The Western news. [volume] (Libby, Mont.) 1933-current, 1934-11-15
FINDS BANKS WILLING,
BORROWERS CAUTIOUS
Prominent Writer Refutes
Statements Bankers Are Re-
fusing Sound Loans - De-
scribes Reasons for Reduced
Volume of Credit.

FIGURES supplied by TYPICAL we'll
managed banks in different parts OF
the country show that high proper
tion of all applications for loans have
been granted In the past year or two.
says Albert w. Atwood In recent arti-
Gle In The Saturday Erening Post on
THE Idle Dollar" Excerpts from Mr.
Atwood's article follow:
Frequently banks state that as high
as 80 per cent of all such applications
are granted and for from 60 to rs per
cent OF the amount asked for. Allow.
Ing that the bankers make these figures
as favorable to their own case as pos
sible. 1t seems strange that we are told
again and again that banks are not
lending at all.
III we take into account the whole
class of regular bank borrowers. the
plain fact Is very few want to borrow
yet. For the word borrow Is merely an
other name for the word debt and we
face great worldwide drive to get out
of debt.
IAN experienced small-city banker.
asked If banks were lending freely
enough. wisely replied: The really
good borrower does not wish to borrow
now. In fact. think our customers are
making a remarkably fine showing In
paying off their loans, especially loans
OF long standing.
The Shrinkage OF Credit
"Or II we think Of business concerns
rather than OF individuals. 1t is CON
sentative to say that those able to main
tain high credit ratings have been most
y the ones able to maintain ample cash
resources and. therefore. least In need
OF credit. As prices and costs fell. many
concerns found themselves with plenty
of cash because OF the shrinkage In
operations. Cash resources were still
further swollen by reduced dividends.
and smaller inventories made bank Dor
rowing still less necessary
Expressed In another way. banks
cannot expand credit. they cannot make
loans, unless there Is demand tor the
same. Fundamentally. the business
transaction makes the loan. the loan
mistake to try to force upon business
organizations funds which they do not
need. Under the circumstances the
Idle dollar Is natural and proper
orb hnY ~ arr A Vs. Fsd
credit Is difficult to create artihcially.
and there Is always danger In so doing.
Banks must be liquid enough at all
times to pay depositors. The idea OF a
commercial loan is that II represents .
seIf-liquidating process In business. II
the banker makes only those advances
that are inherently sound. and selects
his maturities wisely. he will have In.
coming funds to meet demands.
Government Lending
"As everybody knows. the Govern
ment has vast lending agencies. for
| home owners, farmers. and the like.
| These have nothing to do with the sub
| ject OF this article, except that all such
Government operations would be I'M
! possible If the banks did not lend the
Government money for the purpose.
mo one can set time when borrow
/ Ing will be resumed. But 1t will come
when men once more feel that condi-
lions are sufficiently settled to warrant
them In taking chances, In entering
upon deals. and In trying to make
money
Mr.. Atwood says that 1t may be that
| the banks are overcautious now, just
as they were overconfdent In 1929 but
calls attention to the fact that until
little more than year ago banks
were falling partly because they had
loaned too freely. and were being
criticized right and left for precisely
that fault" He adds:
Indeed the banks which had been
cautious In their lending policy cams
through the crisis safely. Under such
conditions 1t Is utterly useless to criti
cize banks for not making loans. After
the experience they had for severa
years, especially In 1882 and 1898. 1t Is
only natural that they should relax
their requirements very slowly and
gradually.
Unfortunately, many of the applica
lions for loans are not people who
want temporary banking accommoda
ton for three or six months and art
quite able to meet their maturity dates
but are from those who really need per
manent capital. They are busted ant
they want someone to stake them to
new start. What ther really seek IS
partner to furnish them with longtime
capital. But depositors hsist upon be
ing paid on demand. and. therefore. 4
! -. L. ls.. L.