The Washington herald. [volume] (Washington, D.C.) 1906-1939, 1910-08-14
BANK

robbed by an employe or tens or hundreds
Of thousands OF dollars. as in the case OF
Erwin Wider and the Russo-Chinese
bank. HIS first thought is. How did he
manage to steal II without getting
caught?" Not accustomed 20 handle
money as his grocer does potatoes. TO
him the idea Of any one not missing for
years the presence OF a comfortable for
tune is incredible To be sure your av-
erage citizen knows that the money taxi
en- was not In small change, and that the
removal did not require ? furniture van.
but even then. ought not some one made
it his business 10 notice little shortage
like that? And II bonds and securities
are swept out with the mornings trash.
so to speak. why cannot any employees
20 into the vault with a travelling bag and
walk out with shares representing the
control OF a transcontinental railway?
Furthermore, perhaps your same aver
age man has lively concern in the case,
instead Of an idle. disinterested curios-
ity. For the money OF stocks missing
probably do not belong TO the bank, but
TO depositors; and the very collateral
with which the departed cashier has
backed his opinion that Y Y. q. shares
must go up instead Of down may have
represented not his own resources, but
those Of the reader. Then he goes hot
foot down to the bank. and asks the d.
rectors and officers why they have not
kept an eye open and what they pro-
pose 10 do about II in the future, says
the New York Post.
II does seem 10 the depOsitor that the
officers should have learned wisdom,
when he is told that the inside thefts
which have come to light in this coun-
try in the past five years have totaled
more than S25,OO0OOO. All OF this amount
was taken by employees. or higher off,
GERS, the defalcations ranging undiscov-
cred over periods Of from one to FIVE
years; and on top Of that is the opin-
ion OF some bankers that much goes on
undetected, cases in which the peculat-
ing clerk. teller. or some other one, Is
fortunate enough 20 choose the right side
or the market His practices are then
unknown TO any outsider. except. per-
haps, his brokers, who. since they ac-
cept his account. do not let their sus-
picions stand In the way of commissions.
Temptations Are Greatest.
The wild West days In this country
are well-nigh gone. and. barring those
IN the smallest towns. the deposltors can
feel reasonably sure that no bands Of
robbers Will ride IN and hold I'D the bank
at the point OF a gun; with modern pro-
lection the safeblower's job Is more ha-
zardous and less profitable than before.
and such schemes hs that Of FinkeI-
STEMS, tunneling TO a vault. are Wis
ionary. But the protection OF an in
stitution against its employees. who can
manipulate books and records. seems not
TO have been advanced, but TO have been
lessened Of late. Greater temptations as
sail the cashier or clerk with greater
opportunities for speculation, and the
banks, in the opinion OF many. have not
made sufficient use OF the machinery
available to put stop to embezzlement.
The results are seen in the enormous
total Of thefts quoted above.
That these can be stopped effectively is
asserted by those IN a position best 20
know. There is no reason. they say, for
waiting several years until the note tel
ler's suicide or departure. or the officers
suspicion, prompts an overhaul from top
20 bottom. with a zeal which. had it been
earlier. would have had some more prac-
teal value than finding out the amount
Of the irrecoverable losses. The delin-
quent men at the top generally put for
ward as excuse the statement that the
science Of banking is so complex that
rascal with ingenuity enough TO falsify
the books is almost impossible Of de-
lection. When the cat is out OF the bag,
however, as In the notorious case Of Paul
o. Stensland. the Chicago banker. the
methods used are .ound to have been OF
the baldest and most transparent sort.
He employed hcticious names, or names
OF obscure persons, to figure as borrow
ers. with dummy security: certainly any
investigation would have disclosed these
irregularities. Again Stensland was
short $4,000 IN 1901. and continued I'M
detected IN his wildcat real estate specu-
lations until. in 1906, the crash came.
He had then stolen $l.50O,O0O The re-
cent case OF August Ropke. OF Louisville.
who embezzled the entire surplus fund
Of the Fidelity and Trust Company,
amounting to $4,000. and. to cite
smaller instance. the case Of John Muir.
OF the Forty-second Street Branch Of the
Corn Exchange Bank. who took about
5000 in period Of several years. are
parallels.
Inspections by Examiners.
If the institutions Will but avail them
selves Of modern safeguards such thefts
can be prevented with certainty, accord
ing 70 the most practical bankers The
national and State examiners make their
investigations, but they only see to it
that the laws are obeyed Their inspec-
lions, which scarcely go into the books
so minutely as to discover defalcations
without chance OF error. are not enough.
1t was an odd commentary on such ex-
aminations that Cornelius Alvord. the IA
nous embezzler, who made away with
$4,000 from the First National Bank. in
this city. In 1900, should have been found
out only a few days after a national
officer had inspected and pronounced
everything balanced. Lyman Gage, then
Secretary OF the Treasury, said in de-
tense, that "our examiners could not be
expected TO discover an old defalcation
where the banks officers themselves had
not found or even suspected it."
The officers OF an institution should
keep an added watch. both for their own
sake and for the safety Of the deposit
tors This they can do by means OF
proper auditing. When such cases IS
those Of Wider, LOwery. Ropke, or AL
word come out, the audit and accounting
companies send out circular letters call
Ing attention TO the warning. and ex-
planning systems for their safeguarding.
Maybe several presidents Of banks which
have done without thorough audits.