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II. The Government Regulation of Banks and Trust Companies

Government Control of Banks and Trust

Companies

By Honorable William Barret Ridgely, Comptroller of the Currency, Washington, D. C.

GOVERNMENT CONTROL OF BANKS AND TRUST COM

PANIES

BY HONORABle William Barret RidGELY

Comptroller of the Currency, Washington, D. C.

The passage of the National Bank Act, or National Currency Act as it was first called, may be considered the beginning of the federal control of banks. This has now been exercised for more than forty years with most satisfactory results, both to the government, the banks and the people who have done business with them. It has resulted in an excellent system of banks, honestly, ably and well managed. The figures in regard to the number of failures and loss to depositors which are given elsewhere in the article show an unequalled record of soundness and safety, and, contrasted with the previous records of State banks and even with the better and stronger State banks and trust companies which have existed alongside of the national banks, make a strong argument in favor of national control of institutions of this character. The total loss in over forty years is less than eight one-hundredths of one per cent. of the average amount on deposit. The volume of experience gained during the forty years' control of the national banks is probably the greatest accumulation of such experience which has ever been made, based, as it is, upon the control of a greater number of banks, more widely distributed, doing a larger volume and variety of business and covering a longer period than has ever been exercised in any other country. As a matter of fact, other countries do not attempt such a complete control or examination of banks as we do in the United States. The nearest approach to our national system is in some of our State bank departments. State banks, and especially the mutual savings banks in several States, are quite closely controlled in their management by specific statutes and are frequently and thoroughly examined. But there is no other system of banks over which there has been for any such period such a thorough control through restrictive statutes, frequent examinations and reports, as has been exerted over the national banks of the United States.

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