The morning call. [volume] (San Francisco [Calif.]) 1878-1895, 1893-11-23
THE BANK OF ENGLAND.

1t is unfortunate that the recent trouble
at the Bank of England should nave hap
pened al time when the recovery OF con.
fdence In business circles is still incpm-
plete. There is nothing unusual ia tie in
cident; 1t is what constantly happens in
banks which conduct large business the
simple fact WAS that the cashier TO whom
the board of directors had entrusted tae
duty OF lending the money of the bank
made loans which have involved the In
stitution in loss. The thing has probably
ha ppened many times before during the
twenty years of Mr. Mays cashiership.
What distinguished this case from the
Others was that some Of the loans were
made TO a brokerage firm in which the
cashiers son was a partner, and which
since failed. 1t is not alleged that there
was any fraudulent intent by the cashier;
be merely exhibited want of Judgment,
and lack of the care which should have
marked the administration OF an official
who was clothed with such vast RESPONSE
bility.
1t is unfortunate for all parties that the
circumstances were allowed TO transpire.
All over the world the Bank of England
has been regarded as a type Of solidity.
Its conduct has been supposed tn be guided
by superhuman sagacity. When it has lost
money no one has known II, and many
have supposed that it never lost any. Now
IT appears that it is run by mere faliibIe
mOrtals like other banks, and that in the
storms Of finance it gives and takes like
any common money-lendiDg Institution.
This began to be suspected at the time of
the failure OF the BsrIngs. i began by be-
coming a mbeT of the banking syndicate
which took an assignment of the Barings'
assets and assumed their liza abilities; In the
end the private bankers unloaded on Il.
leaving il to shoulder the burden almost
alone. The operation must have locked
uD large share of the banks capital and
deposits. When these facts became known
it WIGS doubted whether the ability of the
bank managers was equal to that Of the
private bankers or the officers Of the Joint
stocE banks.
The governor of the bank last year was
London merchant namad David Powell.
He was assisted by board of directors
consisting of twenty-four merchants, of
whom fifteen had sat for ten years at least
at the board. How we'll they conducted
their business may be inferred from the
fact that the yearly dividends are 10 per
cent; the shares are worth about $1,000
each No institution OF equal magnitude
payssuch generous return to its stock
holders. But it is run on different rules
from our banks In cas5 OF q run the
Government always comes to its relief. SO
thar practically in it's case suspension does
not imply insolvency. The end which our
banks attain through issues Of clearing
house certificates is reached In England by
an order in Council spspending theIability
OF the bank.
When the losses incurred through Cash
Ter Mays imprudent loans came to the
knowledge Of the directors. they requested
him TO resign without pension. But they
instituted no proceedings against him. 1t
was hence naturally inferred that he had
been guilty of no offense which the law
could punish; that at the worst be had
merely been injudicious. IF that was
really the case, the omission of the bank
to vote him the usual retiring pension ap-
peared to be piece of vindictiveness. 1t
was followed by unexpected results. BE-
fore bis sons firm failed the father had
stripped himself of every penny and had
borrowed money on his individual credit
in the hope of saving him. Now he is
thrown out Of employment without a dol
lar. The persons OF whom he borrowed
money propose to throw him into bank
rnptcy. In the Bankruptcy Court solici-
tors will be entitled to ask him for full
record of his financial affairs. and in the
course OF this inquiry Ire will have to ex-
plain how be was enabled to lend the
banks money in SO reckless a way The
answers to such questions will be awaited
with great interest throughout the financial
world.