ta its customers and also pay them interest In on such deposits as bear interest it if there were no such thing as unsound business men or enterprises chefe would be no such thirlie thin its as unsound assets in a bank it th a ot of cour course sethe the unquestioned duty ditty of the banker to choose only sound loans and investments but the d c cully u ity of such judgment and humin judgment Is never infallible to Is plainly increased in such buell times and under such conditions as wo we have been passing through with many businesses not making expected earnings and there therefore 1 hampered in meeting their obligations unfortunately some investments and loans created by persons outside e the banks banica which found their way into the banks in a relatively few instances have reflected the 0 business policies and conditions that became lecarno more than usually prevalent in our business activities and contributed to the difficulty of banking the vast bulk of 0 bank assets however are per cent sound above all question hard dolled boiled vs easy banker in another aspect the people of the community have a part to play in maintaining the soundness of their banks and that is through the tha medium of patronage the existence of a bank Is dependent on public patronage it I 1 only those banks banle wore were patronized la ig which the most careful policies wort practiced and tho the most and able raon men in charge it would go tar far toward maintaining the standards of banking it if business men 1 in I a conf coa munley when refused loans by the their k banks for good and sufficient reasons reason because conditions aro are not favorable thereupon withdraw their business to banka where less lesa careful methods pro pie aall they clearly contribute to the creation ot of a less leas sound banking situation also it if in the heat ot of competition a banker offers higher interest rates or oc more moio tree free service to attract customers than the earnings ot of conservative banking justify and Is encouraged by the patronage of tho the public as against a more conservative bank obviously the public Is again playing a part in bringing about a less sound banking situation it is an unfortunate fa fact p t that tho the banker who is strict ba hard rd boiled it you please is liable to be ba less 1633 popi popular ular than the tha ensyl easy banker and by that same token the public itself hns has a voice in influencing tho the character ot of banking also it Is the public in the tha end which pays tho the main part ot of tho the penalty it unfortunate results f follow 0 ilaw still again the publio public can exert ra alit influence in shaping the character ot of banking by supporting tho the purposes ot of bankers to maintain intelligent independent honest banking supervision by the public banking departments through insisting that this function ot of government shall be kept as free fro c from political influence as the judici judiciary a ry itself and shall be manned only by men of the highest ability and character in still another way can the people themselves contribute to maintaining the ability of 0 their banks to meet their obligations and this to Is by granting them the fullest possible confidence As I 1 said the deposits are not kept as an ca cash 8 h but are invested in loans and securities curi curIt ties los even the soundest assets ot of this type require somo time to reconvert at full value into cash deposits la in many cases ot of bank troubles the only thing wrong with iv t bank wa was s an all unduly suspicious auspicious and apprehensive botito of mind in its customers created by no act or condition ot of its own but by baseless rumors which sometimes sometime led them to destroy tho value ot their own deposits by demanding them immediately forcing a bank to sacrifice its assets and otherwise disrupt its it financial operations |