The Ocala evening star. [volume] (Ocala, Fla.) 1895-1943, 1916-09-05
CONSTRUCTIVE VERSUS
CONSUMPTIVE CREDIT

There is food for thought for every
body, particularly for farmers, in the
following from the address of 2. w.
Goebel, vice president of the Ameri-
can Bankers Association, to the bank
ers of North Dakota:
There are two classes of credits,
one call constructive credit and the
other / call the consumptive credit,
or, rather, / prefer to call the latter
the destructive credit. Now, what il
the difference and how can we aid the
thrift movement by making use prop
erly of the two credits; by encourag-
ing the one and discouraging the other
one? By constructive credit / mean,
for instance, credit that is extended
for the purpose of investing in some
thing that while the man uses the
credit and pays you interest for it, it
will enhance in value SO that at the
maturity of the credit it can be sold
without any sacrifice and will pay the
Indebtedness plus the interest, and a
profit besides. That is constructive
credit. For instance, il man, we
will take the farmer, if a man buys
cows and borrows some money from
you to build silo so that he may pre-
serve the feed value of grain or utilize
grain that otherwise would be de-
stoyed or practically have no feed
value, that is constructive credit and
should be encouraged. The same way
il man comes to you and says,
have a piece of alfalfa; want to bor-
row some money in order to buy hogs
and fence that piece of alfalfa hog
tight SO that / may have a pasture
and raise hogs; there is one of the
greatest pieces of constructive credit
that you could possibly use and you
should encourage it, but if man
comes in and says he wants to borrow
some money possibly so that he may
have vacation trip, why then you
ought to talk with him and see wheth-
err he has any constructive credit that
will pay that credit back, as well as
the hundred dollars that he is going
to borrow for his vacation, and if he
has not, it is up to us, as bankers, to
discourage him in borrowing this hun
dred dollars, even though ultimately
you may get your money.
But the greatest curse of the bank
ing system today are a lot of credits
extended for consumtive purposes.
want to call your attention to two ex-
tremes that are being made us of
one not enough and the other / fee
too much that give you an idea OF
what / mean by constructive and de-
structive credits. One man comes in
and wants to buy manure spreader
There isn't anything more construc-
tive in the world than that, every
man ought to be encouraged to buy q
manure spreader and use it. The
other man comes in and wants to buy
nautomobile. Now, there you have
the clearRst example of what mean
on the two lines of credit-the one
ought to Sbe encouraged, the other
discouraged until the first one has
been used long enough to produce re-
suits that the man can buy the auto
mobile without having to ask fol-
credit.
A farmer comes to you to buy a
better COW than he has or a better
hog than he has; that is constructive
credit. But if he comes TO you to buy
new suit of clothes on credit, there
is another proposition again. You
want to encourage him to buy the
cow, but if he hasn't the money OF
credit to buy the suit, persuade him
that the old suit will do another win.
ter. And in our children we must
teach them to have the moral cour.
age to go without Injuries in order
that they may not become a charge
upon the commonwealth. We must
appeal to the pride of the boy, that
he must save not for the purpose OF
boarding up money and becoming Q
miser, but that he must save and lay
by some result of his labor every
week, every month, or every year, a:
the case may be, so that he may be.
come independent and not depend
upon some one else later on and in
that. way become serf. That is the
thing we have to teach our young
people in order to make them become
constructive citizens. We want tx
help them to become real helpers ir
the community in which they live.