The sun. [volume] (New York [N.Y.]) 1833-1916, 1900-01-02
NATIONAL BANK BANNING.
Of the F%aultiness Of the system.

u Nu0 VI ts0
To THE EDIror OF THE SUN-Sir. In your
article upon National Bank Banking" you call
attention to the fact that II was the clear duty
Of National Bank Examiner D. G. Wing to have
taken proceedings at once to forfeit the charter
OF the Globe National Bank OF Boston. when he
discovered for the first time that the officers of
the institution had violated the law by making
loans to the President exceeding in amount the
legal limit by six times,
By touching upon this feature OF the case |
believe that You have called attention to tho
most dangerous custom that has found lodge.
ment with Bank Examiners. and one which has
made 1t possible for weak men and scoundrels
to produce some OF the m ost disastrous bank
failures OF the time and has placed Bank
Examiners and Banking SUPERINTENDENT re-
peatedly in the unenvlable position OF being
suspected OF wInking at or compounding
%felonies.
1t is not the United States Bank Examiners
or COMPTROLLER OF the Currency alone who
have dore these things. State Banking Super
intendents IN this and other States and their
Examiners have done the same things. and
more than one Banking Superintendent In this
State has been forced to acknowledge to the
writer that he had full knowledge OF the rotten
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disastrously months before he took any public
action toward closing them. and before the
general public got warning that they were not
sound.
The Madison Square Bank was IN instance
OF this kind. Now that it's affairs have been f.
nally wound up. It may be possible for those
who did the work TO toll how far back in It's
history the bank was really sound. but It is
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been largely withdrawn and replaced with al
most worthless securities before the failure.
Any one who knowst the peculiarities Of book.
keeping knows that there is not the slightest
security for the public in the. publication Of
statements ~ the condition OF banks at stated
periods or otherwise. A true, statement which
on its face shows that a bank is not only SOL
vent but hasa large surplus may he OF the
most misleading character. simply because
there ia nothing IN such an exhibition to show
what is the real value Of the assets,
Nothing hut an actual examination OF the
books and Of the assets by an expert will servo
to disclose the real condition of such an Nsti-
tuition, and II " for this reason that Btr4 Ing
Departments are created and Bank Exam4 ers
appointed. Unfortunately. however. the men
filling these places TOO often confuse a
Of the banks with their clear public duty.
Instead OF. assuming that the Officers and
Directors OF banks know the law and know
10 have assumed that the Banking Department
IL TO act as a wet-nurse for them. and that in
stead OF ealing them sharply 70 account and
stopping their doing business when they have
transgressed the. laws. and endangered. the
money Of their clients, Il is its privilege. II not
duty, 10, help them over their troubles.
This, ] believe. Is not only n mistaken but
even a criminal position, and II becomes pretty
close to the latter when the Banking S%uperln-
tendent, hides facts in his possession which
would lead 10 criminal prosecutions. as has
been done oenahle Directors to get hack some
Of their risked assets and save their banks
from being wound ny The BNnkipg surcr,
option in such matters. They should examine
without fear and show no favor when they find
faults which endanser he solv"ncy ola bank
officers, The public has a right 10 immediate
protection against such an institution and so
long az the Banking Department allows l. TO
DO business there isa proper assum ption that
the concern is sound
Secrecy has been the stronghold Of those who
have thus violated their obligations 20 the pub.
lie. and there Is q strong feeling among them
that they have n proper right 10 exercise such
secrecy. In the case OF our own State Bank
Examiners have reason to behave that they
have for years made accurate and skilful exam
nations ~ the banks under their charge ard
made truthful reports 10 the Banking S%uperin-
tendonts; II il the Snperintendents who have
exercised discretion in the manner Of treating
banks which were reported 10 be In had shape.
Assuming that. their motives were at all
times good. assert that they had no
moral nor legnl right TO try and help
the lame dogs over a fence. The remedy for
this, 1t seems to me would he TO make every
report Of an Examiner. whether made at n reg
ular time or between times, Il matter OF public
record to be got nj by every person whose in
terests are at stake. The REPORTS Of tho Bank
Examiners in this State have been considered
as confidential communications 10 the Banking
Superintendent. md access TO them has bpon
refused repeatedly, when II has been attempted
20 trace back the bankruptcy Of certain banks
To- tho time when their assets first began To
show the signs Of dishonest manipulation or
unfortunate Investment. {. F..