SIXTH ANNUAL YEAR BOOK — PART VIII. 87& 



money it is certain that the farmer is thriving, and, on the contrary, 

 when you notice banks are not making any loans and show small cash 

 reserves, it is a sure sign that the community in which the bank is located 

 is not prosperous at that time. 



This applies with greater importance to the cily banks than it does to 

 those in the country. When Wall Street speculators see that the bank 

 statements show no surplus funds, he seeks to unload his investments or 

 stops buying, and this forces prices down and vice versa. Stock brokers 

 and moneyed men watch the bank statement very closely, for by it they 

 decide their course of action. 



The bank draft come into such universal use that it is bought almost 

 exclusively for sending money to all parts of the world. Arrangements 

 have recently been made with bankers of all foreign countries by which 

 the draft you buy at your local bank brings the actual spot cash to the 

 very door of your relative or friend in the old country. All kinds of 

 business men use the bank draft for paying bills in any part of the 

 country, and have found it to be the cheapest, safest, and most conven- 

 ient way of sending money. The banker's business is to handle money 

 to the best advantage consistent with absolute safely, and they have 

 covered the earth with so complete a net work, that to transmit money 

 to any part is a very simple and inexpensive matter. 



The great point that should be emphasized in connection with banks 

 is that when the money of a community is deposited in them, it works as 

 a great advantage to both depositor and borrower for, ordinarily speaking, 

 a bank has money to loan in proportion to its deposits. This matter of 

 depositing money with banks is putting money into circulation in its. 

 truest and fullest sense, for the banks will immediately loan a part of 

 the deposit. Furthermore, the more money banks have to loan, the lower 

 interest rates become to the borrower, and most people have to borrow 

 money once in a while, and many find it profitable to borrow money 

 most of the time, for they can make a nice profit above the interest they 

 must pay. If money was to be kept in hiding, like the custom was not 

 so many years ago, there would be little use for banks, and those who 

 wished to borrow would have to go to some friend or relative. This, 

 however, has always been a rather unsatisfactory way of borrowlng,^ 

 for often the lender needs the money when it is impossible for the bor- 

 rower to pay and it works a hardship to both. 



The relation between farmer and banker should be one of a confiden- 

 tial nature, for it is only by close acquaintance that either gets the 

 fullest confidence in the other, and confidence is a very essential thing 

 in business. Without confidence it would be impossible to do any credit 

 business at all. We must have faith in each other, and it is just as neces- 

 sary that the farmer have confidence in the banker as it is for the banker 

 to have confidence in the farmer. The importance of good credit can not 

 be overestimated and should be guarded as zealously as any other 

 possession, and if the banker loans you money he compliments you in be- 

 lieving that your note is as good or better than the cash he hands you. 



