Banking today is conducted upon widely different lines to what it was when the Bank Act of 1864 was enacted, and the law has not kept pace with the constantly changing conditions. Competition with trust companies and other banking institutions operating under State authority, more liberal in the scope of corporate powers conferred, forced many competing national associations doing business in the same locality into undertakings not contemplated by the national banking laws and foreign to the legitimate functions of a commercial bank. The powers conferred upon trust companies and savings banks to make loans upon real estate security, induced many national associations to make loans upon like security by resorting to indirect methods to evade the restrictions of the statute. This was particularly true of localities where mortgage loans were the principal securities dealt in by savings banks and trust companies.

While the national banking laws should be construed as broadly and as liberally as is possible consistent with the intent and spirit of the statutes, it is the sworn duty of an administrative officer to enforce an observance of the law as it exists and not endeavor to twist it out of shape either to meet his own views or the wishes of bankers as to what it should be.

Unfortunately there has been too much of a disposition in later years in the administration of the Currency Bureau to change existing law by administrative regulations or rulings, unwarranted by any reasonable construction of the statutes, to meet the demands incident to competition between national and State institutions. In no respect was this fact more patent than in its application to real estate loans. Official rulings in this connection practically nullified the prohibitive provisions of the statutes and conferred upon the banks privileges which had been denied them, up to that time, by Congress since 1864.

Under such interpretations of the law, the bar to real estate loans was removed, and indirect methods of circumventing the statutes were recognized as legitimate, notwithstanding the declaration of the Supreme Court of the United States that what a bank is prohibited from doing directly it cannot lawfully do indirectly.