Evening star., 1929-06-30
CITY BENEFITS BY ADVERTISING
OF BANKS AND BUSINESS MEN
Growth of Stores and Other Financial
Institutions Brought About by Con-
slant Use of Publicity.
tract, however, is fine sample of the

extract, however, is fine sample of the
work:
IF the working funds of bank are
used to purchase short time, self nqui-
dating obligations of merchants of un-
doubted worth, obligations created by
the production and sale of the neces-
sites of life, otherwise called staple
commodities, bank will need very
little liquid fund in addition to its pri-
mary reserve. 1t will have in its port
folio prime commercial paper that can
be sold or used as collateral TO get
funds to restore its primary reserve
and as such paper is paid in full at
maturity its earning assets will be turn
cd into liquid funds rapidly. When
deposits begin to decline it can meet
that condition by refusing to purchase
any more paper until its reserve is re-
stored and its deposits begin to increase.
The other Kind.
eff the working funds of bank are
used to, make capital loans and UNI
secured personal loans that have to be
carried and renewed for an indefinite
time, or renewed upon the payment of
small curtails, thus making the bank
silent and unwilling partner in several
business enterprises, the working funds
are frozen. While the bank may be
nominally in the banking business, 1t
is really engaged in several other lines
of business by reason of its capital
loans. III deposits drop and the primary
reserve becomes depleted the officers
and directors have many anxious mo-
ments unless their worth and raputa-
tion enables them to get assistance
from the outside to help them to meet
their obligations.
THE two cases cited are extreme ex~
amples of banking practice. The first one
Is the true bank of circulation and dis
count, so-called because 1t helps pro-
ducers and merchants to circulate their
goods among the people by discount
ing bills of exchange arising from the
sale and transfer of necessities, thus
bringing into present and immediate
use the future or potential value OF
goods produced. We call such banks
commercial banks because they are
the reliance of industry and commerce
and their operation accclerates the
process of production and distribution.
Why Country Banks FAN.
"The second type of bank referred to
is found in many small towns and VII
lagos, particularly in agricultural COM
munities. although cities and towns in
industrial sections have some of them
struggling to meet the competition OF
their stronger and better managed
neighbors. The reason for their exist
ence appears to be two7fold. First, the
desire of strong and self-reliant group
engaged in the production of staple
products who make living from the
soil, and those engaged in small indi-
vidual business enterprises to create
and manage for themselves the finan-
cial institutions on which they rely for
credit The chief difficulty that con-
fronts such banks is the lack of oppor-
tunity for diversifying their loans
Their funds are tied up in loans to men
who are engaged in one line of industry
which may be seriously affected by mar
ket conditions Second, the desire of
some successful business men TO pose as
a financial genius and end his success
full business career as a banker. The
depositors in such banks believe that
because they have furnished the de-
posits they should have preference in
getting loans.
Resent Outside Loans.
"They resent having their money sent
outside of the community through its
investment in bonds and securities or
the purchase of commercial paper, and
believe that the funds in q community
should be used for the improvement OF
that community, especially for the inn
provement of the individuals who sup
port the bank. They proceed to tie the
banks funds UP in longtime capital
loans and unsecured personal loans and
expect the bank to carry them until the
business for which the money is hor-
rowed is brought to q successful and
profitable conclusion. If deposits drop
the absence of a liquid secondary re-
serve is a serious matter"