1. National Banks

There are several kinds of bank examinations and reports; and we may begin with the requirements of the national and state governments. The national government has the most elaborate machinery for superintending the business of the banks and requiring reports. The chief officer is known as the Controller of the Currency, who is assisted by a deputy and other officials. Besides organizing national banks, as we have explained, he superintends them while they are in operation, and takes charge of them after they fail, or determine voluntarily to retire, for the benefit of depositors, shareholders, and all other creditors.

2. Reports Required

He requires from them reports five times during a year, setting forth their condition. To render the report a true revelation of things, he calls for a report on a past day, and if there is a day, week, or other period when a bank is likely to be worse off than another, he orders a report to be made of that time. Thus, the New York banks have almost annually unusual demands for country bank deposits in September and October. As these are promptly sent, they are sometimes near the verge of the reserve line and occasionally are obliged to take a portion of it to answer the demands of the country banks. At this time, therefore, when they are down to low-water mark, they are always required to make a statement of their condition. This statement is signed by the president or cashier and three directors, who also declare under oath that they believe it to be true.

3. Responsibility Of Directors

Before going further, the accuracy and extent of the knowledge of the signing directors may be considered. In almost every case they literally know nothing concerning the truthfulness of the statement signed by them. It is prepared by several of the officials of the hank, the cashier putting together the final figures from memoranda given to him by the paying teller and others, and the three directors attach their names because the law requires this to be done.

It may be remarked that this is not always a safe thing for directors to do. If they honestly believe the statement to be true, and have no reason to suspect anything therein, they can not be held liable should it prove to be a fraud; but if they know, or have reason to believe, that it is incorrect, they can not plead innocence and escape, On several occasions dire< tors have knowingly made statements which they knew were false, whereby Others, not knowing this, were led to purchase the stock of their bank and pay far more than its worth. Discovering afterward the truth, the purchasers sued the directors and made them pay the full price for their deception. Such statements, therefore, are something more than perfunctory matters, and, if not made in good faith, may bring those who make them into trouble

4. Special Reports

Besides these five statements, the Controller of the Currency can require as many more as he pleases. If he suspects that a bank is going wrongly, this is one of the first steps taken by him to find out its condition.