Great Falls tribune. [volume] (Great Falls, Mont.) 1921-current, 1922-08-28

that the business depression is over
and the settlement of the strikes prom
ises to bring the United States back
to the path of normal commercial and
industrial activity, the experiences OF
the last two years are being recalled
by business men and %financiers with
much interest. These experiences 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
b~y-products of the two years depres-
sion has been the extent to which 1t
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. Gold,
| crisp banknotes and neatly c~atalogued
portfolios of bills, drafts and checks
are the things the banker is trained TO
handle. For this purpose he uses a
handsome edifice with such accessories
as a cleaning steel safe and polished
brass bars. He is thankful that he does
not have to handle gross and I'M
pleasant objects such as the wares of
the dealer in fish or potatoes.
But the last two years changed
things for many bankers. 1t will be
remembered that when the end of the
war brought about economic conditions
contraction of credit first in Japan,
then in the United States and South
America and then in Europe, many
merchants and producers and middle
men were caught with high priced
goods on their shelves which they had
bought with borrowed money. The
fall in prices prevented them from
selling at a profit, or even at cost.
The unwillingness of the public longer
to pay wal prices for anything-the
economic phenomenon which was
known as the buyers strike and re
suited in such manifestations as the
overall ACKNOWLEDGEMENTS many of
them from selling anything at any
price.
When bankers lend money TO mer-
chants, goods are assigned as the Sc
curity. In normal times it is rare
indeed that the security is called for
by the bank. In the first place, it
usually is worked off OF the public
and the loan it secured is paid. Even
in cases of mercantile bankruptcy. the
security tOuSIStinS VI SOOuS ~ JuSSltu
around through connections of the
bank in some way so that the bank
gets cash and the goods are handled
by someone else.
Bankers Become Merchants
But where business from one end to
another of a great country is stag
nant and the public will not buy, there
is no 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 owed money to the banks
and there was nc one on whom the
goods securing the loans could be I'M
loaded. The banks had to take the
goods.
The story is told of a fur merchant
in Chicago who Had borrowed large
sums on a stock Of furs. He had
bought before the price fell. in the ex-
paying his bank loans. The depression
came, business fell away to nothing. his
notes came due and the bank called
him in. He asked the president of the
bank for a renewal of his notes. The
banker said this was impossible. The
fur merchant thought the matter over
for n few moments and then said to the
banker
Have you ever been in the fur bust
ness"
OF course, the banker answered
No"
We'll, you are now" said the bank
rupt merchant.
And the bank was. The merchant
could not pay the loans so the bank
had to take the security, which was a
stock of furs.
This has been repeated in all lines