The Dorset County Express and Agricultural Gazette.
Dorchester, Dorset, England, 1861-03-05 00:00:00

BANKS AND BANKING.

[roesre AerieLE.)
Tee late THOMAS DR QUINCEY once wrote an
admirable essay on "Murder, considered as one
of the Fine Arts." Some five-and-twenty years
ago the "Quarterlies" used to give us elaborate
disquisitions on the crime of forgery, and its
proper timed of punishment. Mr. EDwARD
(huttoNIVSKEFIELD sometime since published
his views on the plinishineet of death ; and the
late lamented Commissioner PHILLIPS wrote his
"• Vacation Thoughts" on the saute gloomy sub-
ject. The ARCHBISHOP of DUBLIN is the author
of a standard work on "Secondary Punish-
meets ;" and we are indebted to Mr. JARDINE,
a Metropolitan police magistrate, for a lucid
history of the use of torture in judicial proceed-
lugs in this country. The greatest scholars and
legists have not, in any age, thought it beneath
their dignity to analyse the ceases and the
effects of crime. We have BRCCARIA on "Les
Whits et lea Peines ;" VOLTAIRE'S commentary
on ItsceAßlA ; HENRY FIELDING on the sup-
pression of highway robberies; and Couietious
on maritime deprelations. There exists, how-
ever, a great desideratum, and one which we
much a ish to see supplied in this department of
the world of letters, and that is a candid
inquiry, by some one well versed in the subject,
into the philosophy of cooking accounts without
detection according to the HLDPATII and Put,-
LIMIER school. Dishonest, crafty, and clever,
the disciples of those wholesale siviudlers seem
to be everywhere, and their detectors nowhere.
The recent revelations of a fraud committed
011 the Commercial Bank of Loudon by a ledger-
clerk named DCRDAN, reflects great negligence
and culpability on the part of the Directors who
were the trustees for the Shareholders in that
establishment. That there were no signs—no
symptoms of anything going on wrong seems
almost incredible. Hare was a single, humble
biiiik clerk, who never touched a sovereign on
the counter or took a bank-note front the drawer,
working in a corner behind his ledger, the
()illy scoundrel amongst holiest men, with the
assistance of HoLcaorT, a confederate out of
doors, drawing at his will sixty or seventy
thousand pounds front the bank. And this had
been going on, we are told, for the last eleven
years, without the slighest suspicion of his
honesty. The thing seems, at first sight, income-
prelleesible how it mild be done ; and yet, like
many a legerdemain trick, when once 'explained,
is easily understood. To this ledger-clerk be-
longed the sole ditty of transferring front the
pau-book to the books of the bank the accounts
of the customers. The customers, of course,
examined their pass-books and found them cor-
rect. The manager and auditors examined the
books of the bank and found them correct also.
But they were correct in relation to very dif-
ferent testa—the pass-books representing the
actual transactions between the customers and
the bank ; the bank-books nothing that was
true, but the total of the sum* tbat had been
received and paid. In illustratiou, let us suppose
that the hank had a certain number of customers

