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Phil. A. (Philip Augustus) Rush.

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banker's worry was his loans, his bills



The Bankers' Meeting 73

payable, or his fear of burglaries; but
not so. He may reduce the considera-
tion of these things to steady, honest
work; and work never kills.

Colonel Wilmot laid bare the fact that
there was not only no definite way,
under custom or the law, by which the
owner of a bank could ascertain its true
condition, but that the environments
were such as to tempt employees, young
and old, into habits of extravagance,
speculation, defalcation, and ruin, for
the reason that the acts of dishonesty
which occur in any business or trust are
in proportion to the value of the things
entrusted to the employees, and the
facility or ease with which concealment
of the wrong can be made.

The prevailing system of banking is
indeed a manufactory of its own peculiar
brand of vice, and a tempter of weak
humanity; for very few peculations
are begun with the intention of perma-
nently depriving the bank of the money
taken, but to conceal the taking, use
it for profit, and return it or replace it



74 The Teller's Tale

afterwards without loss reference being
had, of course, to the wrong-doings of
trusted employees, especially the young,
and not to hardened criminals who break
through and steal.

Colonel Wilmot pleaded for improve-
ment, for approaching the ideal as
nearly as possible. He admitted that the
banks might go on indefinitely in their un-
satisfactory methods, for people like to be
humbugged up to a certain point. But
this is no consolation to the banks when
they are being humbugged themselves.

Colonel Wilmot did not advocate the
adoption of any rule or the passing of
any law for the benefit of the banks, and
to enable them to answer the important
question, unless the same should be a
manifestly just one just to the public
who deposit their money, as well as to
the stockholders who invest theirs; not
that such rule or law should be tested by
the standard of perfectness, but rather
upon the inquiry: Does it guarantee the
greatest good to the greatest number?
This question being answered in the



The Bankers' Meeting 75

affirmative, it should stand, although, in
some instances, not because of the rule
or law, but because of nonconformity to
it, harm may befall a few.

In the following chapter I give Colonel
Wilmot's paper, omitting preliminary
matters and some of the things already
commented on very fully herein.

While I fear the lay mind does not
anticipate much pleasure in reading this
paper, I wish to assure such readers to
the contrary; for the contents are not
only of surpassing interest to everybody,
but they concern, vitally, the fortunes of
those whose lives we are following along
the road of destiny, Albert, Arthur,
Mary, Alice.

We sometimes think the dinner too
long, too substantial, or a little dry, and
the dessert a little hard to overtake.
But the prudent diner-out will carefully
and patiently eat, remembering that the
first courses not only give muscle and
life, and capacity to enjoy the dessert,
but that waiting makes it all the better
when we do catch up with it.



CHAPTER X

HOW SHALL WE KNOW? 1

IT is a familiar saying worthy of ac-
ceptation, that vice runs ahead of
virtue; for the devil is smart as well as
mean. But this is no reason why we
should allow vice to remain secure in
any advantage which it has gained. We
should be as wise as serpents. If we keep
moving on the strongholds of evil-
driving the devil from post to pillar
we may be at his final chaining one of
these days and escape him altogether
thereafter.

Just at present vice is decidedly in the

1 For the benefit of those who are not interested in
the banking question which this publication under-
takes to answer, but who will read the book for the
story alone, the author wishes to state that this chapter
and the chapter entitled "The Law" may be omitted
without any loss to them.

76



How Shall We Know? 77

lead, as a multitude of instances do
abundantly witness, and it would take
the eye of a prophet joined to a heart of
faith, to see the millennium even in the
distant future. As bankers, we are con-
cerned most about that form of vice
which we feel most which affects most
our business, namely, the embezzle-
ment of our funds by trusted employees.
In fact, whether we are all willing to
admit it or not, there is abiding with us
a feeling of insecurity because we have
found no adequate protection against
such occurrences.

