The corner-stone of credit science may be said to be the requiring from borrowers of statements of the conditions of their affairs. This has now become an accepted custom in the relation between banks and borrowers on commercial paper. It has come to be recognized that the practice is of value to both the bank and the borrower, and this may be considered the reason for its success. Furthermore, the making of statements oftentimes renders concerns themselves aware of weaknesses in their methods of operation, financial practices and results of business. The banker, having a substantial interest in the success of the borrower, may frequently give wholesome advice or timely warning from his wide experience in commercial affairs and his foresight in monetary matters.

There is a distinct parallel in the results that have worked out from the practice of giving statements, to the results with which we are familiar in the methods of the national banking system. Here statements of conditions and bank examinations have resulted in wise improvement in our methods, in wholesome safeguarding of our funds, in conservative financing, and in general advantage.

Again, there is a parallel in the results which have developed from the mutual relations of manufacturers and the factory mutual insurance companies. Here the companies called for improvements in buildings and equipment, which have rendered fire a remote contingency. Whoever doubts the joint interest of such a movement has never experienced the paralyzing effect which a fire has upon the affairs of any concern. The statement of condition has come to stay, and is fundamental in credit matters.