Milford chronicle., 1934-09-14
BANKING FOUND
INCONSISTENT
Ed Perkins Wonders Why
Poor Paying us. Bonds
Are Preferred To His
Gilt-Edged 6 P. C. Loan.
This Is An Article Written BY Edward
M. Perkins, Editor OF The Leroy
Gazette News. And Appearing in
That Paper August ts.
In PASSING

l.
said Consistency thou art jewel
...or words to that effect. and my
book of quotations is not at hand
at this moment regardless of who
gave voice to these words. he may
be credited in pTesent-day parlance
with having said an earful" most
all of us get crOss-eyed in our
thinking and our PHILOSOPHERS as
they are applied to our living. this
not only applies to individuals hut
to governments and nations as well
take for instance our banking
system, either state or national.
two or three times a year represen-
tatives of these systems come
around to the banks identified with
their particular system and make an
examination. among other things
these examiners go over the loans"
and they come to the note of Ed
Perkins.
Note Well Secured
The history of this note indicates
that it is cOllateraled with securi-
ties of a nature that assures the
banks being paid in full in case it
elects to crack down" on said Per-
kins. there is a further record
showing that the interest has been
paid promptly ON time and that up
until the depression blew into camp
regular deductions had been made
on the principal of the note.
What's the matter with this guy
Perkins," asks the head examiner,
lis he getting lazy, neglecting his
business, or just gone to sleep on
the job? There have been no pay
ments on this note the past two
years. 1t has become a capital. long
time loan and we must insist that
regular payments be resumed on the
principal at once, or the note paid
in full"
In the process of their examina-
tion these examiners so over the !
bond portfolio of the bank. this |
word portfolio doesn't mean a darn
ed thing in actual application. it |
is Just a nice sounding term.
Government Bonds o. X.
Bonds are seldom. if ever, con-
tanned in portfolio. which is pre-
sumed to hold papers in loose AID |
fiat condition, but are closely bun
died and stored in the money safe |
in the bank vault amount the |
bonds are several Governments"
which mature ten. 20, 80. 40 or so |
years hence. there also may he
municipal and industrial bonds !
which likewise are not to be paid /
within the lifetime of the present |
generation these bonds are peach
es and cream to the eXaminers-a
regular Michael Angelo picture in
their eyes. the Governments" are
a sacred thing to he revered beyond
and above the point of super-excel-
lence even though not one penny on
the principal is to be paid in so
years. it would be rank blasphe-
my to even think of them in terms
of longtime capital loan, let alone
mentioning it. "A splendid list of
bonds" they say to the banker, "a
splendid list.
Placed On "SlOw List"
We are glad to see you holding
so many Governments. We are plac-
ing this man Perkins on the slow
list until our next examination. If
substantial reduction is not made
before our rPXt visit we will have ,
TO insist that you crack down on
him"
Meantime Perkins gets cOurte ,
Gus little note from the bank, ask
ing him to step around to the pres
ident's desk the next time he is in
.. for three years he has been
q oh tooth apftu IN kaan hic |
business on an even keel. he has
every possible economy in
the operation of his plant. taken
bare living wage for himself. paid
lis emplOye ees every week, met his
current bills, maintained his credit
with the trade and paid his banker
6 per cent interest on his loan ,
promptly every three months. in
addition to this he has extended the ,
credit and granted additional time :
to some of his customers who have
been down on their luck"--cus- :
timers he knows personally and for
whom he has much sympathy in !;
their period of financial trouble. .
Told To Reduce Loan g
All of this was done without bor-
rowing any money because he hes
tated to attempt to increase his
borrowing in the face of general .
. he is told by his bank -
ar that representatives of the ma =
ional or state banking departments :
insist that from now on regular re- 7
iuctions be resumed upon the prin- :
,ipal of his note. n
The banker says he is sorry, as he
s. but unless he follows the orders
If the examiners their bosses will
make it very embarrassing for the
,ank. Perkins goes back to his S
tore, his plant or his Office to think \
hings over. he picks up the paper t
md reads that the government has
ust sold half billion dollars p
Forth of bonds paying interest at t,
# 21a per cent. not a penny of the a
of these bonds is to be 7
aid until they mature in 40 years n
nd the money is to be used in tall
ng up a government business that S.
consistently running behind. v
Hard To Figure Out
The paper further informs Per- Il
ins that the money is to be used d
! helping the forgotten man who
out of a job or being chased by n
/ luck. he also observes that the tC
Onds were taken by banks which d;
re paying more interest to their
epositors for money on deposit de
ian they are receiving on the in