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CHAPTER XIV

Lawrence O. Murray

AWRENCE O. MURRAY, the twelfth Comptroller of the

Currency, was appointed April 28, 1908. He was born in

Steuben County, New York, in 1864. He was educated at Addison College, Niagara University, and the Metropolis Law School of New York, and was admitted to the bar in New York City in 1893.

He first entered the service of the Federal Government as private secretary to Assistant Secretary of the Treasury Curtis, under President Cleveland's second administration, and later was appointed chief of the organization division in the office of the Comptroller of the Currency.

In September, 1898, he was appointed Deputy Comptroller of the Currency. He retained this place ten months and resigned on June 27, 1899, to accept the position of trust officer in the Trust Company of America, of New York City, a new organization. He remained with this company three years and then became secretary and trust officer of the Central Trust Company of Illinois at Chicago, organized by Charles G. Dawes, former Comptroller of the Currency, who was president of the company. He resigned this position to accept appointment as Assistant Secretary of the Department of Commerce and Labor in January, 1904, and continued in that position until appointed Comptroller of the Currency. His only banking experience was that of trust officer in two trust companies, the principal duties of which were to pass upon the legal form of papers. His appointment as Comptroller was purely a personal one on the part of President Roosevelt.

Mr. Murray qualified as Comptroller April 28, 1908, but on account of the condition of his health he did not assume active charge of the Bureau until September 2 following.

Mr. Murray was the most peculiar character who ever occupied the office of Comptroller of the Currency. His moods and

tenses were so changeable and inconsistent that the subordinate officers and employees of the Bureau who came in daily contact with him were at first inclined to believe that his mental eccentricities were due to the condition of his health. But later they were obliged to abandon this charitable diagnosis, because of the fact that as his health improved his peculiarities became more pronounced. His administration of the Bureau always will be known by those who were officially connected with it at that time, as "the period of the reformation," because of the numerous innovations introduced and his utter disregard of law and precedent in the practice of the office and in the enforcement of what he termed modern methods of supervision of the banks.

The first official act of Mr. Murray after assuming active charge of the Bureau, was to call a meeting of the national bank examiners, to be held in Washington on September 21, 1908. About forty-five examiners assembled on that occasion from the Eastern and Atlantic Coast States, among whom were some of the brightest men in the service, who ranked as high in ability and were as capable of rendering, and had rendered, as good and as reliable service as any set of men engaged in any similar line of work anywhere in the country, in the Government service or outside of the Government service.

These men came to Washington in obedience to the Comptroller's call, at their own expense, expecting, as they had a right to expect, gentlemanly and courteous treatment at the hands of their official superior. They supposed that the Comptroller's purpose in calling them together was to make their acquaintance and to advise them as to his policies in regard to examinations. But their astonishment and indignation may well be imagined when, in his opening address, Mr. Murray bluntly informed them that his purpose in calling them together was to tell them that their work in the past had not been satisfactory and must be improved. He accused them of failing to discover embezzlements, defalcations and dishonesty of various kinds, or to estimate correctly, or even approximately, the value of the paper and securities held by the banks. Shortages, he stated, had passed detection through several successive examinations, and other criminal wrong-doing had failed of discovery. He told them that

their work was hurried and superficial and that they appeared to be more concerned in making fees than in getting information in regard to the condition of the banks, and warned them that the time for such carelessness and defective methods in the Government service had gone by and should have ceased long before that time.

Mr. Murray concluded his remarks by telling the examiners that the standard of their work must be raised and that if they were unable to reach the standard which he required of them, or if they were unable to discover the true condition of the banks they examined, to send in their resignations and their commissions at once for cancellation.

