One of the most effective regulations that Mr. Ridgely made when Comptroller of the Currency, and one that accomplished the most beneficial results, was the requirement that the board of directors of a bank should make reply over their individual signatures to letters of criticism based upon the reports of national bank examiners, in which the attention of the board was called to all violations of the law and unsatisfactory conditions disclosed by the examination.
In almost every board of directors of a bank there will be found some men not identified with the active management of the institution who will not countenance any violations of law or loose or dangerous practices, and whenever the attention of such men is called to any matter subject to criticism it is usually corrected. If the subject of criticism was a matter of serious importance, it was Mr. Ridgely's practice to send a circular letter to each member of the board calling his attention to the fact that an important letter had been written to the bank and requesting him to see it and to unite with the other directors in making reply thereto. This practice had the effect of bringing to the attention of every member of the board any unsatisfactory condition in the bank and reaching the men on the board who could be depended upon to correct the matters complained of.
When Mr. Murray assumed charge of the office, he discontinued this practice which had proven so effective, and substituted therefor a list of questions which he sent to each bank examiner with instructions to convene the board of directors at the time of his examination of a bank and submit them to each director for answer. This list contained twenty-nine questions, and was the most amateurish document that ever emanated from the Comptroller's office. They always will be known as the twenty-nine varieties. The directors were required to state how many of them knew of the condition of the bank in all its details. How many had but a general knowledge of its condition. How many knew nothing at all of its condition. Whether they had a full knowledge of the habits and moral standing of the bank's employees. Whether they could certify to the genuineness of the signatures to the notes discounted by the bank. How often they examined and listed all the stocks, securities and real estate mortgages owned by the bank. Whether they called in and balanced the pass-books and satisfied themselves as to their correctness. Whether they verified outstanding certificates and checks, examined into the condition of the lawful money reserve, and counted the cash periodically, checked up the stock ledgers and examined the profit and loss and expense accounts of the bank, read the National Bank Act, etc., etc.
Imagine a director of one of our large city banks, a busy man of affairs and extensive interests, being requested to state whether he ever counted the cash in his bank or balanced the depositors' pass-books. Whether he could certify to the genuineness of the signatures to the notes held by the bank, and similar questions; or the director of a country bank, engaged in farming or some business of a non-professional character, being asked whether he ever studied the National Bank Act. The assertion may be ventured that a large majority of the directors of some of the very best managed banks in the country never have read the national banking laws and have only a general knowledge of their provisions. Nor is it necessary to the successful conduct of a bank that a director should have more than a general knowledge of the main features of the Bank Act, and these he may and usually does learn in the practical operation of his bank, and not by reading the Bank Act.
When Mr. Murray was before the National Monetary Commission, Senator Knox asked him the following question in connection with this list of interrogatories which he instructed the examiners to submit to directors:
"Do you believe that you could get anyone who was responsible to act as a director of a national bank if the law required every director to know that every name signed to every obligation that the bank held was the genuine signature of the person it purported to be?"
To which question Mr. Murray replied:
"I do not think you could find that kind of a man in the United States, or in the world, Senator, and it was to establish that fact officially that I asked the question in my list of questions."
Has anyone ever heard of a more absurd proposition emanating from a Government official? To issue a series of questions, ridiculous in their nature, for the avowed purpose of confirming officially the fact that the directors of banks did not know what he admitted he knew they did not know, and what the law or the proper conduct of a bank did not require them to know, simply for the purpose of establishing that fact officially.
Is it to be wondered, therefore, that a director of one of our larger banks, to whom the questions were propounded, should have exclaimed when he read the questions, "Angels and ministers of grace defend us from such administration." And that another should have lapsed into poetry on the subject and under the inspiration of the muse delivered himself in rhyme, through the columns of a Boston journal, as follows:
TO A BANK DIRECTOR Have you counted the quarters and pennies and dimes; E'er let counterfeits by you - and how many times? Just how many pens, pencils and stamps in a year, How much mucilage, paper and ink use you here? Got the birthplace and lineage pat of each clerk, And the moment they start and get through with their work? On their outside diversion made Sherlock Holmes search - Which they take to the most, saloon, theatre or church? Note the gowns and the hats that your tellers' wives wear, Lest your bank in the payment for same have a share? Do you walk round at midnight to test lock and bar, Lest some window be loose or some safe door ajar? And do you as an expert in handwriting rank, Daily scan every word that is writ in the bank? How's the janitor doing? Are corners swept clean? Does the watchman take catnaps, his box rings between? On the dames who do scrubbing your eye keep, let's hope, Lest extravagant they in consumption of soap? If in any of these little stunts you don't shine, You've just one thing to do, sir, this moment resign.