The morning news. [volume] (Savannah, Ga.) 1887-1900, 1896-12-23
Reckless Banking.

Notwithstanding the stringency of the
national banking laws and the severity of
the penalties for violating them the num-
Der of national banks which are wrecked
by bank officials who violate these laws is
large. National bank failures would be
of very infrequent occurrence if the laws
for their control We're strictly obeyed It
seems to be impossible in all cases, how
ever to find men sufficiently honest to dis
charge faithfully and conscientiously the
trust reposed in them.
An account of the suspension of the Ma
tional Bank of Illinois was given in our
dispatches yesterday. 1t is one Of the ARG
est, and was regarded as one of the SAT-
est, financial Institutions Of Chicago. It
was ruined by reckless banking. 'All the
facts have not been published yet When
they are known it may appear that the d.
rectors and officers have rendered them
selves liable to criminal prosecution If
they have it is to be hoped the law will be
enforced against them to the utmost eX-
tent. RI
From the published accounts it appears
that they tHUpmgly and deliberately VIC
lat ii the national banking laws. AS long
/ ago as last June Mr.. Eckeis, the controller
of the currency, was made aware Of the
fact that the banks condition was peril
Gus, because sums of the banks deposits
had been loaned on insufficient security.
At that time he would have ordered the
doors of the bank closed. except for the
promise of the directors, that they would
call in at once the loans that were unsafe
and the prospect that the bank could, un-
der safe and conservative management,
work its way out of its difficulties. The
directors did not fulfill their promise. They
continued their reckless policy of ioaning
money in large amounts on insufficient Sc
curity. The consequence was what might
have been expected and what Controller
Eckels foresaw.
As an illustration of the banks reckless
method of doing business it is stated that
it loaned $4,000 on the bonds of the
Calumet street railway. This loan alone
exceeded the banks entire capital and sur
plus. The Jaw does not permit bank to
loan to one person or one corporation a
sum larger than small portion of it's cap
ital. There were other large loans, one
being for $4,000 to a firm of which a SON.
in-law of the banks president was a men,
Der.
When the bank attempted to dispose of
the street railway bonds, in order to get
back the money it had loaned it found it
could not do so. It's efforts to sell the
bonds aroused suspicion and brought about
the failure.
Just what criminal liability the officials
and directors of the bank have incurred
is not stated in the dispatches, but it is
fair to assume that they are liable to
criminal prosecution, and that they will be
prosecuted.
The deposits of the bank amount to SILL
600, 900. The loss of such an immense sum,
or even half of it, would bring trouble into
many homes in Chicago and endanger
many business interests. In fact, the
banks failure has caused a loss of conf
dence in banking institutions in Chicago
and brought about run on some of them.
Before confidence is restored hundreds, and
POI maps NhO0SdiiuSs VII DC ilAldACldllS III
jured if not ruined. If the authors of
this trouble and ruin are not held to an ac-
countability to as great an extent as the
law will permit the government will be
negligent Of it's duty.
Only a little while ago a New
Orleans national bank failed, and
dragged down other financial in
stitutions. In Denver national bank
was wrecked by system of ''kiting" In
both cas7s the officials of the wrecked
banks were guilty of wrong doing, ana the
government undertook to prosecute them.
Our dispatches yesterday stated that the
Denver bank officials had that day been
convicted And why shouldn't they be?
The bank official who deliberately uses
bank funds for advancing his private in
terests, contrary to the plain letter of the
law, is no better than the burglar who
blows open banks vaults and carries
away the banks money. Each accom-
plishes the same end-the robbng of de-
posltors and stockholders-but by differ
ent methods