Did you know before government intervention and the Fed that the majority of banking was a charity business meaning no interest if any. It is funny how the statists try and change how things actually worked in the 1900s. This is an excert from a class in Michigan. The truth is this, according to R.D. Wadhwani In industries such as healthcare, education, agriculture, utilities, social services, and personal finance nonprofits(charities) played pivotal roles in innovation and market development. Now listen to the modern statists talk about the banks. Many farmers had to obtain loans from local bankers to buy land, equipment, animals or operating expenses. This was always a dreaded occasion because the banker had control of your farming destiny. This was before the days when bankers learned to treat customers in a friendly manner. Most small town banks were small in size, also. In the front of the bank were two or three tellers windows. Usually only one was available for service. In the back, behind a short wooden fence, was a desk with two hard wooden chairs in front of it. Behind the desk sat the bank owner and president, in a black business suit with a white shirt and tie. The farmer and wife would approach the fence and be invited in to sit in the chairs in front of the desk. The farmer would ask for the loan and the banker would immediately ask what it was going to be used for, how it would be repaid, and what the farmer had that could be used for collateral. The farmer had to have a good reputation plus good collateral to get a loan. After signing their lives away the farmer and wife might be granted the loan. Until it was repaid, the loan would be a constant worry. Bad weather, diseases, and many other things might intercede to inhibit repayment of the loan. Being in debt was a condition to be avoided if at all possible. Bankers were viewed by most farmers as people who would take their farms if the loans were not promptly repaid. This was before the Federal Reserve System was established. There were no agencies to insure a bank. The banker was often loaning his own money, so he looked at collateral very closely. Collateral was any possession that had cash value, including animals, equipment, land, or future crops. The banker would usually know personally the quality and value of the collateral. If a crop was mortgaged, the check from the sales of the harvest had to be taken directly to the banker. No mortgaged collateral could be sold without the permission from the banker. From the University of Michigan(glad I choose differently).
Posted on: Tue, 09 Sep 2014 17:50:41 +0000
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