The times. [volume] (Washington [D.C.]) 1897-1901, 1900-08-14
LOANS ON INDUSTRIALS.
Revived Discussion of the Subject of
the Securities.

NEW YORK. Aug. 13-A big envelope
containing nothing but the shares OF stock
OF industrial corporations. the total mar
ket value of which was $3.50, GOO, was Of
fered to the president of downtown
bank last Saturday with request for
loan OF 100000 The con'tents of the
envelope were examined carefully. and
the merits of the stock were set forth by
the owner. The president said:
Il DO not think ! shall make this loan.
You have brought me a package of in
dustrials and expect me to make the foai
on them because they have price which
gives us a. good margin in ordinary times.
Now. am aware that money is cheap:
that you can get all you want on call and
time at your own rate, but it is too much
TO ask me to make you loan on batch
of collateral which while IL is good. COM
parGtively speaking yet is not good
enough Of itself. When money is com
mahdins a rate which you consider high
nowadays. but which you paid uncom-
plainingly a few years ago. you bring us
collateral with only 20 or 80 per cent OF
irdustrials in it. and you do it because
you know We would not take more than
that. Mixed pledges like these are well
come TO most bankers. but it is not fair to
US and not Just to yourself to ask US 10
lend on solid bunch CT industrials.''
The borrower replied that he had pre-
sented the stock because it represented
Just as good value as other securities
which he had offered a. times before, ard
about which there had been no question.
Here's good diyidsnd-paying Stock said
he, which almost every bank takes read-
ly. Now. if We were on the verge Of a
Nr oh to - =
ness or encounter some big disaster which
would depreciate this stock and make your
loan unsafe. then you might take excep-
ticn TO 1t, but there's nothing on the busi-
ness. financial or even the political hori-
zon to warrant an assumption OF anything
very unfavorable."
The banker again looked over the list in
the envelope and, becoming a little more
emphatic. said
why. my dear sir you have some Sc
curities here that hags luctuated from ten
to twenty-five points-nay, more than that.
Some OF them would be rejected by any
deceit banking house, and IL we took them
and you failed to pay of the loan and We
sold you out, this bank would have the
finger Of derision pointed at it, and we
should hear something about wildcats
No. | won't lend on them. Try somebody
else"
This conversation between barker and
borrower explains fairly the relation be-
tween them in this matter of industrial
loans.
Comment on this class of loans has been
heard for the past ten days. 1t is r fact
that bankers have been importunCd 10 ac-
cept more of this Industrial pledge than
usual. When money is plent ful and ates
are low and business stale. fiat, and IN
profitable some OF the borrowers. bankers
Cot hax
assume that the banks are ready and even
anxious to run risks in the effort to make
a little profit. OF course, the merits OF
each case are taken into consideration. IL
borrower is man or firm OF high stand
ing whose collateral has always lean first
class. his patronage is. naturally highly
valued, and he could with perfect safety
ask for favors. But ii is pointed cut by the
bankers that this is not the class of Tor
rover that as a rule asks anything unroa-
sonable. He knows that his own credit can
not be improved by dealing in and offering
what many lenders regard as disc; edited
collateral. 1t may be stated. however, that
some of the bankers themselves are not
blameless in this matter of loans. The liv-
airy between them is SO keen that to-row-
ers feel at times that tnes can take advan-
tage OF il A bank hates to lose a custo-
mer. 1t will make sacrifices for him. II
ne Is sinai uorIoWeT S-hu udS SOou lSc-
ord he can get loan On some collateral
which his banking neighbor on the other
side of the street will not touch. 1t is as
interesting as 1t is suggestive to watch a
bank officer look at the list of securities
offered, frown upon at least one-third OF
them, pull wry face shrug his shoulders.
hear him mildly protest that there's too
much Industrial there, and then tell the
loan clerk to "let it 60" And so the 10 ms
are made. There is TO concert among he
banks. and the borrowers know pretty ac-
curately what to expect at the re Give
banking offices.