The Express.
London, England, 1865-04-21 00:00:00

LIFEBOAT BERVICSIL —During_ the storms
Olio poi poor, 111/No 11110 «LLIa Mating Lllaboai
Instleolias naval eltpannas tem dlifinont w moor Gonda.
The Irlinallahrbrio 41110141 Id.. dd. In LW saw
redid so No La adddlos to gThatles
61,10 se row& be opring 111111 wreckod parrula
Mins% and other mom The Moo of Um
emsaalig AMAL Ur pelage Mr ASSIEITANCE.%7Z—bIe
Ohm be men the continued limy domande on the In
Ida lisbese eshattehmeents.
thsertbeteens tiollseed by Korn WM' and Co.. Maeda
and Co. °mita and Co., sad Ivy ail alb London and country
beakers. sad by the Bearstary,ll.l Levi; M.N., as the In-
seinsiloo. 14. Joisolrann. Adalp/01.

GOLD ORAINS.-JOHN BROOMS
to call the attention of the public to the MEN /Abel!
VOICE which he delivers with Gold Guard Chaim parehaasd at
Ids manufactory
fo workmanship of patters chain. Si Incises load
To (18) carat gold, welglilpg or. dwt. rt. at
Ad 3s. Bid. per ounce, Stint price
io ---•
Ttal /
oPoll this system. the UALM. WEIGHT, and VALTIE of
_

Qs pilaw ooloony Moo& asceoellool to
Join Drogloalooldoglors comoolkoNgs es Or iTrlcsoook4
000. wkick cioned oscoodlog Ur Iblicom or simplicity of
the patters—JOHN itainwor. flablimalk.tocWry,
U.
Ncerlottootroot. Covemiewien. Labe.A.1"798'
N.B. Thk octobliclussol i carol ci I la tko scooks& and on
kkikordayo i 7 o'clock.

RIDISHBIIIt I yon will see your friends at
IVAN, after Y. Orr& We dud sup them

Vie Orovtoo.

TO 00112X1PONEMMTS.
adatelbeseste Mended tor •• Mee ltopirene London Itatrdng
=most be at the Oa" beavorteattesa, by Two
on tbe day of pabibetlon.

TM MOM MY MISS YOSHI& --TRH WOMAN IN
VAIN). Mom% Whom, IlookilNK ,WSHowe and comp-
Sou Ileadamos Smart sod LovoIL—LOILD DUY MAIL-
RIND AND DONN 1011,. Yr. Dollioni.—And lAA? SHAVING.

TGII I MMO,
_ICZAZT4TILINGS AND PIDDIXISTIGNOB.
—MULCH NA POGUE. Man. D. Bondman.. 1. 11100gbaco,
H. Vaadtchaff, D. D. Burn,. &Mos.
ROUCICIIAS and Met IL Oilver.—Asd AN MULL APOLOGY.

AND
ESEimili. SIMPSON AND 00. Moors. awry sad
Horsann . Miss Ebirorthy sad Mrs. Horsman.—And THE
MOUNTEBANK. Mr. realer sod Muter Tedder, Mr. Widdi-
comb ; MBA Leriereq, MBA Bssldes.

ZNITANN
Tsls Zvisnia, TIM VOLCANOIA.
OF ITALY: THE
NV TIV PERIL /An & LassA —Pram°, 11/ItooL—Aild
IIACSI GU INNA.—Comeasemi AS haltiplat &

HIGH WATIIII AT LONDON-BRIDGE.
TEM DLY Mania& iti. 4722.....Aftin500a, 2511.
To•NOLIOW Yoraths, ILIA. tas.....Attienooo. lib. Um

LONDON, FRIDAY, APRIL 21.

