The daily dispatch. [volume] (Richmond [Va.]) 1850-1884, 1876-03-27

What are blnk directors for? Why
should not the entire responsibility of man.
asement be entrusted, with absolute power,
to the man who may chance to be chosen
president or cashier? Obviously because 1t
Is desired to secure for the bank that conf.
dence which an able, honorable, and we'll
known body of directors, supposed to be
sharing in its management, may bring to it.
Therefore, il blnk director does not direct
what shall be said of him? If he brings to
bank the confidence of persons who be-
lieve that he will direct wisely and honora-
bly,, and then neglects TO direct at all, leaving
the real power wholly in the hands of some
body who would not by himself have been
equally trusted, is he free from blame?'
These and some kindred questions seem
pertinent in view of the failure of the Bank
of the State of New York. There were
honorable and competent men among the
directors, but they, it is said, were as much
surprised as the outside world when the
singular and long.continued mismanagement
was discovered. The street, however, does
not seem to have te,n wholly taken by sur
prize. Probably it is fact that more was
known about the management of that bank
to Ieople interested In some other banks
than to some of it's directors. They will
plead, with truth, tha. it is not by any means
an established rule for directors of 3
financial institution to know all about its
affairs that it is generally known that they
do not in many cases; and that no one should
have been deceived. Yet it appears that some
persons were led to place in that bank con-
fideuce which neither the ill-health Of its
president nor the known history of its vice.
president would have created. 1t Will be
said that it is not possible for director to
keen fully informed in regard to the business
of q company. If that be true. under the
present ystem of conducting such corpora
tions is it not about time to change the sys-
tenn?
No general alarm has been caused by this
failure, because it is believed, with reason,
doubtless. that very few of the banks Of New
York are managed iE the same way. But
that does not tell the whole story. The sys.
tenn of stock organization has many great
public advantages. but it has also one grave
defect, which is liable to become fatal weak.
ness. "What is everybody's business is no.
tody's," or is liable to become nobody,s. 1t
is decidedly not for the interest Of stock cor
porations generally to tolerate or encourage
the tendency to leave the details of manage.
ment to single individual or two. That
tendency is quite too strong, and unless It
is firmly checked the result will be to
undermine confidence in such institutions
generally. If it comes to be commonly ex.
pected that directors OF stock companies will
give little or no personal attention to their
management, there will follow gradual
transfer O! business and of confidence from
such companies to private firms, in the man-
agement of which those who personally
conduct the business have the largest pecu.
mary interest. The very rapid increase In
the number Of private banks within few
years may perhaps be in part the result Of
growing feeling that the conduct Of stock
companies Is too often left to one or two
persons, who may or may not be so largely
interested in the success OF the institu-
tion as to handle its affairs with as
much prudence as they would give to
the conduct Of private business. at bot
tom, the success of the whole system Of
stock corporatios, and its ability to reap the
important benefits to be derived from it,
depend upon public confidence in the rigid
fidelity of business men In fdueiary labors,
and whenever that confidence is weakened,
as II must be to some extent by failure like
that OF the Bank of the State, some injury
follows to the whole community. That in.
iury is only aggravatedif if it Is truly said, by
way of excuse, that the directors of a cor
poration often do not andeannot thoroughly
acquaiut themselves with its business. Ex-
ception will Justly be made wherever
the facts are known in favor OF corpo.
raticns of which the real management
is in the hands of principal owners, whose
watchfulness is stimulated BY strong per-
sonal interest. Nor should those banks ana
other sorporations be forgotten In which
those who have the practical management
not only coart but insist upon the constant
scrutiny Of their doings by the directors, Tor
such institutions deserve especial honor.
Bat 1t Is undepiable that there is room Tor
general Improvement in the management OF
corporations. a great many directors 90
not really direct, and ought to askshemselyes,
soberly aud conseientiously, !" Why notsy-
Nes York Pubic Ia faanciat oTgGn). ID
A Poastor, f(,ens, 4 man ryas very angry on