This section is from the "Practical Banking" book, by Albert S. Bolles.
When solicited by a neighbor or a friend, few men possess vigor enough, or conscientiousness enough, to refuse a recommendation, or to state therein all they suspect or apprehend. They will studiously endeavor not to make themselves pecuniarily responsible by any palpable misrepresentation; hence they will so qualify the recommendation that it will admit of a construction consistent with truth; but the qualification will be so enigmatical or subtle that the banker will not interpret it as the recommender will show subsequently it ought to have been interpreted. Besides, the man who merely recommends a loan acts under circumstances that are much less favorable to caution than the man who is to lend. When we are in the act of making a loan, our organization presents the danger with a vividness that is not excited by the act of recommending. To believe speculatively that we will suffer the extraction of a tooth, is a wholly different matter from sitting down and submitting to the operation. Suicide would be far more common than it is, if a man could feel, when the act was to be performed, as he feels when he only prospectively resolves on performing it. This preservative process of nature no banker should disregard by substituting any man's recommendation for the scrutiny of his own feelings and judgment at the time when the loan is to be consummated; though he may well give to recommendations all the respect which his knowledge of the recommender may properly deserve.
By acting according to the dictates of his own judgment, a man strengthens his own judgment as he proceeds; while a man who subordinates his judgment to other men's is continually debilitating his own. Nothing also is more fallacious than the principle on which we ordinarily defer to the decision of a multitude of counselors. If fifty men pull together at a cable, the pull will combine the strength of one man multiplied by fifty; but if fifty men deliberate on any subject, the result is not the wisdom of one man multiplied by fifty, but at most the wisdom of the wisest man of the assemblage; just as fifty men, when they look at any object, can see only what can be seen by the sharpest single vision of the group; they cannot combine their vision and make thereof a lens as powerful as the sight of one man multiplied by fifty. A banker may, therefore, well resort to other men for information, but he may differ from them all, and still be right; any way, if he perform the dictates of his own judgment, he performs all that duty requires; if he act otherwise, he performs less than his duty. Let the counsel of your own heart stand, says the Bible; and, by way of encouragement, it adds, that a man can see more of what concerns himself, than seven watchmen on a high tower.
As virtue's strongest guarantee is an exception from all motive to commit evil, a banker must avoid all engagements that may make him needy. If he wants to be more than a banker, he should cease to be a banker. Should he discover in himself a growing tendency to irritability, which his position is apt to engender, let him resist it as injurious to his bank and his peace; and if he should find himself popular, let him examine whether it proceeds from the due discharge of his duties. A country banker was some few years ago dismissed from a bank which he had almost ruined, and was immediately tendered an honorary public dinner by the citizens of his village, into whose favor his misdeeds had unwisely ingratiated him. The service of massive plate that was given to a president of the old United States Bank was in reward of compliances which soon after involved in disaster every commercial interest of our country. Could we trace actions to their source, these mistakes of popular gratitude would never occur. The moroseness that we abhor proceeds often from a sensitiveness that is annoyed at being unable to oblige; while the amiability that is applauded proceeds from an imbecility that knows not how to refuse.
A banker should possess a sufficiency of legal knowledge to make him suspect what may be defects in proffered securities, so as to submit his doubts to authorized counselors. He must, in all things, be eminently practical. Every man can tell an obviously insufficient security, and an obviously abundant security; but neither of these constitute any large portion of the loans that are offered to a banker. Security practically sufficient for the occasion is all that a banker can obtain for the greater number of the loans he must make. If he must err in his judgment of securities, he had better reject fifty good loans than make one bad debt; but he must endeavor not to err on the extreme of caution or the extreme of temerity; and his tact in these particulars will, more than any other, constitute the criterion of his merits as a banker.