The Fairmont West Virginian. (Fairmont, W. Va.) 1904-1914, 1906-09-27


the daily business. ANY man who IS
dt 10 run a bank al all should be civ
en- sumcient authority uuo not be ham
pered Nth too numerous 1nstrucdons.
But In ihe language Of Justice sever
ems. quoted before:
lit IS tie right and duty Of Tie
board 10 maintain a snpervisfon 81 the
affair d the bank; 70 lave + general
knoWIedge & the manner Which fts
business s ~conducteds ana the
character 81 that business and 10
have at least snch degree OF init.
macy With Its atfafrs d know to
whom andnpon what security. It's
large lines OF credit are GWEN and
generally I know /. and give direc
ton wfthsregard to the Important and
general atlaiFs Of the bank. o. which
the cashier executes the details
Ii lis not necessary To. go!fnto details
as to how this shan be done TO you
who are bankers. The main thing Tor
the directors is to require complete
reports from all officers and to have
them verified by directors who are not
.omcers, and to make frequent and.
complete examinations. These should
be made by the directors ndepends
emily Of the omcers. and when posi-.
BILE, competent outside accountants
should be employed to do the work
thoroughly Every bank whose bust
ness is large enough to AFFORD It should
have a regular auditor or audit de-
partment constantly az work check
ing up first one man and then another.
This will pay in the improvement in
methods it brings, without regard to
the probability of the discovery of
fraud or wrong doing. Any reasonable
cost for such work Is a most proper
charge on the expense account of a
bank. The money of the shareholders
can not be better spent than In max
ing the business safe and sure. In
some large cities special examinations
being conducted by clearing house
organizations. which is a most excel.
lent plan. 1t has SO many advantages
that great good is hoped for from its
trial.
sAbove all. the directors Of bank
should most closely scrutinize the.
loans to officers and other directors.
andys that they are kept down to not
only legal safe amounts.
Far the most frequent cause Of bank
troubles, in fact the almost invariable
bank failures, is the granting
OF credits far beyond the legal and
prudent limits TO the officers or to.
one concsfn or group q allied CON
GERMS generally owned and managed
by the officers or directors q the bank
or In which they have, directly or a
directly, some large pecuniary inter-
est.
When a bank is in anything ap.
preaching this condition, 1t Is in grave
danger, for its entire safety depends
on the success of outside enterprises,
and the man who should protect the
bank has, perhaps, a greater Interest
In protecting the other concern. 1t is
probably the most common, serious
dereitctton of duty on the part OF
directors to allow such a condition
this to gradually obtain in q bank.
1t may sometimes be done honestly
as the result OF bad Judgment, only,
but in my experience it is-the most
frequent cause of dishonesty and fraud
among bank officers. do not remem-
Der a case where a bank officer had
the moral courage to let loans of this
kind carry down his bank without re.
sorting to crimes of some kind of con-
cealg or postpone the catastrophe. in
hopes that some fortunate ctrcum-
might intervene to save him
and conceal his fraud.
am aware that 1t is sometimes adj
visabIe and necessary to secure as
bank directors men who can control
important accounts and bring bust
ness to bank. I am not obtecting to
this, when it is done in good faith and
the business is for the real interest OF
the bank, 1t is not good business or
good banking, however, to have men
on the board whose interest lies in
borrowing from the bank more than
they should prpdenfly or can legally
loan, or who would, under any cfrcum-
stances, be tempted to risk large sums
of the money of the bank to protect
their own interests, rather than those
OF the bank. No man who would ac.