The Express.
London, England, 1856-09-06 00:00:00

LONDON, SATURDAY, SEPTEMBER 6.

Tex wile-spread distress caused by the failure at
the Royal British Bank will, we earnestly hope,
awaken the shareholders and depositors of other
Joint Stock Banks to the necessity of at once taking
measures to obtain what we have more than otos
urged with reference to these important establish-
ments—a real and efficient audit, and • means of
fixing on the directors a personal liability in the
event of wilful misappropriation of the funds. The
new Joint Steck Companies Aot—which, however,
does not apply to banka—renters the directors liable
for any dividends which may have bean feuds.
lently declared ; but this does not sufficiently meet
the case. What repayment of dividends could
compensate the eherehfilders 'and depositors of the
Tipperary and Royal British Banks for the wholesale
dissipation of their funds? In the former use asum
out of all proportion to the dividends was applied to
the personal eve of the directors, and from what has
already transpired respecting the affairs of the Royal
British Bank, the deposits of tradesmen possessed of
but slender means, widows, and small capitalists,
attracted by the promise of interest on their current
balances, have been largely applied by the late Ma-
nager and Direztors for similar purposes.
A more flagrant cue of culpable negligence,
amounting almost to complicity in a fraud,
than that which attaches to the late Board,
we can searc.ly conceive. The Manager, Mr.
CALCRON (the grounds of whole appointment to so
important a port we base reser been able to under-
stand), was in receipt of a salary of 2,2001. per an-,
num; his whole time and energies were assumed to
be devoted to the affairs of the,Bank, and yet we find
this well-paid cfficial oh:aiming advances from the
funds of the institution, and accumulating a debt
against himvelf which he is utterly unable to dis-
charge. Now, it follows, either that the
Directors were not aware of the state of '
his account, and therefore grossly neglected
their important treat ; or that they know of
what we can only look upon in the light of
defalcation', and eocnisid at them, thereby as grossly
abasing the confidence placed in them. It will,
however, probably turn out that some of them fol-
lowed his example, and were consequently precluded
from acting as they were in conscience bound to do,
and compelling Mr. Cemutom to refund the moneys
he had borrowed from the Bank, or resign his
eitsatioa.

It is impossible to place soy legal prohibition too
strong on Managers and Directors, as regards
&alive with the funds committed to their charge
for their own private purposes. Their facili-
ties for obtaining advances shoots be even
less than those of any ordinary customers,
sad severs penalties should attach to any
set either of the individuals or of the postal body
forming the Board, which should place the funds of
the beak in the power of any of the officials for
objects which, in almost every case, are purely specs.
lade'. We have as stroegly insisted on the necessity
for confining backing operations within their proper
sphere. The examples are so mimesis' sod notori-
oss of the ruinous coos quecces of making advances
on inconvertible securities, that there is no excuse for
Directors or Managers who neglect the warning; and
when we found the lt-iyal British Bank lending on
mineral property, we felt morally sure that only
a miracle could save it from ruin, bearing in salad
more especially the character of its drawing
and deposit account,. It is no• sufficient that a Bank
Director should own • large business, or live in Bel-
gravia; a certain ,mount of banking knowledge, on
far as its history and practice in the present day at
lust is concerned, is equally essential; otherwise!,
is likely to become • mere tool in the hands of ate
or two members of the Board, whose views jump
with those of the Manager. Bat sash diserizeiaa-
don in the election of Directors is hardly to be ex-
pected from bodies of shareholders, and they have,
tossequently, no security against a misappropriation
or injudicious employment of fonds which may entail
ruin upon them, unless some legislative southwest,
which, by attaching a personal liability to the direetoss,
compels them to do their duty strictly and coned-
'otiosely. Is it not a monstrous thing that the whole
available fends of the Newcastle Bank should have
been spirited away by the SADLIII clique, and that
one of the directors should have known nothing of it
until long after? And is it not (goody strange that
such frauds by Managers as the meetings of August
disclosed should have remained so long woo-
tioed sad unknown by Mentors ? Unfortunately,
in these latter cases it wculd appear that the!
culprit escapes with a legal inapaoity, escopt
DO far all the sum misappropriated beemmes
a debt. The Directors shou'd therefore be
compelled to exercise a strict supervision for their
own sakes, and, above all, should be responsible for
the truth of the statements in the baLance.shasta
submitted to their shareholders. Bat these very
Wanes sheets in their present form ars convenient
vehicles for covering such • state of tiller as existed
in the Royal British Bank. Who, on reading that
there were "convertible securities, short loans, cash
credits, &a.," for 600,0001.. would imagine that
among the items were such "convertible" securities
as 00s1 mines, icon works. OLIVER'. bills, and West-
minster bonds? It is useless to mince the mat.
ter—each a statement differs only in degree
from the "Tipperary" balance sheet. inasmuch
as it was unaccompanied by any esplanades or *beer-
vatioo, save that astounding one in the Report, that
a soon than ordinary provision had been made for
bad debts. By issuing such mounts es these the
Directors of Joint-Stock Commies commit a posi-
tive fraud on the poblie, by giving a fictitious value
to their shares ; and these who pet forth the last
Report of the Royal British are morally liable kw
every shilling of loss that may be sustained by the
shareholders who may have purchased shares of 1101
Bask since that period. Reprehensible ass
injudicious se the payment of dividends out of
capital undoubtedly is, still, if allanabolarso
receive them knowingly, it is their owes affair;

but when they ere— paid out of the pc:
party of depositors and under sever of a balsam.
sheet giving as untrue Jamaica as to tie position
of a company, it is a freed, sod the ameba who
issue, sod the auditors who sip each statozessts
shoed be held rersooally responsible, end sompelled
to make good thole statements to the letter. We
await with some curiosity the detail of the item
comprising the 810,2041. of seenritier, dm. The
public were led to behalf; that the market valve of
these securities was represented by that MM. and
by the oncost set spat for bed and doubtful
debts ; and until that be the real numb.
of sod items is bask amounts them is so seenrity

either for shareholders or depositors. Those who are
eognisant of the deceit can quietly withdraw from
the peril at the expense of the public they are de-
ceiving, and if the swindle, for it is nothing else,
floats long enough they now escape with impunity.
Surely this last disgrace to the moutary world,
following so closely on the heels of the STRARAN,
Samna, and other colossal frauds, will awaken
the public and the Legislature to the necessity
of establishing bank audits, which shall pre-
clude the possibility of such statements of
imaginary meets as those which are °coa-
-1 sionally laid before shareholders, and of fixing
on the Directors the penalty for so atrocious a breach
of trust. The present case is a most distressing one,
the depositors being for the most part persons to
whom the temporary privation of their funds will
be almost ruin, and the shareholders belonging to a
elms who can ill respond to any further all in addi-
tion to the capital already lost. Another and very
anions evil inflicted on all other banks is the want
of confidence which such an event inevitably urn-
dere ; but we trust the lesson will not be thrown
away upon them, and that they will aid, instead of
obstructing, the ;seeing of some Act which will give
the public such guarantees as to the reality of their
smote, and soundness of their position, es we have
more than woe demanded.