The general manager's department may be described as the heart of the bank. It is the most interesting of all. The source from whence advancement and increases flow, and from whence loans and discounts come, it is very much in the thoughts of staff and customers alike. The general manager himself may be engaged under contract, running five years or more. The directors, on behalf of the bank, contract to pay him a certain sum per year during the term of the agreement for managing the bank. In their capacity as representatives of, or trustees for, the stockholders, they own the bank and its whole business; their manager is supposed to get their authorization or ratification for important transactions.

General Manager And Directors

But the general manager is an expert banker, and knows the whole business thoroughly; while the directors are generally actively engaged in outside businesses and professions. So, in actual practice, a good many of the general manager's actions are confirmed as a matter of course. It could hardly be otherwise. But, although the majority of bank directors may not be high experts on banking, they are in most cases men holding prominent places in the community by reason of their wealth and all-round business capacity. And, as a rule, they are well qualified to judge whether the bank's money is being unduly hazarded in the transactions submitted to them by the executive manager. Also, they can usually tell from their intercourse with him whether the manager is to be relied upon or not.

Thus it happens that the general manager's authority is practically despotic in all but the most important affairs. It is so either because the directors leave them to him to deal with, or because they habitually take his view of the matters referred to them.

When Opinions Differ

A conflict might occur in two ways. The directors might wish the bank to make certain loans that the general manager did not wish to make; or the general manager might be disposed to carry an account or accounts to which the directors were opposed.

In the first case, the general manager would assuredly not forget that his chief duty was owed to the bank itself and not to any particular board that might be in power. Especially if the loan or investment he disapproved of was in the interest of any of the directors themselves, and if he considered it unsafe and dangerous, would he be likely to oppose it. And the position of the general manager of an important bank is usually so strong and commanding that he can effectively check any such disposition on the part of directors when he chooses to put his strength into the fight against it.

Then, on the other hand, in a case where the directors were firmly of the opinion that a certain loan was too dangerous or risky for the bank to make, the chances are that it would not go through, even if the general manager favored it strongly. For the latter officer could not but feel that in a case of that kind, as the directors were the parties who would chiefly stand to lose by the transaction, their ideas should prevail.