We make our physical positions perfect
with vaults, combinations, time-locks,
etc.; and our methods of examination
are as good as can be devised under the
present banking system of rules and
laws. In most businesses the present
system would be sufficient; but not so
with us. We are not only beset by foes
without, but by those within, as well
persons who occupy subordinate posi-
tions, so-called, but from whom the
"big fellows" of the concern must obtain



78 The Teller's Tale

their information as to the real condition
of things. The head of the bank is not
master of the situation. The subordi-
nates not only know the condition of the
bank but practically make its history.

A teller or bookkeeper may, by the
scratch of a pen, obligate us to pay thou-
sands of dollars which may not become a
part of our assets, and of which there
may not be a record; and we may
become, and be, insolvent while the ex-
aminer or auditing committee is report-
ing us prosperous and happy. By a mere
manipulation of figures in our portfolios,
an unlawful disappearance of the funds
held in trust by us may be made to ap-
pear as lawful : seemingly, our liability is
cancelled, but in reality it is the same.
It is the asset which has disappeared
altogether.

This is an anomalous condition, but
one we should face fairly, intelligently,
and in a practical way. We should act
upon that which we do know : that those
in positions of trust with us do take ad-
vantage of their ability to keep us ignor-



How Shall We Know? 79

ant of the true condition of the bank;
and they do this to our hurt and the hurt
of our customers. That they have done
so at every point of the compass, and in
every section of every country on earth,
falsified entries, unentered credits, and
vaults emptied of thousands, do most
positively attest; and this they will
continue to do until a plan is adopted
by which every possible, effectual act of
every officer of, and every worker in, the
bank may be regularly reviewed by his
fellows and by the bank's committee of
stockholders.

Sometimes our ignorance has been
taken advantage of in one way, some-
times in another; and generally as each
fraud brought to light another plan of
the defrauder, some remedy has been
found which would prevent the thing's
being done in that particular way so
easy again; but up to this time no
plan has been suggested by which the
stockholders or anybody else may know
absolutely just what the bank's liabilities
are.



8o The Teller's Tale

What if the National examiner or the
State examiner does come around occa-
sionally and go over our cash, our notes,
and our exchanges, and check up by
correspondence the amount of money we
have in other banks? What does this
avail, even if we admit that he can check
up our assets, since he does not and can-
not ascertain and test by comparison or
correspondence, the amounts we owe our
hundreds of depositors and others ? no ;
not even the amounts which appear on
the books, to say nothing of those sums
which may not be entered on the books.
He does not therefore test the work of
the bank as a whole, much less the
separate work of the several employees
therein.

What would we think of the architect
or contractor who, in placing his founda-
tion, should ascertain the weight of the
building, but neglect to test the capacity
of the earth to support this weight ? His
foolishness would not be unlike that of
the bank examiner or bank committee,
in the one-sided, half -proving test which



How Shall We Know? 81

they would make. The one may result
in cracked walls and fallen buildings ; the
other, in financial disaster.

Realizing that if we can answer the
question propounded by the subject of
this paper, we are safe, while otherwise
there is no safety, I have undertaken in
this paper to open up a plain and prac-
tical method an entirely feasible way
by which this information can be had at
a very small annual expense, and the lia-
bilities and general condition of banks
and banking institutions of all kind ac-
tually and legally determined.

We are at present working wholly on
the faith we have in the integrity of our
fellowmen, which is very good when
there is integrity; but what if there
should not happen to be integrity, and
stability, and strength of character suffi-
cient to stay them in the daily and hourly
temptation which becomes the besetting
sin? Is it our purpose to go forward,
progressing in the business of banking,
which is yet in its infancy? If so, how
much farther can we go in the dark?

6



82 The Teller's Tale

I know it is as impossible to stand still
in the banking business as in the others.
We must advance or recede. We cannot
advance unless we overcome the one
difficulty that stands in the way of every
bank on earth. It will destroy us unless
we destroy it. This is true for two
reasons at least: (i) The fact that funds
can be taken, and the taking concealed
from the officers, is known to every bank
employee in the world, which knowledge
is to them both a suggestion and a temp-
tation to use the bank's funds for un-
lawful purposes; (2) this knowledge has
also travelled to the reading public, and
the intelligent depositor knows that his
deposit may not be held safely, not-
withstanding the integrity of the man-
agement.

