Evening times-Republican. [volume] (Marshalltown, Iowa) 1890-1923, 1904-09-06
Revelations as to MANNER In
Which Crookedness Is Con-
cealed From Examiners
WEAKNESS OF PRESENT SYSTEM
At Present Bank Examiners Know
Practically Nothing About the Value
Of the Paper Held as Collateral for
Loans, or Whether it is Honest or
Forsed-capitaI Gossip.
to Tlmes-Republican.

Des Moines, Sept 6.-As the result
of recent revelations as to the manner
in which dishonest men are able to
conceal their crookedness in banking
matters from the directors and bank
examiners, state and national, it is ex-
pected that the next general assembly
of Iowa will institute some reforms
providing a banking committee can be
legislation. Already without express
legislative authority the banking de-
partment of the state auditors office
has inaugurated number of important
reforms, which will go far toward dis
closing any crookedness that may be
found in the state and savings banks.
When the committees of the Thirtieth
general assembly had under considera-
ton various banking bills last winter,
representatives of the banking depart
ment went before the committee and
urged the passage of bill requiring
that the statutory examining commit
tee of bank directors, who are re-
quired to examine the books of the
bank. be required to report at least
four times a year to the state auditor,
who could require the committee to ex-
anime into the character of the bills
received and other assets Of the banks.
At present the bank examiners can go
but little further than to report on the
face Of the bank books. AS to whether
the accounts are good and the notes
and mortgages worth what they are
represented to be worth, that is some
thing about which the bank examiners
can find out little. The directors may
know and the cashier and president
may know. 1t is here that the weakness
of the system becomes apparent, for the
frauds and forgeries and deception
come in estimating the character Of
the paper held. The plan proposed for
reporting on the character of the
assets of the banks would give the
state banking department check on
frauds. But the committees of the leg
islature report adversely on the pro-
posals made. If there is weakness in
the present bank examination system
of Iowa it is therefore to be laid di-
rectly to the state legislatures which
have refused to make any progress or
improvement.
In the absence of any specific au-
thority to enlarge upon the province of
the banking department, this much of
an innovation has been made recently,
that a system Of checking up on the
accounts of banks with each other has
been adopted, and when bank reports
that it has certain amount on deposit
with another bank, either in the state
or elsewhere, and there Is any reason
to think that the account may not be
correct it is followed up and the re-
ports verified. If this system had been
adopted previous to the failure of the
bank at Sigourney the frauds there
would have been disclosed. in time to
prevent loss, for the entire Justification
was covered up in bogus accounts with
other banks. 1t has been demonstra-
ted, as In the case Of a bank failure
at Corning that bank examinations will
not always prevent loss, even where
the examinations are perfect. In that
case all the forged paper, with the ex-
ception of one item, was thrown into
the bank between the time Of the last
examination and the breaking. In fact
the bank was wrecked In few weeks
time.
There is a view Of the matter that
is being somewhat assiduously culti-
waited to the effect that no possible
good is accomplished by the examina-
tions of state and national banks.
When there is failure it is heralded
that the examinations were of no avail.
But as a matter OF fact, as has been
demonstrated abundantly to the writer,
the examinations do result in straight
ening up many crooked places and in
strengthening weak spots where the
public never learns of anything being
done. Reports come in showing that
bank has too much money out at in
terest and the banker is notified that
he must strengthen his reserves He
does it quietly and the public is pro-
tected without any noise. A repor.
shows up with a lot Of questionable pa
per included in the assets and the
bankers are advised that they must
make it good quick 1t is done and
the bank patrons are protected quietly.
This is going on all the time, and of
necessity there is no publicity given
to this branch of the work, by either
the state or national departments.
When r. P. Clarkson drops out of the
United States pension office and retires
he will be succeeded by w. v. Wilcox,
insurance agent and campaign manager
for Captain Hull. This much is already
settled. Captain Hull stated soon af-
ter the last campaign that it was his
intention of giving Wilcox the place
whenever Mr. Clarkson should be thru
with it. There can be no real con-
troversy over the matter. Mr.. Wilcox
has become quite conspicuous in local
politics in the mast few years. He was