The Portland daily press., 1898-01-26

| UnOSe VINO claim DnaG the enactment of q
law requiring some one to verify deposit
tors accounts would afford additional
protection from embezzlement by dishon-
est bank officials. On the other hand, there
are those who insist that we have suffi-
Gle law already, and that there has been
. failure on the part of some one to en-
| force that law, or use it to its fullest ex-
tent to protect depositors. But all agree
that depositors should have every consist
| ent and reasonable protection poSslDle.
| The difficulty, however, lies in suggesting
any other IN ethod or any additional pre-
cautions that will guard absolutely the
funds in our banking institutions.
The public generally in considering
this matter, do not distinguish between
a comparison of the individual ledger
accounts of depositors with the general
deposit account, and ver1ncatlon, or
comparison, of the books issued to depoS-
itors with the depositors' accounts as
they appear on the ledger of the bank.
1t can be seen that these are different
necessarysto apply both tests, they are en-,
tlrely distinct and should be considered
| separately.
| AS already stated, it has not been the
custom of the examiner to make 1oob-
| ing of the individual ledger accounts
If this test was not applied, 1t might De
possible for treasurer thussto conceal
enbezzlement to a large amount without
any more danger of discovery than In a
case like the one under consideration
| The fact, however, that it was compare
lively easy to guard against any 1rregu-
| larities in this direction, 1ed to the en-
actment of a statute in 1885, providing
method in which 1T should be done. The
present law provides that the treasurer
| of q sQvinos hoDL shall Cat 1naat once in
each year. cause to be entered in sulta-
BILE book the net sum of each individual
deposit at fixed date, and ascertain the
aggregate of all such deposits and wheth-
er it agrees with the other books OF said
bank, and said book shall be open at all
times for the inspection of the trustees
| and corporators, and OF the examiner OF
| banks. In making examinations, 1T is
the custom of the examiner to inspect
| this book and ascertain il these provisions
| of law have been complied with. The
department also requires the trustees in
their May return, and the treasurer in his
| November return, to state under oath
whether this comparison has been made,
and the results obtained. In this partic-
| ular case, both the trustees and treasurer
made their return to this department for
| the year 1896, stating under oath that
| this trial balance had been made and
| that the accounts agreed. From informa-
| tion received, however, am satisfied that
| the trustees not only made this state
ment, but all other statements contained
| in their report regarding the condition of
| the institution, without any perSunal
| investigation or examination or It's
affairs whatever. In the case OF this bank
| the depositors' ledger used by the treas
urer, and exhibited as the regular ledger
| of the ba2k, did agree with this trial
| balance 1t would be impossible for this
department, with its present clerical
force, to perform the labor necessary in
making this test in all of the banks in
the State The present provision Of law
| is giving satisfactory results and all
agree that no change is needed in this
| direction.
| In 1886 the bank examiner, Hon. L. E.
Richards. called attention to the import
ance of some provision for verifying de-
positors' books, and recommended the
| passage of law requiring this TO be done
by trustees. Each succeeding bank ex-
aminer has renewed this recommended
ton and again urged the passage of such
law. Despite all this, the law still re-
mains without amendment, and the de-
positors in Lubec Savings Bank are like
" to suffer loss for want OF the protec-
ton it would have afforded. With the
present object lesson before us, there is
no doubt the legislature will. at the next
session, regulate this matter in some way
by statutory provision. AS another re-
port will be made by this department be-
fore the legislature again assemblies, 1t
does not seem necessary or proper at the
present time to discuss the form of the
law needed or the particular manner in
which these Notifications should be made.
1t is we'll to bear In mind, however,
that it would be utterly impracticable for
the banking department to attempt these
notifications with any clerical force the
pnnStcfQnf1v nrOVida for the
purpose. There are now l67, 879 individ-
ual accounts on the books of the savings
| banks of the State, and q corresponding
number of depositors' books outstanding.
| The veritication could be made only as
depositors would voluntarily bring in
| their books, and in any one OF the larger
banks where deposits number from 10, 600
| to 10000, it would be necessary to con-
tinue the work over q period of at least
several months. AS the most important
object would be to ascertain II all depos-
| it's had been entered upon the books of
the bank, it would be necessary, not only
to notify each depositor whose name ap-
pears thereon, but also to publish no.
tice in the newspapers requesting all de-
nositors to bring in their books for verifi-
cation. The depositors are widely scat
tered and as appears from the list of
| q Denositors who have not made deposit
or withdrawn any part thereof for peri
cd of more than twenty years contained
in this report each year the whereabouts
Of many are not known, and 1t would be
impossible to get in all of the BOOKS of
any institution. Some States have pro-
visions of law requiring the trustees to
have these veriflcations made once in two
or three years. by some other than the
regular employees of the bank. In those
states. with no more difficulty in the ap-
nlieation of these provisions than would
he met with here, the banks are able to
oct in only a portion of the books, and
The system Is not, therefore wholly salts
| factory. The amount of labor and ex-
nense that would be incurred, the fact
That in a large percentage of cases the
veritication is not needed-as will here
after be explained-and the many diff.
cultes in the practical operation of the
system, have doubtless prevented the en-
actment of any law in this State, not
withstanding it has been so often urged
nv the different examiners.
The small number of depositors and the
large amount of the deficiency in the Lu-
bee bank would have made it an easy
matter for anyone authorized to verify
| the depositors'' books, to have discovered
| that the treasurers' accounts did not
show the full amount due depositors. On
the other hand, If the same amount of
! bo5 ayietpd N ona of ho lar~ox