The Birmingham age-herald., 1922-06-16
The Extension of Credit

| securing statements direct from the customer
 When deciding as to the extension of credit. nothing takes the place of the judgment of a capable man who has interviewed the borrower. No statement mercantile report or opinion expressed by another can take the place of the estimate of a man who has had experience in the eXtenSion of credit and who has some knowledge of human nature. How ever, advantage must be taken of all means of getting light on the ques- ton and of reaching a correct con Iclusion.
 It is particularly desirable to know something of the family connections Lof prospective borrower. For ex- ample. if he has moderate means and an expensive household, his ability to meet his obligations is seriously impaired A lack of felicity at home is always a great handicap, for there is no truer statement than that house divided against itself will fall. Also if a man does pot receive co- operation at home or fails to dis charge his obligations there, it is perilous to deal with him.
 7 Credit Data
 When line of credit for com mercial and similar purposes, par ticularly is promised, a memeran= dunn covering the l alter should be carefully prepared and filed It must show the credit arranged for, , the terms 0 the same, the security if any, required and the rate of in- terest to be char ;ed statement of ones impression of tn borrower p6 ,9f t.ae fflfpp him , as has been obtained, should be ine cludee Unimpor amt details fre- quently throw light on matters of this sort and any data that seems germaine t0 the subject must be preserved.
 Tn occupations of people and the length of time they have followed them enter right largely Into de- cision with referenc ta credit to be extended. party came into a Bir- mingh m bank on one occasion for lean and stated that his occupations for a period of five years had in- cluded, among other tn under taxing business in the literal sense of that term, the selling of lightning rods, the writing of insurance and the teaching of school He did not obtain the loan desired.
 A noted American financier said that partnerships are the bane of commercial life and few of them prove permanent. The use of cor porations has largely increased in the past 30 or more years, and will doubtless continue to be the form of organization through which business is rried on.
 Some Precautions
 Needless to say. the most effective precautions against losses are those taken before credit is extended. Credit risks. like fruit, must be hand picked. The brick in the building we are in was not laid in lots of fifty or one hundred, but each Trick wa separatel. laid, and by hand
 After.~a loan has been made the fact of the bor rowers insol eney can often 6 discovered in time to save tn day, provided proper care is ex- ercised and even when the situation is bad, sulfie.er tly vigorous and carefullys planned efforts will some times prevent a loss. Without in- tendine to disparage the function of attorneys it is no means suffi- cient to place claims in the hands of an attorney for collection, how ever capable he may be- In the ab-
 
 self can often handle the matter more successfully than an attorney.
 In the handling of credit and other wise. many a difficult situation can he worked out by concentrating ones mind on the problem and giving it sufficient thought, free from inter- ruption. For good many years, I have found that the best place to think is while walking and if you will walk far enough there are not many people who will intrude on your menta. processes. I once knew a banker on six-mile walk to work out a plan which prevented a sSo.- 00e-loss.
 Liquid Assets
 The loans of banks should be han died In such way as to make them, as far as practicable, easily eonver- tible into money. There is, among pa irons of successful banks particular ly, a strong tendency to expect re- 'newals at maturity. After all pre- cautions Nhave been taken there will be still the necessity to renew good deal of paper A bank should en- deavor to accommodate worthy cus- toners, but the first consideration Is to handle the business such a way as to be able, under all condi- tions, to meet it's obligations to de- positors. The money being loaned Is largely the property of depositors, and borrowing customers should un- derstand that the bank is not only not