"Distribute your loans rather than concentrate them in a few hands. Large loans to a single individual or firm, although some times proper and necessary, are generally injudicious and frequently unsafe. Large borrowers are apt to control the bank, and when this is the relation between a bank and its customers, it is not difficult to decide which in the end will suffer. Every dollar that a bank loans above its capital and surplus, it owes for, and its managers are therefore under the strongest obligations to its creditors, as well as to its stockholders, to keep its discounts constantly under its control.

"Treat your customers liberally, bearing in mind the fact that a bank prospers as its customers prosper, but never permit them to dictate your policy.

"If you doubt the propriety of discounting an offering, give the

directors' meetings and discounting.                   

bank the benefit of the doubt and decline i]t; never make a discount if you doubt the propriety of doing it. If you have reason to distrust the integrity of a customer, close his account. Never deal with a rascal under the impression that you can prevent him from cheating you. The risk in such cases is greater than the profits.

"In business, know no man's politics. Manage your bank as a business institution, and let no political partiality or prejudice influence your judgment or action in the conduct of its affairs. The National currency system is intended for a nation, not for a party; as far as in you lies, keep it aloof from all partisan influences."

In 1876 Mr. McCulloch delivered an address before the American Bankers' Association, closing with a statement of the principles of sound banking, which are a proper sequel to the foregoing.

"First.—The capital of banks should be r2al, not fictitious.

"Second.— The managers should not be borrowers, nor should loans be made to stockholders merely because they are stockholders.

"Third.—A certain amount of the annual profits should be carried to the surplus—the larger the surplus the better—not only for the safety of the stockholders, liable as they are, under the bank act, for an amount equal to their shares, but for the protection of depositors.

"Fourth.—Banks should be kept strong in their cash reserves, as times frequently occur when the strongest stand in need of them. Nothing in the long run pays better than a goodly amount of idle money, especially when specie is the only legal money.

"Fifth.—As banks are commercial institutions, created for commercial purposes, preference in discounts should always be given to paper based upon actual commercial transactions. Banks are not loan offices. It is no part of their business to furnish their customers with capital, nor should loans be made under any circumstances for operations in stocks, or to furnish facilities for stock operations.

"Sixth.—Renewals should only be permitted to secure doubtful debts, or in cases in which more time is required than was anticipated when the loans were made, to complete the transaction upon which they were based.

"Seventh.—Such salaries should be paid to officers and clerks as will relieve them from the temptation to dishonest practices; and the services of those whose expenditures exceed their salaries should be promptly dispensed with.

"Eighth.—Bank managers should bear in mind that they are not only trustees of stockholders, but that they owe something to the public—that their whole duty is not performed when good profits are made and when solvency is secured, but that they should do all in their power to encourage morality in business and to elevate credit, especially commercial credit, to the highest standard."