The sun. [volume] (New York [N.Y.]) 1833-1916, 1876-03-19

To THE EDITOR or THE SuN-Sir: Your
article on tic ccr'iAcation ~ checks by bank
toilprs n yoar issue of the 18th inst has attracted
much uttc'fiou. You are aware that rational
banks arc piolihitcl from certifying any chcck
unla-s sufficient fund. arc to credit Vt the draw
or. AMI yet thc law g. uniformly disicsardcd.
Ttc whole system 81 ocr'ircation is a per-
ni,iou. o,ir. involving indefinite risk for sli-ht
compensation. II places the hanks subject TO
the carol,-.n,. or % honesty of the tolicri vho
certify. II ,uatlc. mrn with no means Of their
own AZ risk to disturb values. II fosters specu-
ation IN f. worst form and Is a curse financially
and morally and yet the losses suffered by the
banks are not due to this evil practice to any
great extent. This may he owing to tho fact
that tccrs are limited to names and amounts
and that this Limitation has So far been observed
The system Of ccrtiacntiun has become so inter-
woven with business in our city that 1t cannot
be dispensed with lest the provision Of the law on
the subject should be rigidly enforced and II
necessary further legislation should make its
violation q criminal offence.
The losses incurred 10y banks and the de1recia-
tion Of their stock In the market result from
various other cdii-ce. the most important one OF
which is to ice found IN the board Of direction.
Men seem nowadays DESTROYS to become hank
directors. not to give tie banks the benefit OF
their advice. supervision. or influence. but to
use the POSITION I'm their own interest. directly
by getting an the money they want for them
selves aud ticir friends. and indirectly 10y the
credit and siuudfuv i'm business circles such
positions confer. I venture TO say that the
accounts of directors In the banks In which they
hold such positions are of no value i'm their
ing capital BE- absorbed Toy them and their friends.
and very often a. collateral that IL unavailable.
Ii Is entirely too easy Co become . bank dircc-
tor. II Is requisite to- hold only ten shares say
the mar value STA each in all cltn0 When the
oath # director . aiken ne must swear that
lac H. the ah-t ltte uN ntr OF the SAM ten shares
but q Minute Inter he can hypothcratc elsewhere
Ills certificate OF ten shares Tor a loan ~ S"N'
leaving him Interested In the bank OF which me
H. director only SlOJ; aud on the basis OF TINS
intcrr.t the man cement of a large moneycd
rort,,r,ti.u d. iuttt-ipd to him. lie can pass On
the credit of others. control the disposition OF
immense sums ia the a.t gate, ana hpfr"" hl
the money Doe wants even a. the righteous CHAINS
Of other are disrcsardcd.
In order to secure director. who will care for
the interest of stprNhul!er-. q radical change rs
necessary. For example. say hanh ui e'h'".-
Wncapii-l has .Wc!Fr dltC'i Dls eH'h uli'' l'l ON
qualifying H. such rhuuld bee the owner ul sil-
~ par value OF ,nG -togk, ccrtlhcaie ior same
in his nahc should be forwarded TO the comp
trOller of the currency. who should give him ~
exchange "directurs commission mat shall
not be negotiable. ON his ceHsing to be dtrcc-
tor. and FORWARDING tho banks notification to
that effect to the Comptroller. together with his
commis- ion. he should be entitled to his stock,
always provided that hc ia not indebted to the
bank either ~ principal cndorser. surety IA an
individual or With others, the obligations lnatur-
ed or not vet due. In banks with capital OF
from SlOunu to SjntfN, each director should
hold three per cent. Of the stock over $4,000 to
SiuJlUt. two per cent; over Sl.OplOVu TO S3wN.-
ON. one per cent? over that sum. one-hai Of one
per cent on The amount exceeding same.
Under these circumstances directors would
very naturally exercise n constant ana careful
super, ieiuu II the bank. and guarding their own
Interests would guard the interest ola the stock
holders. hut. as IL il now, a widow or guar
| dian or person Of moderate means may. and In
some eases does own more stock In bank than
| its officers and directors do combined.
1t Will he urged Ia oN icrtion TO this plan, that
under its operation II viii hrimpo-she 10 secure
| directors. / Doubt ii this will be true, hut AT
any rate II viii he impossible for irresponsible
| men to uttain to the position. Some means may
| hc devised to obNiatc the difficulty of procuring
directors. for instance. 10y masking the position q
| salarci one. the amount thereof 20 depend on
| the addition To- the reserve each year.
| NEW NONN March H. FINANCE.