Tax trial of the Manager and the Secretary of
the Unity Bank, which has just resulted in the
acquittal of the prisoners, has disclosed certain
facts in the management of such institutions which,
the public will probably agree with the jury in
thinking, well deserve animadversion. The charge
against the defendants was, in the first place, that
they published a false balance-sheet of the affairs'
of the bank for the half-year ending June, 1862,
with intent to deceive and defraud the shareholders.'
But the Grand Jury ignored the bill as regards
this charge against Borten, the secretary, and con-
sequently the prosecution proceeded against both
on only the second charge—that the two defendants
conspired together to commit the offence which the
first counts had charged as actually committed.
The particular points in which the balance-sheet
was represented by the prosecution as de-
ceptive and fraudulent were these. It stated
the current accounts open as amounting to
159,3921., whereas they were in fact 170,0001.;
it stated that 38,0001. was in the till, w!"55
was only 29,000/. ; and it stated the bills under
discount to amount to 207,0001., while in fad
the greater portion of them were bad, dishonoured,l
or forged, and only 16,0001. of good bills was
actually under discount at the time. And it ap-
peared from the evidence that these corrections of
the figures in the balance-sheet were in fact true.
The money had been lost, but it was made to ap-
pear as not lost by means of the representations
which the balance-sheet contained. This docu-
ment was further proved to have been drawn up
by Burcia, while the items it contained were fur-
nished by Tema. There were also some charges
made against TEARY of having been concerned
with some of the customers through whom the bad
debts bad arisen ; but this did not appear to have
been for his own profit. And it is also fair to
both defendants to state that the losses incurred
by the bank bad reached a large amount under a
former manager, and were existing at the date of
their appointment, and that such further looses as
were incurred during the period of their control
were to a great extent the inevitable result of at-
tempting to carry on business at all with inade-
quate and diminished funds.
But the defence of the prisoners lay in the alle-
gation that, false as the balance-sheet might be, its
falsehood was known, or ought to have been
known, to the directors. The books of the
bank, it was admitted, were properly kept.
These books the directors in previous years
bad taken credit to themselves for regularly
and systematically examining. And the ba-
lance•sheets made out from them were, with the
books themselves, submitted regularly to auditors
chosen by the shareholders, who as regularly cer-
tified them as correct. Hence it was argued that,
all being done with the knowledge and approval I
of the directors and auditors, there could Se nOI
conspiracy to defraud the shareholders on the
part of the manager and secretary, and that
if the balance-sheet was deceptive the blame
must rest with the directors who sanctioned
and issued it. This view was indicated by the
presiding Judge at an early period of the trial,
when the fact of the appointment of shareholders'
auditors was first stated, and he was even disposed
to dismiss the case without further evidence. The
jury, however, properly desired that it might be
proceeded with, though they ultimately expressed
the same conclusion in their verdict. Yet it may
fairly be doubted whether such a defence ought to
be accepted as sufficient. It is fixed by a decision
of the House of Lords that the officers of a bank
are not the servants of the directors, but of the
shareholders. This proper principle prevents the
authority of the directors from screening their
subordinates, and gives the shareholders the
security of the responsibility of both. Nor does
it seem reasonable that the appointment by the
shareholders of auditors to check the accounts of
directors and managers should exculpate both or
either, if the auditors fail to detect fraud at once.
Even if the fraud should have been discovered by
abler or more careful eyes it would be a singular
and dangerous doctrine to lay down, that the inca-
pacity of one set of servants should liberate from
penalty another set who profited by that incompe-
tence to commit a fraud upon their common
masters.
But it is when we come to the procedure of the
Directors that we find most cause for surprise and
reprehension. These gentlemen, while promising
to the shareholders the fullest care in supervi-
sion of the accounts, contented themselves with
casting their eyes over such as the manager
thought fit to Ly before them or to read to them.
Alderman MECHT, the governor, says, " the direc-
" tors examined the balance-sheets." But he also
says that they never altered them, or interfered
with them in any manner, but merely ordered
them to be printed ; that they took no steps
to verify the items, and relied entirely upon
the examination of the auditors. tie declared

‘v!es!'

