Grand Forks herald. [volume] (Grand Forks, N.D.) 1916-1955, 1922-08-28
washington, D. c., Aug. 25.-Sou

Washington. d. c., Aug. -25.-Now
that the business depression Is over
and the settlement of the strikes
promises to bring the United States
back to the path Of normal CONNER
cial and industrial activity, the ex-
periences Of the last two years, are be-
ing recalled by business men and fin
anciers with much interest. These ex-
periences are being studied in many
aspects for the benefits which they
may bring in the meeting Of the next
business crisis.
One of the curious examples of the
by products of the two years' depros-
sion has been the extent to which it
has thrust American banks into in
dustrial and commercial activities.
A bank is a dealer in money and
credit-especially in credit. 1t Is not
normally equipped to deal in goods
and heartily dislikes to do so. Cold,
crisp banknotes and neatly c~atalogued
portfolios of bills, drafts and checks
are the things the banker is trained
Ito handle. For this purpose he uses
a handsome edifice with such Access
SORES as a cleaning steel safe and
polished brass bars. He Is thankful
that he does not have to handle gross
and unpleasant objects such as the
wares of the dealer in fish OF potatoes.
But. the last two years changed
things Cor many bankers. 1t will be
remembered that when the end of the
war brought about economic condi-
lions throughout the world which
caused contraction of credit first in
Japan, then in the United States and
South ~America and then in Europe,
many merchants and producers and
middleuen were caught with high
priced goods on their shelves which
they had bought with borrowed mon
ey. The fall in prices prevented them
from selling at q profit. or even at
cost. The unwillingness Of the public
longer to pay war prices for awning
the economic phenomenon which
was known as the buyers strike and
resulted In such ma nifestations as the
i.oyerall neutrality-suspicious. many of
them from se1ling anything at any
price.
When bankers lend money to mer-
chants, goods ure assigned as the Sc
curity. In FORMAL times 1t Is rare IN
deed that the security is called for by
the bank. In the first place, it usual
ly is worked or or the public and this
loan it secured is paid. Even in cases
of mercantile bankruptcy. the security
consisting of goods is tuggled around
Through connections of the bank in
some way go that the bank gets cash
and the goods are handled by some
one else.
Bankers BECOME Merchants.
But where business from one end to
another Of q great country Is stag
nant and the public will not buy,
there is one who will take the goods
readily. This was the condition In
which American banks found them
selves up to a few months ago. There
were thousands OF failures Of store
keepers who owned money to the
the goods securing the loans could
be unloaded. The banks had to take
the goods. .sss5
The story is told of FUR merchant
in Chicago who had borrowed large
sums on q stock OF furs. He had
bought before the price fell, In the ex-
p~ectation Of selling in b few wssks
and paying his bank loans. The de-
preston came, business fell away to
nothing, his notes came due and the
bank called him IN. He asked the
president Of the bank for 9 renewal
Of his notes. The banker aaid this was
the matter over for a few moments
and then said to the banker;
"Eave you ever been in the fur
business?"
OF course, the banker answered
Swerl. you ars now, said the
bankrupt merchant. v
And the bank w@s. The merchant
could not pay the loans 10 tho bank
had to take the security. which was
. stock Of futs.
This has bsen repeated In all lines
Of s13ueineSa, and banks in avery StAte
have found themselves III actuat pos
session M goods because the notes
'whfchSthe eOods secured could not be
paid.
The great New York hanks have
even found It neeessary TO AstAhliahl
54ssotitutton baa Wbet atHa0st aniountt
tssasAsSASthsSnt ttofs, % pkny kiads