Evening star. [volume] (Washington, D.C.) 1854-1972, 1927-09-11
ABILITY OF. BANK DIRECTORS
OUTWEICTiS TRADE THEY BRING
Place on Board of Institution One Of Great
Responsibility-Character Also Is
Necessary Attribute.
BY i. 4. FLEMING.

- ~ ~ ~ ~ O~~A -
BY i. 4. FLEMING.
Bank directors have serious duties
and obligations which they assume on
taking office, under or / repeated each
year Immediately after election and
before exercising the duties of office.
Bank directors should be selected
wholly for their ability, reliability and
character as primary consideration.
with their ability to get business and
help along the bank, as a secondary
condition.
Here is the oath that directors of
national banking associations are
obligated TO subscribe to:
Oath of Director.
7, the undersigned, director of
the. 800. located at. ...... being n
citizen of the United states and
resident OF the State of ......,
do solemnly swear (1llirm) that |
will, so far as the duty deVolves
on me, diligently and .,oneStly adj
minister the affairs of said associa-
ton; that / will not knowingly vio-
late, or willingly permit to be VIC
lated. any of the provisions of the
statutes of the United States under
which this association has been
organized; and that / am the
owner, in good faith and in my
own right, of the number of shares
Of stock required by said statutes.
subscribed by me or standing in
my name on the books o. the said
association; and that the same is
not hypothecated. or in any way
pledged as security for any loan or
debt. ..............
Subscribed and sworn (afIirmeO
to before the undersigned this
.....,.. day Of .......
............... Notary Public.
Some Of the Duties.
1t is the duty of bank director to
have thorough knowledge of the loans
of a bank. how made and how Sc
cured, or extended on lines of credit
agreed upon by the officials of the
bank lie is or should be informed at
every session of the directors as to
the extent and character of loans
made during the past week, of any
past-due paper and the reason there
for, and should be informed regard
ing the loans of his fellow directors
even more closely than of others.
Many bank officials and directors
prefer to make credit applications at
other banks, but Washington lead
ing institutions prefer that their d.
rectors and officials should use their
own bank when in need of credit
1--WE will loan them what they are en-
titled to and no more. 1t would be a
serious matter if we numbered on
our directory. directors in whom we
lacked faith in credit matters and
retained in position as a director
Directors expect much of their Of
fiCers and are entitled to all informa-
ton available as to the credit rat
ings of borrowers. 1t is also neces-
sary that the directors shall be in
formed weekly Of important matters
that may affect the standing or the
future of the bank nor can the di-
rectors dodge the responsibilities they
have assumed.
Penalties Provided.
Serious penalties are imposed for
neglect and the suits that may re-
suit for various negiects may aSgre-
gate important amounts
Stockholders may hold the direc-
tors, and stockholders and directors
are subject 10 heavy assessments, on
their stock holdings in the event or
inability to pay depositors in full,
A bank in process Of liquidation in
this city was forced to meet a 80 l-3
assessment on the shareholders: -
Celebrated Geneva Case
The Geneva National Bank of Ge-
ncva, n. y, contrary to the usual
run of banks in like position. had
failed without loss to depositors, the
loss falling on the stockholders.
Suits against the directors followed,
the shareholders charging:
Negligence in the performance OF
their duties.
Suffering and permitting the prop.
erty of the bank to be wasted ana
squandered
Permitting the accounts of the bank
to be inaccurately kept with lncoh-
plete entries being made.
Permitting insolvent persons TO
overdraw their accounts.
Negligently loaning moneys or the
bank to irresponsible persons without
adequate security.
Loaning excessive ana llIeSal
amounts to irresponsible parties.
Not making accurate and trutn1ui
reports of the affairs of the bank.
permitting excessive loans to ire.
snonsible persons to be concealed ana
permitting such concealment to pc
carried into the records OF the banK.
Neglecting to make complete anu
accurate examinations Of the BANK at
least twice year.
Failing and neglecting to give the
banks business proper care and at
tention and failure to administer It's
affairs in a careful manner.
Directors Deny Guilt.
The directors replied with denial of
olo "a nd cd a II
The plaintiffs offered objection, but a
Supreme Court judge issued an order
framing the issues in the case and au-
thorized d jury trial on charges OF
negligence and excessive loans.
Notes Charged Off as Losses.
Upon trial of the action, Justice
James Z. Hill presiding. the stock.
holders, as plaintiffs, put in evidence
large number of notes, aGgregatlnS
81 200 900, which had been given TO
the bank by its customers, ana proved
that the amount of these notes had
been charged off the books of the
bank as losses.
they also put in evidence the
books containing the minutes of the
meetings of the board of directors, the
bylaws of the bank, the customary
statements of condition rendered by
the bank to the controller of the cur
rency and the reports of the eXami-
nations of the bank made twice
year by the Federal bank examiners
and all the books of account of the
bank. The period covered by this
documentary evidence began in Janu-
airy, 1917, and ended in October, 1873.
when the bank closed its doors and its
business was taken over by the new
bank. which was called the National
Bank of Geneva.
Bank Examinations.
The reports of the bank examiners
n,.n,aa La n1lat.A. 1917 to Snntemher.