New Britain herald., 1927-07-13
LOOMS TELLS HOW
TO BORROW MONEY
Bank President Explains Essen
tial Things Banker Requires

A comprehensive knowledge Of the
buying and selling markets and an
intelligent advertising policy. are
among the essential things a busi-
! nessman must have who borrows
money from bank, according to
John c. LOOMS, president of the
Commercial Trust Co.
Mr.. Loomis spoke at the meeting
of the Kiwanis club today, on the
subject THE man who borrows
money"
His talk in part was as follows:
1T is said that even the devil on
occasions will quote scripture. Sup
ported by this precedent, it seems to
me that a mere banker might be
forgiven should he choose text
from the scripture. particularly so
when the selection summarizes con-
cisely the principle by which the
banker is guided in extending credit
to the man who borrows money. The
text is this, TO him who hath shall
be given, but from him who hath
not shall be taken even that he
hath
Literally translated, that pas
sage might well create fear and
hopelessness in the minds of the I'M
fortunates, and justify vanity and
arrogance in the attitude Of the
fortunate. But that I take it is not
its intended meaning. 1t should be
remembered in interpreting the
teachings of the ancient sages of the
East, that they invariably expressed
themselves by parallels, metaphors,
and cryptic sayings, ard hid their
real meaning under an imagery of
speech. And this particular sem
tence Is no exception to the general
rule. Instead of justifying merci-
less doctrine, it really points the
way for the business. man to the
basic principle of economic success,
both to him who hath and to him
who hath not.
What is it, then, that the man
who borrows money must have in
order to obtain a loan from his
banker? Just two things. an order
ly financial statement, and capacity,
with the emphasis on capacity
am aware that capacity is broad
term, but it includes thorough
knowledge of business principle, and
its intelligent application. He must
have comprehensive knowledge of
his buying and selling markets, and
an intelligent advertising policy. A
business may be soundly organized
and perfect in its functioning, but
the moment that It's management
ceases to give to 1t initiative and
that business from that
moment starts on its way to dis
solution.
THAT is very brief summary Of
the essential qualifications necessary
for the obtaining Of credit from a
bank. And now the question is, how
does a banker extract this required
from the man who Dor
rows money
When the Federal Reserve Sys-
TEN was placed in operation in 1913,
there was made available for bust
ness a practically unlimited supply
of credit, but coincident with its
availability there came a keener and
more scientific scrutiny CT the re-
sponsibility o. the risk. SO that today
a banker applies a series of tests to
the property and profit and loss
statements of the borrower. These |
tests not only reveal the degree of |
solvency and liquidity Of the borrow
er. but also his capacity. The test is
made of eight ratios divided into I
two groups of four each. The first
group Is known as the static ratios,
and they determine solvency and Ii
quidity. The second group is known
as the dynamic ratios, AMI they de-
termine capacity. They are: The first
group (static) current ratio. receiv-