CHAPTER XI

THE HUMAN ELEMENT IN BANKING

In the preceding chapters there has been a study, largely from a legal standpoint, of the organization and the operation of banks. Since the human element necessarily enters into the banking business, it is deemed fitting to devote a chapter to the personal side of a bank. What kind of persons should be chosen to operate the bank? What kind of training should they have? What are the special requisites of a successful banker? What should be his relation toward the bank's patrons? What can he do to develop and to hold the confidence of his community for the benefit of the bank? What is the bank's obligation to the community, if any, other than to discharge faithfully the duties for which it is organized? These and other similar questions should be in the minds of the directors before choosing the officers of the bank. should they not be in the minds of the stockholders when they choose their board of directors? It is by the authority of the board of directors that the officers of the bank operate, and it necessarily follows that the shareholders should be very careful in the selection of the board. To answer these questions, which always arise in organizing a new bank, is the purpose of this final chapter.

In fact,

In disposing of the stock of the bank, great care should be taken. The stock should be owned only by those persons who have money to invest. It is an unwise policy to sell stock to those unable to retain it or to those who may later become borrowers to any considerable extent from the institution. The reason for this is obvious. The stock should be placed in the hands of persons who can reasonably be expected to be of benefit to the bank. Nothing is gained by peddling the stock of an institution of this kind. It should be in the hands of its friends and those who are in a position to render it service. Stock should be sold to all those persons who are regarded in the community as men of affairs. It adds stability to the bank to have it known that it is owned by men who have been successful in their chosen lines.

After the stock has been sold, the stockholders are called together for the purpose of electing a board of directors, whose duty it is to choose the officers of the bank and to have general supervision over the same. The board of directors should consist of an odd number of stockholders. In some states the number is determined by legislation. Ordinarily, in most rural communities, seven or nine is a desirable number. The men selected should be the very best material offered by the stockholders. They should be men of wide business experience and should have a knowledge of the credit situation in the community in which the bank proposes to operate. The board should be made up of men engaged in different lines of

business, so that there will be some one of the directors fully acquainted with the problems of any class of business which will come to the bank. They should be men of the highest standing in their community. A bank is handicapped at the beginning if the stockholders have not shown wisdom in choosing the board which will control its management.

After the directors have been chosen, it is their duty to organize by electing, from their number, one to serve as president. The man chosen for president should be the strongest man on the board. It is obvious that he should be a person who has been a complete success in his particular line of business. If his business is one which has brought him into close touch with other business in the community, it will add strength to the bank. He should be a man of sound judgment and ripe in experience. The people in the community from which the bank expects to draw its business will look upon the president as the official head of the institution, and it is well for the bank to select a man who understands the needs of the community and the business therein. He should be able to devote sufficient time to the affairs of the bank and be at the head of the institution in fact as well as in name.

After selecting the president, the directors should employ a cashier, and such other officers, clerks, etc., as may be necessary to operate the institution. In the selection of the cashier the greatest of care should be exercised, since the cashier and his subordinates represent the bank in its relation to the

public. The impression the bank makes upon the depositors will be made chiefly by the cashier and his cohelpers. Since the success or the failure of the institution depends largely upon the management, and since the management, to a great extent, devolves upon the cashier, it will readily be seen that the directors should exercise due diligence in the selection of the man for this important office.

No set rules can be given for the directors to use in making their selection of a cashier; yet there are a few things which would seem too important to be overlooked. Is he honest? If there has been any question concerning his honesty in his previous business, mark him off the list, as there must be no question on this point. He must be faithful and loyal to the trust imposed upon him. His previous history should be known to the directors, as it will be the best indication as to what his future with them will be. Has he the ability to handle the work? What ability does it require to operate a bank? These are difficult questions to answer, since certain qualifications are needed by a banker, and, if he does not already possess these, they are hard to acquire. Certainly, he must have education, and the more he has the better for him and his institution. However, it must not be inferred that every well-educated man can be a successful banker. He should be broad-minded and should be a student of affairs. He must be widely read, especially upon matters relating to his business. He must have the desire and the ability to work until his work is done. The cashier's work, in the ordinary bank, is not

usually so difficult as it is exacting. In order to be successful, the cashier must have that peculiar ability which enables him to concentrate upon detail, a thing irksome to many persons. He must be accurate. No slipshod methods can prevail in a successful bank. He must have the ability to make decisions and must be a master in the use of the word "No," knowing where and when to use it and having the moral courage to use it when and as it should be used. He must be capable of deciding on all questions arising in the community, but must have the good judgment to keep himself and his institution from becoming involved in the various controversies common in all communities. He should realize that he is serving all the people of his community and not any particular clique or class and should not permit himself to be attached to any of them. He should be an interested worker, if not the leader, in all movements for the betterment of his community. In order to be successful in these undertakings, he must be able to secure the assistance, at times, of people of many different positions in life; hence, as before stated, he must not permit himself to be handicapped by the restraints of clique or class. Above all things, he must be sincere. Unless he is sincere, he loses his greatest opportunity for usefulness. Advice on many questions, relevant and irrelevant to banking, is sought of the cashier. People think that, because of his varied experiences, he is in a position to advise them, and they believe that he will give honest advice. Is not his business founded on honesty?