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Nursing an Account

banker, bring, money and debt

NURSING AN ACCOUNT. An operation which, on the one hand, may result in a banker extricating himself from malting a bad debt, but which, on the other hand, may result merely in throwing good money after bad. It is a common saying that the first loss is the least, but as no banker relishes the idea of a bad debt it requires a considerable amount of courage to face a debt which, to all appearances, is lost money. The tempta tion is very strong " to nurse " the account ; that is, to endeavour by gentle treatment in various ways to bring it back again to healthy life, in the hope that the money, or, at any rate, some portion of it, may ulti mately be recovered. A banker may try to get a reduction of the debt by periodical instalments, or to get the customer to dispose of some of the securities, which might not be so advantageously got rid of in the event of the customer's failure. He may also endeavour to bring about a change in the nature of the bills which are offered for discount by gradually getting rid of those of an unsatisfactory nature. A banker may also look to his securities and see what improvement can be effected in them. So long as a banker does any of those things in his efforts to bring the account into a better condition he is not, in an ordinary way, putting himself into any worse position than he was in when he first discovered the unsatisfactory state into which the account had drifted, but when he is tempted to lend more money under the promise of some large reduction in the near future, he embarks upon a rather perilous voyage. The additional

loan may, in many cases, be made against a deposit of further security, but, unless the security is of such a nature as to be easily realised, the end of the matter may be worse than at the beginning. The history of many banks which have had to close their doors reveals the same story of some large over drafts which the banker had been nursing in the fond hope that he might eventually. bring matters right.

Whenever the question of nursing an account arises. it is highly necessary that a banker give it a most careful consideration, especially if further accommodation is required under the promise of a large reduc tion or the bait of additional doubtful security.

In the words of the late J. W. Gilbart (" History, Principles and Practice of Banking "), " we do not mean to imply that in every case it is inexpedient to ' nurse an account.' This is frequently done with the best results ; but the determina tion to attempt it must be governed by circumstances, and in view of the fact, as experience has proved, that it is always a dangerous movement, and that the chances are always very much against the success of the result."