Askov American. [volume] (Askov, Pine County, Minn.) 1914-current, 1931-10-29
How the New Bank
Will Help the Country
Editorial in the Christian
Science Monitor.

Science Monitor.
"Just how will it work." is the
question on the lips of many in re-
gard to the new $1,000, 100000 Ma
tiOnal Credit corporation which is
being set up at the recommendation
of President Hoover to help the banks.
"Just how will the benefit of it get
to my bank and to me?"
Well, for an explanation let's look
in on a man whom we may call Peter
Gorham, president of the Farmers and
Merchants National bank of Johns
vile. Mr.. Gorham's bank has been
reasonably careful in its loans and has
kept cash enough in it's vaults for Or
binary times. But lately some de-
positors have been drawing down
their accounts and he has felt others
a little skittish or concerned about
their deposits. And he realizes that
if run got started the cash might
not last very long. The FEDERAL Re-
serve bank could give him some help,
but possibly not enough.
Now, among the assets of the Farm
ers and Merchants National are sew
eral such items as these: Some Bur-
lington railroad bonds, sure to be paid
when due, but would have to be sold
at loss if turned into cash on the
present market. A few New York real
estate bonds which the bank bought
to diversity it's investments-safe
bonds, but almost unmarketable.
Mortgages on the HerGaman block and
the White Front store, two of the best
buildings in townsville. And mort
cages on string of farms belonging
to men like Arthur Price and John
Cassidy and Ben Wallace, who can't
meet much more than the interest out
of this years 25-cent wheat, but who
will make their land pay if anybody's
does another year.
These things are perfectly sound
investments, but they are not like
the short-term loans which can be
called in to meet an emergency Nor
can Mr.. Gorham take these bonds and
mortgages to the Federal Reserve
bank and get money on them by re-
discounting them as he does the
thirty-day or ninety-day notes of his
business customers.
But when the new credit institution
is opened, Mr.. Gorham and hundreds
of other local bank presidents will
be able to take portfolio of their
sound but temporarily unstable bonds
and mortgages to a committee of his
local clearing house or some other re-
gional group which represents the
credit corporation in his district. The
committee will look over this collat-
eral, and, If it approves, will lend
money to the Farmers and Merchants
bank to add to it's cash reserves.
Then Mr.. Gorham will not have to
hold such a tight rein in order to
be safe against scare among his
to call in that loan to George Kelsey,
the grocer, who deserves help in car
rying the accounts of folks who have
been out of work at the tannery, and
he can renew the notes of the Eagle
Printery and Max Bernstein, the
SAoeiiiSi. DSoluSoS hO YAH ObSOui e@SO
Ed Thorp, down at the mattress fac
tory, to go ahead with putting in that
new machinery and to stock up on
cotton while it is cheap. Although
Will Reed, the hardware man, has not
been able to move his farm imple-
ments very fast. little extra credit
would enable him to do a good bust
ness in electric refrigerators. And it
would be worth while to let Nick
Fotenopoulos have that $500 to paint
up the Elite cafe.
So with all these things doing
there will be work for few more
mechanics, truck drivers, statesmen,
printers, painters. and so on. And
with this happening not only in Johns
vile but in Bloomfield, Clay Center,
Martinsburg, Middletown, Oak Cliff,
Fort Wayne, Savannah, Seattle, Gin
cinnati and Philadelphia, to name only
few of the places in the bankers
directory, probably enough more peo-
pie will buy new pocketbooks, over
coats, automobiles, gas stoves, books.
chairs and airplane rides so that the
townsville tannery and hundreds of
other plants can start work again.
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