At the hearing before the National Monetary Commission Mr. Murray opposed the recommendation made by the Deputy Comptroller for an amendment to the law authorizing the Comptroller to close and take temporary possession of a bank when its capital became badly impaired, pending a reorganization and readjustment of its affairs. He declared that such a proposition was too drastic. But subsequently, as part of his administrative policy, and without any authority of law, he proceeded to exercise a power over banks with an impaired capital far more drastic than anything that was contemplated by the amendment to the law proposed.

After Mr. Murray made his misleading announcement that as a result of his reforms there was not a national bank in the entire country that could be said to be in a bad condition, and that bank failures were a thing of the past, the average number of insolvent banks developed each year, and in order to conceal the fact that these banks were actual failures, instead of appointing a receiver for them as provided by law, they were coerced into liquidation.

The articles of association of the banks that have been chartered in recent years require the directors to give a thirty days' notice of a meeting of the stockholders by publication in a newspaper published in the city, town or county in which the bank is located, or by mailing to each shareholder a notice in writing thirty days before the time fixed for the meeting, in order that all the stockholders may be present either in person or by proxy. The annual meeting of stockholders for the election of directors, which the law requires to be held in the month of January, on the date specified in the articles of association, is the only meeting of stockholders which does not require a thirty days' notice, but if any business other than the annual election of directors is to be transacted at such meeting, thirty days' previous notice is also required. In no other way can a legal meeting of the stockholders of a bank be held, unless this notice is unanimously waived, or all the stock is represented at the meeting. Cook on Corporation Law states that:

If the time and place at which a corporate meeting is to be held and the business to be transacted are distinctly fixed in the charter or by a by-law, this is of itself sufficient notice to all the stockholders, and no further call or notice of that meeting is necessary, unless the charter or by-laws require it. But a by-law which fixes the day of meeting without also fixing the hour is insufficient as a notice of the meeting. And it is a general and settled rule of law that notice, in some way or other, must be given to every person entitled to be present at a corporate meeting. When, therefore, no sufficient notice is given by charter or statute or by-law, each stockholder is entitled to an express notice of every corporate meeting. No usage can operate to excuse a failure to give such a notice. These rules are based on the necessity of protecting the rights of stockholders, and especially of the minority.

A provision in the articles of association of a bank has all the force of law, and neither the Comptroller of the Currency nor the board of directors of the institution has any more authority to waive or disregard a requirement of the articles than they have to waive or disregard a provision of the statutes.

In forcing banks into liquidation, whether solvent or insolvent, without due notice to all of the stockholders of a meeting called for that purpose, Mr. Murray and the directors of the bank exceeded their authority under the law, and the stockholders in every such instance who were not notified and were not present at the meeting in person or by proxy had the right of redress through the courts.

In furtherance of the policy of avoiding receiverships and in support of his pronunciamento that bank failures were a thing of the past, in some instances insolvent banks were put in liquidation over night and a new national association was organized in a day in the same place for the purpose of taking over the assets of a failed bank and assuming its liabilities to depositors. In some instances banks were forced into liquidation without even the two-thirds vote of the stock required by law, some of the proxies necessary to make up the two-thirds not having been received until after the vote to liquidate had been taken.

Section 5136 of the Revised Statutes of the United States provided that upon duly making and filing articles of association and an organization certicate in the office of the Comptroller the association should become, as from the date of the execution of the organization certificate, a body corporate, and Section 5140 provided that before a bank should be authorized to commence business at least fifty per cent, of the capital stock should be paid in, and that such payment should be certified to the Comptroller, under oath, by the president or cashier of the bank.

In some instances the Comptroller's certificate of authority for a new bank to begin business was issued before a single paper had been filed in the office, not even a formal application for authority to organize the bank, action having been taken upon telegraphic advice from the examiner that all of the necessary papers had been executed and the requisite amount of capital subscribed for and paid in. In such cases several days elapsed before the organization papers were filed and when received were found to be imperfect or incomplete. In the meantime the bank had been opened and was doing business.

In other cases where longer time was required to perfect the new organization, or negotiations to that end had failed, the insolvent bank was allowed to remain open a week or more, with knowledge of its insolvency, and in the meantime some depositors who were aware of its condition were permitted to withdraw their deposits, while others who knew nothing of the situation continued to put money into the institution.