Where an examiner was restricted to the statutory fee for a regular examination and was required to remain at the bank until all unsatisfactory conditions were corrected, his compensation in many such cases barely exceeded his expenses.

As a result of this policy some of the very best examiners in the service, after two or three months' work under the conditions stated, tendered their resignations, giving as a reason therefor that their net income during that time, over and above actual expenses, averaged only two dollars a day. Other examiners had the same experience, and within a period of eighteen or twenty months, thirty examiners voluntarily resigned and left the service, either because of the inadequacy of the compensation or the intolerable conditions under which they were required to work.

Mr. Murray's policy of requiring examiners to devote as much time to an examination as was necessary to a thorough understanding of the condition of the bank, and to have all objectionable matters corrected before leaving the institution, was, without doubt, the correct theory of examinations. But such thoroughness could not be secured under the fee system of compensation. An examiner should be adequately compensated for the time actually and necessarily employed in making an examination, and this could be accomplished only under a salary or per diem and expense allowance.

Is it to be wondered, therefore, that examinations were more effective under Mr. Murray's administration than under those of his predecessors? In making the contrast, however, the unlawful methods employed to accomplish results must be taken into consideration.

In connection with the organization of new banks the law provided that any number of natural persons, not less than five, might form a national banking association, and after they had executed all the necessary papers and complied with the provisions of law relating to organization, the Comptroller should issue his certicate of authority to the bank to commence business. But if he had reason to suppose that the shareholders had formed the association for any other purpose than the legitimate objects contemplated by the National Bank Act, he was authorized to withhold his certificate.

No Comptroller of the Currency before Mr. Murray ever assumed the right to determine the question of the business needs for a new bank, or an additional association, in any city, town or place. That question was left to the judgment of the organizers and the subscribers for the stock in the proposed institution. If they chose to risk their capital in a doubtful venture of this kind, it was held by the Comptroller that banking was free and that he had no authority to deny them a charter. If the organizers of the bank were ascertained to be men of reputable character and standing in their community, and were organizing the bank for the legitimate purposes contemplated by the banking laws, it was held that they had the same right to engage in the business of banking as those already in the business; that banking was free to any five reputable citizens who desired to form an association, and that when all the provisions of law had been complied with, the Comptroller was required to issue his certificate of authority.

But Mr. Murray assumed the right to determine whether or not there was any business demand for the proposed bank and exercised the discretion of issuing or withholding his certificate of authority accordingly.

Nowhere in the national banking laws could authority be found, expressed or implied, vesting the Comptroller with such discretionary power, and in the absence of any provision of this nature, Comptrollers from McCulloch to Ridgely held that they had no discretion in the matter. Banks with a capital stock of fifty thousand dollars and less required the approval of the Secretary of the Treasury to their organization. This exception would seem to confer upon the Secretary the discretion of determining whether or not banks of this class should be authorized.

While such discretionary power, if judiciously and impartially exercised, would prevent the organization of banks for which there is no legitimate field, at the same time it is a power that is open to serious abuse and therefore a dangerous discretion to vest in any administrative official. In the hands of an unscrupulous official it could be wielded in the interests of existing associations ambitious to monopolize the banking business of their respective communities. If too many banks were organized in a place, the fittest would survive. In some instances this condition had existed, but the latest organized institution sometimes absorbed the business of the older one, because of the greater confidence of the community in the ability and integrity of the management. Following the example of Mr. Murray his successor in office pursued the same policy.

Another regulation made by Mr. Murray in connection with the organization of banks was the requirement that the president and a majority of the directors of a new institution should reside in the place in which the bank was to be located.

The National Bank Act required at least three-fourths of the directors of a bank to have resided in the State in which the bank was located for at least one year preceding their election, and to continue such residence in the same proportion during the existence of the association. But there was nothing in the law requiring the president or a majority of the board of directors to reside at the place of location of the bank.

The purpose of this administrative regulation was to insure the regular attendance of the president and a majority of the directors to the business of the bank, and Mr. Murray thought that this could better be accomplished by having them reside in the same place than to have a non-resident president and nonresident directors.

In this same connection Mr. Murray required the shareholders of a new bank to be financially worth double the amount of their stock subscriptions. He contended that as the law held stockholders liable in their individual capacity to the extent of the amount of their stock investments, the statute contemplated that they should be worth double the amount of their subscriptions, and he prescribed a new form of organization certificate requiring the financial worth of each subscriber to the original capital to be stated.