Weekly independent. [volume] (Elko, Nev.) 1887-1914, 1909-10-22
REQUIRING DIRECTORS
TO DIRECT

The wreck or robbery Of banks per-
mitted by II, nayliysl:. ,; directors in
not exercising the vigilant supervision
that their position demanded has hap
pened often enough to make the ed
itorial writers strongly endorse the de-
cisiun of the New York Supreme Court
by which thirteen former directors of
the Trust Company of the Republic are
held financially responsible for the
losses suffered by the company through
loans made upon securities Of the United
States Ship-Bnilding Company. The
facts of the case are thus reviewed by
the Philadelphia RsG1rd.
In 1902. when the rage of PROMPT
ing industrial trusts with floods of
watered stock was AT its height, "a
coterie of clever operators created the
United States Ship Building Company,
known as the Ship Trust. On the
watered stock the Trust Company of the
Republic advanced large sums of money,
ana after raking an enormous profit the
hl'Aii Wv ''iiN y as
The Ship Trust WAS Soon wrecked ON
| the shores of Wall street and the Trust
Company of the Republic along with it.
OF the ruin very little was left for the
depositors of the financial trust, while
the stock holders lost all. One of the
stockholders then brought suit against
the directors of the Trust Company OF
the Republic. who had neglected to
direct, to make them responsible for the
loss. As the result Of the suit the couri
exception of one who was absent at the
critical period of the financial trans,
actions between the financial trust and
the promoters of the Ship trust inns,
make good the loss To the last dollar"
In delivering the opinion of the court,
Judge G. G. Van Kirk said in part:
Where the duty of knowing exists,
Ignorance due To negligence Of duty
creates the sam, liability Us actua'
knowledge and failure to act thereon
Where trusted officers cause loss. the
directors who trusted them. and there
fore neglected to exercise the care {
reasonably prudent man wOnld e~xercis,
in his own affairs cannot escape liability
if such care would have avoided ol
leSSencd the loss. 1t is not Il full per
formancc of duty to employ competcn'
officers who are believed to he reliable
The directors have other and additional
duties"
Directors who do not direct shoult
heed the warming" says the CLEVELAND
Plain Dealer. adding that the decision
has framed in Il judicial decree :;
thought that has been in every think
ing mans mind" Further. the Plair
Dealer says:
This should prove the dcath.kncll q
the man who assumes to direct the If
fairs of an institution, who stands bc
fore his community in the character o
u trustee. but who, through negligenc,
or i~ncapacity. refuses to perform tn,
duties Of II t~rustcc-or the director wht
does not direct. The story j. almost
as old us the history of cinhczzlcment
In IN overwhelming majority of case
involving the dishonesty Of bank of
iiciuls the wrong doing could have beer
prevented or st0pt in its inception hat
the directors. the official superior Of tn,
criminals, performed their full duty
Had they done what they made pre-
tense before their community Of doing
their subOrdinatcs, in most cases. wunlt
have been saved the ignoininy Of pcna
sorvitudc. their institutions the crush
ing blow Of II failure. aud their ON
munity the convulSion Of Il financial
crash.
THE bank dircc,Jr should either
direct the affairs Of his bank or Civ,
rty to one who will. The director wh,
refuses to direct IL an anomaly ant; {;
menace"