The one annual report made by Mr. Hepburn to Congress, covered a period of only three months of his own administration and nine months of that of his predecessor. In this report he commented upon the phenomenal crop production of the United States in 1891 and the important part it played in alleviating the depressing effects of the severe monetary stringency and resulting failures of banks and business concerns during the two preceding years.

This report shows that the value of the merchandise exported from the United States during the year ended July 1, 1892, exceeded one billion dollars, the partial failure of the cereal crop in Europe having created an unusual demand for American food products.

A remarkable feature to which Mr. Hepburn called attention in this connection was the fact that although there was a merchandise balance in favor of the United States of over $242,000,000, which under ordinary circumstances would have resulted in large imports of gold, the gold and silver exports exceeded imports by over $86,000,000. This, he stated, was due to the fact that the short crop in Europe having been followed by a serious financial disturbance it became necessary for Europe instead of paying for American cereals from their surplus cash to draw upon their own capital invested in American securities, which were returned in considerable amounts. Apprehension of our monetary legislation and the fear that this country was drifting toward a silver basis, it was said, created distrust of our securities abroad, and had an important influence on gold expor-tations.

The monetary stringency of 1890-91, Mr. Hepburn thought, was wholesome in its effect so far as putting a check upon speculation, and while conditions generally in 1892 were favorable for a year of average prosperity, caution and conservatism characterized the business transactions of the year.

In this report Mr. Hepburn dwelt at length upon the operations of the Silver Coinage Act of February 28, 1878, and its repeal by the Act of July 14, 1890. He also discussed the proposed repeal of the Act of March 3, 1865, imposing a tax of ten per cent. on State bank circulation, and drew a comparison between the old State bank note issues and the circulation of national banks. To compare one with the other, he said, was like comparing order with confusion, and a perfect system under central control with an imperfect system under diversified control. The most notable feature of State bank circulation, he said, was the violent expansion and contraction to which it was subjected, and its loss of money power in a crisis. It was a source of weakness which added to the danger. Instead of paying debts, it came forward itself to be paid. The return to such a system, he said, would produce disaster to those who most need and have the best right to governmental protection in guaranteeing to them a safe and sound currency.

In closing his report to Congress Mr. Hepburn devoted a chapter to the subject of the duties of directors of banks. His views on this subject were those of a practical man and were quite in contrast with the impractical ideas of one of his successors in office, as indicated by a list of questions which the latter instructed the bank examiners to ask directors at the time of examination of their banks.

"Directors," Mr. Hepburn stated, "give direction and control to the business of a bank, accept and reject credits, and should understand its general condition. The detailed workings of a bank must be trusted to the officers and employees. We cannot have anything better than men. Men make our laws and men enforce them. Men manage our banks. No matter how elaborate the system, how numerous the checks upon error or upon wrongdoing, or however perfect the machinery, the mechanism must be set in motion and the system operated by men. There is," he said, "in every system a point where good or ill results depend upon the character of the man in charge. If an engineer wants to ditch his train, he can do so. If the president or cashier of a bank wants to rob it, he can. Well devised systems may make it difficult. Efficient supervision may make it dangerous. The law may punish, and the certainty of detection and punishment may reduce the risk to a minimum. Hence the chief and most important duty of directors is to select officers of character as well as of experience and ability. They can best protect themselves and best serve the public by so doing."

In concluding his comments on the duties of directors, Mr. Hepburn suggested that the management of banks could be substantially reached and corrected if the Comptroller, with the approval of the Secretary of the Treasury, were given power, after a hearing, to remove bank officers and directors for violations of law, leaving the vacancies to be filled in the regular way. Such a power, he thought, would be seldom exercised, but its existence would deter many bank officers who now observe the letter, only to violate the spirit of the law. The existence of this authority would also, he believed, have the effect of commanding more respect on the part of officers and directors of banks for the requirements and directions of the Comptroller in connection with the prompt correction of bad practices and unsatisfactory conditions called to their attention through the reports of bank examiners.