Peter Hays: "I was director of a small literary publishing company in Vancouver, British Columbia, called Talon Books. Each spring our cash flow dried up, as we waited for bookstores to pay for shipments of Christmas past and as our government subsidy grants were always in the proverbial mail. Each spring my partners and I had to go to our local branch of the Bank of Montreal and get a loan of $10,000 to tide us over. The company had been doing this for seven or eight years with clockwork regularity, taking as security a $10,000 savings bond deposited each time by one of my partners' mother.
"This particular spring in the late 1970s, our printing bills were heavier and our deficit yawned wider than usual, so the company needed $15,000. But our security bond was still only $10,000. We thought that the bank manager, who saw our steadily increasing sales figures year in and year out, would let us have it. We were wrong. He shifted uneasily in his leather chair and waited to see if one of our parents would come up with the family jewels. Finally one of my partners had an inspiration: 'What about our inventory? Why can't we borrow against our inventory?' 'What inventory?' The man seemed mildly interested. 'Well, we have a quarter million dollars worth of books. That's why we have all these printing bills--we publish books.'
"So these books,' the banker proceeded cautiously, 'have printing in them?' 'Yes, that's what we manufacture.' 'I cannot give you the loan,' he said with an air of finality. 'The paper would have been worth something, but you've spoiled it by printing on it.' A couple of years later, as a result of this incident, I decided to leave Canada. My wife and I started a small publishing house of our own in Los Angeles. We were new in town, with no track record, but we had one manuscript we needed to get printed. We went to see the loan officer at City National Bank on Sunset Boulevard, where we had opened an account. We presented our project and outlined our prospects. We asked for $15,000 and got it---on our signature."
Sources
Peter Hays, Book of Business Anecdotes, p. 30
