Morning journal and courier., 1881-12-08
COMMUNICATIONS.
Banks and Banking.

To the Editor of the JOURNAL AND COURIER: Not long since you favored me with space in your valuable journal to express 8 few ideas relative to 8 recent disaster in banking, and referring to the present loose way of making examinations. Since then Boston hasshad one more unfortunate bank and a few 'ships cousins'' have elsewhere increased the list.
 | In the case of the Newark bank, there | seems to have been a long history back, ! which proves conclusively that there were those in that citysswho were not surprised, except as to the extent of it. And the extent of the disaster and it's reaching back into years establishes the fact, stronger than ever that official examinations by govern ment officers are many times next to worth f less, for under their eye, even when they ! have been warned they heed neither facts nor kindly warnings.
 When Mr. Wm. S. squier, 8 former officer | in the Newark bank, in confidence kindly ! warned Comptroller Knox, and suggested to him some of the places or accounts to look | into, that officer simply sent shGd0ao to ex- anime the bank and gave him the confidential ! letter he had received, and allowed it to be shown to Mir. Baldwin, the cashier. This kind of examination and breach Baldwin, who, after that, increased
 the breach at least $500, 900, and to this ex tent the depositors have special claim on the 1 government For had the comptroller and deputy examiner,done their duty, then they would have saved at least half million of | dollars, which after that date was lost, and perhaps larger amount. It is too simple thing to examine bank and learn it's true indebtedness to ever be de- ceived, and when deceptions have come to light they prove in every case unmitigated stupidity, ignorance, or design to deceive. The writer says this having been an examiner for three years, never once deceived, and never once examining the books of 8 bank, for examining the books of a bank is not examining the bank any more than in specting the acres on which wheat grew is examining or inspecting the wheat itself. True, after the capital and deposits of a bank have been stolen, some idea of where they went or who had them may be traced out by ! the books, but so far as examining bank in regular business is concerned there is but one ! way, and that way is never adopted except as ! the exception.
 It is time that all this pretence of watch fitness was abandoned, and common sense and real examinations substituted; for until this is done defalcations and ruin always will accumulate, and more silly laws and officers of the law will follow. Just to the extent that States and governments assume the l management of corporations and business, 1 just to that extent they become morally and
 
 or not they repudiate the doctrine, it is true. | The law holds express companies, telegraphs, railroads, steamboats Gc., &c., to their per sonal responsibilities, and the same law of responsibility should hold up the government l to theirs. The truth is, the law and the cus- l toms of the bank department are such that l directors themselves depend upon govern ment examiners and the sworn statements of 1 their own officers to the Comptroller of the | Currency. If this were not so, the directors of every bank would look out for it, and 1 they would know if, or not, the bank was in | line and that knowledge would be the truth | of the matter.
 He who knows anything about banking l knows that it is not worth cent to call up- l on bank to show by sworn statement how | it stood on some previous particular day at 3 o'clock. If said day had proved to have been "black Friday" or a ssb1ue Monday, :"
 what of itP No law could be made to avoid 1 it, or to mitigate it's disasters. You might as 1 well compel man who did not get drowned on particular day to make an affidavit to show how near he came to 1t, and then cen sure him because he did not think to carry in | his pocket few extra air cases.
 In short, MT. Editor, too many of the bank examiners are useless political orna- ments They are shadows and not the sub
 stance, and should be discontinued, and that part of the sham safety be corrected by such l alterations of the law as would be power l fu1 incentive to do right and force out of the
 banking business those useless legal require ments which merely vex and annoy and do no good, and leaving, as of old, the directors
 accountable for the manner in which the
 funds of the bank are used. The govern
 ment hold the people up to their liabilities | and the performance of their duties and ob- | legations; in return, let the people hold the government up to its duties and. obligations Lone of which, so far as. the people are con