The herald., 1897-08-25
OFFICE OF THE HERALD,
Los Angeles, Aug. "a, 1s9


The New York Financier has the follow
ing timely remarks upon the subject of in
dividual surety bonds, which will be read
with interest:
The reports made from time to time by
the larger surety companies of the coun-
try possess a significance not usually at
tributed to them. In their growth can be
traced the evolution of American bank
ing toward plane of better business judg-
ment more stable administrative methods
and higher appreciation of profit posi-
bilities. The reports referred to indicate
this because of the fact that banks more
than ever are becoming the patrons of
surety corporations, and their business is
doing a great deal to build them up. 1t
has taken a long time to bring home to
bankers the fact that it is poor policy to
accept individual surety for their employees.
Conclusive experience has taught them
finally that the insurance of corporation
is superior to the guarantee of an indiVid-
ual. not that the latter may be weaker,
but because the former is business,
rather than sentimental relation, and
as such is to be placed in different cate
CORY. We have referred to this question
at different times and we do SO again for
the reason that we deem it worthy of con-
slant agitation. AS between the newer and
the older method there is no comparison.
In the first place no bank can afford to
have its best customers placed in position
where some day they may be called upon
to make good the peculations of trusted
officer. Cases are frequent where the
amount of surety being small. the bank
has charged the sum to profit and loss,
rather than risk losing a valuable account
by insisting upon the fulflllment of a plain
contract. On the other hand, instances
are not lacking where a bank compelling
the enforcement of the penalty of an in
dividual guarantee. has lost business and
with it the withdrawal of an influence
which was even more profitable. Both
cases are illustrative of the point in ques-
tion, and figured in dollars and cents the
results cannot be said to have been salts
factory. In these days of modern busi-
ness facilities, coupled with cheap outlay
for service, it would appear preferable to
set aside fixed sum yearly for insurance
of this sort, insead of placing both custom
ers and the bank in a position where
mutual embarrassment is apt to follow.
Gratuitous service is sometimes the most
expensive in the end, as banks have fire.
quently learned to their cost.
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Concerning certain reports to the effect
that the American Bankers Association
is about to dissolve on account of "inter-
nal frictions," an eastern financial journal
of authority says that the reports are
fabrications. The American Bankers AS
sociation was never in better snaps than
at present, its membership was never so
large. and it's prospects SO bright. The
'internal dissensions'' vaguely hinted at
are nothing more than the desire of those
who have the associations best interests
at, heart to make its future still more en-
couraging. Vice-President Eugene II.
Pullen of the National Bank of the Re
public, New York well says on this point:
There has been no friction between the
State and National Associations, as ru-
mored there has been no apprehension on
our part that the State Associa ton would
form new organization, and at best we
are too strong to fear such result" The
American Bankers Association stands for
ideas which preclude anything like a per-
manent separation of interests. In view
of the wonderful work which the present
officers and committees are doing, it is
the veriest nonsense to say that the asso-
citation can be disrupted on this one ques-
tion. 1t has grown too strong for this.
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