IN DEFENSE OF COMMON SENSE – On Line Edition
# 3 – “The way it was…”
Mid-October found me motoring down scenic US 52 to a speech at a festive Franklin County gathering in charming Brookville. Along the way, Mother Nature displayed a virtual greeting card of vistas painted in soft hues of brown, gold, and orange. Occasionally, a bright crimson tree popped up — a delightful surprise in a pleasant, but predictable woodland palette.
Passing through every small hamlet along the road was thought provoking, but never so much so as when I drove through New Salem. On the east side of the road stood a solid building. One story high, its architecture spoke volumes. Heavy limestone and pale brown brick had stood the test of time and whispered of the days when local businesses thrived — unthreatened by the huge enterprises seen today.
Mentally, I pictured early automobiles parked in front. Passengers alit and drew back the heavy front door only to disappear inside with the observer left to imagine what happened next. No doubt, management serviced patrons that varied in background, occupation, and social station.
Theirs was, indeed, a valuable relationship. Similar ones are rare today. In fact, I wonder — if pressed — if I could name one with which I am familiar. You’re probably wondering what kind of a business this was. I’ll get to that… Patience, please?
It has been at least two years since I focused on what I truly believe to be the truly endangered species. Of course, I’m speaking of small businesspeople. Hardy souls who worked very hard to build their businesses and took such personal pride in accomplishment are disappearing with every passing day.
The pleasure of doing business with an owner and staff who know you by name is — in most cases — doomed to be nostalgic. It should be a fact of life today, but it is not. When you consider all the financial troubles facing America, it doesn’t take a rocket scientist to see that the problem roots in not that we still do business, but HOW we do business.
Today, countless entities still offer the services that beckoned people to that little brick building. Folks still walk in and sit down across the desk from the person in charge. The difference is that today’s expectations are low and results are abysmal. The security borne of successful transactions in that little building built confidence in families and extolled thrift. Even more important was the fact that parents, living by example, not only passed on solid values of hard work, honesty, but also reinforced the importance of fulfilling obligations.
Oh, would that it were true today! Yes, the little brick building encouraged folks to do the right thing. It instilled in them immeasurable self-respect and personal pride.
Honesty and accomplishment are values worth being chiseled in stone, and it didn’t escape me that is precisely how the little building proudly displayed its name to all passersby — chiseled in stone: NEW SALEM BANK.
Yes, things were far different when small local banks held sway over home and farm loans. Once upon a time, people saved their money and small banks helped them buy land or a home, start a business, or simply live out a dream that required more money than they could scrape together on their own.
The scenario was predicable for generations. A borrower needed about 20% down to secure a loan. A good job and a solid credit rating were important, but, undoubtedly, there were exceptions. Credibility counted for something.
I imagine that people who had experienced “money problems” did receive loans when a bank official recognized their personal mettle and merit.
One serious look at the “no money down, no interest, no payments for a set period of time” loans that spawned the financial morass that spiraled out of control this year makes someone who understands economics cringe.
What responsible bank loan officer would devise such a system? Probably very few…. However, government pressure and a social bent that people had a “right” to home ownership relegated these loans were to the equivalent of throwing gasoline to an already burning fire. Whoosh!
A small banker would never have considered loaning money without solid collateral, but the world of the small banks ceased with deregulation and buy outs by bigger banks.
Perhaps if we had failed to allow bank mergers, this would never have happened. I remember when women once “bundled” their babies — tucking them in tightly so that they didn’t roll around in a crib or cradle. How appropriate that “bundling” was the term used to package high-risk loans and sell them to larger banks. Like the baby in a bundle, banks that bought these loans found little room to move.
Face to face banking always works, but when large banks — virtually salivating at the prospect of quick profits “buy up” paper from smaller banks, well, you get the picture….
Balloon payments come due. Homeowners default on mortgages. Banks foreclose. Cash flow evaporates. Banks fail — and along with them — America fails to live up to the work ethic that built her economy. Oh, for the days when you had to “face up” to your ability and succeed only to the degree that you were able.
Once upon a time, that wasn’t just a pipe dream. It was — as the title implies — the way it was…. Think about it.