The morning call. [volume] (San Francisco [Calif.]) 1878-1895, 1891-11-04

The Maverick Bank OF Boston, which has
just gone 10 the wall, enjoyed a business
and prestige far beyond what its capital
warranted. That was only 100000. A
year ago it showed a surplus and undivided
profits amounting to about 81, 200, 600 more.
But even this would hardly explain a
deposit line seldom falling below ten and
sometimes reaching thirteen million dollars.
The explanation OF the anomaly is the repu-
tation which the bank had acquired during
a long series or years for conservative and
prudent management.
Its decline and fall is the old story Asa
Potter and one friend acquired by purchase
$500 OF the 1000 shares OF the bank capital,
thus giving them absolute control OF the in
stitution. They then proceeded to borrow
from the bank, and in q short while Potter
and his friend had borrowed the whole
capital and surplus and something like
million of the deposits. With the money
thus obtained they proceeded 10 speculate.
and the speculations turning out badly, as
they usually do in such cases. they ran
along until a trtling accident petty
quarrel with another bank preSident-led to
an investigation and the catastrophe came.
II now appears that the bank owes some
five or SIX millions over and above its
assets, and besides what may be realized
from Polters property. la L stern cities
the rule is that when a bank fails other
banks assess themselves TO make good the
deficiency in its balance sheet where that
deficiency is not too large. But in this case
the Boston bankers do not feel disposed to
levy an assessment of five or six millions on
their stockholders. They will probably let
the Maverick go down without interference.
1t will be a blow 10 Boston pride and 4
shock to the conservative instincts of Bos-
tonians, but the blow and the shock can be
bettoT borne than an assessment of five
millions.
When explosions of this kind occur the
public foam at the mouth over the dereiic-
ton of duty by Bank Examiners and Bank
Directors. AS a matter of fact, Bank Ex-
amlner Magruder reported, as long ago as
last January, that the bank was in an un-
safe condition, out the Comptroller of the
Currency took 10 action, and when the failure
occurred Mr. Magruder fell down dead. AS
to Bank Directors they are generally figure
heads, who rely upon the President and
Cashier for the conduct Of the business Of
the bank. They are chosen because they
have been ell-adyertisei in the mercantile
community, and are generally esteemed to
be men of probity and character. But
scarcely one in ten Of them ever takes any
active part in the administration Of the
affairs of the bank. He has his own bust
ness TO attend to, and he is far less familiar
with the details of banking than the Cash
Ter who is paid to know them.
II the Maverick Bank had been doing
business west Of the Missouri Valley, its
collapse would have been ascribed to wild
Western business methods. The Boston
papers would lave abounded in homilies on
the reckless ways of Western fnaneiers, and
would have pointed out how differently
things are managed in sedate and consery-
alive New England. One can fancy the
grave counsel which the Boston Post and
Irdreler would have served up for our con-
sumption. These New Eaglanders are now
realizing that bank failures are not like
social usages, a matter OF meridian; and
that in the Oldest and wisest societies men
will try TO get hold OF other peoples money,
and if they succeed, will often make away
with it. 1t used to be said that you could
always tell when bank in Kansas or Ne
braska was going to fail by footing up its de-
post line; whenever that reached such a
figure that there was more money to
be made by suspending than by continu-
ing in business, the bank closed its doors.
1t was by refusing to fail when there was
money in falling that Senator Plumb ac-
quired his hold on the people OF Kansas
But after all, it is not so very different in
New England, or, for that matter, any
where else. Money is just as sweet in Bos-
ton as In Topeka. In one place, as in the
other, given percentage OF adventurous
spectators will concoct schemes to fitch tue
money of other people. They do not al
/ first take it for keeps" They propose to
operate with it, to double it. and then to
restore the original stake to its owners. But
the law of compensation comes into play,
and declares that stolen money shall not
fructify. The danger of the thief increases
as his position cUmpels him to swell his
thefts, and some day smash is the result