The evening times. [volume] (Grand Forks, N.D.) 1906-1914, 1906-09-28
pered with too numerous instructions.
But in the language of Justice Sever
ems, quoted before:

| but IN the language OF Justice Sever
ems. quoted before:
1T is the right and duty of the
/ board to maintain a supervision Of
| the affairs of the bank: to have
| general knowledge of the manner
in which its business is conducted,
and of the character of that bust
ness: and to have at least such
degree of intimacy with its affairs
| as to know to whom. and upon
| what security, its large lines of
credit are given: and generally to
| know Of. and give direction with
regard to the important and gen.
eral affairs OF the bank. of which
the cashier executes the Details"
1t is not necessary to go into details
as to how this shall be done to you
who are bankers. The main thing for
the directors is to require complete
reports from all officers and to have
them verified by directors who are not
officers. and to make frequent and
complete examinations. These should
be made by the directors independently
OF the officers. and when possible. COM
petent outside accountants should be
employed to do the work thoroughly
Every bank whose business is large
enough to afford it should have regu-
lar auditor or audit department con-
stantly at work checking up first oae
man and then another This will pay
IN the improvement in methods it
brings. without regard to the prob
ability 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 tot I've
better spent than in making the bust
ness safe and sure. In some large
cities special examinations urc being
conducted by clearing house organi-
cations, which is a most excellent plan.
1t has so many advantages that great
good is hoped for from its trial.
Above all. the directors OF bank
should nest closely scrutinize the
loans to officers and other directors,
and see that they are kept down to not
only legal but safe amounts.
Far the most frequent cause OF bank
troubles. in fact, the alnlcSE invariable
cause of bank failures, is tile granting
OF credits far beyond the legal and
prudent limits to the officers or to one
concern or group OF allied concerns.
generally owned and managed by the
officers or directors of luc bank, or in
which they have, directly o: Indirectly.
some large pecuniary Interest.
When Il bank is in anything ap-
preaching this condition. it 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 lie
reelection of duty on the part of direc-
tors to allow such condition as this
to gradually obtain in Il hank! 1t may
sometimes be done honestly as the re-
suit OF bad Judgment, onl.. but in my
experience it is the most frequent
cause OF dishonesty and fraud among
bank officers. do not remember
case where q bank officer had the
moral courage to let loans of this kind
carry down his bank without resorting
to crimes Of some kind to conceal or
postpone the catastrophe. in hopes
that some fortunate circumstance
might intervene to save him and corr
ceal his fraud.
| am aware that it is sometimes adj
visable and necessary to secure as
bank directors men who can control
important accounts and bring business
to bank. | am not Directing to this,
when it is done in good faith auc the
business is fer the real interest of the
bank. 1t is not good business or good
banking. however to have men on .he
board whose interest lies in borrowing
from the bank more than they should
prudently or can legally loan, or who
would. under any circumstances, 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 accept
place on q bank board under such
circumstances can be proper men,
Der of it.
1t may be urged that If bank lirec-
tors are to be held to such strict
accountability. it will be difficult to
get the right kind of men to serve on
bank boards. My reply to this is. that
it is no new responsibility l am try
ing to create. 1t already exists in the
law as it has been construed by the
supreme court. Nothing you or l say
or do will change this. If what may
say shall call this fact home to bank
directors and prompt them to fuller
realization of their duties and respon-
sibilities, shall be content The pur-
pose OF this article is to emphasize
the fact that the responsibility of bank
management is. under the law, placed
upon the board of directors, and upon
them alone. Not only the money of the
shareholders, but that OF the deposit
tors, is put in the care of the directors
of bank, upon the faith that they are
not only honest, but that they are dill
gent and competent. Any man who
accepts a place on bank board must
accept this responsibility, and take an
oath he will diligently and honestly
manage the affairs of the association.
He thus adds moral to his legal OBJ
legation, and is bound, in all honor and
good faith, to observe his oath and