The Guardian And Evening Star, with which is incorporated the West Coast Times. FRIDAY, SEPTEMBER 10, 1926. ECONOMIC CONSIDERATIONS.

Hokitika Guardian, 10 September 1926, Page 2

The Guardian And Evening Star, with which is incorporated the West Coast Times. FRIDAY, SEPTEMBER 10, 1926. ECONOMIC CONSIDERATIONS.

In all the work of standardisation and applied economic but little attention has been given, says a financial journal, to the puzzling problem of causes of business failures. Bankers more than aiiy other one class of men should be acquainted with some of the reasons why failures occur for banks have direct relations with practically every enterprise, regardless of its prosperity or straightened financial circumstances. Indeed banks are beginning to look into this matter themselves. The vicepresident of the Citizens’ National Bank. Los Angeles, in a recent address before the credit section of the American Institute of Banking, said that one of the most expensive fornts of waste in industry, is the un-neces-sary failure of business concerns. Eighty per cent, of the failures recorded by Bradstreet, lie maintained, were due to conditions inside the organisations and therefore preventable. He further asserted that if banks re-

gnrded danger signals which come fo them as to no one else, the hank might find it possible not only to protect its customers by watching these signals, hut also to assist the business itself by discussion with the executives. lie pointed out one fact to which hut little attention has been paid, but the truth of which cannot he denied. This is that “some failures take place through no fault of the individual, hut due to changes in the larger economic situation in the industry, the locality, or even the national and international situation. In 1920 there wore many failures of this character.” Tn general, however, success or failure is determined by the state of affairs in each individual business. Incompetence and inexperience are the commonest troubles, though many failures occur through unwise extension of credits and speculation in inventories. In each case a departure from sound business principles will he indicated by a study ol the statement of the business, by the enquiries that come to the hanker, by official records of assignments or mortgages, and other channels. Up to this time failures have been viewed mostly from an after-the-fact standpoint. Tito time has come when the preventive theory, which is-gaining much ground in medical practice, should lie applied to business as well. The average business man has little time, and indeed lias had no preliminary technical training, to fit him for the task of surveying world conditions which may .si>dl prosperity or ruin and disaster for him. It is not necessary that he have this training. That is the work of specialists. and particularly of financial specialists. Ranks themselves are realising the fact through a larger employment of men whose duties consist in assembling facts and figures which have a common meaning. The literature put out by some of the greater institutions in rising to the dignity of the university grade, hut fortunately without- its technical and somewhat advanced language. The work which these institutions are doing is having a splendid influence on business at large. Coming down to smaller facts, and including larger ones as well, it is possible for the sympathetic and friendly bank officer to point out to the client sins and errors in his own business which hear the seeds of grave consequence. A decade or two ago the average hank would not have considered this a part of its mission. It would have regarded the offer of such advice as an impertinence and an intrusion on the customer’s own affairs. To-day banks are not only teaching such services to customers hut are making public their desire to extend and expand it. Business interests are reaping the profit. The reward to the bank conies from more stable conditions that it helps to create, and probably last, but not least, in the realisation that the institution lias performed n real service to society.