In calling this meeting of the examiners, there is no doubt that Mr. Murray was actuated by proper motives; that he desired to raise the standard of examinations and thus increase the efficiency of the service and the effectiveness of official supervision of the banks. But there was no foundation or justification for his unqualified denunciation of the work of the examiners as a whole, because of the faulty work of a few of the less efficient or careless men on the force. Nor were the statements made by Mr. Murray based upon any personal knowledge of the work of the examiners then in the service. At the time he made this address he had been in charge of the Bureau only twenty days. He had not personally examined a single report of an examiner, notwithstanding his statements to the contrary, and knew absolutely nothing personally of the relative merits or the efficiency of any examiner's work. Whatever information he possessed on the subject was derived from outside sources before he assumed charge of the office, which was as unreliable and as faulty as his own impressions and assertions on that occasion.

In his address to the examiners he told them that when he was connected with the Comptroller's office ten years before that time he had had opportunities for knowing the quality of their work and declared that it was equally as faulty at the time of his remarks as it was then. But it is a positive fact that Mr. Murray knew very little more about the work of the bank examiners at the time of his former connection with the Bureau than he did

when he made his denunciatory remarks on the occasion referred to.

As chief of the organization division of the Comptroller's office he had nothing whatever to do with the reports of national bank examiners or their work. His duties pertained solely to the organization of banks and the increase or reduction of the capital stock and the liquidation of existing associations. He was Deputy Comptroller for a period of only ten months, during which time he had very little opportunity to inform himself as to the relative merits of the examiners or the thoroughness or laxity of their work. At that time all the correspondence with the banks growing out of the reports of examiners was signed by the Comptroller and such correspondence did not come under the observation of the Deputy Comptroller, except during the temporary absence of the Comptroller. Therefore Mr. Murray's sweeping arraignment of the examiners and his aspersions upon their work were not based upon personal knowledge acquired during the few days intervening between September 2, when he assumed active charge of the Bureau, and September 21, when he made the address referred to. Nor were they based upon any knowledge derived during his brief connection with the office ten years previously. His impressions of the work of the examiners were predicated solely upon the popular but erroneous belief that it is incumbent upon an examiner to absolutely know and insure the accuracy of every figure entered in the books of the bank examined and to guarantee the genuineness of the signatures to every note and the financial responsibility of the maker and endorser. If a teller receives a deposit and enters only half of it on the books of the bank, putting the other half in his pocket, the examiner under the popular idea of thoroughness must discover that false entry without ever seeing the pass-book in which alone the correct amount is shown, and which is not accessible to him at the time of his examination. In a word, he must insure the absolute honesty of every employee of the bank, the good judgment of its officers and directors, and the ability of the association to pay in full, on demand, every dollar that it owes, which, of course, carried with it the guaranty that every dollar that has been loaned or invested was collectible in full.

This is the general conception that the public has of what constitutes an efficient examiner, and this is the impossible standard by which Mr. Murray measured the work and worth of the examiners whom he addressed, and the efficiency which, he admonished them, he would expect them to attain and maintain in the future.

In a large number of employees such as constitute the force of national bank examiners, there must necessarily be different grades of efficiency. This is true of every class of public service employees. But it was decidedly unjust and unfair to measure the efficiency of the entire force by the shortcomings of the exceptional few, or to declare an examiner to be inefficient after several years of good service because in some one instance he failed to discover something which he should have discovered, or possibly was excusable for not discovering.

While superficial work on the part of an examiner cannot be excused or defended, in many instances they have been unjustly held accountable for conditions for which they were in nowise responsible and were utterly powerless to discover or correct.

Bank Examiners and Bank Examinations

A successful administration of the Currency Bureau depends largely upon the efficiency of the force of national bank examiners and the thoroughness and reliability of their work in connection with the examination of banks. The Comptroller of the Currency has no means of ascertaining the condition of the banks except as reflected in the reports of the examiners. If a report shows a bank to be in a satisfactory condition, he must accept it as correctly representing its true status, if he has any confidence in the ability, integrity and judgment of the examiner who made the examination. If a condition exists other than that shown by the examiner's report, the Comptroller has no means of knowing that fact until some unexpected development brings it to his attention. If a defalcation or shortage is disclosed which the examiner failed to discover, the Comptroller could know nothing of it until revealed through some other source by accident or otherwise. If the examiner's estimate of the value