Deming graphic. (Deming, N.M.) 1903-1948, 1921-01-04

should and must absolutely cease. and
banks should not and must not make
such loans with the expectation that
be obtained by rediscounting with us
The course OF safety lies in granting
credits only for productive purposes,
and then only In conservative amounts
We have repeatedly attempted to
impress ON our member banks the fact
that they should not consider this bank
a mere source of supply for loanable
funds to permanently increase their
lending ability. hut that the rediscuunt
privilege should be held i'm reserve for
temporary emergencies, or 10 meet UNI
usual demands Of legitimate and
strictly seasonal character. Such was
the primary purpose of our redlscomt
facility.
II seems important that this fact
should he emphasized and member
banks are urged to bear 1t in mind in
shaping their loan policy during the
coming year They should limit their
offerings to us to the lowest amount
possible and send us only such paper az
there Is reason to believe will he act
ually retired at It's maturity.
We have no power 10 control the In.
crest rates charged their customers by
our member banks, but we feel that
when you are called upon to make
loans out Of your own resources, for
essential and productive purposes,
those loans should not be burdened by
IN increased rate simply TO give your
bank margin Of profit. should II be-
come necessary for you to rediscount
with us
Again. II seems worth while 10 call
attention of our member banks to what
Gems to be a practice too generally
qdopted by many NJ them OF borrow
ing heavily and continuously against
government securities. The rates here
fofore adopted by our board on notes
ecured by this class of security has
encouraged the practice
While we regard an obli-
cation Of the United States as the best
security In the world, Il must never
theless he remembered that loan by
rs against such securities uses up just
as large a part Of our resources as II
secured by commercial paper, or live
stock. or farm products IL seems time
~, therefore, TO suggest payment or re-
luction in all such loans wherever at
al possible.
With courage to meet the future and |
, firm determination 10 do our part, |
et us all resolve 20 get our feet down
10 earth. and plan to build wisely for
he future IL does not need 10 be said |
hat we shall be quick and eager To
nder any assistance reasonably with
n our power To those banks which |
reed and are entitled TO same. But, by
m means lets get all Of our banks ont
4 the brokerage house class and
ring them back 10 their rightful and
roper status Of conservative banking
As an Indispensable pre-
edent 10 this condition there must he
practically complete cessation OF
oans except for legitimate production
nd essential commercial needs, coup
I'd with an orderly, determined, hut
ot unnecessarily drastic, liquidation.
Such policy generally and resolute-
Y adopted and preserved In will. In n
short time. work a won
erful change In this district. There
re latent powers Of liquidation In each
which can be discovered.
rhich when worked out will reason
hly insure not only safety 10 the
ank. hut credit availability for all
,gitimate demands.
our board earnestly requests that
GU read this letter 10 your directors
I their next meeting and that you
rite us their opinion OF the views out
ned and suggestions made herein.
r.. L. VAN ZANDT,
Governor.