Certified financial statements as a basis for credit;

              86 HASKINS & SELLS September
Certified Financial Statements as a Basis for Credit
BY JOHN RAYMOND WILDMAN
A Paper Read Before the Utah Bankers' Association, Ogden, June 19, 1920
THE way from hiding shell money in the
crevices of rocks to the gigantic and
versatile financial institutions of to-day is
a long one. The sole idea in the former
situation was to preserve the funds and
protect them against loss. The modern
financial institution maintains the same
idea but at the same time makes the funds
available for use.
The old idea that a bank was a place in
which to keep money has given way to a
new order of things wherein the bank has be­come
an institution in which to accumulate
funds in order that they may be made avail­able
for the financial needs of the country.
The country owes much to the banker.
He has been an important factor in the
expansion and development of business.
He has become an instrument of service in
financial matters, locally, nationally, and
internationally. He gives advice as to
investments, taxes, general business pro­cedure,
and sometimes matters of account­ing.
He does all this freely and the service
is gratuitous.
The banker makes most of his money
through the loaning at interest of funds,
which have been deposited with him and
for the use of which he suffers, generally
speaking, only the expense of keeping the
depositors' accounts.
But the banker has certain duties and
responsibilities. To his depositors he is
liable for maintaining intact the loanable
fund constituted largely by their deposits.
To the stockholders he is responsible for
the integrity of their capital. To the pub­lic
he may be regarded as having the moral
obligation of acting as controller and
regulator of industry and business.
Good judgment is necessary if the loan­able
fund is not to be impaired through
losses. Courage, vision, and public-spirited
interest are necessary if the banker
elects to play his part in regulating financial
affairs as opportunities offer.
Some few years ago a previously un­known
individual, under the cloak of
corporate organization, opened a new de­partment
store in New York City. The
show windows contained goods which were
cheap looking and tawdry. The advertis­ing
copy was undignified and unconvincing.
Everything about the store contributed to
an atmosphere which was anything but
first class. The establishment continued
only a few months. The company failed.
The failure disclosed the fact that three
prominent New York banks were creditors
in the amount of about three hundred and
sixty-five thousand dollars, no part of the
loans being secured. Fortunately the re-