Glacier County chief. [volume] (Browning, Mont.) 1931-1940, 1939-08-11
WINNING ESSAY IN
BANKERS ASSOCIATION
ESSAY CONTEST
Written by Kenneth Schurch
Senior, Powell County High
School, Deer Lodge


Three fundamental factors govern
a bank or any other agency which
lends money in its decisions con-
corning prospective loans. They
are the character of the person
seeking 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 we'll, it
is the business of Mr.. Smith to
know the character of Mr.. Jones.
Everybody in a community is
potential borrower of money from
the bank; therefore, Mr.. Smith
should have a general idea of the
character of most of the people in
the community. If Mr.. Smith is
not sure about Mr.. Jones' character,
he can usually get Mr.. Jones' credit
rating from the local credit aSSo-
citation. Sometimes persons cred
it rating is not a good index of the
persons character, but it usually is
of some help to Mr.. Smith.
If 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-
pendability is also 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 to
handle money and his capacity to
make more so that he will be able
to repay the loan. Mr.. Jones'
ability to handle money can usu-
ally be judged by the amount Of
money he has saved or by the
amount of property he has. His
capacity to make more money will
depend on the type of job that Mr..
Jones has or on the type of bust
ness that he operates. If the amount
of money to be borrowed is large,
Mr.. Smith, the banker, also has
right to know what the money is
to be spent for Mr.. Jones has a |
better chance to obtain the loan if
he is going to use it to build UP
his capacity to make more money.
Mr.. Jones should have a fairly good |
business or at least a 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 a ne
cessary factor to be considered in
the case of large loans in particu-
lar. Security for loan is usually
not necessary if small amounts of
money are wanted, especially if
the person lives in the community
and works there. With large
amounts at 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 a mortgage on some of his
property. This is not a sign that
the bank doubts Mr.. Jones' honesty
but is just precaution on the part
of the bank. Property which can
easily be sold is usually preferable
but real estate is also a good form
of security. Mr.. Jones must have
ample security to obtain a large
loan although it is not always ne
cessary for small loans.
As rule the bank will be glad
to give Mr.. Jones loan if MIR. Jones |
has good character and can show
that he has the ability to handle |
the money. OF course the bank |
cannot be expected to give Mr.. |
Jones all the money he needs for
his particular enterprise. 1t likes
to feel that Mr.. Jones is taking
part of the risk himself. The bank
will go into partnership with Mr.. |
Jones, so to speak, but it does INTO
Like to buy something for Mr..
Jones.
The bank is business concern
after all and whatever its decisions
may be, they are from a business
standpoint. Mr.. Smith, the banker,
cannot let his own sentiment enter
into a decision for in this way he
might endanger the savings Of his
depositors. The depositors' money
must be absolutely safe at all times.
This Is the principle that must
govern Mr.. Smith in all his deci-
sions concerning Mr.. Jones' loan.