New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1881-11-03
sail it give the people too little credit Tor
sound sense and sturdy honesty.
ROBBERY MADE EASY.

ROBBERY MADE EASY.
The Newark failure calls attention 10 the
nature of existing provisions for the protection
of the public. II is commonly supposed that
@business men" take greater care ana ADOPT
better methods for the protection OF their IN
terests in various corporations with which they
deal than the Government in its efforts to pro-
tect the community. We hear great deal OF
thc excellence of business methods, and of the
inheritance of applying them to the conduct OF
nublic affairs. Whenever an orator declares
that the Government ought to do this or that
lust as practical man conducts his own Dusl-
ness the audience applauds, and 1t Is Thought
that the speaker has said very good thing.
Vet scarcely month passes without some start
ling revelation of fraud, occasioDed by the
babitual failure of eminent business men to
look after their own interests.
Do directors direct The question has been
asked more than once. 1t WAS asked when the
Rank of California went down, when the Glas-
,,o,v Rank collapsed and when the Bank OF
tba State of Missouri closed its doors 1t has
beep asked thousand times, when other bank
ina institutions have plundered the public.
Tho Newark case is fresher in mind, but not
more startling, than others OF comparatively
recent date. Talk with a bank president
about it, and he will attribute the disaster 10
tbe excessive confidence of the directors III the
cashier. But business methods" 1t appears,
involye confidence il somebody; II not III
cashier. then in a president, or, as in the Man.
haitian Bank case in janitor. Ask bank
presidcnt what the directors of his own bank
really know of its condition, and, if he is candid
ho will nYnhablV admit that
they know almost nothing. Perhaps he viii
explain that it is practically impossible that
they should know. They come to directors
meetings. though it is often found necessary TO
pay 80 for each meeting in order to get quo
rum They hear an account from the prcsi-
dent of what has been done since the last meet
ING. and of the condition of the business. be-
inc busv men. as well as business men, they
rarely waste time in asking questions. Pro-
posed loans are quickly considered, and the
Board generally does what the officers recon-
mend. Members are business men. and are III
n hurry to get back to their own business. On
rare occasions a committee is appointed To eX-
anime and verify things. Baldwin gives
prapbc description of the Newark method !;
eacn $50 package was carefully counted whle
no one ever asked question about the
81 300 900 deposit in Newlork. question
about that would have implied an insult.
1t is SUPP osed by the public that each director
feels bound to exercise constant watchiulness
over the affairs of the Institution. In point OF
fact. if any director goes into the bank to ask
ouestions he is apt 70 bc stigmatzed as Z" q
Pail Pry sort of person" and usually gets
omitted from the list at the next election.
Bank officers state that it is their understand
ING and rule that no individual director has any
right to ask n,thing about the affairs OF the
bank. except in the Board or when empowered
as IA committee by majority OF the Board.
One of the best and most distinguished bank
presidents of this city, when asked why some
director of the Newark bank did not inquire Of
the New-Yorll Mechanics Bank rs to the re-
ported balances, replied that President SheF-
man would not have been bound TO give any
answer; that he would probably have replied
that such Il question could be answered only
when asked by the Newark Board in it, organ.
lied capacity and through its proper officers
that Is through the dishonest cashier. These,
il is said are business methods"
What remedy, then, has a director who sus-
poets mischief He may be the largest stock
holder, but he can obtain no information I'M
less majority of the Board demands it. His
own fortune and reputation are at stake. Ii hc
oneuds the officers, without discovering any
wrong, refusal of usual accommodations may
ruin him. If he asks questions, he is thought
to imply an insulting suspicion, because such
questions are not usually asked. He can pray
the United States Controller to have the bank
examined, but the request would be likely to
get him into trouble. director and large
stakeholder does not like to east a slur upon
the credit Of his bank without absolute Ger
tainty that he has reason, nc will very rarely
raise unusual questions, even in meetings of
the Board. And if ne tries To find ont anything
anywhere else, he is out Of the limits of his
duty, and is considered a meddling and ungcn-
tlemanly person.
Banks differ, of course. In some, all opera
tons are open as the day to those who have any
proper reason to inquire. But the prevailing
customs of business men do not sustain di
rector in doing his plain duty. He is bound in
honor 10 watch, to exercise constant care and
TO ask questions continually which call for
proof of statements made. But business Gus
toms render it extremely difficult, not to say
practically impossible, for him to say or do
thing that is not based upon the assumption
that all the officers of the bank are absolutely
honest. If he suspects anything, tie chances
are ten to one that he can only injure himself
by asking questions. For a director, appar-
entity Mr.. Blaclburns remark is true: He
that doubts is damned And these are called
business methods y