The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1883-03-14
RANK DIRECTORS.


The decision made by the Circuit Court
Of Macoupin county Illinois, if fol-
| lowed up may go lar toward determining
the responsibility of bank directors a ques-
ton that has long been the source of much
speculation. A heavy depositor in one of
the banks at Bunker Hill, in that State, an
institution that had long been insolvent
through populations of the cashier, and finally
closed its DOORS brought suit against the d.
rectors, holding that they were legally re-
sponsible through willful or culpable neglect
and the case has just been decided in favor
of the depositor. The justice of such deci-
A man who accepts the position of bank di-
rector almost always does so with the knowl
edge that he is thus honored because
his name will add to the standing
and credit Of the institution. His name is a
pretense that the business of the bank will
be conducted in a raightforward, careful
and business-like manner; it is a guaranty
that his personal watchfulness and expert
and that he will exercise the same oversight
of the affairs OF the bank that he does over
his own Ii it does not mean this, it means
nothing. That it does mean this it is only
necessary to imagine what the effect would
be were other names substituted as directors
in place of those of wel-known and infuen-
tia business men. What kind of patron
age would bank have-what kind of bust
ness would it do-after naming as its directors
men known to be defaulters or bankrupts or
of doubtful credit? A bank wants its direct
ors known, for the same reason that it wants
it known that the funds are kept in burg
lar-proof safe and that a Waterman
is on guard daily and nightly. 1t is prime
guaranty of the banks integrity, and if
through the influence welded by these men,
depositors are secured, these latter should
have some hold on the responsible directors
for any neglect of duty whereby deposited
money is lost.
This, of course, does not apply in cases
where money is lost in the regular course of
business, nor where simply bal judgment
results in a collapse. But in instances like
the great defalcation at Newark n j., where
millions were misappropriated by dishon-
est cashier and the loss was not detected by
the proper oficers-the directors-it is only
just that the directors be held personally re-
sponsible and that their personal property
be levied on to make good the loss suffered
| by the failure or indisposition to de-
tect the Encouragement at the earliest
moment. The decision at Bunker Hill is
that directors are personally responsible to
the depositors for money deposited after the
bank had become insovent; that it is the
duty of directors to keep themselves in
formed as to the condition of the banks af-
fairs, and that ignorance in that respect is no
excuse if diligence would have disclosed the
truth, and that, failing to keep themselves
so informed, they are liable. 1t is said that
the case will be appealed to the Supreme
Court, and it is to be hoped that it may be-
and this matter determined. Ii the statutes
as now written, will not hold directors re-
sponsibe for neglect of duty in this respect
they should be so amended as to secure that
end. The entire financial interest of the
country is involved in this question.
If it be decided that bank officials whose duty
it is to inspect the workings of the bank and
to act as guarantors for its stability are
not to be held accountable, it is time to ask:
Tor what are bank directors and bank officials
generally? 1t certainly is to the interest of
every conservative and honest banking house
to have the law so made as to call for the
greatest care on the part of directors, and to
provide that no neglect of patent duty shall
escape the proper penalty. If unsound and
irresponsible houses can attract business
only to be followed by disaster legitimate
business will suffer- 1t is therefore to the
interest alike of the banks and of the public
that the law shall hold bank directors to a
strict accountability for failure to detect
Insolvency long after anything like a careful
investigation would have unerrngly de-
tected it.
THE Board of Trade has unanimously