In order to bolster up some of the doubtful or worthless assets taken over by the new association, the officers or directors of the failed institution were coerced by the examiner into giving mortgages or other security on their individual property, or required to pay notes or overdrafts under a threat of criminal prosecution for violations of law if they did not comply with the examiner's demand.

The following is a specimen of the communications received from the examiner who did this class of work for Mr. Murray:

I called in every doubtful borrower that could be reached and informed him that if he did not satisfactorily arrange for the payment of his indebtedness to the bank I would consider reporting the facts to the District Attorney for such action as he might take. As the people in this State are very much afraid of the Federal Judge, this bluff worked so beautifully that I was able to commence to pay my depositors on Thursday morning.

When the attention of this examiner was called to his unlawful and reprehensible methods he declared that he did not care what the law required so long as he accomplished his purpose of not allowing a bank to go into the hands of a receiver, and those officials of the Comptroller's office who dissented to such procedures were regarded as representatives of old methods and not in sympathy with Mr. Murray's policies.

This examiner was subsequently indicted and became a fugitive from justice, having fled to Europe before the World War.

These and other loose and unlawful practices were indulged in by examiners and countenanced by Mr. Murray during his administration in furtherance of his modern methods of supervision, which appeared to recognize no law other than that the end justifies the means.

One of the worst features of this policy of liquidating insolvent banks, or banks that were in an otherwise unsatisfactory condition, was the fact that the institution was allowed to remain in the hands of the men who were responsible for its failure or its unsatisfactory condition, thus affording them ample opportunity to cover up any criminal wrongdoing they may have been guilty of, and to escape also their civil liability for any losses or damages the bank may have sustained by reason of their violations of law.

When the capital of a national bank became impaired by losses or otherwise the law gave the stockholders the option of making the impairment good by assessment of the stock, or the alternative of placing the association in liquidation by a vote of two-thirds of the stock. If they voted to assess the stock, they had three months under the law in which to pay in the assessment.

Mr. Murray insisted upon the immediate restoration of the capital, or the immediate liquidation of the bank, and in a number of instances directors were coerced into taking the latter course because of his insistence upon such action, and the stockholders were thus denied the right to exercise the discretion conferred upon them by law.

If a bank became insolvent and could not be immediately restored to solvency, the law required the Comptroller to appoint a receiver for the association and directed the course that should be pursued in liquidating its affairs.

In a number of cases of insolvency Mr. Murray persistently refused to appoint receivers, in support of his declaration that bank failures were occurrences of the past, and that receivers would be unnecessary during his administration. Such banks were permitted to be liquidated by their stockholders or by another banking institution in the same place.

If an officer or director of a bank wilfully violated the law, the penalty prescribed by the statutes was forfeiture of the charter of the association, to be determined by suit brought for that purpose by the Comptroller in his own name.

Mr. Murray demanded and insisted upon the removal of any officer or the resignation of any director who violated the law by making excessive loans or doing any other unlawful act, thus exercising a power which Congress had persistently refused to confer upon the Comptroller, notwithstanding the fact that several Comptrollers had recommended legislation granting such authority. Directors of banks are elected by the stockholders for a period of one year, and the board is authorized to appoint its officers and remove them. Nowhere in the law was any authoriity conferred upon the Comptroller of the Currency to remove or to demand the removal or resignation of an officer or director. Mr. Murray assumed this power and when such a demand was made it was generally complied with through fear of the injurious effect upon the bank of frequent examinations which were threatened if his demand was not complied with. In one case at least the Comptroller was required to revoke his demand for the removal of an officer because of threatened civil action by the objectionable officer for damages.

Bank examinations in the main were a great deal more effective during Mr. Murray's administration than formerly. That such was the case was due to the fact that he instructed the examiner to convene the directors at the time of examination and require them to correct as fully as possible all unsatisfactory conditions before he left the bank. In other words, the examiner was required to have done under his personal direction what other Comptrollers undertook to accomplish by the slower process of correspondence based upon the examiner's report.

That former Comptrollers did not pursue Mr. Murray's policy, except in special cases, was due to the inadequate fee system of compensation. They did not feel justified in exacting of an examiner several days' work for one day's compensation, and did not feel authorized to increase that allowance by an arbitrary and unlawful assessment upon the bank. But they recognized the weakness of the system in this respect and recommended to Congress time and again a change from a fee to a salary or per diem and expense allowance. They did not assume the right to change the law by administrative regulation. Mr. Murray, however, overcame this obstacle by disregarding the law and unlawfully assessing a per diem for the number of days devoted to a special examination where the statute fixed the fee.