HUGH McCULLOCH was appointed Comptroller of the Currency, March 9, 1863, and held the office until March 8, 1865. He was born at Kennebunk, Maine, December 7, 1808. In 1824 he entered Bowdoin College, but on account of ill health he was obliged to leave the institution in 1826. He subsequently engaged in teaching school, and later studied law.
In McCulloch's "Men and Measures of a Half Century," he gives a very interesting account of how he was selected to be the first Comptroller of the Currency and the circumstances under which he accepted the appointment. He states that in 1862 he went to Washington for the purpose of opposing the establishment of the national banking system, upon the ground that it might prove greatly prejudicial to the State banks. He was at that time president of the State Bank of Indiana, one of the largest banking institutions in the country, the main office of which was located at Indianapolis. His connection with this bank began in October, 1835, when he was appointed cashier and manager of the Fort Wayne branch of this institution. He was a lawyer by profession and previous to his acceptance of the cashiership of this bank had had no banking experience. When the Bank of the State of Indiana was organized in 1857, to succeed the State Bank of Indiana, he was chosen as its first president and continued his connection with this institution in that capacity until he resigned in April, 1863, to accept appointment as Comptroller of the Currency.
Although Mr. McCulloch was originally opposed to the national banking system his opinion underwent a complete change after the bank act became a law, and, because of this fact, he stated, the tender of the position of Comptroller of the Currency to him by Secretary Chase was not only wholly unexpected, but was exceedingly embarrassing.
In a letter written to a friend, published in The Bankers Magazine, he said:
The national system of banking has been devised with a wisdom that reflects the highest credit upon its author, to furnish the people of the United States a national bank note circulation without the agency of a national bank. It is not to be a mammoth corporation with power to increase and diminish its discounts and circulation, at the will of its managers, thus enabling a board of directors to control the business and politics of the country. It can have no concentrated political power. Nor do I see how it can be diverted from its proper and legitimate objects for partisan purposes. It will concentrate in the hands of no privileged persons a monopoly of banking. It simply authorizes, under suitable and necessary restrictions a number of persons, not less than five, in any of the states or territories of the Union, to engage in the business of banking, while it prevents them from issuing a single dollar to circulate as money which is not secured by the stocks and resources of the government. It is, therefore, in my judgment, (as far as calculation is regarded,) not only a perfectly safe system of banking, but it is one that is eminently adapted to the nature of our political institutions.
In referring to his conference with Secretary Chase, at the time he was tendered and accepted the appointment of Comptroller, McCulloch states that when the interview was about to terminate he said to the Secretary that he had but one request to make, and that was that as he would be responsible for the proper organization and management of the bureau, which was likely to become a very important one, he desired to have the selection of his clerks. To this request, he quotes Secretary Chase as saying: "Manage the bureau in your own way. When you need clerks, and as you need them, send their names to me and they will be appointed." This understanding, McCulloch said, was fully carried out, and that in no instance while he was Comptroller was an appointment made for the bureau which was not on his recommendation.
While this rule has been adhered to generally since Mr. Mc-Culloch's time, there have been some notable exceptions and irritating consequences resulting from interferences by subordinate officials of the Secretary's office with the personnel and management of the bureau, more or less frequent and successful according to the flexibility or rigidity of the vertebrae of the occupant of the Comptroller's chair, for the time being, and the degree of his insistence, not only upon an observance of the rule established by McCulloch, but of the provision of the national banking laws which conferred upon the Comptroller the authority to "employ from time to time the necessary clerks, to be appointed and classified by the Secretary of the Treasury, to discharge such duties as the Comptroller shall direct." This right and privilege was recognized by every Secretary of the Treasury since the Currency Bureau was established whenever the Comptroller insisted upon the exercise of his prerogative by appealing to him against the arbitrary interference of some subordinate official of his office.
While some very able and experienced men have occupied the position of Assistant Secretary of the Treasury, there was a time for awhile when these positions became an exceedingly attractive school of finance from which a number of very bright and exceptionally capable young men, with no previous experience in banking or finance, were graduated in remarkably short periods as expert financiers and bankers, with the honorary degree of "Ex" as indicating their principal specialty and main reliance for recognition in the busy financial and commercial world.
When these young men first entered the service of the Department, they became thoroughly imbued with the idea that everything in connection with the Department's business methods needed reforming, and they immediately set to work to suggest or inaugurate changes of various kinds which, while invariably involving the Government in considerable unnecessary expense and generally disturbing the public business, contributed nothing toward improvement in methods or economy in public expenditures, but in some instances amounted to pure vandalism in the destruction of public property, wastefulness of public funds, and demoralization of the service generally.