The Rock Island Argus and daily union. (Rock Island, Ill.) 1920-1923, 1922-08-23

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that the business depression 10
over and the, settlement OF the
strikes promise to bring the Unit
ed States back to the path OF nor
NAL commercial and industrial &C
tivity, 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 by-products Of the two years
depression has been the extent to
which it has thrust American banks
into industrial and commercial ac-
tivities.
A bank 10 q dealer in money and
credit-especfally in credit. It Is
not normally equipped to deal in
goodS and heartily dislikes to do so.
Gold. crisp bank notes and neatly
catalogued 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
unpleasant objects such as the
wares of the dealer in fish or po-
tatoes.
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 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 middle nen
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 unwllingness Of the
public longer to pay war prices for
anything-the economic phenomc-
non which was known as the buy
e-s' strike and resulted in such
manifestations as the overall move
ment-prevented many of them
selling anything at any price.
When bankers lend money tC
merchants, goods are assigned as
the security. In normal times it is
rare indeed that the security is
called for by the bank. In the first
! place, it usually is worked of or
the public and the loan it secured is
paid. Even in cases of mercantile
bankruptcy, the security consist.
ing Of goods is juggled around
through connections of the bani
in some way SO 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 a great country
is stagnant and the public will no.
buy, there is no one who will take
the goods readily. This was thu
condition in which American banks
found themselves up to a few
months ago. There were thou.
sands of failures Of storekeeper;
who owed money to the banks ant
there was no one on whom the good:
! securing the loans could be un
loaded. The banks had to take thu
goods.
The story is told of fur mer
chant in Chicago who had borrowed
large sums on a stock of furs.N HI
had bought before the price fell
in the expectation of selling in ;
few weeks and paying. his banl
loans. The depression came, bust
ness fell away to nothing, his note:
came due and the bank called hin
in. He asked the president Of tbs
bank for a renewal of his notes
The banker said this was impos
sible. The fur merchant though
the matter over for a few moment
and then said to the banker:
Have you ever been in the flu
business"
OF course, the banker answere,
mo"
We'll, you are now,' said tn
bankrupt merchant.
And the bank was. The mer
chant could not pay the loans 81
the bank had to take the security
which was stock Of furs.
This has been repeated in al
lines of business, and banks j.
every state have found themselvn
in actual possession Of goods be
cause the notes which the good