The Minneapolis journal. [volume] (Minneapolis, Minn.) 1888-1939, 1905-05-11
BANK DIRECTORS
JOB NO SINECURE
Controller Of the Currency Tells
How Directorates May Pre-
vent Defalcations. -.

Boston, May 11.-William Barrel
Ridgely. controller of the currency,
last evening delivered an address before
the National Bank Cashiers associa-
ton of Massachusetts, in session here.
His subject was bank defalcations and
means of avoiding them, and is Of spe-
eial interest just now. lie SAID. III
part:
The ruin of bank is practically always
the result of fraud or the use OF its 1unus
in undue and unlawful amount by It's
officers and directors. This money IS
sometimes lost in legitimate enterprises
thru bad judgment and mismanagement,
but far the most frequent cause for actual
stealing or sdefalcations in banks IS spec
ulation. No one knows, until he tries IT,
how great that temptation is or can De
sure he can resist it. The only safe way
is to avoid it.
If customers and depositors would dis
criminate more closely between banks and
take their deposits only to those run on
conservative principles by careful, pru-
dent men who devote themselves to the
interest and welfare of the bank rather
than large enterprises outside of it, whose
directors are substantial rather than spec
tacular. and if shareholders were more
careful as to the character of the men
whom they elect to represent them on
boards Of directors, it would accomplish
much moro than can be done by any law
to prevent speculation.
In many cases Of failure, the directors
are as much surprised as any one. sim
ply because they have not exercised theil
rights and performed their duties as they
have sworn to do. In such cases, they are
more to blame than any one. "
The duty Of q bank director require:
that he should know positively that thu
affairs Of the bank are being propcrl.
managed. Meetings Of the directors SHOULD
be held regularly and frequently, and b.
we'll attended by all the members of tn;
board At these meetings the officer
should be required to make full, conplet
and intelligent reports in such form AM
detail as to be easily understood by tn
directors. All loans and important trans
actions should be reported and passe
upon, and especially all notes ard securi
ties should be submitted for the persona
inspection Of the members of the boar
who are not active officers. All loans t
officers and directors should be NOR
closely scrutiniZed and examined than an
others, and the amount Of their total liza
b1lfties clearly understood In additio
to such exhibitions as are made at regu
lar meetings, the directors should hav
frequent thOro examinations made b
committees Of the board. or experts en-
ployed for the purpose. These should /
made independently Of the active office,
OF the bank and with all the incredulit
OF the proverbial Misscurian, everythin
should be shown and no mans word taxi
en- for anything.
Every clerk and every officer of tt
bank should be examined and checke
up as thoroly as possible. and required
show the examining committee or auditf
just how the matters in his change stan,
The point I wish to emphasize IS thu
the responsibility for bank manageme1
is by law placed upon the board of d
srectors. It is certainly not asking tc
much Of men who accept such trusts thu
they simply do their plain sworn duty an
obey the laws