New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1877-12-15
ER1rD NOT MISEORIENF.

Another savings bank, and one Of the most
reputable and strongest in the country, has
sought protection in the courts from the dis
trust of depositOrs. Because bad assets may be
left for the later demands. if unrestralned de
mands continue, the court takes the company
under IFS protection. But what ~ the
condition of existence of a savings bank7 Is 1t
not that the bunk will undertake to meet
every demand from dcposit-creditorS, reasonable
or unreasonable Has 1t any business to say
that it will not pay in full because, IN Its
opinion, deposltOrs are unreasonable, and
are seeking to protect themselves without
proper occasion7 1t is their business To say
when they want their money. Ii is the bust
ness of the bank to pay whenever they ask
If it cannot it fails, and must be judged, not
AS if 1t were the obligation of the bank to
pay when it pleased or found IT convenient,
but as If it were the obligation of the bank to
pay on demand whenever dep0stOrs wanted
their money.
A very large share of the recent failures OF
| financial corporations arise from the notion
that failure does not imply wrong; that Il
bank or insurance company can fan, like "a
merchant without any presumption that there
| is anything worse than misfortune. But the
conditions are entirely different Men who re-
| ceive funds in trust undertake to hold them
safely, subject to demand The merchant
| who obtains credit does SO subject to all the
| risks of an ordinary commercial business it
is known that his utmost care may not suffice
to protect him against failure of other mer-
chants or of banks, or against sudden and
unexpected change in the value Of
a.. cd
capital a price supposed to be proper
toned TO the risk fduciary corporation,
whether a bank, savings bank, trust or insur-
ance company, obtains confidence because it IL
believed to be not subject to the ordinary
commercial risks. 1t Processes TO loan funds
on none but the most undoubted securities
and to keep always available an ample re-
serve If such company is not so conducted.
what can he said in its defence Not that
it WAS unfortunate. 1t had no right to lend
trust funds in such a way that fortune would
determine payment. The one thing which it
is dishonest and dshonorable for such con-
Germ to do, is To violate the fundamental condi-
| ton Of its existence by gambling or spccula-
ting with trust funds or exposing such funds
to ordinary commercial risks. That sort of
! thing is not mere acknowledgement. II il fraud
II is deliberate breach of the most solemn
compact; wanton disregard of the most sacred
! trust.
! Failures of such companies have become
very numerous. Yet there has been no lust
| excuse. For example, If the Silver Bll
! should pass, causing an unexpected fail
of 10 per cent or more IN United States
! bonds, very many trust and savings com
panes might fail without blame, because
| it has been their duty 10 keep their
reserves largely in such bonds, and they would
! have been unfaithlul and criminal had they
preferred less safe and profitable securities.
! No such cause accounts for the many fall
ures which have recently been witnessed.
They have arisen, not from wise
and honest investment of trust funds.
but from investments known to be not the
safest nor the most available There has been
a violation of the fundamental condition
Of the trust. Men have expected safety
the companies have given them risk.
Men have avoided tho ordinary chances
of commercial business, and, trusting to