—Big 500—one of whom was the frandident '
chat, whose amount was kept in Iliitcnoer's
Mime. All that he had to do, when transferring .
the accounts irons the pass-lsouks to the bank
ledger was to enter, say, A:10 less against each
customer's name than was showu by the 499
pass-books, and carry these 499 ten pounds to ;
Hothatorr'e account, he would then have
£4,990, which he could draw out at any time.
He could do this because the cashiers, when in
doubt of a customer's balance, refer not to that I
customer's pass-book but to the bank ledger.
All that lie had to do was to take care that no
elle transferred any ace: nut from the pass-book
to the ledger hut himself, and to guard against 1
reducing a customer's account so low that the
cashiers, after referring to the ledger, should
refuse to change a cheque when presented.
While he could manage these things detection
was impossible, as it would seem that in
examining and auditing the accounts of the
Commercial Bank the pass-books and ledger
were never compared. Several of our contem-
Formica, in commenting on this subject, have
condemned the Directors for the lax manner in
which they discharged their duties towards the
shareholders, but none of them seem to have l
I made the slightest allusion to the effect the '
serious fraud would have upon the depositors I
and other customers of the bank, provided it
had not merged into the London and West-
minster This omission is indirectly calculated
to throw discredit on some remarks we have
made in former articles respecting the safety of
the J • t-stack system of banking.
Now, mi referring to the financial statement
put forth by the Directors of the Commercial
Bank since the accounts have been examined,
we 611 d that the amount embezzled was about
£67,000, while the reserve fitiel amounted
to £75,000, or 0,000 more than had been
abstracted by DURBAN. The autmcribed capital
of the bank was £1,500,000, of which only
£300,000 was paid up. The liability to customers
was i'910.000, but as the current business of the
bank was supposed to have been very safe,
there is no reason whatever to doubt that hail
the fraud been ten or twenty times the amount
it was, the customers could not have suffered
any loss. The Directors, in allowing the bank
to collapse, attempt to justify their conduct by the
fact that some four years ago the establishment ex-
perienced some discredit by a series of malignant
and wholly unfounded ruinous!' from the effect
of which it was but slowly, although steadily,
recovering. Under these circumstances, if no
timely plan for averting a run had been adopted,
a sudden sacrifice of securities might have been
necessary, which, with money at 8 per cent.,
could not fail to have involved heavy loss, and
cons&ineittly an amalgamation with the London
and Westminster Bank was resolved on. But
the subject of amalgamation was one which
mainly concerned the proprietary ; it was done
that they might receive back the whole of their
paid-up capital ; but had it not taken place the
customers would then, as now, be safe.
Contrasted with this Commercial Joint-Stock
?auk, we have another case of a private bank, a
meeting of the creditors of which to,k place
about BOr 10 days ago. Mr. JOHN CROSBY
(the banker at Kirby Thorpe) was, during his
lifetime, a gentleman highly respected by all
classes of society, and his solvency doubted by
• none. Mr. CROSBY died suddenly at his resi-
dence on the 12th of February, and upon his
executors going to examine the books after his
death they found there was a great deficit. A
meeting of the creditors was held on Saturday
se'imight at the George Hotel, Peurith, when it
was stated that the liabilities amounted to
£411,000, and the assets were £90,000, leaving a
deficiency of £42,000. It is generally expected
that the creditors will receive only about 55. in
the pound, and it is said the failure will cause
the greatest misery in the neighbourhood where
Mr. CROSBY was held in high esteem. The
number of depositers was large. Many small
fanners who had placed their money in the bank
to be ready for their rent-day on the 25th of
March sill be almost ruined ; others who had
taken farms had their money accumulating in
the bank, as they thought, to stock them; farmn
servants had deposited their savings in Mr.
Caosev's hands, and have lost their all. The
losses will be heavily felt in all the country
side. It la supposed the insolvency must have
been for a long time appmaching a crisis, but
the tact was shut lip in Mr CROSBY'S own breast.
Even his own son, who was in the office, not
being permitted to examine the books, did not
know of the insolvency of the bank ! Here.
then, we have another remarkable instance of
the hazard many people run in dealing with •
Private firm. We have, it is true, travelled a
conaiderable distance for this illustration of the
posl'on we have taken in our present series of
art cles on " Banks and Banking," but who can
tell when the next blow will be struck, or how
near it will he to our own doors? While Joint-
stock Banks have been extended on every hand,
three private banks which, six weeks ago en-
joyed the entire taanfidence of the people in their
respective neighbeurhoods. have ceased to exist.
The last is that of Mr. HEATH, the banker of
Andover, whose business was en Friday last
transferred to the Hampshire Bankisig Company.
Nor need these things be wondered at. The
interest of the customers of Joint-stock Banks
are strictly guarded by Acts of Parliament,
while all the security those of private banks
hive is the cdulidence they place in the respective
firms with which they transact business. The
only thing that excites our astonisument is that
so many private banks still exist. " Ichabod"
however, is written over their doors, and the
time may not be so distant as many suppose when
they shall be known only in the history of the
past.