The Richmond palladium and sun-telegram. [volume] (Richmond, Ind.) 1907-1939, 1910-12-20
eY SIDNEY ESPEY.


the administration of the Office of the
comptroller of currency number OF
suggestions have been received by
Comptroller lawrence c. Murray from
his agents in the field. Several
months ago he assigned various sub
jects relating TO the administration
of the Office to agents in the field.
Within the past few days he has re-
ceived replies from a number OF these
agents.
One. representing the expressing of
views of the national bank examiner
OF the state of New York, writes to the
comptroller:
The subject assigned to me for a
paper is certainly an important one
from any standpoint. and especially
to the bank examiner trying 10 find
dangerous practices in bank. Con-
cealed excessive loans have proven in
the past fruitful cause of failure add
from the very fact that deception is
temporarily or for a longer period,
the examiner to discover them. Soon
er or later the management of bank
resorting to this method of loaning
customers in excess OF the law, will
come to grief, for the element Of
danger Is present both in the loan it.
self. and the wrong doing of the Off
Ger. who must deceive If he would
successfully maintain the practice.
Concealed excessive loans to bank OFF,
GERS are in the same class. for the de-
ception is practiced in the same way.
"A multiplication OF corporations al
lied in interest makes it more difficult
for an examiner to discover conceal
ed and excessive loans than hereto
fore. The excessive loans are made
to two or more corporations, each
loan within the limit, but the total in
excess. In order to discover excess
loans in this class. the examiner
should carefully inquire into the form
alton OF the corporations under sus-
picion. and if the directors and officers
are the same or nearly the same, it is
safe to assume that an evasion of the
law Is attempted: at any rate a dill
gent inquiry may disclose commun-
ity OF interest and should be reported
to the comptroller to put the officers
of the bank on record.
Concealed excessive loans are fire.
quently discovered by an examina-
ton of the individual ledger, where
the deception Is sometimes disclosed
by credits to the borrower in excess,
represented by loans granted to other
persons or corporations for the benefit
OF the borrower Many banks know
Ing this comparatively easy way of
discovering the hidden excessive loan
do not credit the account in the indi.
vidual ledger. but give a draft to the
borrower in excess. Often an examin.
alton of the cancelled draft will dis
close the hidden violation of the law.
"All loans to n wife or relative of a
director. or to others where a con-
cealed excessive loan is suspected,
should be closely examined. and if ne.
cessary, the officers should be put on
oath as to whether it an excessive
loan. A loan to two persons, which
would be to one person excessive, Sc.
cured by collateral in the name of the
principal borrower, especially If the
other Is not financially strong enough
to warrant his loan, is often an ex.
cessive loan. Under a ruling of the
comptroller's Office, business paper re.
newed for the indorser should be add
ed to this direct loan, and when the
sum total exceeds the limit, is class
ed as an excessive loan. These loans
are always dangerous and should be
reduced.
MANY bankers high up in the fin
ancial world. with the best reputation
for truth and honesty. will not hest
tate to carry concealed excessive
loans on the ground that ii is not
their business to know what the Dor
rover whom they always believed is
personally responsible does with the
money. Ii the banker is reasonably
certain that the sum conceals an eX
cessive loan it is his business to know
il, and his duty to report il to the de
partment. and to tell the truth about il
when the examiner charges him with
concealing the loan. 1t is safe to as
sumo. for the purpose of having the
matter looked into. that whenever the
managing officer of bank makes