Evening star. [volume] (Washington, D.C.) 1854-1972, 1926-08-15

| ceiVe no direct returns. In this list
are the privileges of consultation on
your business, which takes the bank
er's time but gives him no return.
He is frequently called on by widows
and orphans and by many men prac-
tically as helpless for directions that
| would naturally be furnished by a
lawyer and at a fat fee.
| Reciprocity is one thing that the
banker understands to the fullest. II
| you are a good customer there is a
very willing bank official in his office
listening to you whenever you need
assistance.
You will not be charged for drafts
on New York. and while nearly all
banks make charges for exchange,
both foreign and domestic, the man
who realizes the benefit of paying
bank balance is generally accom-
modated as a concession.
| A bank reference is a valuable as
set for any business man. 1t IS not
to be had for the asking nor for the
newcomer who has not established his
standing. Reputation is made by
long records of uprightneeSS in bust
| ness life. of the prompt meeting OF
obligations, actually of establishing
reputation, when all the world will be
| easier to master.
Lays Cards on Table.
In applying for credit the merchant
| lays his cards on the table and makes
plain his status his resources on one
/; side and his debts on the other, IN
! Guiding in the former his cash re-
sources, the value Of the stock of mer-
chandise on his shelves, real estate
holdings and in the debts the amount
| owed for merchandise, the Obligations
against realty holdings; worth Of the
! ol xNf no oy.tva in, firm
or, if a corporation, it's capitalization
| and bylaws including the names of
those entitled to sign checks, notes,
| etc. the number of bank accounts
and the amount of outstanding notes.
| A record of results for a few years
| is desired.
Merchants and others prepare these
statements: they are verified by DUN
and Bradstreet, by personal 1nvestl-
cation, and if all is as stated and the
| merchant is really entitled to credit,
a stated sum will be agreed upon AS
a credit lineup to which credit Is
available.
] Bankers also make a practice OF
/, taking care of securitieS-not as
rule free of charge, but for the sood
customer arrangements may be made
for an indefinite period, while any
one paying the very moderate charge
| NAV leave securities just as lonS
as he desires Banks aid deposltors
in preparing their income tax returns
several enga ging the services of an
expert during the period when the
income taxes are being prepared.
They also help on the intangible tax
returns when requested and solve
many a problem put up to them Tor
which their return is nil.
/ How, Ranks Make Money
Banks are not in business for the
fun of it. There is nothing suggest
ing sweet charity, although they are
overly generous in their good works.
Bankers are in the business to
make money for their shareholders
land that they do it is evident from
the current market values of local
bank shares. Returns on bank stock
rarely average over 3 to 4 per cent.
TOR shares in seasoned institutions.
The original shareholders, the men
who participated in the underWrltl1g.
have reaped fortunes through priv
ileges of subscribing for new stock
| at concessions in price, rights, so
called These shares are usually
bought by high grade investors who
know the value of bank shares and
the probabilities OF distribution in
dividends buying for the future rather
| than for the present.
AS a matter of fact the greater part
! of a banks profits must come from
its interest on loans and discounts;
| interest on the deposits and interest
on that part of capital that can be
| loaned The prevalent rate on com
| mercial loans is per cent and much
of the real estate money being put
out is bearing the same rate plus the
! half per cent for the intangible tax.
/ True many loans are being made he
t low and also above these rates, but
the average has been with some SIC
per cent money.
Must Pay Interest.
If banks could place their de
| poSitS out at 6 per cent in toto. It
would be fine business. this banking.
It is obligatory on the part of the
banks to carry legal reserves against
the time when the deposit may be
! withdrawn in part or entirely. Even
/ that would he easy for the banker but
! he is called upon to pay interest to
all savings deposits and on many
! other accounts.
Trust companies have always paid
. per cent on checking accounts and
generally 3 per cent on savings.
A tax Is made on the real estate of
banks and there is a tax on gross
earnings of banks as well. and for
national banks a tax on circulation
Earnings on tax free securities are
often included in gross earnings.
National banks with $1.000,00O cap
ital and surplus. since the enactment
Of the Federal reserve act, have been
permitted to add trust departments to
their services, to act as registrar OF
! stock, transfer agents and do every
thing that is possible for trust COM
pany to do.
They are progressing favorably in
their efforts and have added materi
ally to their income as a result there
from. Many estates that would other
wise have gone to trust companies
have been entrusted to the care of
national banks.
Exchange transactions are often
very large with the banks and this,
too is a source of good return.
Hold Treasury Deposits.
Banks hold large deposits to the
credit of the Urea sury Department
for indefinite periods, on which they
pay per cent. which bring fair inv
terest return. These funds are fire.
ouentlv invested on Wall Street on
call loans, so that they will be imme-
diately available when demanded by
the Treasury.
One of the largest sources of profit
to the bank is found in its invest
ments When money is cheap and
plentiful. that is when commercial
borrowers are not using money free
TX. bankers go into rle bond market
and accumulate many bargains. Then
again they participate in Government
tio,ations on bonds and notes. and
,h.. Treasury has Yet TO put out an is
sue low rates or relatively high. but
What there has been good profit in
the investment.
With increased demand for money