[Volume XXVII
THE CHICAGO BANKER
16
Geo. L. Colburn
President
Pekin, 111., June 2$־, igog
Mr. Geo. L. Colburn, President
The Pioneer Life Insurance Co., City Dear Sir: 1 want you to know how very much I appreciate the promptness with which your company settled the $2,000 of Insurance carried by you on the life of my late husband, Cornelius R. Rust, which was within a few hours after I had filed the necessary papers. The characteristic promptness of the Pioneer Life Insurance Co., and the courtesy of your representatives, must surely endear your company to the policyholder and result in the further attainment of a magnificent growth in prestige and usefulness.
Yours very sincerely,
LENA RUST
Operating the Savings Bank System whereby the carrying of Life Insurance becomes a means of saving money, and not an expense.
PIONEER LIFE INSURANCE CO.
PEKIN, ILLINOIS
(V5 ANY AND ALL COLLECTIONS ON
€ BELOIT and Vicinity €
WILL BE SURE TO RECEIVE CAREFUL AND PROMPT ATTENTION IF SENT TO THE
German National Bank
A Special Collection Department, up-to-date in every line, under the supervision of
L. A. MERGEN, Assistant Cashier GERMAN NATIONAL BANK Beloit, Kansas
IT WILL PAY YOU TO TRY US
not be measured by the rules of mathematics, accountancy, political economy, or finance, and yet bank examiners, as well as bankers, should be familiar with all of these sciences.
A year ago when playing golf on the old links of St. Andrews, Scotland, I saw a party of players coming towards me with quite a gallery following them, showing that they were recognized as experts at the game. Turning to the old man who was carrying my clubs, I asked him who the players were, which he told me. Recognizing among their names that of a well known authority on the game, I remarked that I supposed he was a very good player. “Weel,” said the caddy, “he used to be among the best, but two years ago he wrote a book on the science of golf and he has not been much of a player since.” I have sometimes wondered since if there was not some practical sense in the old man’s observation. The gentleman’s close attention to the technique of the game may possibly have affected his natural ability to play it; while thinking of how to place his feet he may have neglected to keep his eye on the ball.
Borrowing from their own banks by officers and directors is another matter which it is thought should be regulated by further prohibitive or restrictive legislation. That there has been serious abuse of banking privileges along this line is only too true but, as I have already pointed out, it is due to an evil lying at the very foundation of the development of our banking system, the arbitrary prohibition of which now would be almost revolutionary. The trouble lies in one man being permitted to act on both sides of a transaction, i. e., both as borrower and lender. Officially, he passes judgment on his personal credit, and it is not human nature that he should degrade himself in his own estimation. Bank directors who know their responsibilities and care to assume them will not permit such practices.
It may be necessary under our system to do as some of our state legislatures have already done, prohibit loans to salaried officers, except with the full consent of the board of directors, regularly recorded in their minutes. It is a mistake, however, to pass laws which are too easily circumvented. It only induces evasion which is always demoralizing. As a rule, salaried officers of banks should have little occasion to borrow, and it is open to question if when they do they should not do so at their own banks, always on satisfactory security and with the knowledge and approval of their directors; never in my opinion otherwise. It is certainly better so than that they should be compelled to go to
policy adopted by the present comptroller of appointing as examiners men of previous banking experience, giving preference to those who have been connected with sound, progressive and well managed institutions and refusing to consider applications from officers or employees of badly managed banks, cannot be too highly commended. However, as he will have to compete for the services of such men with practically all the good banks in the country, their remuneration should be made such as will enable him to do so successfully.
It is most desirable, almost essential, that bank examiners should have had a bank training. Without it, unless they are men of very exceptional natural ability and adaptability, they are liable to be impractical in their work and erroneous in their judgment, applying theories to problems which will not solve them and failing to exercise that sound judgment which as a rule is only acquired through practical experience in the business. On the other hand, the experience of a bank examiner is of incalculable value in the evolution of a bank training, provided he has previously been long enough in the banking business to have acquired something of what may be called the banking sense—a sort of intuition by which a banker reaches conclusions and makes decisions that are generally his best. Policies controlling successful bank management must be in accord with the laws of political economy and with sound financial theories. Such laws and theories will not, however, solve the problems connected with individual applications for loans, no two of which are ever alike. The theoretical banker, who knows it all and can give you a definite rule for all he does, is not generally the successful one. Accompanying theoretical knowledge there must be sound judgment and applied common sense. Bankers have human nature to deal with in all its varying propensities. They must, as Burns advises,
“Keek thro’ ev’ry. other man,
Wi’ sharpen’d, sly inspection.”
Not coming into daily contact with the borrowing public and having constantly to pass judgment on transactions after they have been completed, bank examiners have little opportunity for the development of this banking sense, and unless they have by previous experience acquired it they are very liable to get into a too critical frame of mind and to become over-technical and theoretical in forming their judgments. Having been a bank examiner myself I speak from experience. The value of a bank’s resources can-
our business rush and rapid growth, together with the necessity there has been of employing men to manage our banks who have had no previous knowledge or experience in the business, the wonder is that failures have been so few. The results afford no basis for serious complaint against the comptroller's department as it has been administered and disclose but little necessity for new laws to regulate it or bank examinations as they are conducted under it. Both are developing as the system develops and are steadily improving in efficiency.
Many of the suggested changes in the administrative features of the national bank act are such as under the general powers conferred upon them, the comptroller, his deputy and examiners can best work out for themselves. Some of them, however, are quite necessary and desirable. It would, for instance, be ideal to have a corps of trained examiners, adequately paid by salary and under civil service rules, both as to their appointment and the tenure of their office. Also to make the position of comptroller of the currency such as to inspire the ambition of leading and successful bankers to fill. But these suggestions, however desirable, do not seem practical or available at the present time. They must await the further development of our system and in the meantime we should take such practical steps as may make them possible in the future. Good, capable and faithful service are not always nor mainly dependent upon adequate remuneration. This is conspicuously the case in the public service. The fact affords no excuse, however, for perpetrating and perpetuating a palpable injustice. The pay of the comptroller is now and has long been totally inadequate. As a matter of simple justice as well as of sound public policy his salary should at least equal that of the presidents of large city banks. Instead of being regarded as a position from which bank presidents may be graduated the comptrollership should be considered a post-graduate honor and a distinction of the highest order to be conferred on men who have previously filled a president’s position and demonstrated their ability by the success they have achieved. These ideals can hardly be realized, however, so long as the acceptance of the honor by one holding such a position would mean the reduction of his income by from one-half to two-thirds, besides having to give up a permanent position for one of limited term of service.
The pay of the comptroller’s deputies and examiners should also be such as to command the services of experienced and competent men. The