The Coconino sun., 1923-12-21


could choose by own | have
not really chosen any subject and this
talk, or reading matter, will be more
or less at random. Sid did say not
to weary the club with a bunch of
to comply with that much Of his re-
quest, at least.
The theory of banking is the same,
whether it is in comparatively small
town like ours, or in a larger place,
but there is, of course, more chance
in a small community for personal
contact, which is not possible where
the bank officials are not more or
less personally acquainted with most
of their depositors and borrowers.
This reminds me of story which
is applied to one of the large New
York banks. 1t seems that two men,
spending the winter at one of the
large resorts in Florida, became very
well acquainted, putting in good deal
of time together on the golf links
and otherwise, and becoming very
good friends, although they had not
previously known each other. At last
the time came for one of them to go
home and he told his friend that he
hoped their friendship could be con-
tinued after they got back to New
York, where they both lived, and the
other man asked him what his busi-
ness was and where he could find him.
He replied: II am one of the vice.
presidents of the National City bank, .
and the other man said:
"Well, that is peculiar coincidence,
isn't it? / happen to be a viee-presi-
dent of the National City myself"
Times change even in a small COM
munity like Flagstaff. For instance,
Is wears ago here, no one would have
dreamed that Navajo Indians would
come in to help our farmers dig po-
tatoes, or that the American and
Swedes in the logging camps would
be practically supplanted by Mexieans,
or that we would have as many miles
of paved streets as we have. Never
theless, these things have all come to
pass.
The Santa Fe depot has not
changed in that time, however, as
/ recall, and | am simply men,
tioning this as an exception which
proves the rule, without trying to
steal any of the Coconino Suns
thunder.
By the way, / saw a headline
yesterday that the Santa Fe was
going to spent seventy millions
for 1924 improvements and read
the accompanying article careful
ly to see how much the Flagstaff
depot drew, but could find no
- Vrfcf
think what they could build for
say One-tenth of one per cent OF
!. that seventy millions.
/ doubt whether Is years ago any
bank in northern Arizona took state
mentS from its customers. They de-
pended on what the customer could
and would tell them of his financial
condition, (Which he often did not
know accurately himself), and made
loans more on the ability and char
acter of the borrower and their past
experience with them, than on what
would have been disclosed by a state
ment if one had been available.
The income tax law, which went into
effect about 1913,. changed this con-
dition to some extent, because prac-
tically everyone who was in business
for himself had to start keeping his
books more accurately, in order to
enable him to tell how much was due
Uncle Sam, and it was not a great
while until the banks up here changed
their system and started asking their
customers for statements, realizing
that the desired information could
now be obtained. / believe that the
furnishing of statements to banks has
been beneficial, not only to the bank,
but also to the individual or firm
which furnishes the statement, when
asking. for credit.
Credit is largely matter of con-
fidence- that the applica-
cant for credit will be able to meet his
obligations and meet them promptly.
A borrower who always does what he
says he will do-who goes to his
banker and explains why he cannot
meet his note, (if he cannot) before
it is due, and who conducts his busi-
ness capably, is building the sort of
confidence that is a foundation for
credit.
Character and ability don't show in
statement, but are just as impor-
LdnL dS cdplldl anu LOT HuIuIcusS VI
years loans based on these two factors
alone, have been safely made. Our
county, state, and our own commun-
ity, would not be developed to the
point they are today if it had not been
for this class Of loans. "Capital loans"
undoubtedly, and as such they are
frowned on today by bank examiners
and bankers, but they have been made
in the past and doubtless more or less
Of them will be made in the future.
The financial statements value lies in
the evidence it gives with respect to
all three factors, character, ability and
capital.
In every consideration Of a financial
statement, we have first Of all the old
rule that the ratio of current assets
to current liabilities shall be as two
to one. While this is rule of thumb,
it should not be despised, because it
is founded on experience. Tt may not
be exact but is valuable in checking
ont more scientific methods It is