The herald., 1896-12-31
BANK MANAGEMENT

DAMN MAN NEALEMEN j
Quite number of national banks have
failed recently. but every one of them
was obliged to close because every rule
and law of sound banking had been vio-
lated. The bears in the speculative mar
kets are trying very hard to make it
appear that the business situations the
country over Is weak and uncertain, and
that bank failures are the natural thing
to expect, but they give out pessimistic
and alarming reports to depress values.
The lower they can force prices the
greater will be their profits. They are
a class Of men who never engage in
legitimate business operations. They
may be said to live upon the misfortunes
OF commerce, and nothing conduces
more to their advantage than bank fall
ures. 1t is SO easy to attribute the clos
ing of money institution to hard
times" and the public is so ready to be-
lieve it all.
The condition Of the currents of trade
and traffic movements had no more to
do with the recent bank failures than
the Armenian question or the health of
Ii Hung Chang. They failed because
they had been robbed by trusted officers,
and they would have closed their doors
no matter what the business conditions
were. Thieves do not stop to inquire
whether the pepole are buying much or
little, or whether business is active and
profitable or inactive and Improbable.
For months and in some instances for
years the guilty officials of these
to loot the trust that had
been confided to their keeping,
and the institutions had to fail. OF
course the money was borrowed on
personal account" and of course, too.
had the ventures in which the money
was risked turned out as was expected,
the bank would have sustained no loss"
That is the old stereotyped and thread
bare explanation, but those who "bor-
rowed on personal account" stole the
money. and after a far more disreputa-
BILE fashion than professional safe
blower or sneak thief would have done
the job.
There could be circumstances under
which a bank might have a legitimate
excuse for failure, but such conditions
are not often seen in the world of busi-
ness. On general principles bank that
is conducted in harmony with the SCI
ence of sound banking cannot legiti-
mately fail and oblige depositor to sus-
tain any loss. The share capital of
bank is security against loss to the de-
positors to the extent it is used to stand
between the depositor and losses that
the bank may sustain, but when the cap
ital is impaired from any cause, the de-
positor's security is weakened morally
as we'll as financially, for it often hap
pens that impaired capital prompts the
banks managers to take extraordinary
risks to make it whole. AS matter of
fact, even the slightest impairment of
the capital of a bank should be remedied
Immediately by the voluntary payment
of assessments upon the stock, or the
bank should go into liquidation.
Except under the most extraordinary
circumstances, the money of the depos-
itors should never be in jeopardy, and
it never is in a bank that is honestly
managed While the bank is at liberty
under ordinary circumstances to hire
out rs per cent of its deposits for its own
profit 1t never has the right to place it
except on paper of the highest CONNER
cial character, and then in no very large
and honest management it is next to
impossible for bank to fail. OF course
run" upon bank might oblige it to
clio it's doors, for it is not required of
bank to keep enough cash on hand to
return all deposits on demand, but if it
closes it's doors and has not enough
assets to satisfy the account of every
depositor its management has been in
ignorant or dishonest hands. The bank
that makes it's officers and directors pre-
ferred borrowers is dishonesty man
aged. When business integrity and
business sense direct the affairs of a
! bank, it is monetary Gibraltar.