The Raymer enterprise., 1923-06-14

for tho use Of the money. He thea
credits Mr.. Smith with the proceeds
Of the note, or 34s5. When the note
10 due in sixty days Mr. Smith has r.
csivsd payment from bis customers.
and he pays the bank $500. The
bank marks the note paid and returns
It to Mr.. Smith.
II Nr. Smiths business condition
were not sufficiently strong to war.
rant granting him unsecured credit the
banker might say to Mr. Smith. Il want
to hslp you. but you viii have to get
the Endorsement Of yeur friend. nr.
Jones'" Jones ID known to the bank
Or % . very reliable and responsible
business man. Should he Be willing
to help Mr.. Smith he will write his
name on the back Of Nr. Smiths nsts
and II Smith cannot pay the note
when due Mr.. Jones will have to pay.
In another case the banker. still
anxious to help Smith, hight say. II
am willing to loan you up to $500,
but you must secure the loan with the
goods which you purchase for that
amount and with some additional
goods" Mr.. Smith would have to
warehouse the merchandise used as
collateral In such q way that It might
be easily identified through ware.
house receipts as being the banks
property until the note 10 paid. II
Smith finally found himself unable to
pay. the banker could sell the mer.
chandiss and use the proceeds to pay
The note. II the goods brought more
tAan the amount Of the note the bank
veulA pay the excess 70 Mr.. Smith:
Il ths amount were not enough the
balk would look to Mr.. Smith to
make good the difference.
Mortgage Leans
Loans against farm lands, called
mortgage loans. are frequently made
In country districts. II Mr.. Smith.
lacking an indorser or sufficient col.
lateral or business standing. owned .
farm free Of debt hs might give q
mortgage on It - security.
The procedure would Be somewhat
different from loaning against mer.
chandise. The law. realizing the use.
full place farm and home owners oc.
cupy. protects them II . special man.
ner. II says to the lender, in case Of
default on . mortgage loan, you
must give this owner Of land one
year after serving notits that you q.
pect To sell his land to pay the
mortgage and redeem the debt" This
Il called the period Of redemption.
Mr.. Smith has still another method
open to obtain funds from his banker.
He has sold, say, . $500 bill Of mer.
chandiSe to Mr.. Brown, . dealer IN .
smaller community. who must sell
the goods to his own customers be.
fore he can pay Smith. Smith says to
Brown: III you can't pay cash give
me ninety day note. ! will discount
II and get immediate cash On It from
my bank. I will have to pay { per
cent interest to do 30, and I shall
want you to pay that interest" Mr..
Brown agrees and makes bis ninety
day note for $500 with interest at Z
per cent. Mr.. Smith takes this note
to tho bank. which advances him
credit for $500. When the bank col.
lects the note from Brown ninety
days later It receives S507.50. the
added $3.50 being the 8 per cent In
terest charge for the use meanwhile
Of the money for the ninety day Pc.
riod Of the note.
These are the various ways in
which the bank serves Its community
BY placing. through loans. the accu,
mulated thrift Of the community ct
the disposal of business and industPv.