The Birmingham age-herald., 1910-10-30
BY SIDNEY EspEY

loans and discounts, real estate and mort gages, stocks and bonds and the balances in the bank Bonds and stocks, as a rule are quoted in financial journals. In this kind of bank the items are usually a few checks, coupons, protest fees. small items of discount or interest awaiting adjustment and occasionally small expense items. If there Is found overdue paper and large personal checks of officers or employees then careful con- sideration must be given and careful in- quiry made.
 "As to real estate, the bank building has two values, one If 1t is to be kept as the home of a going bank and another if 1t Is to be sold. When a building is to be sold so many different things affect its value that it is idle to discuss it, as each case must stand by itself Other real estate taken for debts may be scattered from Maine to California and a large part of the information necessary to make an estimate must be gathered from the bank records.
 "The loans and discounts Mir. Mur- ray states, ''are usually the heart of every examination. Some banks have a large home demand, and at times are large borrowers themselves to meet home needs. In bank of this nature 1t is we'll to have one of the directors go over the | notes with an examiner. especially at the | first examination.
 "A great deal of information" MT. Murray says" can be obtained from the tellers, booxkeepers and clerks without them knowing that they are giving 1t | It has been surprise" he continued, "to find on what small information loan Is made on some banks. If the officers and directors are careless about such mat ters the bank is sure to lose.
 ''To sum 1t all up, the most important thing, after totaling the notes to see if they agree with the general ledger. is to get line" on the officers and directors, to see if they are careful and capable men and know the business"
 In speaking of banks generally, MT. Murray came to the conclusion that there Is no more important bank off cal than the officer who Is in charge of the credits. Let the other depart ments be ever so efficient" he says, fin collecting deposits. they cannot offset the failure of those who loan the funds to secure their safe return. Vital as is the credit man, be he president. vice presi- dent or cashier, the bank examiner holds a similar position, towards the loans of every bank he visits He Is supposed to be the credit man not for one bank or for one town, but for an entire dis | trict
 Some of the considerations which af- feet the adjustment of commercial risks" tthe comptroller continued, "are the na- ture or the business; do creditors have a greater risk in the business than the owners; do the quick assets exceed the quick liabilities; have owners other prop erty; are they making or losing money have they the reputation of paying their bills promptly or of taking long time in merchandise accounts; is the loan war ranted by the amount of bank balance carried; is the paper met at maturity or extended, and in the latter, does 1t con- tinually grow in amount7
 To the question: "Is judcious in- quiry outside the bank, concerning the credit of business man, essential in keeping 'tabs' on the bank paper?" Mir. Murray has his doubts. He says My opinion is that such an inquiry is fraught with danger. The credit of a business firm or individual is a sacred thing, and by most men is as jealously guarded as their personal reputation. Not few are as sensitive in the matter of their credit being questioned as they would be in re- marks which might be made concerning their personal character.
 Let 1t become known that the bank examiner is looking into MT. John Smith's s loans and there will develop tendency to call those loans, which will do harm to John Smiths credit. Such inquiry can !, best be made through a third party, an l independent commercial agency. Trade opinions are source of additional value to the examiner because 1t sometimes happens that a concern will keep all its bank relations in as good shape as pos sible to maintain it's local credit, and in the meantime, be very slow or take a long time in merchandise accounts. From this source also can be ascertained whether the borrower Is protected by a sufficient amount of insurance to pre- vent insolvency and protect the bank, in case of total loss by fire. In case the borrower has had one or more se- rious fires in his business career, the re- ports will show the extent of losses made at that time. attributed cause, and whether trouble was experienced with the adjusters growing out of any sus- picion of fraud or carelessness.'
 The idea of taking up personally with the officers and directors all matters re- quired correction in the administration of the banks affairs. MT. Murray thinks is an entirely feasible one. He believes l ulat a great uodl OI BOOQ Cdu De dttOHi- plished thereby, providing the directors can be induced to meet or their attend ance insisted upon.
 An exceptional instance" he says where the officers and directors mani fest indifference about compliance with any suggestions or the corrections of matters subject to criticism. the question as to how to deal with such remissfu institutions, and as to how far the ex- aminer should so in making and en- forcing suggestions to bank officers, de- pends upon the latitude the department may give the examiner.
 "A good plan would he to point out to the officers and directors that by get ting into disfavor with the department they are apt not only to be admonished but to be placed on special list for ex- aminations every three months. Fur thermore, that if placed on the quarterly list for examination the .presence of the examiner at irregular Intervals. especially if there is a competitive national bank | in the same town. will be known by the 1oco t,a 1k nd t6o od