The herald., 1897-10-06
OFFICE OF THE HERALD,

OFFICE OF THE HERALD,
LOS ANGELES, Sept. 8, 1897.
The preliminary ordinance of intention to
debtedness of the city in the sum of $780,
600 for school purposes in the further sum
Of $15O,OOO for fire department purposes has
passed the council.
The Banking Law Journal contains an
article by Frank Blackjack urging a closer
connection between the directors and the
clerical force of a bank as a means of
preventing defalcations. He says:
In many banks the cashier is the only
medium Of communication between the
clerical force and the board of directors
room, in many cases 1t not being consid-
cred bank etiquette for a director to go
into the clerical department alone, or to
look at an account on any of the books of
the bank. The president is supposed to
attend to the public that call and the out
side work of the bank, and the cashier to
the clerical department. This system may
have it's good features, but it practically
puts every clerk in the power of the CASH
Ter, who may be either morally weak or
even dishonest, or have one of those over
bearing dispositions which are OCCASION
ally met with that know no will but their
own ideas. Until the present notion that
directors are only elected for their ability
to drum up business for the bank has been
discarded and the director as well as the
other officers and clerks of the bank. is at
full liberty to go digging around the ac-
counts at his will and pleasure without it
being thought out of the usual run for him
to do so, defalcatons will continue, for
many timid or even sensible clerks in
In, yhnr
proceedings, will speak quiet word of
warning to a friendly director who comes
now and then to their desk to engage in
little talk, who would not think of making
an open charge to the cashier, who in all
human probability would suppress 1t from
the knowledge of the board as an imputa-
tion on his management,
No defalcation of any amount or running
through any length of time ever occurred
in a bank, and was confined to the knowl
edge of only one person; but so long as
the present system of keeping the directors
studiously away from the clerical depart
ment of the bank, except under certain
conditions and at stated times, is contin-
ued, so long will directors continue to sign
their names to long arrays of figures with
out an idea of the correctness of what they
are signing. The English system of
board of directors with a man
ager or managing director, is a
better preventive of defalcation than
the concentration of the executive
power in the hands of the president or
cashier, with no appeal on the part of the
clerk, for human nature is about the same,
and at all times it is much easier for
clerk to keep his mouth shut and his skirts
clear of anything that may have aroused
his suspicious than to run the risk of losing
his job by being too clever by half. In
conclusion, If bankers want to stop defal-
cations, they will do we'll to throw down
the wall that has been erected between the
directors room and the clerical depart
ment of the bank, and after each board
meeting have 1t custom for first one and
then another of the directors to walk
through the clerical departments, both up
in the attic and down in the basement if
any of the clerks work there, getting ac-
quainted with the clerks and the manner
of doing the clerical work of the bank.
Then. IL a defalcation should come. they
would not be so much surprised as they
now are at the way things have been rum
ming, and the rut that clerks have allowed
themselves to fall into.
Mr.. Blacklocks panacea for preventing
bank defalcations by converting the board
Of directors into body of spies and anna
teur detectives would not deserve much at
tention were 1t not that 1t receives a GER
a prominent banking journal. What would
become of the discipline of large institu-
tion if the clerks were encouraged to chat
confidentially with the directors as they
sauntered through the working depart
ment, and if directors were to show, by
encouraging such practice, that they had
SO little confidence in the men they had
put in as managers. No business can be
run without placing trust in some one, and
no system Of checks was ever yet devised
that turned a dishonest man into an hon
est one.
The Bank of British North Americas
financial report at the meeting just held
in London. shows profit of 933,323, in
Guiding G601S, out of which the directors
declared an interim dividend OF 29s
per share, payable October 5th, leaving a
balance of 9S323 to be carried forward. The
bank reported the opening of five branches
in British Columbia, necessitated by the
rapid advances made in mining throughout
the northern part of America, where the
output of precious metals is steadily in
creasing.
At first glance 1t seems strange that the
postal service of the United States should
cost $9,000,000 a year above receipts, While
that of Great Britain yields profit of
over s14, 4,OOO,O 900, that of France nearly $1O,-
100000, that of Germany $6,Ooo,O0o, that of
Russia 81, 600, 600 and that of even India
and Japan $500, 900. About the only other
nations whose postal service does not pay
expenses are Canada. Norway, SIAM Chile
Peru. Bulgaria and Bolivia. But light is
thrown upon our postal deficiency by the
fact that the United States has six times
the length of postal routes by railroad of
any other country. although Its excess of
population is nothing like such proportions.
We believe the day is close at hand when
our postal service will be a source of ma
tional income instead of outgo and in ef-
ficiency will be superior to any on the
globe.
\ \ y
The showing of September dividends de-
Ssa, ai..1a1. tictas