This is a fictional story, set in 1965.

It starts with a bright young fellow (BYF) entering his bank managers office. “Thank you for taking the time to hear my idea”, he says.  “I have developed this recipe, it’s mostly ground up corn and other stuff, I mix it up like waffle dough, and when I pour it out real thin on a really hot grill, it cooks and dries into a sheet which cracks up into pieces, like flakes, like this sample here” Offers sample to manager.  Manager tastes it, looks non-committal, bright young fellow says “Well, it’s a lot better in a bowl, with some sugar, that healthy natural brown stuff of course, maybe slice up a banana on it, or a handful of blueberries, slosh on some 2% homo.  People are too busy to cook breakfast these days, and here is a balanced nutritious breakfast in seconds.  I think there will be unlimited market for it”

So what do you want from me”, says the manager.

“Well, I have designed up a rotary dryer-flaker”, here BYF produces some neatly drafted plans for a mechanical contraption, “and Mr. Jim Cutsteel over at the blacksmith shop says he will build one for me for $3000. I would need an institutional – size mixer, and that costs $2000.  I can buy the corn and stuff already ground up, and my dad says I can set the whole thing up in his garage.  So I want to borrow $5000 to buy the mixer and dryer, then I can start boxing the stuff up and sell it.  As the market develops, I can work into a more industrial scale operation.  I need $5000” he says looking up expectantly.

Now we split into two scenarios. First, BYF is a Canadian.  He is talking to Cuthbert Pinstripe, manager of the local small-town (perhaps a northern Ontario mill town) branch of a national institution with branches all across the country; whose shareholders are mostly Canada’s wealthy leading families.

Cuthbert is a young bureaucrat on his way up, looking to be promoted to manage bigger branches, or an older bureaucrat already passed over for promotion and on his way down, either way not interested in anything out of the way which might put a blot on his resume. Cuthbert says, a little snootily “we only make business loans to proven businesses, and in any case we would need at least a mortgage on your dad’s house for security.  If you have political connections, you might get a grant somewhere.  Seriously, I suggest you get out of the kitchen and go get a real job, maybe working in the mill like everybody else.”

Now we will look at the second scenario, where BYF is an American. He is talking to Flashy Jack Shortnote, manager, proprietor, sometimes teller, and even occasionally janitor of his local, one-branch privately owned bank.

Flashy Jack says “Why, Billy Kellogg, I am sure happy to see a young fellow with some independent spirit and new ideas. I know your daddy and grand-daddy, and they are men of honour who do what they say they will do, and I am sure you are cut from the same cloth.  So let’s see, what can we do for you?”  Thinks for a minute, then goes on “I won’t lend you that money, because worrying about having to pay it back is too much of a burden on a start-up business.   Let me see, here is what I will do.  You will need working capital, so I will give you a revolving line of credit for $1000, so you can pay for your supplies until your sales receipts come in.  I will invest $1000 in your idea, and I will find 4 other investors with $1000 each.  Doug Pillpopper, over at the drugstore will come in, and I bet Bill Shortbottle at the liquor store would too.  If I lean on old Jim Cutsteel, he will probably take shares for $1000 of his bill.  We will incorporate a company.  It’s your idea, and your hard work to make it go, so you get 75% of the shares, and we will put up the money, so we get 5% of the shares each.  How does that sound?”

Bright young fellow, overwhelmed, says “Mr. Shortnote, that sounds just fine. Thank you so much for your help and generosity”, to which Flashy Jack replies, “Oh, it’s not generosity, it’s just business.  If you succeed, we might make a lot of money, and if you fail, the tax system takes some of the bite out of our loss.  Four out of five new businesses fail, but if we keep investing in bright young fellows like you, the winners more than offset the losers.  Good luck to you, now get out there and sell corn flakes”.

Remember, this fictional account is set in 1965. In today’s Canada, Cuthbert is gone, and BYF would have been dealing with Patty Puffdegree, Small Business Loans Manager, who would have had him fill out a multitude of forms and forwarded these to a central computer which would have issued BYF his rejection notice. And cancelled his credit card.  Even in the US, BYF might be rejected; independent bankers like Flashy Jack are becoming rare; most of their banks are bureaucracies like ours.

But let’s extend the story by adding another chapter. Suppose BYF was able to raise the capital he needed, perhaps a rich uncle lends him the money, and he actually gets into business.  In today’s world, he will face unbelievable hurdles in terms of food safety regulations, marketing boards, supermarket shelf space politics, all designed to preserve the market for the presently rich and keep the serf class in their place.  Unless his uncle also has political connections, BYF would be bankrupted without ever really understanding what happened to him.

So it’s a good thing Corn Flakes was invented in the US a long time ago.

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