Vermont phÅ“nix. [volume] (Brattleboro, Vt.) 1834-1955, 1881-11-11

| dreds Of thousands Of dollars TO the railroad
company, then all the old railroad bridges in
the country are carefully looked after, and
the public travel in almost perfect safety, as
to defective bridges, for a time, at least. SO
IL will be in the banking system. Directors
will look with double care after the affairs of
banks till the effects of the shock to the gov
eminent banks, lately received, shall have
worn away and, indeed, part of the les
son, dearly paid for, will be retained in the
form of record and experience" As to what
constitutes a safe bank the Herald says;
"a safe national bank should first be perfect In lie
organization. perfect record Of it's organization
down to the smallest detail ia kept in minute books.
Bylaws for the government Of the affairs Of the bank
should at once be adopted and rgidly adhered TO,
and these bylaws also part Of the records Of the
bank, always at hand. The capital stock Of safe in
suion Is all paid in ps soon at least as the statutes
require. In short, its capital stock ia reality and not
hction either in whole or IN part It's stockholders
should be men of means, able to buy the stocks and
not active merchants or poor men who are at once
obliged to turn around and become borrowers to the
full extent Of their credit Here is dangerous ground
to the safety and prosperity Of national bank. II
nine-enths Of it's stockholders are borrowers of mon
ey, instead Of lenders and at insist upon large
amount Of loans, that bank may be considered to be
in an unsafe position. The public have a right to be
distrustful Of bank where even one Of the heavy
stockholders s known to be borrower Of funds from
the bank equal to or greater than his amount Of capt.
tai stock paid in"
The directors should be chosen with special
reference to their knowledge of and acquaint-
ance with the business of the community in
which a bank expects to prosper. TOO
much stress cannot be put upon the practical
capability and shrewdness of each member of
the board of directors. If each member is a
irst-class accountant, the affairs of the bank
are doubly safe. II they-or, at least, one or
two of them-are naturally suspicious men,
e-catchers-always 'mousing round
disagreeable as such men are in polite society,
so much the better for the safety of the bank.
Above oil, the easy going, lazy man, who is
inclined to shirk duty as much as possible, is
to be avoided as q director of a safe bank"
The bookkeeping of the bank must be sys-
tematic and ineligible. Suitable checks or
restraints must be placed on the cashier and
clerks, and these officers must be paid liberal
salaries. "But, after all" the Herald says
"a great deal of confidence must be placed in
human nature. Somebody must be trusted
and the only way to proceed is to take up
with the advice of the eminent English jurist
and have honest men chosen. The Newark
defalcation now appears to have grown out
of a nest of rogues but, after all, any one of
the directors had right to demand why that
bank purported in its accounts, to have 81
500, 600 of reserve funds in New York, and
to demand that it be withdrawn and loaned
to local borrowers. Good bank managers are
universal in declaring the opinion that the
directors are to blame for not having attend
ed to this matter But in Newark, as in
Brattleboro one man power, so dangerous
to the management of public institutions and
corporations, was regning supreme.
With tho harsh criticism so freely passed
upon Controller Knox and the New Jersey
bank examiner the Herald does not sympa.
thize:
SIN reality the bank examiner has but little power
The statutes fail to dictate to him powers beyond the
examining Of the agents officers OATH The
property Of the bank is not his to examine. He must
take the statements Of the officers oath. Perhaps
here is one OF the weak points in the banking act.
But said one who knows from experience where
of he speaks. 'an examiner cannot take up bank by
the nape Of the neck and shake it and say why do
ye so? Step this or shall annihilate you'll The bank
examiner is simply an examiner OF the officers under
OATH 1t Is true that verihcation belongs to him. but
in this he is behind the bank directors hank
aminer, according to the terms Of the banking act,
must make his EXAMINATIONS but the bank officers
can If they At, make false reports and entries for
the purpose of deceiving him, and his in de-
tGcting them Will depend entirely upon his skill and
experience expert and detective. Dishonest
men have always been found in all kinds Of business,
and in banking affairs they will crop out now and
then, and bank examiners cannot forever Annhilate
them. bank examiner has not the power TO
wind up the affairs of bank. He only report to
the comptroller and from him the decision must
come. The odium being cast upon Comptroller Knox
concerning the Baldwin affair is not generally relished
in banking circles, and by the intelligent public Is
considered unjust"
The suggestion has been made in several
"a
ableness questioned, that the banking law be
SO amended as to compel directors to be pres
ent when a bank examiner is doing his work,
and to make them criminally responsible if,
after they have approved the securities which
the cashier presents to the examiner, it shall
turn out that these are forged or bogus. I'm.
der such law there would be fewer men
who would accept the position of director of
a bank simply as a matter of honor or orna-
ment, but this would be gain. There would
be great waking up among bank directors.
The Philadelphia Record thinks the offici-
al visits of the bank examiner should be sud
den and without warning, so that dishonest
officials may have no time to elk things" for
his inspection. Another suggestion which
the Record makes is that sit would probably
be an improvement upon the present system
if the examination of national banks were
committed to competent and trustworthy
persons occasionally designated for that pur-
pose, instead of being lodged with a set of
permanent officials as at present" First-class
accountants not in the employ of the govern
ment, who should be called on from time to
time, the Record thinks, would be surer to
make thorough and searching examination
than is the regular examiner under the pres
ent system. The attention of the business
community is thoroughly aroused on this
subject, and it would not be strange if the
outcome of the discussion now in progress
should result in some beneficial changes in
the minor details of our national banking
system, which is SO generally and SO justly re-
garded as being, on the whole, "the best ev-
/ l.