The Indianapolis journal., 1893-05-15

times been examined twice ayear. Once
In while the banks have asked Tor
special examinations. and. of course, banks
have often private examinations. for the
benefit of their boards of directors. The
Controllers order is entirely inexpensive
to the government. the fees for the ex-
aminations come solely from the banks
themselves. Nor Is there likely to be any
serious objection to the new plan on the
part OF the banKers. In the first place.
the cost Is ,inconsidersble. varying. for
single examination, from $50 TO $40. sc-
cording TO capitalization. The moro fre-
Quent examinations. moreover, project
oihcers against careless or dishonest
clerks. and in general inspire healthier
confidence among the business COM
mnnIty.
The bank examiner drops in some day
without notice or warning. and practically
takes possession of the bank about TO be
examined. for the day or two or the longer
period. during which the examination Is In
progress. He counts the cash and the notes
and bills and looks over the stocks and
bonds and everything. In short. that is
valuable to find whether the assets or the
bank. as called for By the books. are sc-
tually on hand; and every silver quarter
and Rreenback or piece or collateral ne
must actually count In order 20 know this
Then he figures I'D the liabilities to see II
they correspond with the figures on tho
books OF the bank. He bnds ont where
the bank is borrowing and what interest
it Is paying TO know whether IL Is borrow
ing too much or whether 1t Is paying too
much interest. The la wful and safe rate
.of interest varies, of conrse. in different
communities. from II per cent. IN Texas. or
j. in Montana. dewn to g IN the Last. or
even 20 . per cent. for call loans In New
York city.
The examiner after finding that the as
sets and the liabIsbilities appear 10 bal
ance and that the bank has not borrowed
suspicionsiy. secures verihcation OF his
results by an actual correspondence upon
blanks furnished by the Controllers office,
with the executive officers. the cashiers
nsnaIly, with all the banks with which the
particular bank under examination has ac-
counts. and. OF course. these are numerous
and the labor very exactiDg. Ibe obJect OF
this vericstion is TO find II the books of
the bank tally with respect both to what 10
has and what it owes.
TRICKS OF DISHONEST BANK OFFICERS.
method not uncommon. among the very
small proportion of bank officers who
choose to be dishonest, is to put dollar
bills INTO packages of tens or tifties. or to
put silver dollars into bags containing
gold ones. This implies that the work of
the dishonest officer is not supervised by
any other officer of the bank. lt Is not so
transparent a fraud as might at first be
Supposed; for IL the embezzler il not
watched from the inside, neither Is he
watched from without-except once q
year The Controllers new order will
naturally prevent very much of this. for. IL
the chance OF detection Is twice as great,
the risk of detection will he undertaken q
| good deal less than half as much. The
thief absolutely expects to return the
money stolen. Sometimes he resorts TO
this substitution OF small denominations
for large ones TO cover his tracks In q
| previous unsuccessful speculation.
Another scheme. especially where two
positions in bank. like that of teller and
Dookkeeper are held by the same person.
| ts TO abstract bonde or any other negotia-
| bic assets and sell them. falsifying the
| looks as occasion requires. This lack of
| any check upon one bank officer by an
! other Is responsible for great deal of
| trouble. In recent case thousands OF
dollars of funds due depositors were actua /
/ Is abstracted by teller who. as book
| keeper. could accommodate his books
to his peculations by represent
dug due 'VHs depositoTs %S AWUas' %as less @ % than
| the fact. So thousands of dollars were
misused. 1t is extremely difficult for q
bank examiner To detect this sort OF em-
bezzlement. for evidently the only way TO
make sure that the sum OF money repre-
| sented on the books TO be due the depos-
/ ltors is the true amount. Is to examine all
the several pass books of all the deposltors
and compare them with the entries of the
| bookkeeper. This method of theft has been
heard of also where there Is collusion be-
! tween two officers of the bank-a more
dangerous plan. perhaps with the chances
| of some weakening or falling out on the
part of ono or the other of the c0nspirators.
| A method by which bank directors
| sometimes seek to make money with very
| great celebrity is to loan the funds of the
bank 10 themselves too much. This was
| the case of the Maverick, of Boston. It is
the hardest thing in the world TO convict a
| bank director of this misrepresentation. as
| the national bank law says that any act in
| violation of it must be "willfully perpe-
~
| the defense could be that with loans,
| whether made Co good and responsible par
| ties outside or TO alleged good and respon-
| sible parties inside the directory, there has
been no crm nal intent but rather u busi-
| nessllke tral saction. These embeZZlers
| not only conceal their tracks on the books.
| but they make false reports TO the Con-
troler. Heretofore the ckoning has come
| but once q year.
DECEIvING THE EXAMINER.
The officers of one bank Will sometimes
deceive tho examiner by representing that
come other bank owes it much more than
it actually does Here again occurs the
necessity for actually comparing the ac-
| commits of different banks for Il he vertical tion
| of tnemlall All well-oonducted baDksrecon-
| clle their accounts with other banks once
month and the clearing house In n large
city watches of course. the standing OF all
banks within Its membership. Ii
| ie not likely that banks ever
come into collusion with each other
to falsify their accounts with each
other. But one bank will sometimes heir
another out. unconscIously, when an ex-
aminlnstiOn Is actually upder wey; for if
the examiner drops in when the cash is
| short or the securities, for that matter. an
officer of the bank has been known 30 &c
ouy and borrow money or securities ro
make up the deficiency before that partic-
| uier branch of the examination has been
| reached. The possibility of this mplies in
| efficiency on the part of the examiner. be.
cause he is supposed. while examining q
| Dank, to take possession of lt. at least so
far as any change in It's condition is con-
corned.
In the West not long ago the officers of q
bank issued certificates of deposit In large
amounts 10 outside persons and received
the money for them. and then made the
books show the amounts due the outside
persons at very much smaller figures; that
is. certificates may have been issued fol
| $4,000, while the books were made TO show
that the bank was liable for only 5000
This thing was done in the case
mentioned to the amount of hun.
dreds of thousands of dollars. The
bank examiner could not detect the
falsihcation of the books unless he could
go to every person who had q certificate OF
deposit and find the total of all these Ger.
| tifcates md man1festlv thaf was imDOs