The National Banking Act of 1864 provided for the establishment of a separate bureau of the Treasury, under the Comptroller of the Currency, charged with the execution of that and subsequent laws respecting the issue and regulation of national bank notes. The Comptroller is appointed by the President, upon recommendation of the Secretary of the Treasury, for a term of five years at an annual salary of $5,000. Neither the Comptroller nor his deputy may be interested directly or indirectly in any national bank.
The powers and duties of the Comptroller's office as they developed under the national bank laws were, in part, as follows:
1. To make investigations to determine whether a bank had satisfied the conditions prerequisite to issuing a certificate authorizing it to commence business; to issue such certificates or withhold them for good cause; to determine the maximum and minimum capitalization of a bank; to issue permits to increase or decrease the capital stock or to merge with other banks; to extend charters; to approve the name or change of name of a bank; to require and file oaths of directors; and the like.
2. To take possession of defaulting banks, appoint receivers, liquidate the banks, cancel their notes, and pay depositors.
3. To care for the issue, redemption, security, withdrawal, and cancellation of bank notes. This includes the engraving of plates and the making of dies and the custody of same; the printing of new notes and the custody of new and old notes; furnishing notes to banks; issuing new notes for those worn or mutilated; calculating and watching the redemption fund; requiring deposits of bonds and increases of such deposits if values fall; examining bonds, notes, dies, etc.; transferring these bonds for owners; redeeming notes; etc.
4. To appoint examiners and conduct examinations of all national banks and of all banks in the District of Columbia.
The Federal Reserve Act as amended affects the Comptroller in several respects. By this act he is made ex officio a member of the Federal Reserve Board, and for his services in this connection is given $7,000 additional salary. He is also made ineligible during his term of office and for two years thereafter to hold any office, position, or employment in any bank which is a member of the federal reserve system.
By the provisions of the act he is empowered to issue to federal reserve banks, upon deposit by them of bonds bearing the circulation privilege, federal reserve bank notes under the same conditions and provisions of law as govern the issue of national bank notes. He is given full charge of the execution of the laws governing the issue and retirement of federal reserve notes, under the general supervision of the Federal Reserve Board. To him the federal reserve agents return for redemption all federal reserve notes unfit for circulation, for which purpose a 5 per cent redemption fund is carried with the United States Treasury. It is no longer necessary for him to require the deposit of bonds and the taking out of national bank notes when a national bank is to be organized.
The Federal Reserve Act also changed the law with respect to the Comptroller's duties relative to bank examinations The Comptroller now, with the approval of the Secretary of the Treasury, appoints examiners, who examine every member bank at least twice in each calendar year, and oftener if considered necessary. The Federal Reserve Board may, however, authorize examinations by the state authorities in case of member state banks and trust companies, and may direct special examinations of them. The examiners are clothed with ample powers and make full and detailed reports of conditions to the Comptroller. The expense of the examinations is assessed by the Comptroller upon the banks examined in proportion to assets of the various banks. The total assessment of examiners' fees for 1920 was $1,184,026. As a condition of membership in the federal reserve system, state institutions are subject to examinations, made by direction of the Federal Reserve Board or of the federal reserve bank, by examiners selected or approved by the Federal Reserve Board. The national and state examiners co-operate increasingly, and this serves to effect better banking in both national and state banks.
In addition to examinations conducted by the Comptroller, the federal reserve banks may, with the approval of the federal reserve agent or board, provide for special examinations of members within their respective districts, and the expense of these special examinations also is borne by the examined banks. The object of these special examinations is to inform the reserve bank of the condition of its members and of the lines of credit which are being extended by them. The reserve bank must, at the request of the board, furnish such information as may be required concerning the condition of any member bank of its district.
The board is required to examine each federal reserve bank at least once each year, and upon the joint application of ten member banks to make a special examination of the reserve bank.