Evening journal., 1914-03-09
NEW NEWS eF YESTERDAY
A Curious New England
Financial Transaction
By Holland.

At the time Of the financial and bank
ing panic in the fall Of 1873 was
chatting one afternoon with i. S. Scran-
ton, banker OF New Haven, Conn. and
member Of family distinguished as
financicrs. industrial leaders and rail.
road authorities One OF that famih.
built and for years operated what is
iiow vital part of the New Haven rail
road system, stretching from New
Haven 10 New London. Conn.
Another was for many years presi-
dent of the New York. New Haven and
Hartford railroad. and il was due 10 the
energy and business statesmanship OF
another member OF the family that the
industrial community which received its
name Scranton--from the founder was
instituted and developed
Mr.. scranton was speaking TO me OF
the queer shifts men who wanted to
borrow money az a time OF panic some
times make in the way 4 offering col
lateral security for loans. We're the -c-
onrities TO be accepted. said. many
OF the banks would have the appearance
of pawnhrokers' shops
Il was told recently. Mn scranton
continued "of what ! think was the
for a loan. II was absolutely perfect
security Its value could not be oues-
toned. and there WAS no need OF giving
expert opinion about the inherent value
OF the security. II told the story OF
that value on its face, and the man
who offered the security got the loan
without question.
u viii repeated the story 10 YOU as
nearly as l recollect it, manuiactur.
or. in town near Lewiston. Me. won't
to his bank and asked for a discount
note of $4,000. The mans credit was
excellent and his business was Of good
repnte. The bank officers said to him;
"'Nc will discount your note upon
two conditions-frst. that you accept
the money in the form of the notes Of
this bank and withdraw il al immedi-
ately. and, second, that You do not use
these notes until the life Of your own
note has expired
"rhat seemed TO be a queer sort Of
offer. for even though he took the money
in cash from the bank instead of allow
ing il TO remain ON deposit TO his credit,
50 that he could check against it. what
good would the loan do him if he was
unable 10 maze use of these bank bills
for three months
"The hank officer told him just what
could be done. tie said; You take the
bills Of this bank, amounting to $4,000
10 Boston and then 70 70 a certain note
broker. whose name ! will give you and
ask him it he will discount your note
for $4,000 provided YOU offer him the
$4,000 in thr bills Of our bank.
"Wcll the merchant did this. He took
the $1,000 in bills Of that bank to Bos-
ton and put mp the money as security
for loan Of $4,000 made by the note
broker.
Furthermore the broker told him
that he needn't bother about paying
the note when il became due because
tho ten thousand dollars which had been
deposited with him as security would
be sufficient TO pay OIL the notes, OF
course. he would have 10 take up the
note which he gave. to his hank
After the negotiation was finished
and he got his money from the broker
he asked for an explanation Of that
I very peculiar Transaction. ! want to
say to you, Alr. Scranton said, that this
was before the national banks were es-
/ tablished. The broker said II was all
I very simple. The hank in Maine had
itsued 10 him ten Thousand dollars of
| it, own bills. If the bills went immed
lately into circulation they would be
presented for redemption within a few
4 DAYS at the central redemption bank at
Boston. in which tho New England State
bank notes were redeemed. But II those
bank bills could be kept out Of circu-
lation during the life of the note drawn
! by the merchant for discount that would
b. so much to the advantage Of the bank
in Maine. For it would not need TO
furnish the specie for the redemption
OF these bills, amounting to ten thou
sand dollars. until three months had
/ passed.
II was told that after this transae.
tion other banks in Maine occasionally
followed the very shrewd method adopt
ed in the case ! have Just described 10
you."
Copyright, 1914. by +. J. Edwards. Al
rights reserved).
Tomorrow Mr.. Edwards viii tell OF
"a Granite state pcddler's Business
Slogan"