The Ely miner. [volume] (Ely, Minn.) 1895-1986, 1933-07-28
How All the People Played Part
In Building Nation Credit Stru cture
Banker Describes the Way Loans and Securities of Banks
Are Based the Hopes and Plans of All
Classes-Values Dependent Pubc's
Ability to Meet Obligations
BY FRANCIS H. SISSON,

working people Of the nation were
fully employed, while wages and sal
aries were steady and generous, while
prices of commodities were strong and
while the minds Of the people were
dominated by faith in the future and
confidence in one another.
Great CHANGES Came to the Nstiea ;.
Then suddenly, almost as II the sun
itself had lost part Of its vitality.
everything changed Foreign markets
failed and disappeared. Industry slack,
ened. A rapid drop in all kinds Of COM
modify values set In. The earnings Of
business fell. Unemployment dsvel-
oped. Wages and salaries went down.
Domestic markets shrank. Pear b.
came general The securities markets
became panic-ridden a. the prices OF
stocks and bonds withsred TO fractions
Of their former values. It was the
greatest disintegration Of h N an
plans, economic conditions and worldly
values that history had ever witnessed,
These destructive changes cut right
through the qualities and values OF the
loans and investments. the notes and
securities in the banks Business men
and manufacturers could not repay
their notes to the banks as due. Many
defaulted the payments on their bonds
Property underlying real estate mort
cages became worth less than the face
of the mortgages. The market values
Of standard securities became, less
than the banks had paid for them as in
vestments or accepted them at as col
lateral for customers loans.
This meant. In fine, that the ability
of borrowers to carry out the future
hopes, plans and good intentions that
I have denned above rs the basis Of
credit, had become impaired to . Tar
greater extent than had ever before. oc-
Cured in the nations history. The re-
sulting losses could not be absorbed by
the banks alone out Of the normally
ample funds that had been set aside
against the expectancy Of certain IN.
evitable percentage Of human plans
gone wrong.
Banks Showed All Reasonable Care
1t was in loans and Investments,
whose values thus became 20 unfore-
seeably impaired, that the banks, In AL
confidence, In all good faith. In all
humanity reasonable care and good
judgment had entrusted the billions Of
dollars Of deposits which their Gus.
toners had entrusted to them.
Those loans and investments were,
under all normal conditions, rs good %
gold itself. Indeed, IL the banks In.
stead had filled their vaults with gold
bars, and then some unknown cosmic
ray had transmitted them into lead, the
results would have been scarcely more
startling than the depreciation that
was caused in the assets of the banks
by the unforeseeable economic forces
which permeated and debased them.
The inevitable result was that, when
the banks urgently needed the money
they had entrusted to those assets, 20
that they could meet the unreasoning
demands OF their depositors!' they could
not get 1t back.
It was not that our banking system
and methods were of themselves weak
or reprehensible, apart from the rest
Of the life Of the nation, as has so much
been made to appear.
It was not that our banks were per-
meated with incompeteney or dis
honesty or with lower standards, Of
business ethics than wers the other
forms Of human activity with which
their own fate. and activities. wers in,,
extricably interviewer, as. II almost
seemed at times, there was . concerted
national conspiracy to lead our people
to believe.
The great fact of American banking
Is that 1t shared fully in the plans and
hopes and hazards o. the American pss-
ple.-and when those plans went
wrong, the banks carried their shars
Of the burden and suffered their share
| of the misfortune.