New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1881-11-22
NETWORK DAILY TRIBUNE TUESDAY, NOVEMBER q 1881

this concern. It's methods were extraordinary
suspicious. Months agO-lOng before there was
any embarrassment traceable to the aliaIis
of Mr.. Weeks-the Pacific Bank OF Dos
ron WAS irving to borrow %2OO,OOo III
this city through money brokers' Oh ITO
own certificates of deposit, with aSreeheh.
that such certificates should not be forwarded
until the loan should fall due. 1t comes OUT
now that the habit of the bank to do tins sort
of thing was well known in Boston, ana YET
the concern went on without interruption from
other banks. In short, it was OF necessity
well known in Boston that this concern was
doing an illegitimate business and was pre-
snmablv banE<r1lpt. and still it was able to use
credit with other banks and to impose on the
community. Now the question will be
asked, and not unreasOnably, how much ohcin
examinations and the cOuntenance OF repu-
table banks are worth in other cases, since they
have proved so deceptive in this instance.
The Central National Bank, it appears, found
itself embarrassed because it had rediscounted
on collateral for the Pacific National to large
amount. A large part of the $i35, $50
reported October 1 as educ from other
National Banks" is said to have been loaned
10 tine racine NdJlOldl III tlllo ""J'
of this paper" it is stated, is perfectly Soou'
and the readiness of other responsible banks
and bankers to help the Central National BANK
Indicates that its condition is not unsound,
But 1t is a question, nevertheless, whether that
or any other reputable bank ought to have
advanced money so largely to concern like
the Pacific National, when the very fact that
it wanted to borrow more than its capital
stock on collateral deemed perfectly good was
evidence rs to the character of its business.
1t may be said of course, that there was Moth
ing contrary to the customs Of good banking
in all this, if the cOlaterals were perfectly
good but in that case is it not time to recon-
struct banking cuStomsP
Banking institutions, which have the support
Of charter or certificate from the State or
National Government, have no business to for
get that they owe certain duties to the public.
The interests of stockholders in every such
bank must be held subordinate to those pub
lie interests which, by acceptance OF fran
chisc, the bank undertakes to serve and guard.
It's duties to the public are defined
in the laws. If it does not find 1t
profitable to obey those laws with absolute,
rigid and conscientious fidelity to their spirit
and intent as well as to their letter, the
bank has no right to retain or act under It's
franchise for an hour longer Ii can wind up
business a. a National or State bank at Its
pleasure and conduct banking business after
ward as private firm; but if it uses public
franchise its first duty is to obey the
laws. Now the National Banking Act does not
provide that these public institutions shall be
50 conducted that directors know nothing of
their condition. If the requirements of law
in that respect are irksome, a bank has one
rcmcdy-it can retire from the national system,
and terminate its obligations under the law.
There are banks in this city Of which it is
frequently said that they are backing certain
SPECTATORS. or quilting or " bearing" GER
tain stocks. Reports of this sort may be I'M
founded and unjust in many cases, but the
public has no means of knowing, and cannot
get the protection which the law means to
give unless directors and examiners constantly
do their full duty unshrinkDgy and faithfully.
Il is their duty, whenever they hear such re-
ports 10 think first of their duties under the
law. No harm has been done to the Trades
mems Bank by the investigation which the
officers promptly invited. If bank is con-
Quoted rs it ought TO be, rumOrs can do it no
lasting harm, and its directors will never be
amazed to learn that its entire capital has been
gamblrd away by president, a cashier, or any
body else.