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10 HASKINS & SELLS February Reliable Information Versus Faith BANKERS by and large ten years ago would probably have told anyone who asked, that bank credit was based largely on character. Some of them, if they had admitted the truth, would have confessed that many bank loans were made and denied on "hunches." If the complete history of bank credit granting could be accurately written, it would probably prove conclusively that many a banker has been a poor judge of character. Some of them would be willing to admit that the remark ascribed to the late Mr. J. P. Morgan, about preferring to loan a million dollars, without collateral, to an honest man, rather than ten thousand, on gilt-edged bonds, to a dishonest one, has been considerably overworked. There are still many bankers who loan on what they regard as intimate knowledge of a borrower's affairs gained through long association with him. There will always, in all probability, be cases of this kind. Reputation and standing in the community are enough foundation for some bankers to establish a liberal line of credit and loan on it to the limit. Character, confidence, capacity, etc., as the basis for credit, lend themselves admirably to alliterative speechmaking and inspirational essays on sound credit granting. The banks in the larger cities, and particularly New York, have discarded during late years the romantic philosophy of bygone days, and have taken to requiring certified financial statements with a careful checking of various aspects of the credit-seeker's condition and future prospects. A great deal of pioneer and constructive effort in this direction has been put forth by the Robert Morris Associates, an organization of bank credit men. The future holds great promise of improvement as a result of the work already done, to say nothing of that in contemplation. Slowly but surely banks in smaller cities and towns will be bound to see that what is good for the big city bank is good for them. A well-known concern of many years' standing, selling an article of the semi-luxury type, found itself toward the end of the year nineteen twenty-one in a condition where money was tight. Lines of credit with four banks in the home-town, a city of some one hundred and sixty thousand inhabitants, had been used to the limit, and even stretched some. The bankers were somewhat apprehensive as to their loans, and were demanding that they be reduced. New officers of the corporation took the situation in hand and developed a plan for relieving the pressure. The scheme assumed the form of going to banks in various cities and towns throughout New England, New York, and New Jersey, borrowing amounts ranging from five to fifteen thousand dollars and opening accounts with the understanding that a branch store was to be established in each place. This plausible story was accepted and the
Object Description
Title |
Reliable information versus faith |
Author |
Anonymous |
Subject |
Banks and banking -- Accounting |
Citation |
Haskins & Sells Bulletin, Vol. 06, no. 02 (1923 February), p. 10-11 |
Date-Issued | 1923 |
Source | Originally published by: Haskins & Sells |
Type | Text |
Collection | Deloitte Digital Collection |
Digital Publisher | University of Mississippi Libraries. Accounting Collection |
Date-Digitally Created | 2009 |
Identifier | HS Bulletin 6-p10 |