I WANT TO TELL YOU ABOUT HOOKERS, $100 BILLS, ECONOMICS, DERIVED DEPOSITS AND OTHER GOOD AND INTERESTING THINGS.. HERE’S HOW THEY FIT TOGETHER.
I went to work in the installment loan department of the First National Bank of Miami in 1959. I stayed there for almost eight years working in a number of progressively more responsible jobs. This was the largest bank in the State of Florida with 1,000 employees under the same roof – it was before branch banking was permitted in the state.
They gave new employees classes on Wednesdays in the nice meeting room in the Personnel Department. (This is before we discovered Human Resources.)
One lesson was about Derived Deposits – Meaning that when we made a loan, the funds would wind up in a bank somewhere in town. If it was a cash loan the customer might cash the check and walk out but, before the day was done, it would be used to buy a washing machine, pay a doctor, buy a scooter or whatever comes to your mind. The money would mingle with other funds and go into someone’s bank account. Maybe even in our own bank. So we never minded when a customer took his loan proceeds as cash. We’d get it back eventually to loan again to another deserving customer.
By the way I met my wife Daisy over the phone while working at the bank. She and her first husband George Kruntz were expecting a baby at any moment when they applied by phone for a $300.00 loan to help with hospital expenses. They didn’t meet the bank’s stringent standards for an unsecured loan and I lucked out to be the one to call and turn them down.
She was really mad when I gave her the “no” news. She gave me a bawling out that I remember to this day. Sadly she and George had to go without the First National’s money. I recommended Beneficial Finance Company when she paused to think of some other names to call me.
We met in person in 1967 at work and married in 1974. It was probably 1999 or so when we remembered that conversation. She got mad again!
Here’s the story about the $100.00 bill ~
It’s a slow day in a little West Texas town.
The sun is beating down, and the streets are deserted.
Times are tough, everybody is in debt, and everybody lives on credit.
On this particular day a rich tourist from back east is driving through town. He stops at the motel and lays a $100 bill on the desk saying he wants to inspect the rooms upstairs in order to pick one to spend the night. As soon as the man walks upstairs, the owner grabs the bill and runs next door to pay his debt to the butcher.
The butcher takes the $100 and runs down the street to retire his debt to the pig farmer.
The pig farmer takes the $100 and heads off to pay his bill at the supplier of feed and fuel.
The guy at the Farmer’s Co-op takes the $100 and runs to pay his debt to the local prostitute, who has also been facing hard times and has had to offer her “services” on credit.
The hooker rushes to the hotel and pays off her room bill with the hotel owner.
The hotel proprietor then places the $100 back on the counter so the rich traveler will not suspect anything. At that moment the traveler comes down the stairs, picks up the $100 bill, states that the rooms are not satisfactory, pockets the money, and leaves town.
No one produced anything.
No one earned anything.
However, the whole town is now out of debt and looks to the future with optimism. That is how the world sometimes conducts business. THE HOOKERS DERIVED EARNINGS SAVED THE DAY!