FIGHTING CORRUPTION

At the end of two years of detailed and painstaking investigation into the affairs of the Bank of the United States in New York, the court has found the president, Bernard Marcus, and the vice-president, Saul Singer, guilty of "willful misapplication of corporate funds." They have been sentenced to a term in Sing-Sing of from three to six years. The evidence given in this inquiry and others of the recent past indicates that the crime is common, and can be met not by more stringent laws, but by more vigorous prosecution of the present statutes.

The particular ways in which the Bank came to be in such unsound condition that it had to be closed in 1930 were devious and complicated. The major "misapplication" of funds was the transfer of debt from the Bank of the United States to other companies personally controlled by Marcus and Singer. This was done largely through a huge loan, eight millions in excess of the legal limit, and through the sale to these affiliates of a block of stock at almost twice its book-value. For the sake of simplicity, only these operations were brought up by the investigators, though it was known that there were numerous other questionable deals. Faced with such magnificent swindling, it will seem to many that a sentence of only three to six years was out of all proportion to the seriousness of the crime. Small-town burglars and grocery store robbers usually get as much and more than this for offences incomparably less vicious and less inexcusable. It is but natural to demand that the laws be made more strict and the punishment more drastic.

That demand cannot be denied in theory. But the realities of the situation are opposed to it. It is exceedingly difficult, even now; to get a conviction for these malpractices. Bankers invariably plead "ignorance" or claim that the whole affair was "just a mistake." If the penalty were increased, it would be almost impossible. The present sentence is as effective a deterrent as any. What is needed is a speedier, stronger handling of the existing laws. Congress has recently acted to speed up the appellate process in Federal courts. This should be extended to state jurisdiction as well, making it possible to hurry procedure along at something better than the current snail's-pace. If this were brought about, there might be a chance of curbing the wide-spread corruption in banking circles.