5. Deceptiveness Of Reports

That the statements thus prepared for the Controller are often false and mislead him has been again and again proved. In truth, if a bank sets out to deceive him, it succeeds in most cases - for a time. Rarely is a wrongdoer caught in the incipient stage of his rascality. Ultimately he is found out; that is the sad history of them all.

Besides these reports or statements, national banks are examined by men especially appointed for that purpose, and work under the direction of the Controller. Many of them have served for a long period, and are highly competent; and the worth of their examinations has long been a subject of discussion among bankers. Some contend that their service has been very valuable in preventing and detecting frauds; others, that it has not been worth the cost.

Whenever a large defalcation is discovered covering a long period of time, the criticism is at once raised that if prior examinations had been thorough, it would have been discovered. On the other hand, if a rogue can cover up his tracks so well as to defy detection, what is the use of examinations? Admitting that examinations ought always to be made by competent men, may not this be said of them, that, if there is a rogue in a bank who is robbing and yet escaping detection, the examiner is likely sooner or later to discover him? Is not this, in truth, the history of bank examinations? And if the examiner had not been after him, would he not have continued longer and stolen still more?

6. Value Of Examinations

Several things more may be said in favor of examinations. One is, they do have a deterring effect; the fear that detection will come keeps many a tempted man from venturing. Another thing may be said of them, if there is a wrongdoer he may be found out. There is always the possibility. No matter how large the bank may be, or slight the examination, if there is any irregularity, it may be discovered. Lastly, irregularities are found in the early stages of which the world has no knowledge; in all such cases a long credit mark may be placed to the examiner's account.

On the other hand, too often examiners are appointed who have inadequate knowledge of their work. Such are worse than useless. They drown investigation by others while not investigating themselves. In other cases examiners are swerved from the path of duty by bank officers, are bribed by means of loans to them or gifts of money. The cases that come to the public knowledge are rare; perhaps not all of them are known.

Most of the states also have bank superintendents, who are required to supervise the conduct of the banking institutions within their control. Their examinations are not so thorough or frequent as those made by the national bank examiners. In some states they are of no account whatever. Private bankers in all the states except two or three escape on the ground that the state has no constitutional authority to examine them.

7. Judicial Examinations

The courts, too, sometimes take a hand at bank examinations. The special charters of some banks and trust companies require that the courts shall appoint one or more examiners at stated periods to make examinations of their affairs. Usually, these e\ami nations are made with great thoroughness and are worth all they cost, in all cases the banks examined are re quired to pay for the work. One of the principal objec-tions to national examinations is, examiners have not the time, even it they had the inclination, to do then work in the most thorough manner. If they did, they could not make their round annually. Examiners appointed by a court have all the time they need, and, consequently, if capable men are appointed, their work is more exhaustive. 8. Examinations by Banks. - Lastly may be mentioned examinations made by the banks themselves. In England this is a very common practice. The usual method is to call in expert accountants to make examinations, the result of which is made known to the public. This is made with a view of satisfying the managers of the soundness of their institutions. They had no doubt before; but an examination is made to fortify their assurance still more.