The midland journal. (Rising Sun, Md.) 1885-1947, 1933-07-07
A BANK REFLECTS
THE LIFE ABOUT IT
Loans and Investments on
Which Condition of a Bank
Depends Determined by
the Kind of Business
Surrounding 1t

nOLITICAL ana popular mlsappre-
tensions toward banking are due to
little else than failure to realize that
1t is what the people themselves do that
the condition OF banking reflects, and
that banking cannot Of itself reflect
events and conditions other than those
that actually originate from surround
ing circumstances, Francis H. Sisson,
President of the American Bankers AS
ISOLATION. says in an article in Forum
Magazine.
The character of an institutions
notes and investments indicates
whether 1t Is In the farm regions. a
manufacturing center, mercantile
neighborhood or a great financial dis
trict, he says, and furthermore, besides
identifying the Institution as to Its
locality. study of Its notes will equal
ly clearly indicate the economic condi-
tions surrounding 1t.
III farm district banks note his.
tory shows that its loans rise and fall
with the normal cycle of production
and marketing Of the products of the
region, it may be taken as an index of
economic good health for the locality"
he says. But IL, over period, the loan
volume shows dwindling trend 1t may
mean region that Is losing ground
becoming exhausted or being robbed of
business by another community. Or IL
large proportion OF the loans are not
paid at maturity but are chronically re-
newed, or IL stocks OF bonds or real
estate have to be taken as additional
security. these too have economic sig
niflcances. rejecting perhaps crop fail
ures. over-production or inefficient,
high cost farming methods in highly
competitive national or world market,
such as wheat. Inevitably all these
facts are reflected In the condition of
the local banks.
City Banks Too
"If the loans Of bank in a manufac-
turing or merchandising field show a
smoothly running coordination with
production and distribution they, too,
mirror healthy economic situation.
Or there may be here also signs that
reflect growing unfavorable conditions,
such as excessive lean renewals. over.
enthusiasm and therefore over-expan.
sion Of credit extended. to makers or
dealers in particular products, and SIM
liar circumstances. Similar conditions
apply to banks engaged in financing the
activities of the securities markets.
"The foregoing is merely suggestive
of the infinite aspects Of the life out.
wardly surrounding the banks which
form and control their internal condi.
tions. Although these facts seem obvi.
GUS enough, the discussions and criti.
cisms that have ragged about the banks
often appear to set them apart as some.
how separate from the lives Of our PEG.
Pile, casting forth malignant infiu
ence upon agriculture, industry and
trade from forces generated wholly
within themselves.
"The truth of the matter is that the
fate Of the banks 10 inseparably inter
woven with the fate Of the rest Of the
people and Of the nation. What hap
pened to the country happened to the
banks and what happened to the banks
is in no way different or detached from
what happened to the people. They are
all part of the same pattern, of the same
continuous stream of events. No one
element in that stream can be called
the cause of business depression.
IF the banks caused trouble to some
of our people it was because they were
irresistibly forced to pass on troubles
that came to them from other people.
These troubles impaired the values Of
their securities and customers notes
and rendered some unable, in turn, to
pay back to other customers their de-
posits that had been properly used to
create these loans and investments.
Unless these truths are kept continual.
ly In mind there is no such thing as
approaching an understanding of the
banking problem or of properly safe
guarding the very heavy stake of the
public in that problem"