It is impossible that such knowledge
should fail to have its influence against
the continued and increasing use of the
banks by the public. For whatever may
be said of the many employees who have
been faithful with the millions entrusted
to them, and who have never betrayed



How Shall We Know? 83

a trust, our experience and observation
teach us that no amount of confidence is
equal to the feeling which conies from
absolute knowledge. And we know that
every person's efforts to do right may be
strengthened by the knowledge that his
every act will be reviewed by others.
We know human nature too well. We
know the desire for wealth which comes
to the poor man who handles thousands
for the rich daily, as well as the greed of
the rich for more. We know the easy
stages by which the honest man takes
the journey along the road of extrava-
gance, speculation, defalcation, and ruin.

As long as there is a tempter, men will
fall into temptation; and our falling is
most likely when there is an opportunity
to conceal the wrong. "Opportunity (to
take and conceal) makes the thief." If
we add to this the fact that the wrong to
be done promises the gratification of
some strong natural desire, like greed, the
temptation becomes almost irresistible.

Shall we continue to handle our neigh-
bor's money in this wise ? Have we the



84 The Teller s Tale

heart to repeat that prayer "Lead us not
into temptation," when we are daily ex-
posing our fellowmen to the greatest of
temptations ? That is what we are doing
exposing them to temptations, I mean;
for no doubt many of us omit the prayer
altogether.

I repeat again,with emphasis, that, after
a close study of, and much practical ex-
perience with, the business operations of
a bank of deposit, I am convinced that
there is now no certain means employed
by the officers and auditing committees
by which they may ascertain the bank's
legal liabilities as incurred by their au-
thorized agents. I refer especially to the
work of the tellers and bookkeepers, who
control the initial sources of liability.

The plan I propose for giving this
knowledge to the owners of the bank is
a twofold one, imposing duties on the
bank's committee and on the public who
deal with the bank. I would bring the
stockholders, their committees, and higher
officials, in contact with the depositors
and other customers of the bank, so that



How Shall We Know? 85

each should know that the books of the
bank and the books, or other evidences
of debt, in the hands of the customers,
are in accord. I would put a stop to the
way the teller and bookkeeper have of
"playing the middle against the two
ends," because in such a game the ad-
vantage is always with the middle.

But how shall they know this? How
shall it be done?

It is a matter which must be handled
carefully and with delicacy, at first,
since the depositor must not be im-
pressed with the idea that there is any
doubt (and there should be none) as to
the correctness of his account as recorded
on the books of the bank; and he will
not be so impressed, provided the sit-
uation and method are properly laid be-
fore him.

My plan is this : Let the bank have the
following printed at the head of the page
of the pass-book in which the first entry
is made:

"It is a rule of this bank to ascertain
and fix, at stated times, definitely and



86 The Teller's Tale

exactly, its legal liabilities; and, with
this end in view, it will publish, from
time to time, detailed accounts of every
character of its business, omitting the
names of its depositors and other credit-
ors, as well as its debtors, but using a
number to correspond with each item or
account. Such publications will be made
for the purpose of giving notice to all
persons concerned, in order that they
may have their accounts adjusted and
reconciled in case the sums set opposite
their publication numbers do not agree
with the balances shown by their pass-
books and other evidences of account.
Your account number in the publica-
tions to be made will be - .

"Your attention is especially called to
the fact that this bank will not correct,
or be responsible for, errors in your ac-
count unless complaint be made to the
publication committee of the bank
within thirty days from the completion
of the publication showing an error.
Publications, until further notice, will be
made in the once



How Shall We Know? 87

a week for four successive weeks, and at
least eight times in each year.

"Do NOT TAKE THIS BOOK OUT WITH-
OUT GOING TO THE PRESIDENT OR CASHIER
AND HAVING HIM SIGN THIS NOTICE AND
GIVE YOU A PUBLICATION NUMBER, FOR
THIS MUST NOT BE DONE BY ANY OTHER
PERSON.

