Page:International Library of Technology, Volume 89.djvu/180

 was secured by the institution's "bills receivable." This is often due to the fact that the failure of a bank results in the embarrassment of its principal depositors and borrowers, the collateral thus becoming uncollectable at its face value.

Too many bank losses and even failures are the result of defalcations on the part of officers or employes. The majority of the defalcations or embezzlements are brought about by losses sustained by officers or employes in speculation on private account. They are due to the desire to invest in something that promises a quick return, or the wish to live better than the personal income warrants, which results in an appropriation of the funds of the bank with the expectation of replacing them later on.

Banks also meet losses through forged drafts paid, or through loans made on notes either fraudulent themselves or bearing the forged indorsement of the party on whose responsibility the loan was made. Banks in villages have limited protection in the form of vaults and safes, and often suffer losses through burglary.