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# BANKS ROBBED FROM WITHIN.
The receiver of the Keystone bank of Philadelphia finds that the assets equal $1,726,511, of which $996,992 are of doubtful value and $153,912 worthless. On the other hand, the liabilities are $1,735,577, not including the due bills for Bardsley's alleged loan of $925,000 of public money-or $2,660,000 with those thrown in.
In other words, the bank has been robbed of about $1,500,000, not by burglars from without, but by embezzlers from within. The worst of it is that these national bank frauds not only reveal the existence of extraordinary opportunities for theft, but they establish a still more ominous fact, the utter inefficiency of the only means which it is possible for the government to employ to check or prevent fraud when once the bank official proves to be a scoundrel. During the nine years ending with 1886 there were 55 separate cases of defalcations in national banks, amounting in all to $9,959,741, divided as follows among the responsible officials of the banks: Fourteen presidents, total embezzlement, $5,184,569, average for each individual, $370,326; 21 cashiers, total, $3,798,000, average, $180,857; 9 tellers, $462,000, average, $51,000, and 11 sundry officers, $515,172, average, $46,833. These figures represented direct frauds.
Of the 27 national bank failures that took place during the four years following 1886, twelve were due to frauds by bank officials, while eleven were attributable to excessive loans to bank officers, two to bad management and two to decay of trade. The record of the current year will raise this startling average. While the average losses from national banks is very small, since only a fraction over three per cent. of the national banks organized since 1863 has been placed in the hands of receivers, nevertheless one is startled by the absolute ruin of nearly all the banks that have been victimized by fraudulent officials; by the impunity with which such frauds are committed, and the seeming difficulty of devising any means to prevent them.
It is a noteworthy fact that some of the banks esteemed to be safest have proved to be the most rotten and corrupt in their management. The national bank exam- iner is seldom a person who is likely to discover defalcations which presidents and directors fail to trace. His official func- tions are to see that the bank was properly organized and administered; that no law had been violated in respect to loans, re- serves, investments, bad debts, dividends; and that the assets were really worth the amounts representing them on the books of the bank. He comes but once a year, stays but a single day, and of course can not be relied upon to discover thefts or false entries that have escaped detection by the directors, who are always present, and are naturally spurred to vigilance, since they are personally sure to be the sufferers if the bank's money is stolen. No mode of official examination by the federal official, under the present bank system, can be expected to be an effective substitute for the interested vigilance and personal accountability of the president and directors of the bank.
The English banking system is superior to our own, because instead of maintaining thousands of small banks it permits the establishment of large banks radiating in all directions from a central office within a limit of 500 miles. Under this system the examination is efficient and continuous, being, so far as the branches are concerned, conducted by the bank
