Los Angeles herald., 1891-07-04
LETTER BAG.
Some Ideas on Banking.

EDITORS HERALD: Your correspond
ent signing B. in your issue OF the 1st
does me the kindness to say some good
things OF me, and to also give ME an
idea, in line with the matter under con-
sideration.
However, before leaving the matter of
the influence and power within the con-
troll OF banks, let me mention one or two
more facts, going to establish what /
have already said, as to how much good
results to a city having enterprising
bank capital how much is lost from the
lack of it.
1t is a fact that all of the larger fruit
packers and shippers resident in this
section have, and maintain, offices in
San Francisco at considerable expense
to each of them.
1t may rot hold good in each case,
but several OF them have these San
Francisco offices and keep some conf
dental man there for the sole purpose
of handling and discounting their COM
mercial paper.
They do not do this as a matter of
choice, but are forced to do so because.
the banks here cannot or will not handle
this paper for them.
| 1t is but reasonable to assume that the
San Francisco banks do this at rate
satisfactory to themselves and within
! the business economy of these patrons.
Does it not as reasonably follow that our
banks could do this business if they
wanted to? If we had no bank that
could, is it not reasonable that one such
would pay here if it would anywhere in
this country? One or two of these south
| Il:
markets from 10000 to $4,000 car loads
of the products of the soil alone, and
each shipment means that the money
in some form must pass from buyer to
seller to the amount of it's value. One
eighth of one per cent on one-fourth of
this aggregate value would pay hand
some returns on banks capital. This
class of commercial paper does not usu-
ally tie up money more than twelve
days, and when a bank discounts it it
receives its interest in addition to it's
current rate of exchange or collection
charges.
Take the First National bank of Chi
cago as an illustration; it does the bus
mess OF great number of manufactur-
ers and dealers in small places, within a
radius OF 200 miles of that city. Why?
Because it is both able and willing to
extend them financial accommodations.
AS a result of this, the interests and
patronage of these numerous business
firms are centered in Chicago, and it
reaps the natural advantage and bene-
fits, while that bank has the reputation
of being the largest and most prosperous
commercial bank in the west, if not in
the United States.
These are facts and would seem con-
II, hot L e L.
character here, having the capital, the
energy and the enterprise, could not
only make money for itself, but be of
great benefit to this city in fixing it as a
business center. Every thinking man
will probably admit that this matter is
worthy of more than passing notice.
This lack of financial accommodation
and the unwillingness on the part of our
financial institutions to foster and en-
courage our incipient commercial enter
prises OF every character is one OF if not
the prime cause of the tardy de-
velopment of this section.
1t prevents men with limit
ed means from engaging in many
mercantile and other legitimate busi-
ness pursuits. 1t also tends to confine
such in the hands OF the few persons or
firms who have ample individual means.
These few often take advantage of the
situation to combine among themselves
in both buying and selling. Compe-
tition is brought down to minimum,
and as result the seller is compelled to
take less for his merchandise than it's
actual value, while, on the other hand,
the consumer is forced to pay more for
it than it is legitimately worth.
| am aware that these ideas bring us
to the border of some great problems
too deep to be appropriately discussed
in connection with purely local matters.
Yet, 1 am convinced that neither the
facts or their influence have been over
drawn, and that if worthy men, who de-
sire to embark in worthy enterprises,
could feel that they could and would re-
ceive reasonable financial assistance
when they had reached the limit OF their
own means, this country would soon feel
the good effects of new commercial
undertakings, and the financial
institution fostering and encour-
aging them would receive its
full measure of reward. pecuniarily and
otherwise. The good effects would ex-
tend over this section generally and to
this city particularly. 1t would tend
to centralize the interests of this section
in this city, and 1T would soon come
much nearer assuming the commercial
standing and importance its position
warrants than it now does. LEMON.
Gorn 70 oroi1x