The Indiana State sentinel. [volume] (Indianapolis) 1868-1895, 1884-09-17

hand; but for all that legitimate trade and
commerce have not suffered materially, al
though the hand of distrust and suspicion is
upon them as well as their speculative neigh
bors. As a matter of fact, the causes Of
nearly every commercial failure can be
traced to what is known as outside
speculation, in which the funds OF
the firm or company. as the case may
be, have been employed and inYestiga-
ton shows that fully IS per cent. OF
the failures would not have occurred had the
energies and capital of the bankrupt been
confined to his business proper. It is true
that this kind Of faithlessness for it is really
that, on the part of some business houses is
well calculated to place the whole business
community under suspicion and create
feeling of distrust among lenders of money,
yet the fact should not be lost sight of that
the majority Of our business enterprises, as
the history of trade and commerce shows,
are conducted upon sound business princi-
Piles, and that to distrust the many because
Of the questionable methods of a few is not
only unfair, but is calculated to do great
harm. OF course under our present system
Of discounting commercial paper, no bank
can know beyond a doubt whether the assets
OF given house are above or below its
liabilities, but that is largely the fault of the
banks themselves, for they, as rule, let
their anxiety to swell their list of depositors
and increase their lines of discount run
away with their better judgment, and thus
encourage the very business methods that
always bring disaster upon both borrower
and lender. Not a very great while ago
commercial failure in a neighboring city
revealed state OF affairs in the firms bust
ness that was simply appalling, if so strong
q word may be used. The credit OF this firm
was excellent, and its account was cons, dered
valuable because of its large line Of de-
posts in certain seasons Of the year and
is large line of discounts in other seasons,
and its offerings of paper were always taken
At the minimum rate of interest. But il
ailed-more, it was complete wreck. In
resignation showed that it had been little
better than a mere shell for years, and that
1t had been kept afoat by permitting its
bankers to base their estimates of its SOL
rency upon something that did not exist
1t all. That is, the firm was known to
pave q large block of the stock of certain
ocsl company and other investment
properties locked up in its safe, aud it was
supposed that these securities we're free
rom all entauglements; that they, in fact,
represented the firms surplus money, and
,ouid be made available at a moments no
Gee should an emergency arise in the
FIRMS business operations. But when the
hrm suspended payment investigation re-
vesled the fact that these very securities had
been hypothetical months before to liqui-
dse debts made by operations that were out
side of and entirely foreign to the firms Re
climate business. The faithlessness or de-
celtion which this firm practiced is cited to
sh,w that while there may be some grounds
| fol- distrust in business circles, there is ne
refson why the suspicion should extend to
AMI embrace trade and commerce in general;
bu it does show the Importance of some
mthod or system by which banks may
know the financial condition of their Gus
toners. Nevertheless. loose and uncertain
as .he existing system is, the industrial in
te,est of the country and all legitimate trade
and commerce are not only sound but pros
porous as well.