Evening star. [volume] (Washington, D.C.) 1854-1972, 1880-01-10
How to stop Bank-Wrecking.

Bank-wreckfng has been extensively engaged
In in the United States especially of late years,
and to many 1t has been profitable. During the
three years ending January /, 1879, 2l0 state,
savings and private banks failed in this country
with liabilities in the aggregate amounting to
Sss, 44O 02S. and actual losses to deposltors and
other creditors amounting to $32, 6l6,66l. Our
national banking system has been In existence
sixteen years, and during that time 81 banks
organized under it have failed with capital in
the aggregate amounting to .S17, 452, 900, and
actual losses to creditors amounting to Sc, 24O, 1872
In many cases 1t was shown that the banks were
wrecked by and for the benefit of the managers
Oficers and directors took the money OF deposi-
tors and sometimes with braZen impudence
defied the duped creditors to help them
selves IL they could. In some cases the
banks were organized to be robbed, and
almost before the storm of indignation
had blown over the dishonest managers
would reopen business with their ill-gotten
gains. Rarely have any guilty bank officials
been punished for their dishonesty. The de-
frauded depositors would sorrowfully receive
such pitiful dividends as the receiver might de-
clare, and the law would permit the guilty to 60
scatheless. This is not, however, the custom in
Great Britain. Wrecked banks but seldom dis
figure the highway of commerce in that country.
forced. The Glasgow Bank, In Scotland, failed
on the I'd of october, 1878. 1t was shown that
the directors had been guilty of gross frauds In
the management, and in less than four months
after the failure they were convicted and under
going sentence In prison. But Scottish law did
not stop with the punishment of the guilty
directors. There were defrauded depositors and
creditors to be protected. The liabilities of the
bank amounted to S64, 900 900, and the assets
were $3S,OO0,O00, leaving a deficiency of
SIG, 900 900, which, under the law had to be sup
piled by assessments upon the shareholders.
Officers were appointed to wind up the affairs
OF the broken bank. and the report OF their first
years work has just been published There
were 1919 shareholders, who were liable for the
hanks losses to the full amount of the property
i.iey owned. In the first place an assessment Of
$500 upon each 800 OF stock was levied but it only
realized SIC, SOC, 0Oo as many of the shareholders
even by surrendertng all their property, were
unable to meet the full demand. BY this as
SesSment $50 Of the shareholders were entirely
ruined and second assessment Of 81, $50 on
each share OF $100 was levied. Only two hun
dred and stxty-n1ne of the shareholders
were able to meet this. all the others being
ruined by it. There remain 1853 solvent share
holders but there is still deficit Of 81 900 900 to
be made up in order to pay the banks indebted
ness A third assessment will be levied and the
result will be to ruin few of the remaining
shareho, ders. Much sympathy has been ex-
pressed fo," the shareholders, and it does appear
hard that tn az, who were innocent of any con-
nection with Il, o dishonesty that wrecked the
bank, should be ma lie to suffer So But, on the
other hand. had the American system been
carried out. the innocent depositors would have
suffered. Upon the whole he Scottish system
is the better Those wbo in,o,, In bank stocks
must take the risks hut No r,s,~ .,, hit to be i'm
posed upon the party who deposits h. \ money.
II the Scottish laws could be enforced n tne
United States for awhile the now prostA Ole
BUSINESS OF Wrecking banks would be brought l.
summary end. ,