•
4. 1
'

that be knew the bank held 8001. or 9001. worth
CI forged bills, but be did not know they had been
carried into the account, for be considered it was
the manager's duty to write them off without in-
quiry or intimation to the directors. He was
aware that the name of &saws, who wee OHO Of
the customers by whom bad debts were for a long
time due, was never reed to the directors by
TIZZY ; but be admitted it was in the cash article
book, which lay on the directors' table, and from
which Tansy professed to read. It was, he thought,
not his duty as a director to look at the ledger, or
at the list of past-due bills which it oontaii;ed.
And so also deposed Mr. EYRE, a solicitor, and
another of the directors. Then Mr. GouLD, who
was one of the shareholders' auditors, performed
his functions by going to the bank, and hearing a
number of totals called out to him by Mr. Bonen
from the books. He had "not the slightest
" idea of what the item of 207,0001. con-
" slated." On cross-examination, he admitted
that he " knew nothing of accounts." Un-
fortunately the other auditor, who was by pro-
fession an accountant, is dead, that we have not
the benefit of knowing how be thought the duty
ought to be performed. But it is to be presumed
that he also "had not the slightest idea of what
" the item of 207,000/. consisted," or he would
strely have informed the shareholders that it con-
sisted chiefly of hopeless bills and forgeries.
Nor can the directors be acquitted of something
more than mere negligence. Though they ulti-
mately lost by the bank's failure, they made con-
siderable advantage out of its existence. Half -a-
dozen of them were pretty regularly in its debt—
that is to say, held the shareholders' funds, apply-
ing them to their own purposes ; and they made a
profit out of this, for they paid on these debts only
the bank rate of interest, while for the same ac-
commodation they would anywhere else have bad
to pay at least one per cent. more. The bank,
in fact, sometimes served them at a loss
of not merely profit but of actual cash, for it had
to obtain its funds by rediscounting bills, in which
it was charged with I per cent. above the Bank
rate. Furthermore, Alderman ME cut, the go-
vernor, used occasionally, personally or by his
firm, to perform a delicate operation to make his
account on quarter-day look handsomer than it
really should have done. Having an account with
both the West-end and the City branches, he
would draw a cheque on the one and pay it into
the other, so that while it was passing back he had
the credit of the amount both at the branch on
which it was drawn and at that in which it was
paid in. This ingenious arrangement for doubling
his apparent assets he calls " a very innocent
transaction." But we presume Alderman MECHI
did not take the trouble of performing such a
transaction without an object ; and if his object
was to make his account seem to his brother di-
rectors better than it really was, we should be
I glad to learn from the Alderman (who is a magis-
trate) at what point, according to his doctrine,
" innocence " passes into guilt.
These disclosures will fully satisfy the public as
to the reasons why the Unity Bank dud not sucleed.
But how many companies are there still extant.
and producing each half-year flourishing balance-
sheets, which are equally rotten at core t This is
an interesting question. But it can only be &n-
-attered by such shareholders IA choose to incur the
trouble of inquiry into their own affairs. If they
content themselves with appointing directors who
make fervent protestations of diligence (and where
wasever the Board of Directors that did not 1), and
auditors who are highly respectable, but know no-
thing of accounts, and accountants who only attend
to the summation, without inquiry as to the com-
position of the balance-sheets, then the institutions
may flourish gloriously until they fall disgracefully.
Nor can shareholders who expect large profits with-
out trouble be very much surprised if the negli-
gence of somebody converts at last the profits into
a loss. But, on the other hand, the circumstance
that the directors are not checked by a competent
audit certainly forms no excuse for their negligence.
They are placed in a situation of trust, they can
enforce production of every book and document,
they can discover fraud in time if it exists, and
they receive a handsome remuneration on the dis-
tinct understanding that they do exercise a real,
and not a sham, supervision. It will be well for
commercial morality if, sooner or later, they are
made to understand that these powers and advan-
tages imply responsibilities • and if, in case of de-
falcations occurring, the ;addle, as Mr. Justice
SMITH expressed it, "should be put upon the
" right horse."

Qs Court.