The law never required a national bank examiner to give a bond, and bonds never were required of them until Mr. Murray's administration. At the hearing before the National Monetary Commission in December, 1908, an amendment to the law in this respect was recommended, for the reason that as examiners are frequently placed in charge of suspended or failed associations, pending reorganization and resumption, or the appointment of a permanent receiver, it was thought desirable to place them under bond.

Mr. Murray did not support this recommendation on that occasion, but subsequently, without any authority of law, required all examiners to give a fidelity bond in the penal sum of twenty thousand dollars.

The law authorizes the Comptroller to require bonds of receivers of national banks, but not of bank examiners, and it is questionable, in the absence of any statutory authority, whether such bonds are enforcible.

Instances of dishonesty on the part of bank examiners are very rare in the history of the service. Their efficiency, individually and collectively, has been frequently questioned, but their honesty has seldom been assailed. Examiners have been known to borrow small sums of money from banks which they examined, in violation of the office regulation, and to neglect to pay it back, but it is rarely, so rare that only one instance can be recalled, that an examiner has been accused of actual embezzlement. The case referred to was that of an examiner who made a practice of abstracting a twenty-dollar bill from the currency of the bank while it was in his possession for the purpose of being counted. On one occasion a package of the bank's own notes was given him to count. These notes had never been put into circulation. They were as fresh and new as when received from the Treasury Department, and were cut and stacked in a package in the order of their numbers. When the package was returned to the teller.

he counted the notes before returning them to the vault and found the package short twenty dollars. He informed the cashier of the fact, who advised him not to mention it. Within an hour after the examiner had completed his examination and left the bank, one of the bellboys from a nearby hotel came into the bank with a twenty-dollar bill to have changed. The teller recognized the bill as the missing note from the package referred to and inquired of the boy where he got the note. He stated that the cashier of the hotel gave it to him to get changed. A messenger was sent to the hotel to ascertain from whom the cashier received the note and he was informed that the bank examiner had paid his bill with it a half-hour before.

This fact was not reported to the Comptroller's office until long after the examiner had left the service, when it was learned that this examiner had done the same thing in a number of other banks. Nor was it known to the Comptroller that other examiners had borrowed money from banks that they examined until after their separation from the service.

Bankers, as a rule, will not report such occurrences. They seem to be under the impression that if they incur the displeasure or ill-will of the examiner, he will cause them annoyance or trouble. No banker who is conducting his bank in a lawful and conservative manner should have any fear of an examiner causing him any annoyance or injury for having reported to the Comptroller any occurrences of the nature indicated, or any dereliction of duty or improper conduct on the part of an examiner. On the contrary, it is a duty which he owes to himself, the service which the examiner represents, and the public, to promptly report all such matters, for the sooner such men are exposed and removed from the service, the better for all concerned.

Another illustration of the character of men who have occasionally crept into the service may be found in the case of an examiner who, at the time of his appointment and for several years prior thereto, was cashier of a national bank, and whose reputation and standing in his community was all that could be desired. It appears that the previous examiner who had made a number of examinations of this cashier's bank prior to the latter's appointment had accepted his statement without verification that a certain old safe in the bank contained securities of the value of about five thousand dollars. The safe, he said, had not been opened for years and the combination had been lost. He described the securities that were alleged to be in the safe, said that he knew they were in it, and as the bank had no immediate use for them he did not want to break open the safe until it was necessary to do so.

The examiner accepted this statement, listed the securities as assets of the bank on hand, and so reported them, but he did not report that they were locked up in an old safe to which he had not obtained access.

This examiner left the service and the cashier referred to was appointed to the vacancy. He made regular examinations of this bank of which he was formerly cashier, but made no mention of the securities in the old safe, always reporting them as part of the bank's assets. This examiner remained in the service several years, during all of which time he made the regular examinations of this bank. He finally resigned to accept his former position in the same bank. When the examiner who succeeded him made the first examination of this bank he was told the same story of the securities in the old safe, but he informed the cashier that it would be necessary for him to see them, and insisted upon the safe being broken open, otherwise he would report the assets five thousand dollars short. The cashier protested against the destruction of the safe, but the examiner insisted upon its being opened. A blacksmith was sent for, the safe broken open, and was found to be empty. The cashier was subsequently indicted for embezzlement, but failed of conviction for want of proof.

Notwithstanding the few incompetents and derelicts that have been foisted upon the service from time to time, to its discredit, the record as a whole is very gratifying. The long roll of bank examiners employed since the establishment of the Currency Bureau, contains many honorable names of men of a high order of ability and integrity, who were a credit to the service during their connection with it, and who subsequently distinguished themselves in the world of banking and finance and in other fields of activity and usefulness.

The efforts of Mr. Murray to raise the standard of bank examinations were commendable and would have received the hearty support and co-operation of every examiner in the service had he proceeded in a proper and orderly way to inaugurate his improvements. But his unwarranted reflections upon their integrity and efficiency, and the publicity given his remarks at the time, were calculated to and did inspire antagonism rather than co-operation. Had Mr. Murray called the examiners together and, behind closed doors, told them in plain and unmistakable terms what he required of them, much good, no doubt, would have been accomplished. But his weakness for sensational publicity, and his disposition to continually play to the galleries through the medium of the public press (a weakness that prevailed throughout his administration), had the effect of not only subjecting the examiners to derision by the public and to discredit among the bankers of the country, but severely and unjustly reflected upon the administrations of his predecessors in office and inflicted incalculable injury upon the service as a whole by shaking confidence in the efficacy of bank examinations.

The results of the good work that examiners did never became a matter of public information. The superficial work exposed itself. The relative merits of every examiner in the service was a matter of record in the Comptroller's office, and the proper course for Mr. Murray to have pursued, if he earnestly desired to strengthen and improve the service, was to have silently weeded out such of the examiners as were known to fall below the standard of efficiency necessary to insure reliability and thoroughness, and not to publicly discredit the entire force, and belittle the service as he did on the occasion referred to, by creating in the public mind a false standard of measurement of the service as a whole by the exceptional deficiencies of a very small percentage of the total number of examiners employed.

In an interview subsequently published in the Journal of Commerce and Commercial Bulletin, Mr. Murray is quoted as stating:

We want better bank examiners in place of some now in the service who, after years of experience, do not measure up to the work and never will * * * We want examiners with courage to tell any bank when it is doing wrong and with strength of character enough to force a correction.

This interview was brought to the attention of President Taft, who, under date of January 9, 1911, wrote Mr. Murray a note referring to this statement and suggesting that he furnish the Secretary of the Treasury with the names of "those bank examiners who are not up to the mark," for removal from the service.

No such list was ever furnished the Secretary of the Treasury by Mr. Murray, nor was it necessary for him to obtain the Secretary's consent to remove an incompetent examiner, as the Comptroller was vested with authority to do so on his own responsibility.

With no disposition to harshly criticise Mr. Murray or his methods, or to excuse or defend inefficiency or superficiality in the work of any examiner, justice to a body of intelligent, competent and conscientious public service employees, whose compensation, with few exceptions, was not commensurate with their responsibilities or the arduousness of their duties, demands that the public mind be disabused of any false impressions concerning them as a result of Mr. Murray's indiscriminate and indiscreet remarks.

This defense of the examiners then employed is not based upon a superficial knowledge of their work, but rests upon the experience of many years and a daily examination of their reports and supervision of the correspondence with the banks growing out of such reports.