St. Paul daily globe. [volume] (Saint Paul, Minn.) 1884-1896, 1893-11-25

Examiner - hFHyOH SOnpii-
mented for DiIigence-Direc-
tors Should Charge Off Bad
Debts, and Their Liability Be
More Clearly Defined.
The grand jury of the September
term finished its arduous tabors yester-
day and handed in its final report. The
report deals principally with the bank
ing laws, and concludes with number
of pertinent recommendations for their
amendment. This portion of the report
is as follows:
In view of the very important and I'M
usual number of cases of financial in
situations which have been investigated
dI ring the prOtracted session OF the
grand jury, we deem it not only proper
and eXpedlent, but believe it our duty,
to report our Impressions and make GER
tain recommendations which we believe
are of vital Importance, and, if they can
be adopted by our next legislature by
way of amendments to our existing
banking laws, our work will not have
been without result.
We would recommends:
First-1hat much larger latitude be
allowed the public examiner i'll the
ili0NlCl VI ClOSllS lHSOlNSHl Vi
banks. The present law only author
ICES a report to be made to the governor
In the case of discovering bad manage
ment or corrupt condition of the bank.
Our recent lnVeStig ationS show con-
ciuSively that the law ought to grant to
the superintendent of banks the author
lily TO Immediately close bank when in
his own judgment the case requires it.
Much serious loss might have been
ayerted during the season just passed
III several cases Of VIGOROUSLY rotten
banks If the power had been properly
vested III this officer to summary close
their doors when the real status of the
bank had been discovered.
Second-We see no reason why our
stale laws might not include the proViS-
ion of our national banking law, which
gives the supervising officer the author
ity TO appoint receivers of inSOlVent
banks without delhy, and to enforce the
liability OF stockholders i'll cases where
the capital stock has been impaired by
bad debts.
Third-We would further recommend
the enlargement of the duties of the
public examiner in the matter of deter
mining the condition of the bank prior
to its public opening, and the real status
OF the banks capital stock paid into
such corporation should be passed upon
and approved by competent and I'M
prejudiced officer in lieu OF the usual
certificate of its president and cashier,
and this officer should be our public eX-
aminer.
FOurth-Our attention has been par
ticularly called to the apparent defect
in our state laws governing banks in not
requiring at stated times the charging
off of bad debts. 1t is certainly in the
of djShnnact honty off
have found, to completely deceive the
examiner as TO the amount of overdue,
doubtful or absolutely worthless paper
held, and this perniciouS practice of
carrying bad debts or covering up losses
will eventually prove serious impair
ment of the capital stock, and we would
recommend an additional provision TO
our banking laws, requiring directors to
list and pass upon officially annually all
assets that are good, and to charge off
all bad debts, at the same time making
the omission of such an annual listing
an act punishable by heavy penalty to
be fixed by law.
Fifth-The legal limit of Individual
loans should be more definitely fixed by
law or at least the penalty for over
stepping the limit should be more Sc
we're than the misdemeanor under our
penal code. 1t ought not 10 be possible
for one man to loot bank of large
percentage OF its deposits under his own
or an assumed name, or through cor
poratIonS which he may have organized
for the very purpose OF borrowing large
sums of money. This pOint.we believe,
should receive the serious attention of
our next legislature.
SiXth-AS a grand jury we wish,
above all other recommendations made
i'll this report, to call the public atten-
ton to the weakness of our banking
laws in fixing the responsibility of d.
rectors. We have found, in more than
one case, gross, If not criminal, negli-
gence on the part of directors in attend
ing to the duties of their office. If
proper penalties were attached to a
failure to fully perform the duties that
should devolve upon director OF finan
cial institution, there would be fewer
failures and less embeZzlement of pub
lie funds by officers caring for such
trusts. Heavy penalties should be the
reward Of such negligence, and directors
should be held equally liable with man
aging officers. The silent or willful
neglect of their duty should be all of
Tense punishable not as mSdemeanor
rs at present under our penal code, with
its insignificant penalty, but as afelony.
To this end we believe directors should
siderable extent, and consequently liza
bic, or held under heavy bonds, as any
other public officer, to fulfill the duties
as defined by law. In other words, d-
rectors of financial institutions should
be responsible officers. and their ac-
ceptance of the trust should not he coll
sidered matter of courtesy. but there
should be involved in all cases proper
personal liability. The public have a
right to demand some changes in this
direction, and hereafter we believe that
directors will be made responsible in
fact. as we'll as in name, and that there
will be proper penalties attached to any
subversion Of the trusts imposed on
them.
BENJAMIN +. NELSON, Foreman.
DAVID r. JONES, Secretary.
Thereport compliments the custodIans
OF the county Jail and the poorhouse
for keeping them in good condition,
md urges that the youthful prisoners
n the county jail be provided with
quarters removed from the old-timers.