The Coconino sun., 1923-12-21
THE MUTUAL OBLIGATIONS OF
Il BANK And IT'S CUSTOMERS
the Flagstaff Rotary Club
by Joe Wilson, VcePresdent of the Arizona Central Bank

SHOulu US SOUQ TGdSOH given Luz
such a condition. The fixed assets
should be covered by capital and sur
plus, and retailer, wholesaler, or
manufacturer, should remember that
he normally cannot hope to make any
money out of his real estate and
buildings, and he should recognize this
fact by carrying reserve for depre-
citation.
This may be getting a little dry,
but / must remember Sid's admoni-
tion not to get that way.
Along with the consideration of an
analysis of statement, bank has tc
consider not only a borrowers willing
ness to pay, but his ability to do So
and statement helps to determine
this.
Banks are more and more requiring
customers to carry ain adequate bal
ance against loans which are granted
them. While / was in Los Angeles
recently, talking to an officer of one
of the largest banks there, he excused
himself to talk to one of the banks
customers with whom he took up this
very point. l could not help over
hearing that he was taking him to
task for his failure to live up to the
agreement which had been made at
the time the loan was granted, to the
effect that he carry 20 per cent of
the loan in his account with the bank
at all times.
1t is hard matter at times to
make borrower see that loan must
be more or less liquid. That is, that
even though the security may be alb
solutely good and the interest paid
promptly, there must be reduction at
regular intervals of the amount of the
principal, and a final cleaning up Of
the indebtedness. If the bank carried
all, or even a large proportion, of its
loans with only payments of inter-
est and no principal reduction, 1t
would be impossible for it to continue
to do business. Frozen loans" are
another sort of loan which draw
frowns from an examiner.
1t seems to me that there Is an
obligation on both sides, both the bank
to the customer, and the customer to
the bank. The bank, of course, would
be unable to do business without the
deposits but the customer should also
recognize that he is getting a service
from the bank III many ways. 1t IS
certainly convenient to be able td
write a check, even to pay debt il
Flagstaff, and isn't it bigger con-
venience to be able to send such
check thousand miles away, anc
thereby settle a bill? The bank also
renders monthly statements, which, By
the way, should be reconciled by the
customer monthly. We occasionally
have a customer tell us that he is
unable TO make his account agree with
ours and usually when this happens il
develops that he does not balance his
stubs with the bank statement at reg
ular intervals and sometimes never
does-very often not even retaining
his cancelled checks and statement,
and then is surprised and sometimes
even peeved when we can't straighten
out such a tangle for him in five or
ten minutes. 1t is not big matter
to keep stubs or reconcile accounts
monthly, and it is a mighty good plan
to follow.
While on the subject of monthly
statements, it might be interesting to
you to know that good deal of the
banks work is done mechanically
nowadays, and that the adding ma
chine and its development has helped
greatly along this line. If / remem-
ber correctly, the bank with which |
am connected, had one adding machine
at the Flagstaff office when | entered
its employ, almost II years ago, and
we now use eight. Most Of them are
in active use, both before and after
and during banking hours.
There are many other services q
bank can and does render but / am
not going to enumerate them for fear
will be fined for advertising my
business"
l spoke about obligation a moment
ago, and want to relate little Incl
dent that illustrates it. Several years
ago I made $25 loan to local farm
er for a short time, with the under
standing that it would be promptly
paid. 1t wasn't, and although it fl
nally was paid, it was after spending
enough time, energy and postage to
more than offset the amount of in
terest collected. He came in some
| time later and asked for another loan
of $40, which l refused politely but
| 4l1llligy anu lOlN MN do q IC1toOH ltl0ll
our previous experience had been so
unsatisfactory that | did not feel like
making him another advance He as
sured me that he had $500 coming
from a certain source within a few
days, and insisted that we loan him
| the $40, but ] did not change my mind
and he left the bank somewhat riled,
and leaving me rather skeptical as to
the truth of his statement about the
$500. 1t. was not half an hour before
| he returned with perfectly good
check for $500, which he deposited and
asked me if | was not sorry | had
not loaned him the ten. would not
admit this, of course, but was surpris.
ed that he brought the deposit in to
us after having been refused the small
| loan he wanted.
His mind evidently did not work
along the lines of a good many minds,
because l believe most people who had
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