[Volume XXVII
THE CHICAGO BANKER
28
As a matter of fact every employee and officer of a bank may be bonded. Some afternoon when one of the tellers counts his cash, he finds, for instance, a $10,000 bundle of currency missing. It was checked in, in the morning, and mysteriously disappeared during the day. Although the money was in his charge, it is nevertheless gone. Under your bond what in your recourse?
It is conclusive that some one in the employ of the bank must have taken the money, it being impossible for an outsider to in any way have committed the theft. What does the surety company do? Don’t overlook the fact that all are bonded. They say, “Pick out the man and prove it, have him arrested and prosecute him, then we will pay.” That is an impossibility, every one is under suspicion, but the guilt cannot be definitely placed. The result is, that although bonded, the bank, in instances of this kind, has absolutely no protection and must stand the loss.
In one large western city, six such mysterious disappearances of money have taken place during recent months and every loss had to be borne by the bank itself surety bonds being inadequate and not sufficient protection. Should the teller of any bank claim the disappearance at any time of a large sum of money, what recourse has the bank? Tellers, as a rule, are not so situated financially that you can hold them good personally. You can’t fix the guilt and the bank must stand the loss. Burglary policies read that “forcible entry by the use of tools must be proven,” and at this time the payment of a claim of a recent large robbery in the vicinity of Los Angeles, although conclusively proved, is being contested on this technicality.
Some time ago a large eastern bank locked its vaults one evening, after the cash had been counted as correct. The following day it was found that $50,000 was missing from its vault. The vice-president, a wealthy man, and another officer were the only ones who had access to the money. Both were unquestionably above suspicion. The perpetrator of the theft was never discovered. This was another case of where burglary insurance was of no benefit.
One of the evils of bank burglary insurance is the possibility of theft by safe and vault experts, who can open almost any safe or vault without knowing the combination and without leaving any trace of the “use of tools” behind them. A safe in San Francisco was recently robbed three times. At first it was a mystery. Money was placed in the safe at night, it was opened after the usual custom in the morning and the money was gone. After the second disappearance of money the safe was watched for several nights, and a man was seen to raise a board in the floor, come through from the basement, and open the safe without any tools and on the combination. He was immediately seized and arrested. Afterward he made an open boast that he could open any safe on the combination without “any tools” and without knowing the combination. One safe concern offered $100 if he could open one of its make of safes. The test was made. He worked the combination a few minutes and the safe opened.
What protection in cases of disappearance of this kind have we under our “burglary policies,” where the guilty one is not detected? And even had the guilty one been discovered the bonding company could have claimed immunity by reason of the fact that neither tools, force nor explosives were used on the safe.
It is a positive fact that if a man is dishonest, no matter how perfect a system we have, he will find a way to steal. The perplexing problem is how to guard ourselves absolutely against any shortage, theft or burglary in every possible way. All this is conclusive evidence that there is room for a protective company that protects.
The Bank of Nokesville, Va., has been incorporated, with a capital of $25,000. W. T. Allen is president.
supervision that in the past fifteen years there have been but few failures, and still fewer cases in which the depositors lost any money. Nevertheless, economists argue that the amount of capital of a bank should not be higher than $1 to every $4 of deposits, nor lower than $1 capital to $7 of deposits, and it is with this theory and the conditions disclosed in the compilation in mind that the special committee will draft a bill relating to guaranty of bank deposits—which is said to be favored in principle by the majority of the committee.
The table shows that in 1895 the total capital surplus in state banks of Wisconsin was $10,-967,737.43, and deposits, $28,062,796.67; while in 1908 the capital and surplus aggregated $20,-834,283.47 and deposits $103,477,300.30, the present relation of deposits to capital being five to one.
WAMEGO STATE BANK Wamego, Kansas
Bank Burglary and Surety Bond System Criticised
By Emanuel Cohen.
In the bonding of employees a careful reading of policies of different companies will disclose that the wording in general is practically the same. When officers of a bank go home for the day, and more especially those who have charge of actual money and securities, they leave worry and fear behind them, and why? Because every employee is under bond, the bank carries burglary and all other forms of insurance, so that apparently a loss is impossible. But if we cautiously read our policies and give them a little study, the startling fact will be revealed that our protection is inadequate, limited to a stated degree, and does not by any means afford the security that we are entitled to, and that we think we are getting. Under the surety bonds your policy reads as follows:
“Make good and reimburse to the obligee any and all pecuniary loss of money, securities or other personal property belonging to the obligee, sustained by the obligee by reason of the fraud or dishonesty of any principal for whom the surety is or shall become liable hereunder, in connection with the duties pertaining to the position to which he has been or may be appointed by the obligee amounting to larceny or embezzlement.”
Wamego State Bank
One of the most noticeable features of Wamego, Kansas, is its neat buildings and the finest of all its business structures is the new home of the Wamego State Bank, which has been occupied by that institution since December 24, 1908. It is a two-story structure of buff brick, with vestibule front 21 feet wide rising to the height of both stories and flanked by two 24-foot Corinthian columns. Although but two stories, it is so stately and dignified in appearance that it is easily imagined to have been transplanted from the heart of Wall Street or La Salle.
The interior, with its heavy fireproof vault extending from foundation through the second story, hot water heating plant, electric lights, lavatories, etc., its tile floor, ornamented ceiling and furnishings of latest bank fixture designs, is in keeping with the outward impressions. On the second floor are suites of law offices. There are only two others in the state of Kansas similar to this building, one at Stafford and the other at Russell, both owned and occupied by banks.
From 1881 up to the time this new building was finished the Wamego State Bank, which was started that year by George Trout and L. B. Leach as a private bank, had occupied a modest frame building that is covered with sheet iron. But these two pioneers of Wamego made it a popular bank and its business grew to the point where it was found expedient to incorporate as a state bank. It was incorporated under the state laws in 1906 with a capital of $40,000, but this was increased later to $60,000. It now has a surplus and profit fund of $10,000, and a report of April 28th, gave it deposits of $220,363. The officers of the bank are : L. B. Leach, president; \׳V. R. Johnson, vice-president; A. T. McMillan, cashier, and Louis L. Parsons, assistant cashier —the directors, including the president, vice-president and cashier, being George Trout, J. L. Prunty, W. L. Cotton and Forest Leach.
Cashier A. T. McMillan entered the bank in 1882 when not yet 21 years of age, and has given the detail work of the institution all his personal attention from that day to this, which means that he has grown up with the bank from its infancy as a private bank to its place among the leading banks of Eastern Kansas. Assistant Cashier Louis L. Parsons joined the institution at the time it was incorporated as a state bank. Directors Prunty, Cotton and Leach have each been prominently identified with the town and county for years. With its accumulated influence of years, its strong patronage and its prestige gained as a progressive institution, the Wamego State Bank will continue to grow.
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Wisconsin Banks in Good Condition
Madison, Wis.—Interesting figures and statistics regarding the condition and growth of state banks in Wisconsin since 1895 are disclosed in a compilation just completed—figures that undoubtedly will form an important part of the report of the special committee on guaranty of bank deposits, which will submit its conclusions to the legislature at its special session in January. The most noticeable feature of this compilation is that capital and surplus have by no means kept pace with deposits, capital increasing about 50 per cent, surplus and profit 55 per cent, deposits 325 per cent, and loans and discounts 300 per cent. All of which means that the banks of Wisconsin are loaning, for the most part, the depositors’ money.
The years of which records are obtainable, are those during which the state has supervised all banks not holding national charters, there being no “private” banks in Wisconsin.
The Wisconsin law places no limit on the amount of deposits as compared with capital, and it is a striking tribute to Wisconsin’s system of