In the report of Comptroller Hulburd for 1866, three banks are listed as having been placed in the hands of receivers during the three years of existence of the national banking system. The cause assigned for the appointment of receivers for these banks was failure to redeem their circulating notes on demand.

As no holder of a national bank note ever lost, or could lose a dollar by reason of the failure of the issuing bank to redeem its circulation, the notes being absolutely secured by a deposit of United States bonds in the Treasury of the United States, re-deemable at par by the Government, it would seem unreasonable and unnecessary to close a bank because of failure to redeem its circulating notes when presented at the bank for that purpose.

In the table of failures, which appears in the reports of the Comptroller for subsequent years, containing a list of receivers appointed for insolvent banks from the beginning of the national system, a different cause than the failure to redeem circulation is assigned for the closing of the three banks above referred to. "Injudicious banking and failure of large debtors," are the reasons given in one case, and "injudicious banking" in the other two.

In explanation of these apparent discrepancies, it appears that in the early years of the system when a bank became insolvent, or subject to a receivership for some other cause, it was the practice to obtain and present for redemption at the bank's counter one of its circulating notes. By agreement between the bank and a representative of the Comptroller's office, the bank would refuse to redeem the note and the note would then be protested, thus affording a statutory ground for the appointment of a receiver.

This was a friendly kind of a proceeding and brought the Comptroller well within his statutory right to close and take possession of the association, as the law specifically provides for the appointment of a receiver upon failure of a bank to redeem its circulation on demand.

Comptrollers in those days were scrupulously conservative in the exercise of the supervisory powers conferred upon them by law, and in order to avoid any question of their right to close and take possession of an association resorted to the procedure described.

They recognized the fact that the same laws that govern the national hanks and define their corporate powers prescribe also the duties and powers of the Comptroller of the Currency and limit his authority, and that the Comptroller has no more right to disregard the law by transcending his powers or neglecting to perform his duties than the banks have to exceed their corporate powers or to violate the restrictive provisions of the statutes under which they were organized and operate, and from which they derive their powers.

As a rule, such of the mistakes as Comptrollers of earlier years are alleged to have made, and for which they have been severely censured and criticised in the public prints from time to time, whether justly so or not, were not attributable to a too rigid enforcement of the banking laws, or an arbitrary assumption of powers not conferred upon them by the statutes, but rather as the result of undue leniency extended to refractory associations in permitting them to engage in questionable or unlawful practices and undertakings not authorized or contemplated by the National Bank Act, and to temporizing with unsatisfactory or dangerous conditions which called for prompt and decisive corrective measures in order to avert inevitable losses that would imperil the safety of the association or reduce it to a condition of insolvency. Comptrollers, as a rule, have been ultra-conservative in their dealings with the banks, and the mistakes that they have made in the administration of the banking laws have been mostly those of omission rather than of commission.

There were sixteen national bank failures during Mr. Hul-burd's term of service. The largest of these was the Ocean National Bank of New York City, which was placed in the hands of a receiver December 13, 1871.

The capital stock of this association was $1,000,000, divided into shares of the par value of fifty dollars, and its total liabilities about $3,250,000. An assessment of forty per cent. was levied upon the stock, of which amount $348,961 was collected. The creditors were paid one hundred per cent. of their claims with interest from the date of closing, and the trust was finally closed April 20, 1892.

Theodore M. Davis was appointed receiver of this bank by Mr. Hulburd. In 1875, charges were preferred against the receiver and others in connection with the administration of the trust. The receiver was charged with having disposed of some of the securities of the bank at less than their actual or market value and as having been personally interested in the purchase of these securities.

Under authority of a resolution adopted by the House of Representatives in 1874, Forty-third Congress, the Committee on Banking and Currency made an exhaustive investigation of these charges and submitted a voluminous report of the testimony taken and of the conclusions based thereon. The investigation covered the period from December 12, 1871, the date of failure of the bank, to October 31, 1873, the date of the last general statement made by the receiver.

It appears that Mr. Davis, the receiver, was charged with entering into a combination or conspiracy with James A. Ayer and Isaac H. Knox, of the firm of Boorman, Johnston & Company, to defraud debtors of the bank who had deposited certain bonds and stocks, known as the first, second and third mortgage bonds of the Portage and Lake Superior Ship Canal Company, a corporation chartered by the State of Michigan, for the purpose of constructing a canal to connect the waters of Lake Superior with Portage Lake. These stocks and bonds were held by the bank as collateral for loans amounting to about $561,000.