Savannah morning news. [volume] (Savannah) 1868-1887, 1884-08-15
PreHention of Panics.

One Of the shortest papers read at the
Bankers Convention, which closed its
session at Saratoga yesterday, was that Of
Mr. John Thompson, Of New York. The
subject OF Mr.. Thompson's paper was the
prevention Of Panics."
In his opinion business men are more
apt 10 lose their heads in a ''boOm" than
in panic. The panic only develops the
fact that business men have lost their
heads in a .bQom." he referred to the
fact that at the Bankers Convention three
years ago he stated that the country was
going too fast and that it was necessary
TO put on the s.brakes' to prevent dis
aster.
Periods Of great prosperity are al
ways followed by a reaction, be-
cause such periods are demoraliz-
Ing. They stimulate the desire
to get rich quickly, and they encourage
extravagances Of all kinds. Men engage
in the widest kind Of speculations and
take risks that their judgments do not
approve with the hope Of getting rich at
| once. OF course disaster, ruin, embezle-
ments. defalcations, domestic troubles
and suicide follow.
Nr. Thompson's paper contained some
good advice to bank officials. The
following is an extract:
Bank officers should manage their bank
and live on their salaries. DepOsitOrs and
stockholders forfeit all sympathy II they
tolerate a specializing official to stay one
hour in charge of their assets. Turn the
sppculat0r out or get out yourself.
Figure-head directors should also 90, or
be held individually liable.
The late panic taught depositOrs and
stockholders that a bank is not safe
that is controlled by bank officials who
speculate. The ruin Of all the New York
banks that have failed since the first Of
last May was brought about by the specu-
lations Of some one Of their officials. II
NAV be said that depositors and stock
holders have no way Of knowing when
the officials of the banks in which they
are interested are specializing. They
ought to be able to find out through their
I directors. Their first duty to themselves
/ Is TO see that their directors are
/ not mere fgure,heads. If the directors
do their duty bank officers cannot do
much specializing with the funds en-
LIu5~Eu 10 LlElls AAANs NDt~A1 - ~
I covered before they had stolen a great
deal. The trouble is that in almost all
cases no dependence can be placed on the
directors. They allow themselves to be
/ satisfied with what the bank officers tell
them. Some fail to make sure that the
banks securities are in the vaults
because they don't like to appear
to doubt the statements of the
officers. and others fail because they don't
like the trouble which an examination i'm
poses. It would seem, however, as if
stockholders and depositors ought to have
had all the experience they want with
tigure-head directors.
To prevent panics Mr.. Thompson thinks
that Congress ought to authorize the Sec
rotary Of the Treasury TO take up at any
time when necessary "any United States
bonds not exceeding in amount S10O,OOO,
600. and to issue therefor currency notes
equal in amount to the par value of the
b0ads deposited, and accrued interest on
the same" He also thinks that there
ought to be a large and independent insti-
tuition in New York city where the banks
ofother cities can keep their reserves and
surplus balances bank that will he to
this country what the Bank Of England is
TO Great Britain.