| Show THE COMMUNITY BANKS by ROME C stephenson Fres president ideal affa iran hankers bankers association while upon the individual bankers there rusts arts without qualification the fit dl i responsibility for tho the prudent hon hen est conduct ot of their institutions nevertheless tile the soundness son n aness ot of banking as a practical matter of 0 fact Is a commit cominus fly ty problem in which the I 1 m public has a pirt part to play as 03 well as bankers backora and government officials charged with the super R C stephenson STEP HENSOM vision ot of bankin th the e first place the assets ot of a bank outside e its government bonds consist mainly ot of loans to business men mea and ot of investments in securities created by corporate enterprises the de deposits ot of a bank are not kept in the vaults as idle dle cash but are employed in these loans and investments to earn tho the money to pay the expenses of 0 the bank so that it can render services to its customers and also pay them interest on such deposits as bear interest it if there were no such thing as unsound business men or enterprises there would be no such stich thing as vin unsound sound assets in a bank it Is of course the unquestioned duty of the banker to choose only sound loans and investments but the difficulty ot of such judgment and human judgment infallible Is plain plainly y increased in such times and under such conditions as we hire have been passing through with many businesses not making expected earnings and therefore hampered in meeting their oblige eions unfortunately some investments and loans created by persons outside the banks which found their way into the banks in a relatively fe fow w instances have reflected the unai unwise so business policies and conditions that became more than usually prevalent in our business activities and con contributed triba to the difficulty difficult of banking the vast bulk of hank bank assets however are per cent sound above all question ilard hard bledl vs earv 32 syl banker in n another aspect the people of the community have a part to play in maintaining the soundness of 0 their banks I 1 and that la is th through rough tile the medium ot of patronage patr the cl existence stence of a bank babil c is dependent on public patronage pat it only those banks patronized in which the most careful policies were practiced and tile the most conscientious andablo and able men la in charge it would go tar far toward maintaining the standards of 0 banking it if business men in a community when refused loans by their banks tor for good and sufficient reasons because conditions are not favorable thereupon withdraw their business to banks where lees las careful methods pro prevail they clearly contribute to the creation of a less sound banking situation also it if in the heat ot of competition a banker offers higher interest rates or more free service to attract customers than the earnings ot of conservative banking justify and Is encouraged by the patrona patronage gp of tile 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 fact that the banker who is strict hard bard boiled it if you ou please Is liable to be less popular than the easy banker anday that same token the public it salt his has a vote voice in influencing tile tha character ot of banking also it Is the public in the end which pays the tha main part of tile the penalty it if unfortunate results follow still again the public can exert an all influence in shaping the character of banking by supporting the purposes of bankers to maintain intelligent independent honest banking supervision by the public banking departments through insisting that this f unction function of government shall be kept as tree free from political influence as the judiciary itself and shalar shall be manned only by men manned ot of the highest ghist h I 1 ability allty and character in still another way can the people themselves contribute to maintain maintaining ing the th e ability of their banks to meet their obligations obal gallons gat lons and this la Is by granting them the fullest possible confidence As AB I 1 said abi are not kept as 85 cash but are forested i arky i in loans and se curit les even ele the soundest assets ot of this type require soma gome time to reconvert at full value into cash deposits in many cases ot of bank troubles the tha only thing wrong with a bank was an unduly and apprehensive siva state bbate of its customers created by no act or condition of its own but by baseless rumors which sometimes led them to destroy the value ot their own deposits by demanding them immediately forcing a bank to sacrifice its assets and otherwise disrupt its financial operations |
