Show afi U munir I 1 IL A BANKS by ROME C stephenson STEF HENSON presidente Pres dentI identA mci lan association HILE upon the individual W bankens there rests without qualification the direct responsibility nsf for the prudent honest ten conduct ol of their jus institutions tItu nevert h e 1 0 s s the soundness af of banking as a practical matter ot or fact Is a community c 0 m in unity problem in which the public has a part parl R c sr P to Q ahl ply as well as bali keis and government who supervise su the banks bank s in the first place the assets ot or a bank outside its government bonds consist mainly of loans to busi busenes bu sines neso men and of investments in ties created by corporate enterprises the deposits of a bank are not ke kept pt in the vaults as idle ca cash but ale aie employed in these loans and investments to earn the money to pay the expenses of the bank so that it can call lender services to its customs cus s and also pay them interest on such deposits as bear inter est esl it if were no such thing as unsound business men or enterprises there would be no such thing as unsound assets in a bank it is of course the unquestioned duty of the banker to choose only sound loans and investments but the difficulty of such buch judgment and human judgment is never infallible is plainly increased in such times and under tinder such conditions as we lye have been passing through with many businesses not making expected e a c earnings and therefore hampered in meeting their obligations unfortunately tuna tely some investments and loans cicat col by persons outside the banks which found their way into tho the banks in a relatively few instances have reflected the unwise business policies and conditions that became more than usually prevalent in our business activities and contributed to the difficulty of banking the vast bulk of bank assets however are per nr cent sound above all question hard boiled s EOS banker in another aspect the people of the community have a pait to play in maintaining the soundness of their banks and that is through the medium of patronage the existence of a bank is dependent on public patronage it if only those banks were patronized in which the most careful policies v were cre practiced and the most and able men in charge it would go tar far toward maintaining the standards of ban banking hing it if busness men in a community anen refused locus loans by their banks for good and sufficient clent seasons because conditions are arc not taio ta rable thereupon withdraw with drav their business to banks bhele less baleful methods prevail pi evail evall they clearly contribute to the creation of less sound banking also if in the heat of competition a banker offers higher interest rates or more moo mo o tree free service to attract customers than the earnings of conservative serva tive banking justify and is encouraged cou cour raged agea by the patronage of the public as against a moie conservative bank banh obviously the public is again playing a pait in ill bringing about a less sound banking situation it is an unfortunate tact fact that the hanker banker who is strict hard boiled it if you please is liable to be less popular pm ular than the easy banker and by that same token the public itself lias has a voice in influencing the character of 0 banking still again the public can call exert an influence in shaping tile the character chai acter of banking by supporting tile the purposes of bankers to maintain intelligent independent honest banking supervision by the public hanking banking departments through insisting that this function of government shall be kept as free froni from political influence as the judiciary itself and shall be manned only by men ot of the highest ability and character in still another way can the people themselves contribute to maintaining the ability ot or their banks to meet their obligations and this is by granting them the fullest possible confidence As I 1 said the deposits ale aie not kept as cash but are invested in loans and securities even the soundest assets of this type require some time to reconvert at full alue aluc into cash deposits in many cases of bank troubles the only thing giong with a bank was an unduly suspicious and apprehensive state of mind in its customers created by no act or condition ot of its own but by baseless babe ess rumors which sometimes led them to destroy the value of their own deposits de by demanding mandli lz them forcing a bank to fice its assets and otherwise disrupt its operations |