The Morning Tulsa daily world. [volume] (Tulsa, Okla.) 1919-1927, 1921-01-18
RESERVE FUND
FOR RAINY DAY
Local Bank Encourages
Laying Away Percent
age for Emergency

Mos, everyone has bccS admon-
ished at some time In his lie to have
money for a rainy day. lie has been
taught to hope e,r the best AMI pre-
pare for the worst, even though the
worst might never arrive. Parents
have urged their chiidrcni To make
hay while the sun shines--and then
cover that hay so that Il will kdcp
fresh and crisp through stormy
weather and possible hay famincs.
II the teaching IN applicable TO an
individual, why isn't 1t even moge
| important to n business institution
That is the reasoning of heads OF the
Exchange National bank, who aLvc
inaugurated new department IN
that institution. In substance. t. is
n rainy day" department. in which
business houses may deposit n per-
centage Of their profits during fair
financial weather. to he held In re-
serve until the rainy day comes, and
with II the usual pitfalls that con-
front business during periods OF de-
preston.
The amount deposited in the re-
serve fund may be either "a specified
part OF the monthly balance or a
percentage --- perhaps 2 or 2 per
cent. This sfund grows gradually
u
pr!sing amount, sufficicM 10 tide
the buiness over any ordinary sea-
son OF depression. IT bears 4 per
cent interest. credited semi-an-
nually.
It's purpose In really twofoid.
While 1t protects the business which
builds the fund. It also insures con-
tinued prosperity for the city OF
Tulsa II the time should ever come
| h..v. 4 ks.s h. ,et
ulated. -,
Several large local concerns have
already joined in the movement, and,
according to the heads OF these in
stitutions, they are weR pleased with
the results obtained thus far.
The oontract---which is moro a
pledge--cntered into between tn:
bank and the business institution,
reads.
WE have decided to open us a
cash reserve account In the FIX
change National of Tulsa, and will
place in this account an average OF
49,. each month during the year
We believe there In merit In this new
Idea Of the Exchange and will well
come your cooperation In helping
us carry out our part.
I'VE understand this Is not an OBJ
legation. but n pledge. made ar
|
will hereby endeavor to further sta =
bilizc our business and thereby help
stabilize Tulsa. You are to pay us
4 per cent or our average deposit.
interest to he credited each six
months. We are to observe the avs
and rules governing intcrest-bearing
accounts"
In an outline OF the cash reserve
plan, issued by the Exchange Ma
tional recently. II In stated
Years OF experience has taught
officers OF the Exchange National
that even In Tulsa there are certain
pronounced business dangers. We
find that with the possible exception
OF health, most all these dangers
lead to one cardinal danger--lack
Of reserve capital.
"For example, a failure from a
bad season from lack II reserve cap
,tai to carry over to better day.
Failure from mismanagemcnt comes
from lack of foresight TO provide re-
serve capital before venturing into
too deep waters.
I'VE believe II Is the duty of a
bank to help the business men OF it's
community guard against business
dangers. We believe that business
swings like pendulum, and that
Tulsa is now entering into an up
ward swing during which foresight
ed men should build reserves against
pitfalls OF the future.
Most firms maintain depreciati ion
accounts, and these are valuable for
many reasons. But book reserves
alone Will not meet unexpected mar.
ket conditions, political changes
that affect finance. unexpected loss
es, etc. when business firm
charges profit and loss and credits
depreciation 1t In following accepted
bookkeeping practice. But banks
themselves with a cash surplus or
reserve account good for extra
credit or use itself In the most trying
times.
Some business men figure that a
cash reserve Is an Improbable and
unnecessary precaution. They 20 on
the theory that the wagon should
bear its limit OF the load at all
times. even though Judgment die
smooth dry road and then few
: mudholes.
Some figure that cash reserve
is unnecessary because reserve can
be built UP In fixtures, merchandise
supplies and good Will Dependence
! on fixtures IN an impossible idea
: merchandise II good only In a going
? business and won't overcome really
= serious obstacles. Good win Is like
many friendships II II present only
when the sun is shining.
"A cash reserve theory MAKE,
careful buyers. A stock reserve the
ory encourages 0per-buying.
cash reserve theory permits advan'
Age OF the markets. a stock re-
serve theory subjects the buyer Il
q style loss time depreciation and
!, reduces his borrowing power. Banks
are proud OF their showing of sur
. plus, which is reserve. II IN one oI
I. the first gauges by which banks ar,
measured. We would ike to SEE
every business firm In Tulsa begir
+, to build cash reserve az "A mean'
OF stabillzing the business life OF the
whole community.
+ CITIES are not built by the mers
. construction OF buildings or homes
/, but by the caution and saving tha
pay for and protect business ant
G homes from Unforeseen loss.
q mo modern business would Dc
= without insurance. within a few
e years no business will do withou
cash reserve