Pittsburg dispatch. [volume] (Pittsburg [Pa.]) 1880-1923, 1891-06-06
THE PUBLIC FORUM.
How the Thought of the Hour Guides
Some Peoples Pens.
A SYSTEM FOR SAFE BANKING.
Why ProhibitionistS Oppose the New Bal
lot Reform Bill.
STRONG DEFENSE OF NINE. BLATATSKY

To the Editor of the Dispatch:
Being a daily reader of your valuable
paper NAV L ask the favor that you give
publication to the following: l want to say
a few words upon the subject of banking,
which. although very dry and unattractive,
is at present enlisting the keenest interest
of the general public, owing to the gigantic
frauds which have of late been unearthed,
showing the successful career of pilfering
scoundrels who have had vested in them I'M
limited power with millions of public
money.
Think it is high time thatthe rotten sys-
tenn of bookkeeping and auditing now in
vogue should be turned to the wind and
something of more practical nature used.
Why should not an institution when organ
lied TO transact the business of banking be
compelled by the Government to issue a
small pamphlet embodying therein the sig
nifcant clauses of the principles to be OBJ
served in its articles of association,
and the submission of such articles
to the State government for approval.
Then have a charter granted by the Govern
ment for the legitimate trading of such in
IlTuLlOn,
body of managers held individually respon-
siblc for the success of its business. The
board of management in all banks should
consist:
First-of n directorate numbering u men,
who should be OF the highest intel
leetural moral and financial standing, who
should meet at the bank one day in each
month, to receive and scrutinize minutely
the reports handed to them.
Second-That a private committee COM
posed of one-half of the members of the di-
rectorate should assemble once n week to
examine the accounts as shown on the
abstract books, which should be taken out
rs soon after the Saturdays work had been
posted and balanced as possible; and it should
be in this committee that power be vested to
grant loans on collateral security.
Third-The ofiicials of a well-conducted
bank should consist of Il general manager,
who should be a man selected from the lead
ing inanciers. He should conduct the gen.
erSil business of the bank and have power to
loan sums of money on approved security,
but not to exceed a stipulated sum.
Fourth-A general accountant, who is to
supervise all accounts, check castings, bal
ances and totals OF all entries carried to
ledgers and other books from waste pads.
Fifth-First teller, to be held responsible
for all cash, notes, bills and other cash real
liable paper, his accounts to be verified
weekly by the general accountant, who
should sign his book and have it produced
at the weekly meeting OF private committee.
Sixth-AIinor officials to be elected by the
tion and signing declaration of secrecy.
Seventh-No officer OF the bank TO obtain
loan on any condition, except when granted
by private committee on presentation by
general manager.
Eighth-The general managers accounts
to be kept strictly in credit.
Ninth-No director shall do business other
than on a strictly credit and cash basis-this
rule to be rigidly enforced.
The auditor shall be appointed by the
Government and must be an expert finan-
cier and accountant-hiS duty being to visit
the bank once in each month after the bust
ness of n preceding month has been closed.
lie shall provide an efficient staff to examine
from the vouchers and other documents all
entries, so far as it shall be deemed expe-
dent, to prevent any previous work from
covering a defalcation or false entry. He
shall also check all securities of the bank,
whether deposited for advances or of prop
erty belonging to the institution, ETC.; also
check the notes, cash, bills and other papers.
He is to have free access to all documents
and power to bring before the directorate
matters he may deem necessary.
4 semi-annual report shall be presented to
the shareholders at a meeting convened for
the purpose, and after the net profits have
been declared a faiT proportion shall be de-
voted to guarantee fund to be invested
in Government bonds before declaring an
interim dividend for the year, and this fund
shall be held INTACT in case ofany unforeseen
loss. That the liability of shareholders shall
be limited to the amount of the shares sub
scribed for, and that in no case shall more
than twO-thirds of a share be called up, the
balance to be held in reserve. Each share
holder. before having and shares allotted
him, must prove to the satisfaction of the
directorate or private committee that he can
be responsible for the unpaid balance should
il be wanted. This shall be repeated at the
discretion of the managers.
In no case shall the bank managers call up
the unpaid balance of shares without first
calling regular meeting of shareholders,
which must be duly convened and proper
explanations made.
The bank shall not enter any into business
which would require more capital than that
set apart for legitimate trading. Should more
capital be needed it must be raised by the is
sue offurther stock, to obtain which general
meeting of shareholders should be called.
As further safeguard against losses by
fraud, would suggest the organization of n
Bankers Guarantee and Trust Association,
TO be conducted upon n plan at present in
successful operation in England The OBJ
iect of the association is to insure all bank
ers whose officials are included in its men,
bership against any loss caused by such
menlbers in their official capacity as bank
empoyes-the guarantee of the association
to cover the estimated responsibility at
which they were admitted as members, some
being graded on basis of position held by ap-
plicant for membership, who pays an annual
premium to cover the Insurance.
The foregoing sketch is taken from practi-
cal workings OF banking houses in England,
at present being conducted on those princi-
piles, and in one of which had the honor to
serve for many years. JOHN SHAW.
PITTsBURG June 8.