The Seattle post-intelligencer. [volume] (Seattle, Wash. Terr. [Wash.]) 1888-1914, 1891-07-23

The receiver of the Keystone bank of
Philadelphia finds that the assets equal
81, 726, 51l, of which 1896. 992 are of doubtful
value and Sl53, 912 worthless. On the other
hand. the liabilities are 81, 735, SIT, not in
Guiding the due bills for Bardsley's alleged
loan of $925,0OO of public money-or ST.
660,00o with those thrown in.
In other words, the bank has been robbed
of about 81, 500, 900, not by burglars from
without. but by embezzlers from within.
The worst of it is that these national bank
frauds not only reveal the existence of ex-
traordinary opportunities for theft. but
they establish still more ominous fact,
the utter inefficiency of the only means
which it is possible for the government to
employ to check or prevent fraud when
once the bank official proves to be a
scoundrel. During the nine years ending
with 1856 there were IS separate cases of
defalcations in national banks, amounting
in all to $9,959, 741, divided as follows
among the responsible officials of the
banks: Fourteen presidents, total en-
bezzlement, s5,1si,569, average for each in
dividual, $3.50, 1926; q cashiers, total, S.
5000 average, $50 s57; tellers, S462, 600,
average, 1000. and IL sundry officers,
$5l5,l72, average, S46,SS3. These figures
represented direct frauds
OF the q national bank failures that
took place during the four years following
1856, twelve were due to frauds by bank
officials, while eleven were attributable TO
~ &, H.,
management and two to decay of trade.
The record of the current year will raise
this startling average. While the average
losses from national banks is very small.
since only fraction over three per cent. of
the national banks organized since 1863
has been placed in the hands of receivers
nevertheless one is startled by the absolute
ruin of nearly all the banks that have
been victimized by fraudulent officials; by
the impunity with which such frauds are
committed, and the seeming difficulty of
devising any means TO prevent them.
1t is a noteworthy fact that some of the
banks esteemed to be safest have proved
to be the most rotten and corrupt in their
management. The national bank exam
liner is seldom . person who is likely to
discover defalcations which presidents and
directors fail to trace. His official func-
tions are TO see that the bank was properly
| organized and administered; that no law
had been violated in respect to loans, re-
serves, investments, bad debts, dividends;
and that the assets were really worth the
amounts representing them on the books
of the bank. He comes but once year,
stays but single day, and Of course can
not be relied upon to discover thefts or
false entries that have escaped detection
by the directors, who are always present,
and are naturally spurred to vigilance.
since they are personally sure TO be the
sufferers if the banks money is stolen.
No mode of official examination by the
federal official, under the present bank
| system, can be expected TO be an effective
substitute for the interested vigilance and
personal accountability of the president
and directors of the bank.
The English banking system is superior
TO our own, because instead of maintain
ing thousands Of small banks il permits
the establishment of large banks radiat-
ing in all directions from a central Office
within q limit of 500 miles. Under this
system the examination is efficient and
continuous, being, so far as the branches
are concerned, conducted by the bank