The times dispatch. [volume] (Richmond, Va.) 1903-1914, 1913-01-12
NATIONAL MARKET
FOR TRADE LOANS
NEED Of BANKING
Continued From FIRST Page)


who ships the goods may demand the
promissory note OF the merchant tC
whom he sends il and 10 whom he
gives a credit, say, OF sixty days
when be receives this note, he may en-
dorse II, and then discount Il al his
bank. or. he may draw on the sec
0nd merchant at sixty days sight. in
which case the second merchant ae-
cspts Il by writing across It's face the
word accepted" with his name and
the date: and II then becomes An in
strumenf convertible into cash By dis
count.
Credit for Productive Industry.
In either OF these cases. We have
two-na.ne paper, based on actual goods
in transit from the producer - the
consumer. and dependent for payment
in the last analysis. not merely upon
the commercial integrity OF the men
who made IT, but upon the ability "f
the public to consume the goods 1t
represents.
In the case of one name pager, the
wisdom Of bank granting a loan de-
nends upon what II knows OF its client.
II the total amount desired is moderate
in comparison with the clients total
assets. and especially In comparison
with his current receipts. IT is good
loan There is none safer. It should
be understood that the selection by
hanks of such paper should be care
FULLY made They must haN" sihe
facts about the business OF the con
Germ asking the loan. Usually banks
haV- a bureau OF information devoted
70 this purpose. called credit depart
ment thoroughly posted as regards
the commercial paper offered t. II.
This department may. in some IN
stances call for full statement Of the
concerns business, or may even en-
plov outside accountants TO go over Its
books. II may, If IL sees fit, demand -
know whether the loan required Is
based upon an actual commercial
transaction. and may demand e>idehces
Of the transaction.
II is often found advisable in cases
OF large loans on commercial paper 10
spli; the loan into a number of notes
which are sold by ote-brokers 10
dirre-ent hanks. Ii not infrequently
happens that small bank VIII puE
fo,,r or FIVE pieces Of we'll known
commercial paper in TINS way as Az
investment for Idle funds: and in that
case Il some unexpected demand Is
made upon the bank. so that 1t needs
frnds promptly. il will send as much
~ mis- paper as may be required 20
MI its need. to its city correpso>dent
for red scOunt.
Lower interest Rates.
Put nv establishing a broader mar
Iset for such paper. interest rates
would be lowered in this country II
.he market were still further broad
ened 10 become international as wen
as national in scope. interest rates oo-
viouslv would be still further lowered.
TIL American merchant would nave TO
nav less for the capital necessary ior
his business. 1t is obvious that the
cost of borrowed capital must enter
into the expense of conducting every
large business If interest rates are
increased, the cost must be increased
of every article into whose production
ar distribution the use Of borrowed
capital enters.
The lower interest rates prevalent IN
England and on the Contlnen. give
merchants and manufacturers there an
unmistakable advantage over their
competitors in the United states Eng
lands unrivalled monetary system ana
her low rates Of interest 10 lndustrial
enterprises are large factors III her
commercial supremacy.
The Panama Canal. opening vistas
of new business opportunities TO
America. is on the verge Of compile
ton. VIII We permit il 70 become an
added help to foreign nations. or viii
We. by adopting scientific banking
system. equip ourselves TO reap full
advantage of il? That il question
fo- the people of the United states to
answer. IL should be- answered before
the canal : completed The answer
should be in the form OF compets Mt
and expert remedial legislation.
Commercial Loans Paid in 1907.
Commercial. pa Per ALREADY has proven
Of such value to u that not 10 broad
en- its field Is folly. Il is now liquid
within certain nelds being convertible
into cash with more or loss ease in
times OF Industrial confidence. And
even in times OF stress il has demon
strated its worth.
was immensely impressed win
this during the panic OF 1eo7. NJ that
time We had large outstanding com
rnercial accounts. which. although they
were NOT secured by commercial paper.
were closely akin 20 H. w simply
stopped buy 'lg goods. and a. W Rad
always paid cash Tor everything. W.
mad nothing but current eNp- nscs 20
meet: 81 maturity of our current ac-
counts. those wNo could not paw ~
fuu would send Us saw. onc-hsif. ana
A little later another rew'ttance and
20 on I apprehend that not two p0r
cent Of the comm rcial paper fo0t.n-
A. that time wont unpaid or aas re-
newed
Il - readily apparent thar CONNER
cisl pane- bridges tro interval between
IT,. production and g.. c7ns1-7t zion
- goods. and gives OBJ. merchant n-
mauufsCturer ready funds l.- Oh. r.--
firuznce ~ bis ols moss without
waiting To- fhc purchaser o. consume
20 whom ~ hss extended thirty. sNtr
or ninety DAYS credit O. mails paw
mont Further 'ha~ tr7'. . srr'u--
axes p m - uze Hfs mono. w0-. f..r 81
m the va - rv0f-i-ie .'s i- i--9- rrf
methods -ad Improved n..r .r.r r-
f.sfinz confident ga. - ran 30 ssf
from fuanr.sl e~harr,7 -s.~.rr .r .a
dong know rf case fH .r f..
rrerufarrlrfr 40 ONE nf f.a .-tar.
products - tNc country - iu-r.,. a
hle proc s-.s se fn r.dl.. f.- ..-f
fully one-tf.-1 ~ri- vas ~ti. r.e-
sible solely D. go re- shat. f...--r
H.. uso % c1mue-r I'D paper. tn. NAV
ufae.urer VAS enabled fn g.f .