A large concern was pursuing this narrow policy. Among other things it made a practice of borrowing large sums in other cities at four or five per cent. when the local rate was six. The recent panic came on. Money advanced to fifty, to one hundred per cent. in New York. The local banks were having all they could do to take care of their own good customers. The result was that this firm came to the verge of an assignment. And, if it had not happened that the banks of its city did generously come to its rescue, it would have collapsed. It is well to remember, that, while the rates of interest in New York are temptingly low at times, they fluctuate violently and often without warning; also that the bankers in a strange city have no personal interest or local pride in your success or failure. Money is only a commodity, and rates of interest are governed by supply and demand. Now the _supply_ of money in the New York banks varies tremendously, by millions of dollars in fact. This variation comes from many causes. On the other hand, the _demand_ for money in New York is constantly changing. The reasons for this are manifold. But in the smaller cities, both the supply and demand are much more uniform and steady. Hence the rates of interest, outside of New York, are much less liable to change. Therefore, unless the demands of your business exceed the banking facilities of your town, it is _very_ advisable for you to confine your loans to the local banks. The loan department is restricted by certain laws, just as the other departments. State and Savings Banks, and Trust Companies must obey the laws of their particular State, but any bank having the word "National" as part of its name, or the letters "N. A." (National Association), or the letters "N. B. A." (National Banking Association) following its name, must adhere strictly to the provisions of the National Bank Act. The Congress of the United States has forbidden the use of the word "National" as part of the name of any Bank or Trust Company which does not comply with all of the sections of the National Bank Act. As the statutes differ in each of the separate States, only the laws governing National Banks will be considered here.