In 1837, W. W. Corcoran established a private bank and brokerage office on Pennsylvania avenue near Fifteenth street, directly opposite the north front of the United States Treasury
Department. In 1839 this office was removed to the old Bank of Metropolis Building on the corner of Fifteenth and F streets. In 1840 George W. Riggs became a partner of W. W. Corcoran and the business was conducted under the firm name of Corcoran & Riggs. This firm purchased the building of the old Bank of the United States on the northwest corner of Fifteenth street and Pennsylvania avenue. After the death of Mr. Corcoran, Charles C. Glover and Thomas Hyde entered the firm and continued the business under the name of Riggs & Company.
On June 27, 1896, the partners of Riggs & Company organized the Riggs National Bank to succeed the private bank and brokerage firm and commenced business as a national institution on June 30, 1896, with an authorized capital stock of $500,000. On April 11, 1903, the capital was increased to $1,000,000.
It will thus be seen that the Riggs National Bank was an old and honorable institution. Its founder and his successors were substantial and leading citizens of Washington, prominent in the financial and business activities of the city. The bank from its early organization had an unquestioned reputation for conservatism and good management. It always was considered one of Washington's largest, strongest and best financial institutions, and enjoyed the full confidence of its patrons and of the community.
Like seventy-five per cent, of the national banks throughout the country, the Riggs National Bank violated at times some of the provisions of the national banking laws, such as making loans in excess of the legal limit or upon the security of real estate mortgages, failure to maintain the required reserve, investments in stocks, buying and selling bonds and stocks on commission, and engaging in other transactions either expressly prohibited by law or beyond the powers of a national bank.
None of these transactions, however, affected or endangered the solvency of the institution in the least degree, but on the contrary were more or less profitable to the bank.
Following each examination for years previous to the incumbency of Mr. Williams as Comptroller the attention of the officers and directors of this bank was called in writing to the violations of law reported by the examiners and a correction demanded. It was also insisted upon that the unlawful practices or transactions be discontinued. Correspondence with the bank and personal conferences with its officers on these subjects were generally conducted by the Deputy Comptroller, but because of the intimate personal acquaintance and relationship which usually existed between the principal officers of this bank and some of the higher officials of the Treasury Department, very little, if any, attention was paid to the Deputy Comptroller's demands and admonitions, and the bank continued for years to be the subject of criticism by the Comptroller's office on account of the unlawful transactions and practices complained of.
On one occasion the Deputy Comptroller met one of the principal officers of this bank at a gathering of the bankers of the District of Columbia. On entering the room where he and some other bankers were assembled, this officer remarked in rather a sneering manner: "Here comes the man who writes those letters to the banks telling them how they should conduct their business."
The Deputy Comptroller replied that there was no intention or disposition on the part of the Comptroller's office to run the banks or to interfere with their business, except to require that they be conducted within the provisions and limitations of the national banking laws and the regulations of the Comptroller based upon such laws. He was told that he might belittle the letters of criticism received from the Comptroller's office and disregard their requirements and admonitions, but his bank was being placed on the official records by such letters as a violator of the law, and the time might come when that record would confront him and his fellow officers and call for an explanation of their course of action, as other bankers had been called upon to do under similar circumstances, to their sorrow. In view of subsequent events this warning seemed prophetic.
Whether or not Mr. Williams was actuated by animosity in his dealings with the Riggs National Bank, growing out of former personal differences with some of its officers and their open opposition to his confirmation as Comptroller, as was freely charged, the instance above referred to is only one of many that could be recited to illustrate the insolent and arrogant manner in which some of the officials of that bank received and disregarded the admonitions of the Comptroller's office when their attention was called to violations of law and other irregularities, and the spirit which prevailed in the bank when Mr. Williams became Comptroller of the Currency, and with which he had to contend.
In the meantime many of the unlawful practices formerly engaged in had been discontinued. The law had been amended increasing the limit of loans from ten per cent,, of capital to ten per cent, of capital and surplus, thereby legalizing the large unlawful loans which this bank had been in the habit of making. The decisions of the courts and the rulings of successive Comptrollers modified the position of the office with respect to real estate loans and enabled the banks to make loans indirectly secured by real estate which before had been held to be unlawful, and the bank changed its method of handling bond and stock transactions. So that at the time Mr. Williams assumed charge of the Comptroller's office the reports of the bank examiners disclosed very little, if anything, in this bank calling for criticism, and the bank apparently was in a sound and satisfactory condition.
Had this bank been handled as firmly by former Comptrollers, when it was violating the law with impunity, as it was by Comptroller Williams, the effect would have been very beneficial. But the officers of the bank could not understand why long after their unlawful practices above mentioned had been discontinued, Mr. Williams should deem it incumbent upon himself to make the bank the object of his special regard so soon after he became Comptroller, and subject it to almost continuous examination for nearly an entire year, investigating and requiring special reports covering transactions running back to the date the bank opened for business, and therefore they attributed his action to personal animosity, especially because of the fact, it was claimed, that at the time the Riggs National Bank was receiving the continuous and undivided attention of Comptroller Williams and the examiners, there were thirteen national banks, six trust companies and nineteen savings banks in the city of Washington, nearly all of which, they stated, were long past due for examination, and several of them had not been examined for eight or ten months. One of these banks, it was alleged, had succeeded the Riggs National Bank in the financial affections and patronage of the then officials of the Treasury Department, and was reputed to be in a very unsatisfactory condition at. the time of its last examination.