Cashier."

When the teller first arranges the pass-
book and writes the depositor's name in
it, I would have him give a publication
number to the account and ask the de-
positor to step back to the cashier's desk
and have his name, signature, and num-
ber recorded for future publication. The
same rule should be observed when it is
a time certificate of deposit, the giving of
a promissory note, or any other transac-
tion. The publication number should
be one that would easily identify the
account to both the depositor and the
committee of the bank.

In addition to the above, I would re-
quire the customers to sign statements
at least once a year showing that a



The Teller's Tale

given publication, already completed,
correctly states their relations to the
bank, naming in each case what that re-
lation is. These should be written by the
customer, so that they might be com-
pared with his authorized signature on
file with the bank. We would then have
an actual, as well as legal, reconciliation
between the books of the bank and the
books of the depositor.

The pass-book ought to be balanced
once a month, and an additional rule
should be adopted and printed therein
requiring the depositor to have it so
balanced, and to exhibit it to the cashier
at that time.

The publications should also state that
they are made for the purpose of recon-
ciling accounts and other business mat-
ters between the bank and those who
have any business relations whatever
with it. It should again warn customers
of the necessity of responding to the no-
tices whenever differences are observed
to exist; and it should warn the public
that if there are depositors or customers,



How Shall We Know? 89

other than those whose numbers appear
in the published reports, they must come
forward and make their claims known to
the committee within, say, sixty days,
and that a failure to come forward will
bar their claims.

There is every reason to believe the
courts would decide that the notices
given the bank's customer by publica-
tion would be sufficient to prevent his re-
covering from the bank after a given
time, provided, of course, the bank had
really lost anything by the customer's
failure to make his claim in time. Cer-
tain it is that sufficient legislation could
be had to enforce reasonable rules along
the lines indicated, so as to protect the
bank against all claims not propounded
within a given time, whether there was
actual notice to the customer or not.

Independent of the law, as it exists, or
as it might be passed for the protection of
the banks in enforcing such rules, every
customer would observe with care the
published notices, and thus the facts
themselves would be known and the



go The Teller's Tale

rights of all parties understood and pro-
tected. There would be no excuse for
ignorance of the true condition of the
bank, both as to assets and liabilities;
the committee who checked up the busi-
ness and the published notices would be
certain of the facts certified to, and this
certainty would give a feeling of security
to them which would be imparted to
others.

With the adoption of this plan and the
same put into general practice, I believe
there would be given to the business of
banking, not only for banking's sake,
but for security's sake as well, such an
impetus as it has never felt before, and
all the money of the country would be
kept in banks and, practically, all the
business would be done through them.

On the other hand, without the abso-
lute knowledge which such a plan would
give, the banks cannot keep up the con-
fidence which now exists. They are
bound to lose some of the ground already
gained. They will do this even where
the bank is small and there are but few



How Shall We Know? 9 1

changes made in its clerical force in the
course of several years. But it will be
especially true where the bank is a large
one and requires the employment of
many persons; because the customers
of such an institution are beginning to
understand that they are not only at
the mercy of the large number of people
employed therein, but of all the people
who may be so employed from time to
time.

But if we know the president and
cashier, in whom we have confidence, and
we know their knowledge to be such that
no serious wrong can be done and cov-
ered from their sight ; and if we know that
the work of the president and cashier,
and of the whole bank, is carefully re-
viewed by a committee of the stock-
holders, whose findings are proven and
corrected by publications, and made
binding on the world, we are absolutely
secure in dealing with the institution;
and we will soon find this out.

We hear a good deal at bankers' con-
ventions about confidence being the



92 The Teller's Tale

foundation of business. Nevertheless,
when we go to the banker at his office
and apply for a loan, security is invari-
ably demanded; and this leads me to
conclude that confidence is meant for
the depositor, while security is the proper
thing for the banker.

Since confidence is the only assurance
the depositor has in dealing with the
bank, just as it is practically all the as-
surance the bank has in dealing with its
employees, ought we not to cast up this
confidence account occasionally to see
what it has cost us?

