The Pensacola journal. (Pensacola, Fla.) 1898-1985, 1916-04-29

It is generally believed that coun-
try bank profits are larger than
Is actually the case. when the
truth is they are much less than
other lines CT business enjoy In
the Sixth Federal Reserve Dis
trict the average net profit Of
all member banks was 7.3 per
cent. The smallest return was
made by the smallest banks, 81
per cent, those properly desig-
mated country banks It Is also
true that these banks pay very
modest salaries to officers and
employees, less as a rule than
simple justice calls for. If sal
aries were commensurate with re-
sponsibilities and duties most of
these institutions would operate
at a loss. It should further be re-
membered that these banks fur
nish facilities that city banks do
not and cannot supply, facilities
absolutely necessary to the hap
piness of the masses of the peo-
pie outside of industrial cen
tiers.
If these are the facts. and an
authoritative denial is yet to be
heard, It would seem that con-
gress, The reserve board and the
comptroller should go very slow
ly indeed about reducing the in
come or adding to the expense of
country banks. Yet, unless pres
ent tendencies are checked, ex-
change profits and profits from
interest above the legal rates to
be denied them. This spells Ii
quotation. conversion or failure
upon a wholesale basis.
No figures are obtainable on
the proportion of net earnings
represented by these two items
of income. It is safe TO say they
will average half the net profits.
In not a few instances they fur
nish the whole of 1t. nor are these
banks necessarily the ones with
interest so high that they are
menace, not an aid. to their COM
munities, or will exchange
charges beyond all reason. This
is no brief for such concerns.
There are black sheep in every
flock. My contention Is that It
Is both unwise and unjust to
legislate or regulate on the
theory that all in banking are of
this color. A safer and saner
a
not deny borrowers the right to
obtain funds at a rate agreeable
to themselves, even though ii be
two or four per cent above the
legal level. At least, before haz-
arding this course. there should
be assurance that means are at
hand to supply funds on the
terms proposed. If country bank
ers cannot DO it and survive, who
will? II not obtainable as here
tofore, what is to become Of peo-
pie who have willingly paid this
small margin above the legal
rate and found the transaction
profitable.
In the country credit is a com
modify like corn or cotton. The
ease with which 1t is obtained,
and the price paid turn on the
amount available in the commun-
ity. The ratio of deposits to cap
ital is small, rarely is it in excess
of four to one. A substantial
part is on rawlings account, draw
ing three or four per cent. The
time that crop loans run, the un-
certain value of the security, the
health, life and earning capacity
OF the borrower, and many other
elements enter into the cost of
credit, adding to 1t as compared
with city credits Again, the
country customer is willing to pay
a higher rate because the use to
which the money is put assures a
consistent return. The few suits
involving usury prove that he has
been satisfied. He remained so
until learning from washington
that his best friend was really
a highwayman In diguise. Now
he Is in doubt. The creation of
that doubt was one Of the
worst things that ever happened
to the farmer.
Opinion is that country banks
charge MI the traffic will bear.
This opinion is as much mis-
taken as 1t Is widespread. Most