New-York tribune., 1919-04-07
Cooperation and
Optimism Guide i'm
Credit Extensions
Banker Says Lenders Should
Take Broad View in Con
sidering Applications Of
Merchants for Fund IS

Cooperation tempered with reason
able optimism should guide the
grantors of credit in making their de
cisions regarding the extension of
credit to merchants and manufacturers,
in the opinion Of Joseph S. Maxwell,
e-president of the Liberty National
Bank.
During the war the balance sheet OF
the merchant or manufacturer was eX-
pected to show large volumes of stock
on hand compared to sales, while the
reverse was true before the war, Mr.
Maxwell states. With our entrance in
to the readjustment period following
the signing of the armstice new
phase has been developed in judging
merchandise as "liquid assets"
The imminent development of our
foreign trade he writes in "Thc Lib
erty Torch" the banks publication,
justfies an expansion in business On
the other hand, some manufacturers
are suffering from overstocks re-
sulting from the cancellation of gov
ernment and civilian orders placed dur
ing the war.
Business Must Expand
at is here, however, that the critic
of the figures must begin to broaden
his vision," he continues. keeping
uppermost in mind that if this country
is going to shoulder, as it will, the
burdens of heavy taxation, it must con-
tinue to prosper, and to so continue
its business must expand, and to ex-
pand it must find outlets for its goods
in countries as yet unaffected by the
competition of American production.
Therefore the continued presence of
merchandise in full ratio to the volume
of sales and to the other relevant
factors in the statement, while not con-
sistent with the prime showing of
peace times, will doubtless, in the
case of many lines OF industry, find its
alibi in the anticipated increase in
foreign demand, however temporary
or permanent such demand may be.
1t would seem nevertheless lmpor-
tant that readjustment of values to
measure market rather than (as in the
majority of instances during the war;
cost prices should take place in most
lines in order to guard against the
dangers of inflated valuations.
another factor vital to the deter
mination of values and one of para
mount importance is the vast plant eX-
pansion of recent times and its conse
quent relation to the cost of produc
ton, both present and future. The
manufacturer who did not materially
extend his plant to meet the sudden
rush of war orders may find his posi-
tion advantageous over that of his COM
petitor who made large additions and
betterments on the basis of war prices
for both material and labor, and the
demand for whose products in the
stress of the present times has reacted
to subnormal.
"While raw material is ordinarily
preferred over merchandise finished
and in process, it is easily conceivable
that an overproduction of certain raw
commodities at maximum costs, par
ticularly those entailing slow process
of completion to the finished product,
might so far fail to overtake a decln-
ing market on the finished goods as to
render that subdivision of the inven-
tory subject to greater shrinkage than
its two cofactors, finished and lin
process, condition common to any
general readjustment.
Cooperation Needed
"While it is not unnatural in a gen
orally uncertain situation. such as |
some lines are now experiencing, to
permit caution and pessimism to dom
mate the decisions of many Judges of
credit, there has probably never been
a time when cooperation, tempered with |
a reasonable share of optimism, was
more needed, and it would seem urgent
therefore, that the dispenser of credit
should pursue with the most painstak-
ing care his investigation of all the
environments of every problem before
nm and thus substantially contribute
TO the constructive effort so necessary
Tor maintaining healthy continuation
OF our recent commercial progress"