The star-progress. (Opelousas, La.) 1917-1921, 1920-11-10
The Financial Horizon

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In the upset condition of economic
affairs that must be considered as a
part Of the war cost, and the subse-
quent somewhat drastic measures tax
en- to keep the financia! ship riding
on an even keel, bankers have come
in for much unmerited criticism. It
has been said that the banks cooperate
with business readily enough when
all is clear sailing, butthat when the
storm coulds gather financial assist
ance is withdrawn. On the editorial
desk is an advance copy of the ad.
dress Of James s. Alexander, presi-
dent of National Bank Of Commerce
in New York, delivered before the
annual convention of American Man
ufactursrs Export Association at New
York. So well does Mr.. Alexander
clear the atmosphere of the popular
misconception as to the part the
banks have been called upon to take
in restricting credits, that some, ex-
cerpts are reproduced below:
"If any responsible business man
sincerely feels that banks as class
do less than their duty toward bust
ness, he has right to a fair answer.
It is not sufficient to say that a bank
should think first of itself and is en-
titled to do as itsees fit with the re-
sources which it controls. That is
not fair answer because a banks re-
sources are not its own private means.
The banking credit of the country as
"a whole is, in eject, public utility
a great national resource, constituting
the country's chief instrument of bust
ness. In handling its portion Of these
resources, therefore, a bank becomes
a semi-public institution with heavy
responsibilities, not only to its own
stockholders, but to its depositors, and
also to general bushes welfare. These
responsibilities impose the obligation
upon the banks oexercise sound judg
ment in credit policy, and to deter
mine whether general conditions as
well as specific expediency require IL
berality or conservatism in making
loans. For, just as wall is built up
brick by brick, so the country's credit
structure is built up loan by loan, and
each individual loan adds strength to
the business fabric If it is properly
made and properly placed, but weak
ness If 1t is not. 1t Is the high duty
OF the banks to exercise their best
judgment to see that each unit in the
financial structure is properly made
and properly placed, and / can say
to you that the credit structure was
never better built than it is today.
because on rbankers have clearly seen
and loyalty fulfilled their duty in spite
of more or less popular demand for
an expansion Of credit that would
have been disastrous.
A business panic in this country
would be chargeable to gross ineffi-
cheney and dereliction of duty on the
part OF business men and bankers, un-
der the improved banking system now
in force, said Mr.. Alexander in an
sWering the charge that bankers fail to
cooperate with business in times of
financial stress. He made the point
that the action of the banks in con.
serving credit was the best coopera-
ton they could extend under recent
financial conditions, that the country's
credit structure was never better built
than 1t is today, and in view of the
elasticity given business Rconditions
by the federal reserve system. the
country need never see another pan
ic.
''The peak of credit expansion must
soon pass" he said, "but this does
not mean that there are not ahead Of
US many serious and necessary adj
justments. There must be establish
ed stable price levels so that business
can be conducted on a basis of conf
dent judgment rather than of guess
and speculation. There must also be-
adequate production, primarily in the
more substantial lines of goods, SO
that we shall not continue to live on a
narrow hand-to-mouth margin which
is responsible for unstable prices. We
must conserve credit so that there
will be ample funds for long time in
vestments to provide for the rehabi
tation OF essential permanent equip
ment, railroad building and repair, and