Part II Qualitative Aspects of Bank Credit

PART II QUALITATIVE ASPECTS OF BANK CREDIT CHAPTER VII RECENT CHANGES IN OUR BANK CREDIT ARRANGEMENTS The principal changes in our bank credit arrangements since the Civil War and more especially during the last twentyfive years, relate to the form of the bank borrower's obligation, the development of the note brokerage business, the rise of the bank credit department, the rise and expansion of the new business department, and the establishment and operation of the Federal Reserve system. An account of some of the more important aspects of these changes, following the order just given, may well serve as an introduction to a somewhat detailed analysis of the factors underlying and affecting the quality or soundness of bank advances. Evolution in the Form of the Borrower's Obligation The form of the instrument of our bank loans has undergone very appreciable change during the last half century. That change, however, has been far from uniform in time and place and defies treatment that is at once concise and definitive. An exhaustive discussion of this aspect of our subject, which would be in itself a fit topic for a volume, must give way to an account of only the main modifications and developments in the form of our banking paper.