Greene County herald., 1920-11-12
Essential Principles of Bank Credits
Valuable Contribution to Financial Literature From
F..w Foote. of First National Bank of Hattiesburg

highly the depositor who furnished
the monev. He has furnished the
means, he has created the capital
perhaps practiced selfdenia, which
has made the loan possible. There
fore, q depositor who carries average
bank balances of 81, 900. 90 is enttled
to ten times as much accommoda-
tion as one whose balances average
$4,000 provided sound paper can
be made. On this principle OF equi-
ty, banks secure deposits from peo-
pie OF all occupations and loan the
funds to such of them as can wisely
use same. Itis natural and right,
that banks should favor their own
customers, to the exclusion OF all
others, if they can use their tnrds.
70 do so is merely business reclproc-
ity and the customers OF bank have
the right to expect preferential treat
ment, aud to receive favors, if wor-
thy, in proportion to what they have
done for the bank. and Indirectly for
their community. They have given
evidence that they are builders for
the community, and that. If supplied
with facilities, they will use them to
the common advantage. So it ap
pears that the only scientific method
OF lending money is to seperate de-
positors who borrow from those who
do not, and lend all of the money,
after retaining sufficient reserve to
establish security, to those custo-
mers who can be indulged With due
soundness.
HUMAN NATURE UNCHANGED.
Human nature has undergone no
change since the birth of Adam. and
life has been lived accordingly to the
beginning only with varying degrees
of refinement. The classes, if there
are classes, we have with US today
have always existed. Strange to say
throughout the land, the proportion
of people who do not borrow to those
who do appears to be about the same
indicating that, while people differ
in efficiency, they are the same IN
nature. There is about the same
proportion OF thrifty and thriftless;
the cain and the nervous; the con-
servative ard the ambitious in all
parts of the country. Analysis
proves that the Der who deposit
in banks aud do not borrow. carry
an average of four to tive times as
much on depositas to do those bank
depositors who borrow. 1t there
fore appears, it banks keep faith with
all their customers and function in
accord with true policy. they must
divide their funds according to these
proportions. thereby supplying all
who require loans Their reasonable
share. Therefore, the person who
carries an average balance with "a
bank OF 81 900 is entitled to credit nf
81, 900 to LOCO and no more, and
one would be exac ting more than his
Il
share who over reached the officers
Of bank and obtained more. Banks
should possess the foresight and the
courage to combat dlsproportionate
distribution of funds, as such disre-
gard of the law of proportion results
in the supply of capital not being ad-
equate to go around, and often eau
ses banks TO denv deserving custo-
mers, or forces the banks themselves
to enter the market and borrow to
take, care or their requirement
thereby entering into competition
with business for funds. While it
is legitimate for banks to borrow and
an institution that does not possess
the courage to do so for good cause,
would fail to perform true functions
in its communitv, yet banks should
not borrow for the mere purpose of
selfshly extending their business, or
to indulge unthoughtful customers
beyond their reasonable rights. But
no act can so commend bank to it's
people, as brave use of its credit,
should the best interest of its envi-
ronnent demand it.
The people want to do right. and
will, If they know how. 1t is the
duty of all citizens to render aid in
so training the pubic mind that the