The San Francisco call. [volume] (San Francisco [Calif.]) 1895-1913, 1909-07-25

. u INN dS d SLOW ana PloddlnS person VIII
spectaces on nose and ink on his fingers, method
cal human machine. No more radical misconcep
ton was ever cherished The book keeper is, il
tact, the most ingenious prevaricator-I use TIT
word in no injurious sense-known to modern
affairs. Glance at the balance sheet OF any bank
supplied under requirement OF law to the officia
examiners. Notice how exactly the assets tota
with the liabilities to the fraction OF cent 1t i
a lie on its face. No such arithmetical coincdenc,
OF totals is possible. 1t is simply manufactured BY
the book keeper in the way OF business The bal
ance sheet OF bank on the verge OF ruin shows a
accurate adjustment of totals s.the old lady o
Threadneedle street might compile for the edifi
cation OF her depositors. I am not finding faul
with the book keeper, who merely exercises unfail
ing ingenuity in compliance with an ancient custom
Always on the Job
Today the competent book keeper can make :
balance sheet for any of the wrecked banks ano
bring it out even for assets and liabilities to the
fraction OF hair His statement would look JUS
as good. as the one he created and swore to las
4aonth
It is not of course, in these ridiculous statements
that the bank examiners find their chief difficulty
but in the estimation of securities Lay sheaf o
notes and miscellaneous obligations under the nose
OF a bank examiner How can he with more OF
less limited knowledge OF business standing, sort
out the good from the bad? He is called upon te
pronounce on the solvency of every man whose
name appears attached to any form OF obligation
Must he apprase the value of land under mortgage
visit the warehouses TO ascertain that the good.
covered by receipt have not been removed or per
haps pledged half dozen times over? In this
battle OF wits the advantage always lies with tbs
dishonest
To Keep Them Honest
Remedy Well, for one thing, I would permit
no bank to operate in any considerable CITY wthou,
an ascertained and secured capital of at least
100000 Trust companies are compelled by law
to give security to the state for the 1uliillmenr o.
the trusts they may undertake Banks should be
otDlSSe ~ ehO odllN Ou III sc THAT THIS would
be hard on the little fellows, and SO it would This
town has been pestered for the last FIVE wears bv
plague of fly by night banks some OF them run
by irresponsible gamblers and carrying ruin to
innocent depositors. II they can not give ample
independent security that must be kept unimpared
they should be driven out OF business That is
about the limit OF bank examiners capacity-to
see that the securities pledged to keep the bank
honest are gilt edged
The Function of Banking Capital
A bank really needs capital for any other
purpose. Given an honest and competent banker,
no capital. not cent, is required. The business
is profitable because it is done with other peoples
money In fact, the less the capital the greater
the profit. Banking capital bears no relation what
to the business done except as it may serve as
testimony to the solidty of the institution. But
there 81 different varieties OF juggling with
banking capital A favorite device is for officials
to borrow money OF the bank on pledge of the
capital stock The California safe deposit people
played that game up to the handle That is to say
they substituted the evidences of impaired capital
for the money OF depositors. If that stock had
represented first class bonds held subject to peri
odical inspection by the government the result
would have been different. In fact, the indictment