Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-02-26


mental supervision as a remedy The
controller said:
LaudS Bankers Association.
IT wish to congratulate the American
Bankers Association for its foresight
in inaugurating these conferences on
bank management. The subject goes
to the very heart of our banking prob
lens. 1t is the desire of all to see good
bank management. The ways and
means however of reaching this goal
are beset with many difficulties and
complications. Conferences such as
these however will go further toward
solution than any other movement
educational or legislative.
While no doubt your deliberations
will be confined largely TO the tech
meal phases of bank management. /
shall. nevertheless. take this occasion
TO direct attention to bank manage
ment in its public aspect We appear
in this country to be fully committed
to the policy of governmental control
over banking. All of our banking sys-
TENS, whether State or national, op-
crate under specific powers granted
by legislative enactment and bank op-
erations under these powers are super
v1sed by public official charged with
the duty of holding the banks strictly
Within the confines of the statute. In
addition to this statutory limitation
the supervising officers frequently are
given the power to make rules and
regulations in the further application
of the statutes. In banking. as in
many of our activities, we are inclined
TO attempt to cure all defective opera
tions by new statutory enactments and
new governmental regulations
In the final analysis however. gov
ernmental action, whether statutory or
regulatory, can only set the metes and
bounds OF bank operations. They can
penaliZe violations of the law and can
exercise a restraining influence upon
banking practices within the law, but
IT Is well known that good manage
ment cannot be produced by legislation
or governmental fiat. Good manage
ment must be natural growth from
within the institution
Opinion Determines Management.
What constitutes good management
can always be determined by the con-
sensus of banking opinion. The larger
the bank the more important becomes
the question OF management Banks of
metropolitan size bear great response
billy ito their shareholders and to the
public, and 1t is essential that their
banking policies and practices measure
up TO the highest existing standards
In our large cities the clearing houses
have played an effective part in the de-
velopment of local banking standards
The type Of work done by these yolun-
tary associations should be extended II
possible to all banks l know of no
better fundamentally through which to
build up this country banking tradi-
tons strong enough 10 effectively dis
courage all types Of bad banking. The
business Of banking in the United
States is less than a century and a half
old, but during that time we have
passed through a great variety Of bank
ing experiences. both good and bad
Perhaps the time has been too short,
but we have not yet developed banking
opinion to such a point that the adj
Venturer, and the outlaw cannot gain
foothoId in our citadels OF finance.
There is. therefore. before this confer
ence great opportunity and great
objective.
Bankers as rule do not welcome
restrictive legislation and that position
can very well be understood. Legisla-
tive restrictions aimed at one type Of
practices may have unforeseen reactions
in other directions In the effort to
produce sound banking by law there
are inclined to grow up a great volume
of statutory enactmcntS aimed at ad-
mittedly unsound practices. but Whlcl
may in turn hamper boards OF directors
of good banks IN developing business
policies. II the bankers themselves fail
nv concerted action upon their own
initiative TO cast out from their midst
those who would convert banking to
their own private and selfish gain u
the detriment of the institution. there
will certainly be new legislation perhaps
both State and national, for the removal
OF unsound management by govern
mental action.
Would Remove Dangerous Officers.
"As you know, the supervising officer
charged with the administration Of the
banking laws becomes readily familiar
with the character of the management
Of the banks under his jurisdiction. In
the nearly 10 years operation OF the
national banking system Congress has
not seen fit To confer upon any eXecu-
tive agency the power Summarily to re-
move from office bank officers who
might be engaged in parctices which are
ininnical TO the welfare of the bank.
Several controllers of the currency
have in the past recommended the
grant of such authority and ] myself
recently indicated to the Senate Com
nfittee on Banking and Currency that
such a statutory enactment might
prove beneficial particularly as a re-
straining influence. A public officer is
in very dificult position when he sees
q bank in the hands Of management
4 (.oatinI,ad on F'Cs,irt aenfh PaQel