The Redwood gazette. [volume] (Redwood Falls, Minn.) 1873-1940, 1881-12-15
Comptroller Knox,s Report
WAsENa1oN, December

WASHINGTON, December 4
The Comptroller Of the Currency, in hio
annual report, says the recent failure Of the
1echanics' Bank, Newark, has called the
attention Of the public directly to the duties
Of Bank Directors and Of Examiner Of Ma
tional Banks. Sections Of the Revised
Statutes and by.laws Of the National Banks
are cited, and the report continues:
The duty OF . Board Of Directors 10
plainly defined, and, however innocent they
may be Of any intention to wrong, they are
responsible for the safety Of the funds com.
mitted to their care. II it can be shown
any Of them had notice Of illegal transac-
tions, i = serious question whether they
loss which may occur; and it IL . question
whether they are not also liable for losses
which may occur from neglect OF duty,
even without notice. II this 10 not Just
and proper construction Of the present law,
then It becomes question for the consid.
islation upon this subject IL not required.
The Examiner can have but limited knowl.
edge Of the habits and character Of those
employed in . bank. II the Teller II max.
ing false entries, and daily abstracting the
funds Of the bank; II . bo0k-keeper II
keeping false accounts, and render.
ing untrue statements; II the Cashier
cefvable and upon the register. books, and
transmitting such paper to distant places
where 1t il purported to be payable, 1t Is not
possible for the Examiner In day or two
to unravel this evil work. which may have
continued for months. and obtain . correct
balance sheet Examinations should be
periodically made BY competent commit.
tee, selected from the Board Of Directors.
They have the whole resources Of the bank
at their command, and IL they have any rea-
son to suspect dishonesty or fraud, it II
their business to investigate thoroughly,
and they should employ experts to assist
them in 50 doing. The Directory must
ants. The Examiner looks after the
acts Of the Directors. The report Of
the Examiner is confidential. It II
for the use Of the Comptroller's Office only,
and Is in NO sense . certificate Of the good
condition Of bank. In many instances the
capital stock Of bank has thus been found
to be impaired and the deficiency been made
public. In other instances banks have been
obliged to pass their usual dividends, using
their earning to liquidate all bad and doubt-
full debts. Tho number of banks passing
dividends the present year is 175; In 1880,
230; In 1879, 3O4, and In 1878, S43. Hun.
dreds Of instances occurred annually, and
many are occurring daily. wherein banks,
Of violations Of the act and are brought un-
der discipline Of the law. The records Of
this Office show only one among all the Ex-
aminers ever appointed who has been found
guilty Of any wr0Tg-d0ing."
Speaking of the Pacific National Bank Of
Boston the Comptroller says the Directors
had full information in reference to the ir.
regular and illegal methods Of the bank,
which have since caused its ruin. His let.
ter, in any properly conducted bank, al.
dressed by him to the Board of Directors,
composed, a. is the case in these instances,
of prominent merchants and business men,
should have been sufficient to correct the
abuse, and save the bank from the disaster
which occurred. The law should certainly
he 50 amended as to make it . criminal
offense for an officer of bank clandestinely
to make loans. either by the use of certifi.
Gates, as In this case, or otherwise.
A considerable part Of the report is given
to the subjects: Substitutes for Money, :"
1.-THE Proportion of Bank-checks Used, -
from data furnished by President Garfield;
"Checks and Drafts in the Principal Cities;;''
and the Comptroller says:
sit would be an interesting subject for
investigation to determine what proportion
the checks received by banks in New York
City ON any given day represent the opera.
tions at the stock Exchange, and what pro.
portions Of these operations represent
Legitimate, and what speculative, transac.
tiOns.''