Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1923-06-07

QeGSOuAI &uo OU1luoU9 00SJxoi
to many people. To some the|
sfortune, while others merely
which they can put 4 debt %
Dir earnings. The Committee
american Bankers Association
,g discussion Of how and why
these MISUNDERSTANDING:
the proceeds Of the note. o. SlSk
When the note 10 due In dxty days
Mr.. Smith has received payment
from his customers. and As pays
the bank $500. The bank MARKS
the note paid and returns Il 70 NJ.
Smith.
II Mr.. Smiths business condition
were not sufficiently strong to VA.
rant granting him unsecured credit
the banker might Say to NJ. Smith.
II want to help you. but Jon viii
have to get the Endorsement Of
your friend. Mr.. Jones" Jones u
known to the banker - . veyy,
reliable and responsible business
man. Should he be willing TO help
Mr.. Smith he will write his name
on the back Of Mr.. Smiths note
and II Smith cannot pay the note
when due Mr.. Jones viii have 70
pay. (.
In another case. the banker. sull
anxious to help Smith. might SAY.
II am willing to loan you up -
$4,000. but you must secure the
loan with the goods which you pur.
chase for that amount and With
some additional goods" Mr.. Smith
would have to warehouse the msg.i
chandise used a. collateral IN such
q way that It might b easily
identified through warehouse 70
ceipts al being the banks property
until the note 10 paid. u Smith
finally found himself unable 70 pay
the banker could sell the merchau-
disc and use the proceeds % Day
the note. II the goods brought
more than the amount Of the note
the bank would pay the excess to
MI. Smith: II the amount we're not:
enough the bank would look 70 Mr..
Smith to make good the di1ersuce.
Mortgage Leans !
Loans against farm lands. called
mortgage loans. are frequently.
made In country districts. II Mr..
Smith. lacking an indorser or suf.,
hcient collateral or business stand
ing. owned q farm free Of debt he
might give . mortgage On Il -
security. ;
The procedure would b some
what different from loaning against
merchandise. The law. realizing
the useful place farm and homo
owners occupy. protects them in .
special manner. It says to the
lender. in case Of default on .
mortgage loan. you must give this
owner Of land one year after serv.
ing notice that you expect to sell
his land to pay the mortgage and
redeem the debt" This u called
the period Of redemption.
Mr.. Smith has stu another
method open to obtain funds from
his banker. He has sold. Say. .
$500 bill OF merchandise to MI.
Brown, q dealer in q smaller com.
munity. who must sell the goods to
his own customers before he cam
pay Smith. Smith says to Brown
III you can't pay cash give me o
ninety day note. I will discount Il
and get immediate cash on Il from
my bank. I will have to pay 6 per;
cent interest to do 80. and shall
want you to pay that interest" Mr..
Brown agrees and makes his
ninety day note for $500 with inter.
est at 6 per cent. Mr.. Smith takes
this note to the bank, which I'd.
vances him credit for $500. When
the bank collects the note from
Brown ninety days later It receives
$507.50. the added $3.50 being the
6 per cent interest charge for the
use meanwhile Of the money fo1t
the ninety day period Of the note.
These are the various ways n
which the bank serves ito com.
munity BY placing. through loans.
the accumulated thrift OF tho Gem.
munity at the disposal Of business
and industry. -.