This type of man will not infrequently be found in a bank that has failed and has been placed in the hands of a receiver, or one that is in a very unsatisfactory and uncertain condition because of the doubtful character of some of its investments and the imprudent concentration of loans.

In other instances the examiner will find an unsatisfactory or dangerous condition due to incompetency, bad judgment, or speculative tendencies, which require the most careful management to save the bank from serious losses, if not insolvency.

To be able to cope with situations of the kind described, and others of a like nature, an examiner must be forceful, resourceful, tacftul and discreet. Forceful in that he should be able to maintain whatever position he believes to be right, after satisfying himself as to the facts, regardless of whom he has to confront ; resourceful in that he should be competent to suggest to the board of directors the ways and means of extricating the bank from an unsatisfactory condition; tactful in his intercourse with men and in coping with delicate situations, and discreet in his investigations and inquiries concerning the paper he finds in a bank and the financial responsibility of borrowers, so as not to disclose the business of the institution or injure the credit of the bank or any of its customers.

It is difficult to find the combination described fully developed in any one man. The standard is a high one and calls for an order of ability difficult to obtain for a compensation such as is paid the average examiner. A man who possesses all of the qualifications mentioned can command, and will have no difficulty in obtaining from financial institutions, a much greater compensation than a bank examiner receives. Consequently, when the Government secures the services of such men, it seldom is able to retain them long, because their ability is quickly recognized by the officers of the institutions they examine, who offer them inducements to enter their service.

In a large force of examiners, such as is necessary for the Government to employ, there naturally will be found different degrees of ability, and while all of the examiners do not measure up to the standard of those of the first class, they are, with very few exceptions, men of as good average efficiency as may be found engaged in any similar occupation in the service of the Government or elsewhere. The degree of ability varies, of course, with the experience that the examiner has had and his personality. Many of those who at first are rated in the second class, in course of time develop strength and efficiency which places them in the first rank. Others remain in the second class throughout their whole term of service, either because they do not develop any special ability, or do not have an opportunity to display any qualifications above the ordinary, there being nothing in the condition of the banks they examine which enables them to exhibit any latent force they might possess.

In justice to the force of examiners as a whole it may be truthfully stated that but a very small percentage of the total number have proven to be incompetent or deficient in those qualities which are essential to a proper understanding and satisfactory discharge of their duties in their respective spheres.

While it would be very desirable, of course, to have all of the bank examiners reach and maintain the standard of efficiency attained by those of the first class, it is not really necessary that this should be so, as a great majority of the banks are excellently well managed and are always in such a satisfactory condition, as far as safety and solvency are concerned, as to require no unusual degree of ability to properly examine them. So that the average examiner is fully capable of making a thorough and satisfactory examination of banks of this class.

Although a great majority of the banks are well and conservatively managed, fully one-third of them violate the law in some respects in the conduct of their business. Not the same banks continuously, but that percentage of the total number all the time. These violations of law are not usually such as to endanger the safety or solvency of the institutions in any way, but are in disregard of the statutory restrictions.

For instance, before the passage of the Federal Reserve Act, the records showed that over seventeen per cent, of the banks made loans upon real estate security in contravention of law, over twenty-five per cent, were deficient in their lawful money reserve, and over ten per cent, made loans in excess of the legal limit. Some borrowed money in excess of their capital stock. Some invested in the stocks of other corporations, or made loans upon the security of their own stock. Some concealed a portion of their surplus or profits for various reasons, while others declared dividends out of profits which they did not possess, having been absorbed by losses, and some engaged in transactions not within the scope of their corporate powers.

These and numerous other violations of law are constantly disclosed by the reports of condition of the banks and in the reports of national bank examiners.

Notwithstanding these violations of law by one-third of the banks, ninety-five per cent, of the total number of national associations are always regarded as being in a safe and solvent condition during normal times, or under ordinary financial or monetary conditions, and are well and conservatively managed. The remaining five per cent, are always in an unsatisfactory condition. Some through excessive loans made in violation of law, some through bad or questionable loans, and some through imprudent or hazardous concentration of loans in the hands of single or closely affiliated interests. Others through unduly large lines of credit extended to interests of a more or less speculative nature, with which some one or more of the officers or directors of the bank were identified.