get proper indorsements upon his paper, proper
outside indorsers, without any secret under-
standing. It is no hardship, but a guaranty.
I think it would be the wildest thing this
convention could do, to loosen rather than to
restrict the liabilities from corruption in bank
officers; especially at the present time when
the spirit of speculation is so rampant in the
land, when the temptation to indulge in the
purchase of stocks and everything else is go
overwhelming. Re-enact the old clause as it
stood, and I guarantee that there will be no
more instances of fraud in bank officers and
bank directors in the next ten or fifteen years
than there have been in the past.
Mr. STOCKBRIDGE. The gentleman from
Washington (Mr. Negley) has the advantage
of most members of this convention in his
intimate knowledge of the character of bank
directors and officers and bank rule. Perhaps
we were too credulous in the former part of
this discussion when we gave full faith to his
statement that persons could not obtain dis-
counts at banks unless they had a certain line
of deposits there. That was the statement
here this morning; and in our vote upon the
former provision I gave full faith to that
statement. But now it seems that any one,
without having deposits, without having
any stock, without having any proper in-
dorsement. without any practical security,
may procure loans to an extent to justify sui-
cide. I confess that I do not see the force of
all this. Why may not banks like every
other man, as the phrase is now, loan their
money to anybody that will give them
good security for it? That is the question. If
a man, being a director or an attorney for a
bank, brings good security, having a line of
deposit enough to entitle him to discount, the
bank is of course safe. The bank loses noth-
ing, in the event that he chooses to go into
such wild speculation and blow his own
brains out. That is a matter between him-
self and his family, and does not affect the
bank.
If we are to protect the community against
fraud on the part of the banks, let us give
them the largest liberty in their business op-
erations consistent with the public safety, I
do not see, the rules of the banks being such
as were portrayed this morning, any peril
whatever in adopting the report of our com
mittee.
Mr. NEGLEY. The very objection that the
gentleman urges against this proposition to
with the the strongest argument in its favor,
It is not the requirement of country banks
that the borrower shall have any line of de-
posit. That is the rule in the city of Balti-
more; and it discriminates still more against
the outsider and in favor of the director.
The director may not have any deposits at all
in the bank, or they may be very slight.
Still they may borrow out the capital of the
bank, indorsing each other's paper, and sit- |
ting in judgment upon their own applications,
the majority admitting only those whom they
choose into the arrangement.
Mr. PUGH. Is there any difficulty whatever
in the way of these rascally directors to whom
the gentleman alludes, borrowing money, by
having a third party, an outsider, in the
ring? If they set out with the intention of
robbing the bank and consequently the com-
munity, can they not do it just as effectually
with this provision in the constitution, as
without it, by having an outside party to op-
erate with them?
Mr. NEGLEY. They do it at the risk of the
pains and penalty of imprisonment and fine.
That is the difference.
Mr. PUGH. They do not discount their
own paper, bat the paper of an outside
party.
Mr. NEGLEY. The constitution says "di-
rectly or indirectly." If they borrow the
money through a third party, by indirection,
they are just as liable in a court of law as if
they borrowed it directly.
Mr. STIRLING Suppose one man borrows
the money, and lends it to somebody else,
who lends it to a director and takes his note.
How is it to appear that the money is bor-
rowed by adirector from the bank?
Mr. NEGLEY. He is liable if he obtains it
by a hundred removes. If he has directly or
indirectly obtained that money, even if there
has been secret connivance between a hundred
parties, he is still liable; as in a case where a
party puts away his property fraudulently. I
do not care through how many removes you
trace it; if you can trace the fraud through
the whole, you may take it. This is pre-
cisely the same case.
The efficacy of this section may be seen
from the fact, the incontrovertible fact, that
in no single instance, in no solitary case, in
the last fifteen years, has it been violated.
Bank officers have not been brought up be-
fore courts of justice, and there has been no
speculation in this direction. That is the
guaranty.
This requires the bank director to do what
other business men must do when they seek dis-
counts. Why should not a bank director any
more ait in judgment upon his own paper,
than a judge upon his own offence?
Mr. STIRLING demanded the yeas and nays
upon the amendment, and they were or-
dered.
Mr. CHAMBERS. If I believed that the mis-
chiefs pointed at by this provision could be
effectually cured by it, I should certainly
vote for it. But I do not believe it can be in
fact executed in the mode in which alone it
would be of any possible advantage to any
human being. I believe it will only invite
an indirect course to accomplish that which
without it would be accomplished directly.
There is no prohibition against these officers
indorsing paper; and whenever you permit |