In conclusion, I will say that, from the
banker's standpoint at least, confidence
is not the foundation of the banking
business, but is only a part of the super-
structure thereof. Down below it are
integrity, the possession of wealth, and
the ability to use wealth as capital in the
production of more wealth.



CHAPTER XI

COLONEL WILMOT AND THE BANKERS

THE reading of the paper aroused
unusual interest. The statements
and arguments made in it were generally
acknowledged to be true and sound, ex-
cept that some of those who joined in
the discussion contended that it was un-
wise to further advertise the weakness of
their position on the question raised, a
weakness which they claimed to be in-
herent in the nature of the business, and
which could be minimized by methods
already employed by up-to-date institu-
tions, but which could not be cured by
any possible means. Said they: " If you
intimate to any depositor, or any would-
be depositor, that there may be mis-
takes made, and that publications may

93



94 The Teller's Tale

be necessary to discover and correct the
same, or that for any reason there is the
remotest doubt as to his ability to with-
draw his money at any time, you need not
expect to gain or retain his patronage. "

The great majority of those at the
meeting, however, agreed with Colonel
Wilmot, and maintained that the dis-
tribution of news and the dissemination
of learning were becoming too general
among the masses to warrant the belief
that their ignorance and credulity could
be played upon by pretensions of safety
in methods and practices known to be
unsafe, even if the interests of the banks
demanded that they should be deceived;
and that the many recent and extensive
losses by banks from the dishonesty of
officers and employees, as published by
the daily press, were much stronger indi-
cations of weakness than the admissions
which the bankers themselves would
make ; furthermore, that it would be far
better to provide a remedy for this weak-
ness at once than to allow a knowing
public to magnify the dangers to them



Colonel Wilmot and the Bankers 95

and to conclude, from the silence and in-
activity of the bankers themselves, that
there was no remedy.

Attention was called to the fact that
the banks and bankers themselves were
much more interested in the question
than the depositors, for the reason that
the losses of a bank always fall on the
stockholders first, and that even in the
larger defalcations which had occurred
the losses of the depositors were not total.

The consideration of the question so
engrossed the minds of the members that
some other appointed subjectswere wholly
neglected, with a result that a committee
was raised, with Colonel Wilmot as its
chairman, to present the subject to the
State Legislature at the forthcoming
January session, and ask for the passing
of a law on the subject in harmony with
the position taken by Colonel Wilmot in
his address and speeches.

The agitation thus begun was continued
by many of the newspapers of the State-
that avenue of communicated thought
which is the palladium of our liberties in



96 The Teller's Tale

this latter day when the crop of corrup-
tion is appalling; and they abated their
fight not a whit, although the opposition
freely charged them with selfish pur-
poses, and declared that it was not on
account of any merit in the law that they
contended, but because the publications
to be made under the law would give
them another source of revenue.

Frankly, I suspect that there were
self -servings which put force and terse-
ness, alliteration, and even rhyme, into
more than one editorial on the subject.
But this argues nothing against the law,
any more than the brilliant speech of
the attorney argues his client guilty;
for generally behind our best efforts are
minds firmly fixed on the recompense of
reward.

The people everywhere discussed the
question, and the candidates for the
Legislature were required (much against
the courage of some of them) to declare
themselves on the proposition, many of
them being elected or defeated according
to the declarations made.



Colonel Wilmot and the Bankers 97

On February , - , the law on the
subject was passed, having received an
overwhelming majority of the votes of
the members in both houses of the Legis-
lature, the bill having been introduced
and championed by Mr. Bowers, then a
member of the lower house, now a repre-
sentative in Congress from the Sixth
District. And the following chapter,
but one, sets forth the law as passed, the
title and the formal parts being omitted.

7




CHAPTER XII

MINISTER AND NOBLEMAN

THE home of the Blairs, on West
Street, was aglow with light and
life, and music and moving figures gave


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Online LibraryPhil. A. (Philip Augustus) RushThe teller's tale; a banking story for bankers, a law story for lawyers, a love story for lovers → online text (page 4 of 9)