The Bridgeport times and evening farmer. (Bridgeport, Conn.) 1918-1924, 1918-01-28
BANKS BUSINESS
is TO TRADE IN
MARKET CREDITS

Over and above the fact that the
conversion of book accounts into &C.
ceptances will promote sound bust
ness methods there is the larger con-
sideration that it will more effectively
utilize the credit resources of the
country and tend to separate the
banking function from the merchan-
dising function. After a sale has
been effected to a responsible party
and nothing remains of the transact
ton but short credit, there is pub
lie economy in utilizing bank credit
1t is the business of banks to trade in
credit as it is the business of mer-
chants to trade in goods and the
banking system is a reservoir in
which the temporarily idle credits of
the country accumulate. Among the
thousands of banks there are always
many who do not have use for all
their funds locally. The Federal Re-
serve Board as a deliberate policy has
made the acceptance a preferred
form of credit. The fact that the
federal reserve banks will rediscount
acceptances at the lowest rates makes
them a most desirable. investment for
member banks, and there is reason
to believe that there will be a stead
lily widening market for them as all
the advantages from their use become
generally understood. They carry on
their face the evidence which the re-
serve banks require as to the COM
mercial character of paper offered
for rediscount and this is calculated
to give them great mobility. AS the
supply of well known names on the
market increases, trading will in
| crease, and banks may be expected
to resort to this class of outside paper
to take up their idle funds. The eff
| forts of the federal reserve authori-
| ties to build up a broad discount
market are deserving of the support
of business men and bankers. They
| have given the lead, provided the
outlet for paper of this class and the
business interests of the countr!
should cooperate.
OF course the fact that paper is exc
cuted in this form will not obviate tht
necessity for close attention to credi
1 conditions and a careful scrutiny o.
names, but it will give greater fluid
| ity to sound credit, and in that wa!
help the country to finance its needs
in the period of financial straiI
through which we are now passing
The acceptance is not urged as
substitute for the cash discount. N
doubt it is desirable to have the buy
er, where practicable, finance himSel
entirely independent of the seller, bu
in a country where so large a volum
of trade is carried on upon open &C
counts it will not do to say that n
improvement short of the complet
adoption of cash payments is wort
while. There is a large field i
which credit conditions can be i'm
proved by using the names of selle
and buyer together. Both will b
benefited, and both will be prompte
to more scrupulous attention t
sound business methods in order t
protect their credit.
1t will promote the introduction Q
the acceptance if business men of tn
various branches of trade will pursu
a common policy in regard to it, an
this is being done in some instance!
The National Implement and Vehi
Gle Association has adopted resolu
tons recommending It to member
of that body. Other organization
have done likewise, and the Trad
! Acceptance Council proposes to tax
I'D the subject with all commerce.
bodies.