The Western news. [volume] (Libby, Mont.) 1933-current, 1939-08-10

Following is Mr.. Schurch's prize
winning essay:
Three fundamental factors gov.
ern bank or any other agency
which lends money in its decisions
concerning prospective loans. They
are the character of the person seek
ing the loan, the ability and capacity
he has for making money, and the
security or capital that the person
has to back up the loan.
! Of these three factors the char
acter of the person is by far the
most important. Ordinarily Mr..
Smith the banker, knows Mr.. Jones,
/ the person to whom he is lending
/ the money, either personally or by
having done business with him. In
this case the character of Mr.. Jones
is already known to Mr. Smith Even
| If Mr.. Jones has not done business
with the bank and Mr.. Smith does
not know him well, it is the BUSH
ness Of Mr.. Smith to know the char
acter Of Mr., Jones Everybody in a
community is a potential borrower
Of money from the bank; therefore,
Mr. Smith should have general
idea Of the character of most of the
people in the community If Mr..
u Smith is not sure about Mr.. Jones'
character. he can usually get Mr..
Jones credit rating from the local
] credit association. Sometimes a per-
sons credit rating is not good
index Of the persons character, but
Il usually is of some help to Mr..
Smith
II Mr. Jones expects to get loan
from the bank. he should have a
good average character. He should
be industrious and his honesty
should be above any doubt. Mr.
Jones should also be of the saving
type. A life insurance policy or a
good bank balance is big help to
Mr. Jones in securing a loan De
pendablity is also a major factor
Of character A good character will
do more for Mr. Jones than any
other thing.
Another factor which must be
considered is Mr.. Jones ability tc
handle money and his capacity tc
make more SO that he will be able tc
4, i1Pdf tli1 Aodli l4i jules dDllllf
! to handle money can usually be
! Judged by the amount of money he
has saved or by the amount of prop.
erty he has. His capacity to make
more money will depend on the type
Of job that Mr. Jones has or on the
type of business that he operates
II the amount of money to be Dor.
roWed is large, Mr.. Smith, the bank
, er, also has right to know what
the money is to be spent for. Mr.
Jones has a better chance to OBJ.
tain the loan if he is going to use
! 1t to build up his capacity to make
more money. Mr.. Jones should
have a fairly good business or al
least good steady job to be able
to get loan Of any size Without
one of these he must have saved {
! part OF the money needed before he
can get the loan.
, Capital or security is also neces-
sary factor to be considered in the
case of large loans in particular
Security for loan is usually moi
necessary if small amounts of money
are wanted, especially if the per.
son lives IN the community and
works there. With large amounts al
stake the bank must take special
precautions to insure the repayment
of the loan in case some unforeseen
difficulty arises. In this case Mr.
Jones is asked to sign mortgage
on some Of his property. This is
: not a sign that the bank doubts Mr.
Jones honesty but is just a pre-
caution on the part Of the bank.
Property which can easily be sold
is usually preferable but real es-
tate is also a good form Of secur-
Iity. Mr.. Jones must have ample
security to obtain a large loan al