It was the elaboration of this limited scheme that suggested to Mr. Murray the gigantic and impossible undertaking of establishing an extensive credit record for the whole United States, such as the public were given to understand it was the purpose of the Comptroller's office to maintain.

In December, 1909, Mr. Murray sent a circular letter to all the bank examiners requesting them to report to him whether or not there were any banks in their respective districts that were believed to be in an unsatisfactory or dangerous condition.

In February, 1910, he made the public declaration, purporting to be based upon the replies received from the examiners to this inquiry, that at that time there was practically not a national bank in the entire country that was regarded by the examiners as being in an unsatisfactory condition. He stated further that for many years before he took charge of the Currency bureau it had been the practice to carry a list of several hundred banks that were regarded as either in an unsound condition or so poorly managed as to require very close watching, and that although efforts were made to improve the condition of these associations they were successful in only a few instances. He then proceeded to claim, through the press and financial journals of the country, that because of the successful working out of the various reformatory measures which had been a feature of his administration a complete rehabilitation of the unsound and poorly managed banks had been effected and that there was then not a bank left on what was termed the "bad bank" list.

In making this statement Mr. Murray not only cast an unjust and unwarranted reflection upon the administrations of his immediate predecessors, but misrepresented the actual condition shown by the returns received from the examiners to the circular letter of inquiry sent them.

It had been the practice for a number of years for the Comptroller or the Deputy Comptroller to keep on his desk a list of the banks that were in an unsatisfactory condition and the date of the last examination of each. These banks were scheduled for examination every three months and this list was kept for the purpose of closely watching these banks and guarding against any of them being overlooked. Mr. Murray abandoned this list and substituted therefor what he termed a "bad bank desk", to which was assigned every bank that was in an unsatisfactory condition, and the clerk in charge of that desk was relied upon to look after such banks and see that they were promptly examined at the stated time. The result of this change was that there were so many banks assigned to this desk and so few examiners-at-large to examine them that many of them were not examined as frequently as they would have been had they been examined in their regular order every six months, and some of these banks subsequently failed and at the date of failure had not been examined for twelve months.

A compilation of the reports received from the examiners in reply to Mr. Murray's circular letter of inquiry showed that at that time there were just as many banks in the respective districts of the examiners that were in an unsatisfactory condition as there ever were under any previous administration during normal times, and a number of them were so near a condition of insolvency that in order to avoid a receivership they were forced into liquidation.

There always has been a certain percentage of the total number of banks in active operation at a given date in a more or less unsatisfactory condition, requiring frequent examination and special watchfulness, the number varying only with the business conditions of the country. This always has been and probably always will be the case under our present banking system. It was so throughout Mr. Murray's administration to as great an extent as during the administrations of any of his predecessors, under similar conditions.

Perhaps the most faulty of all of Mr. Murray's many so-called administrative reforms, and the one that involved the greatest disregard of law and the rights of shareholders in the banks, was his method of forcing banks that were in an unsatisfactory or insolvent condition into liquidation to avoid receivership.

Section 5220 of the Revised Statutes of the United States confers upon the shareholders of a bank the right to place the bank in voluntary liquidation at any time by a vote of two-thirds of the stock. There is no authority vested in the Comptroller of the Currency to compel a bank to go into liquidation. If the officers or directors of a bank violate the law he has the right to institute a suit to forfeit the charter of the association, but the court must determine whether or not the bank's franchise shall be declared forfeited.

The law also provides that whenever the Comptroller shall become satisfied of the insolvency of any bank he may, after due examination of its affairs, appoint a receiver, close up its business and enforce the personal liability of the shareholders for any deficiency in the assets to pay liabilities to depositors and other creditors. Under the general direction of the Comptroller the receiver is required to take possession of the books, records and assets of the bank, collect all debts, dues and claims belonging to it, and, upon the order of a court of record of competent jurisdiction, sell or compound all bad or doubtful debts. In short, the receiver is required to reduce the assets of the bank to cash and make a pro rata distribution of the proceeds to the creditors of the association. If anything remains after the debts of the association are paid in full with interest, it reverts to the stockholders.

Mr. Murray ignored these provisions of law. When the capital of a bank became badly impaired, instead of ordering an assessment upon the stockholders and giving them the right to make the capital good or to place the association in liquidation as provided by law, he ordered an examiner-at-large to proceed immediately to the bank and to require the directors to restore the capital without delay or to take immediate steps to place the bank in liqudation.