Omaha daily bee., 1902-10-05

the securities OF the Philadelphia Record.
In it's politics this journal was opposed to
the national administration Of which the
comptroller was an appointee. There was.
Of course, no tampering with the politics
OF the Journal, although. in one sense Of
the term. II was, through the receiver of
the national bank. indirectly under the man
agement Of the administration. It's policy
was consistently maintained and its editors.
reporters and other employees were as little
disturbed as II the journal had not come
under the receivers influence. Az a conse-
quence. Il earned as high as $3.50, 900 q
year and finally sold for about 81, 500, 900.
But at intervals through the period OF the
receivership II faithfully criticised the ad-
ministration. The credit for this splendid
financial outcome is principally due to
George II. Earle and Richard Y. Cook Of
Philadelphia.
A Capitalists Fine sense of Honor.
One Of the most pleasant experiences In
connection with my administration OF the
ONCE Of the comptroller Of the currency
that l now recall is an episode which lie
we'll calculated to increase confidence in
the integrity OF human nature.
A capitalist whose name Is widely known
in railway circles met me in Chicago 10
discuss the affairs Of a certain national
bank. He said:
You have Just been appointed comp
troller Of the currency. and the course
Of action which you propose to pursue
in relation to this bank will largely de-
termine my own action. / was elected a
director without my own knowledge in
the bank which, though not closed. is in
solvent. and have continued in that official
position under protest. My holdings Of
stock amoun to 1000. and double that
amount, of course. is the limit of my
liability under the law. But the fact re-
mains that l did allow my name to be used
as that OF director of the bank and this
may have Influenced some persons to be-
come depositors. Because Of that posi-
bility / have determined TO step In and save
the depositors and other creditors from
loss, provided the other shareholders, with
out expense to them, will consent to ar
engagements necessary to an equable execu-
ton Of this plan. And now, with this ex-
PLANTATION of the situation, l desire to learn
what is your Official view of the matter"
Though I knew this man to be OF large
fortune, he was not classed among the
multi-millionaires, and the plan which he
proposed involved the immediate use of a
very large amount of ready money-not far
from $500. 0O0. Before he was through with
the project. as l recall it, he voluntarily
took upon himself the actual losses Of
others to the extent of nearly 1 1000, 900, and
all because his fine sense Of personal honor
would not let him see depositors suffer loss
by the failure OF an institution with which,
even without his knowledge, at first, his
name had been associated. The gentleman
who did this has not expected, asked for or
received public credit for his action, and
some years have now passed since these
occurrences. He is a modest man and no
doubt has found his full reward in the con-
seriousness Of duty we'll done. But 1 hope
he may read this and know that In the
annals OF the comptroller's ONCE there has
been no more conspicuous instance OF hdel-
ity to q semi-public trust. and that among
the few Of us who know how he had vnlun-
tarily taken upon himself the losses Of hun
dreds of people Of slender means he stands
and shall always stand as one OF natures
true noblemen.
There are many specific causes besides
the general one of financial panic that are
prolific OF disaster to banking enterprises.
Foremost among these must be placed that
Of unsafe loans to officers, directors and
employees of the bank making the loans.
AS the most useful thing that could be
said on the subject Of bank wrecking would
be the statement of some rule to prevent
It, a word on this point is not Inappropriate.
Beginning with Mr.. Lacey, in 1891. every
comptroller Of the currency has made some
recommendation for the passage OF a law
restricting the making of loans by a bank
to its own directors or ~oficials. The prob
lem is to devise such restrictions for the
safety Of the depositors as will discourage
improper loans to directors and officers
while not ~injuring the depositors by dis
couraging to too great an extent the as
sumption Of bank dictatorship by the ac-
tive and responsible members of the bust
ness community. My own recommendation
was, in substance, that 1t should be made
illegal for an ofhcer or director of a bank
to borrow from It without the written
approval of at least two other directors.
Up to the year 1900 there were $40 failures
Of national banks and Of these sixty-two
were clearly due TO excessive a~ccommoda-
lions to officers and directors. At that time
the comptroller made an investigation which
showed that of the rs, 700 directors of ma
tional banks in this country 1884 we're.
directly or indirectly. indebted to the banks
under their control. These borrowing d.
rectors and 2.279 officers and employees (not
directors) owed their banks S202, 2S7, AL.
This sum was 32.55 per cent Of the capital
stock Of all the national banks doing busi-
ness in the country at the time. It is not
to be inferred that all these loans were
necessarily an abuse OF privilege. On the
contrary, many Of them were among the
safest loans OF the banks in question. In
fact. one Of the cities in the country wherein
30 per cent Of the capital of its national