The Filer record. (Filer, Idaho) 1919-1930, 1923-06-14

for the Use OF the money. He then
credits Mr.. Smith with the proceeds
OF the note. or s495. When the note
is due in sixty days Mr.. Smith has re-
ceived payment from his customers.
and he pays the bank $500. The
bank marks the note paid and returns
IT to Mr.. Smith.
II Mr.. Smiths business condition
were not sufficiently strong to war
rant granting him unsecured credit the
banker might say 10 Mr.. Smith. i want
TO help you. but you will have TO get
the Endorsement OF your friend. Mr.
Jones'" Jones is known 10 the bank
er as a very reliable and responsible
business man. Should he be willing
10 help Mr.. Smith he will write his
name on the back of Ir. Smiths note
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, Il
am willing TO loan you up to $4,000.
but you must secure the loan with the
goods which you purchase for that
amount and with some additional
goods" Mr.. Smith would have 10
warehouse the merchandise used as
collateral in such a way that II might
be easily identified through ware
house receipts as being the banks
property until the note is paid. II
Smith finally found himself unable to
pay. the banker could sell the mer-
chandise and use the proceeds TO pay
the note. II the goods brought more
than the amount OF the note the bank
would pay the excess to Mr.. Smith;
II the amount were not enough the
bank would look TO Mr.. Smith to
make good the difference.
Mortgage Loans
Loans against farm lands. called
mortgage loans. are frequently made
in country districts. II Mr.. Smith.
lacking an indorser or sufficient col
lateral OF business standing. owned a
farm free Of debt he might give
mortgage on It as 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 "a a special man
ner. II says TO the lender, in case OF
default on q mortgage loan, You
must give this owner OF land one
year after serving notiCs that you ex-
pect TO sell his land to pay the
mortgage and redeem the debt" This
is called the period Of redemption
Mr. Smith has still another method
open to obtain funds from his banker
He has sold. say. a $500 bill OF mer-
chandise TO Mr.. Brown. a dealer in a
smaller community. who must sell |
the goods to his own customers be- !
fore he can pay Smith. Smith says 10 /
Brown: IF you can't pay cash give
me a ninety day note. / will discount |
It and get immediate cash on it from
my bank. will have TO pay 6 per
cent interest to do so. and I shall 4
want you to pay that interest" Mr..
Brown agrees and makes his ninety 1
day note for $500 with interest at
per cent. Mr.. Smith takes this note
to the bank. which advances him
credit for $500 When the bank col.
lects the note from Brown ninety
days later II receives s507.50. the
added $3.50 being the 6 per cent In
lerest charge for the use meanwhile
of the money for the ninety day pc
Rod OF the note.
These are the various ways In
which the bank serves its community
by placing. through loans. the sccu-
nulated thrift c; the community at
he disposal OF business and industry.