Public ledger. [volume] (Memphis, Tenn.) 1865-1893, 1881-11-28
THE FINANCIAL OUTLOOK.
A Veteran Bankers Warming 10
Bepositors and stockholders.

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New York Graphic.l
The recent Boston bank failures
following so closely after tho collapse
ofthe Mechanics National Bank has,
in q measure, weakened the confidence
Of depositors and business men, who
have awakened to the fact that the
presidents and directors Of many Of
the leading banking institutions are
but "fgureheadsD and to the necessity
OF the adoption of some
system of examinations of az
counts which will preclude
the possibility of breaches of trust,
large or small, on the part Of cashiers
or other officials in the future So
widespread is the alarm and so strong
is the desire manifested to secure hon
est and capable bank presidents and
directors-men who will devote their
entire attention to the interests of the
shareholders and depositors-that
there is no doubt bat in the annual
elections now near at hand there will
be many changes in the directories OF
many banks throughout the country.
A few Of the old and cautious bank
presidents Of this city who have
weathered not a few heavy financial
storms, and who arc familiar with all
the symptoms that precede a none
tary, disturbance, believe that the
three crashes Of the past three weeks
arc but the forerunners of others, and
warn the neople 10 take in sail and be
on their guard,
THE bell has been rung," said the
veteran John Thompson, Of the Chase
| National Bank, to-day, land it will
be we'll for banks and business men TO
exercise more prudence, for it is evil
dent that there is danger in the at
mosphere. Depositors in banks are
apprehcnsive, and while | cannot yet
believe a reyulsion is upon US, yet a
few more Of these disasters such as
have oyertaken the Newark and Bos
ton banks will precipitate a panic, and
a panic will lead into a revulsion and
a revulsion will essentially break up
the prosperity OF the country. These
failures demonstrate the fact that
there is q vast deal of reckless gam.
bling being carried on throughout the
country, which had its fr~stimpulse in
the profits when the boom was on
aud almost every venture yielded a
profit. We are going too fast. refer
to this because in the delinquency Of
bank officers it is often shown thatt the
defalcation is the outcrop-ofa venture,
Banks that undertake heavy negotia-
tons which, if fortune favors, will
yield enormous dividends, but in
which, if fortune frowns, bankruptcy
is inevitable, must always stand in the
category Of doubtful institutions.
THE deposltOrs and stockholders in
banks are sufficiently numerous to
make the question Of bank manage
ment vastly important. ] attach very
little Importance to bank examiners or
official examinations. Their diseov.
cries are generally too late to save a
badly managed bank. Having re-
ceived their appointment at the rec
ommendation Of bank officers, they are
too modest or too squeamish to expose
the small financial deYiations of their
friends, even if they are smart enough
10 ind out their sins Of omission and
commission! Bank examiners are
mot bank managers. Examiners can
only expose. Managers are presumed
to be on duty. Directors are presumed
to direct or manage, and 10 them the
depositors and stockholders must look.
1t is notorious that boards of directors
are made up Of high sounding names,
with an object to draw business, and
with no expectation or desire that
management be required. In this fact,
in my opinion, lies the greater portion
of danger; the power to secure good
management lies in the hands of the
stockholders at their annual election
What can be done to secure the
reforms in bank management neees-
saTy to restore confidence and secure
safety to depositors?"
First" said Mr.. Thompson, Grad
icate every ~igurehead from the Board
OF Directors, and elect Directors who
will direct. Second, if an institution
has a multitude of Directors, diminish
the numbers to the minimum allowed
by law, so that the old adage, what is
e~VerybOdy's business is not my bust
ness, cannot be thrown from one Di.
rector to the others. Third. Strive
to place the MANAGEMENT Of banks in
the hands Of stockholders who have
, the largest interests in It's welfare, and
who will be the heaviest sufferers il
case of disaster. Failing to efect
some salutary guard, sell your shares
start a n3w institution, and be SURF
the owners and Directors can b.
counted on your fingers. Deposition
can surely catch an idea from what
have said. repeat it. My idea il
that Directors are fduciary agents fol
the stockholders and depositofs, ant
I as such iduciary agents they should
I by law be held responsible for thl
e full amount Of losses sustained b.
| bad management or by neglecto of duty
r and their liability should be Of
$ fduciary character, and judgment.
against them should not be wiped on
: by taking the benefit Of the ~insolyeno.
{ act. This would secure good manage
ment in banks"