these methods would not stand the test of the courts or Congressional investigation.

In dealing with the property rights of others in the liquidation of failed banks the closer the Comptroller of the Currency adheres to the plain letter and spirit of the national banking laws, and requires his subordinates to do likewise, the less liable he will be to mistakes, criticism and responsibility for the results, even though such results may not be as satisfactory as those which, in his judgment, might have been reached through some other course or procedure which, if successful, would not materially benefit the creditors of the failed bank, but if unsuccessful would subject him to censure. The Comptroller of the Currency is no more justified in embarking in experimental methods in the liquidation of an insolvent national bank, because of the possibility of attaining better pecuniary results by pursuing a course other than that prescribed by law, than the banker was in the first instance in making the unlawful and speculative ventures in anticipation of greater possible profits which involved the bank in the losses which made the receivership necessary.

The worst feature of this kind of administration is the dangerous precedent and bad example it sets for the younger officials of the Government service, who are trained in an atmosphere impregnated with a disregard of legal restrictions, and are taught to believe that administrative policy and business expediency are superior to law and order and that the end sought to be accomplished justifies the means.

In no Bureau of the several executive departments did this policy prevail to so great an extent as in the Currency Bureau during the administration of President Taft, but without his knowledge and contrary to his emphatically expressed public utterances on the subject.

Amendments to the Laws Enacted

During Mr. Hulburd's administration, the law was amended to provide a penalty for imitating national bank circulation; for the refunding of excessive tax on circulation; restricting State taxation of shares of national bank stock; prohibiting loans on

the credit of United States or national bank notes and the withholding of such notes from circulation; requiring reports of condition and of earnings and dividends to be made to the Comptroller; prescribing a penalty for false certification of checks; and for embezzlement, abstraction, misapplication, etc., of any moneys, funds or credits of a bank; making false entries in the books of the association, in reports to the Comptroller, etc.; for the retirement of circulation by liquidating banks; and providing for the organization of banks to issue gold notes.

This latter Act provided that upon the deposit of any United States bonds, bearing interest payable in gold, with the Treasurer of the United States, in the manner prescribed by the national bank act, the Comptroller of the Currency was authorized to issue to such associations circulating notes to an amount not exceeding eighty per centum of the par value of the bonds deposited, redeemable upon presentation in gold coin of the United States, and the banks issuing such notes were required to carry a reserve against them of not less than twenty-five per centum of the circulation outstanding, in gold or silver coin of the United States.

There were ten associations organized under this Act, nine of which were located in California, and one at Boston, Mass.

The Act of February 14, 1880, authorized the conversion of all such banks into regular currency associations. Seven of these banks reorganized as currency associations and three went into voluntary liquidation, the last one in February, 1880, since which date there has been no national gold bank.

J

CHAPTER VI

John Jay Knox

OHN JAY KNOX, the fourth Comptroller of the Currency, was appointed April 25, 1872, to succeed Mr. Hulburd, and served until April 30, 1884.

He was born at Knoxboro, Oneida County, New York, in March, 1828, and graduated from Hamilton College, New York, in 1849. After graduation, he entered the Bank of Vernon, New York, of which his father was president for over twenty years, and later assisted in the organization of banks at Syracuse and Binghamton, N. Y., under the free banking law of New York State. Subsequently, he went to Minnesota and started a private bank at St. Paul with his brother, who afterward was Public Examiner for the State of Minnesota.

At the outbreak of the Civil War, he wrote an article advocating the passage of a national banking law, which was published in Hunt's Merchants' Magazine. This article attracted the attention of Secretary Chase and others, and when Mr. Knox visited Washington after the passage of the National Bank Act he called upon Secretary Chase, who introduced him to Mr. McCulloch, which led to his appointment as a clerk in the office of the Treasurer of the United States. Shortly afterward he was transferred to the Secretary's office as a disbursing clerk. He resigned after about three years' service to accept the position of cashier of the Exchange National Bank of Norfolk, Va. He did not retain this position very long, but re-entered the service of the Treasury Department as a clerk and was shortly thereafter detailed by Secretary Chase to make an examination of the San Francisco Mint. He also examined the Sub-Treasury at New Orleans, in which he discovered a shortage of $1,100,000. This shortage was reduced by recoveries to about $680,819.53. Proceedings were instituted against the former Assistant Treasurer, but upon trial he was acquitted. Mr. Knox remained in