Show TIlE THE 1 mm COMMUNiTY r M t TY f Ar AND D II'S BA BANKS 3 S SI I i iDy iI I By Dy ROME nOME C. C t ii A Bankers ii Association upon tho tiro Individual in bankers j here aero rests Without qualification tho cli- cli 1 ct responsibility for tho tiro l i rud honest hon hon- est cat conduct of their Ihei Institutions Institution's nevertheless uc tho Ibo G soundness 0 11 n d n eJ g of six ban banking alg as a practical practical tlc l matter o of ot J k fact tact is a n. j I Ily ity ly problem pro b in ill j r which the public i ihas I Ihas has a no part to pl play playas y t as well as bankers I L and Government r r officials charged with tho tine super cuper- vision ot of banks R. R C. C STEPHENSON I In th the tho 0 place the tho assets of ot a bank outside its Government bonds consist mainly of ot loans Joans to business men nn and of ot Investments investments investments invest Invest- ments in securities created by corporate corporate corporate corpo corpo- rate enterprises The Tho deposits deposit of ot a bank are not l kept ept in tho vaults as idle cash but aro are employed in these loans and investments to earn tho money to pay the expenses of ot the bank so 50 that it can render services to It its customers and also pay them Interest on such deposits as bear Interest If It there were no such thing as unsound business men or enterprises there w would uld be bo no such thing as an unsound assets in a a. bank banI I It Is of ot course tho the unquestioned duty I of ot tho the hanker banker to choose only sound loans and aud Investments but tho difficulty culty of ot such judgment and human Judgment is never infallible is plainly Increased In such times and under such conditions as wo we havo kayo been pissing passing I through with many businesses not not making expected earnings and therefore there there- fore fare hampered In meeting their obliga obliga- a. a Unfortunately somo soma Investments Investments Invest invest- ments and loans created by persons outside the tho banks which found their way into the banks In a relatively few instances havo have reflected the tho unwise business policies an and conditions that became moro mora than usually prevalent in our business activities an and contributed ted tad to tho the difficulty of ot bankIn banking Tho The vast bulk of ot bank assets however are per pOl cent Boun sound above all ques tion Hard Boiled vs Easy Banker In another aspect tho the of the community have e a part to play In maintaining maintaining main main- tho the soundness of ot their banks s I Imd and md that Is through the medium of I patronage e. e The existence of a bank is I dependent on public patronage If only those banks were patronized In which tho the most careful policies practiced and tho the most conscientious end nd able men in charge It would go I 1 Tar far toward towar maintaining the tho standards I oJ of Jf bankI banking b. b If It business men in a n. community com corn when refused loans Joans by their banks for good an and sufficient reasons I 1 because conditions are aro not favorable thereupon withdraw their business to I banks where less careful methods prevail pre vail rail thoy they clearly contribute to tho the creation creation cre cre- of ol a less Jess sound banking situation Also if il In the heat of competition s I sor a 1 banker offers higher interest rates or more freo treo freo service senica to attract customers custom ers era than th n tho the earnings of o conservative banking Justify and is encouraged encourage by bytho i ithe the tho patronage of ot tho the public as against a more conservative bank obviously tho the public Is again agnin playing a n. part put In bringing about a Do less sound banking situation It is an unfortunate fact that tho the banker who is strict hard lIard boiled boned It if you please is 13 liable to to tobe be beless beless less popular than t the tha a easy casy banker cr an and ly b y that hat same token the public itself Itself It it- self has haa a a. voice iu in influencing tIl the character character char char- acter of banking Also it Is the tho public in tho the en end which pays the the- main part pat of the penalty i If unfortunate re results follow tollow Still again the public can exert enert an Influence in ia shaping th the character of banking by supporting tho purposes of bankers to maintain intelligent fade inde In independent e. e pendent honest banking supervision by the public banking departments through insisting that this function of government shall be bo l kept as free from Crom 4 political influence as tho the Judiciary I It Itself self and shall shaH bo be manned only by men 5 of the tho highest ability jr and character i j In still sUll another way can tho people j themselves contribute to maintaining i ithe ithe j i the ability of ot their banks to meat their obligations and this Is 13 by granting them the tho fullest possible confidence j i Ai At I said the tho deposits aro are not kept cs as t cash but are Invested invented In loans and se se- Even tho the soundest assets of this typo type require somo some time to reconvert reconvert recon recon- vert at full Into cash deposits In many cases of bank troubles the only thing wrong with a a. bank hank was Vas an anun un unduly uly suspicious and apprehensive state of mind in its customers created create by no act or condition of ol its own but by baseless rumors which sometimes Je led them to destroy the value of ot their own deposits by demanding them immediately Immediately Im im- mediately forcing a bank to sacrifice Its assets an and otherwise disrupt Its financial operations |