1866 - 1913

In 1868, the OCC's headquarters staff consisted of 72 clerks, a third of them women. Their work was tedious. The office dispatched orders to the examiner force across the country, received and processed applications for charters and other corporate changes, and filed the examination reports. The national currency had to be ordered from printers (initially private contractors and later the federal Bureau of Engraving and Printing). Under tight security, the currency had to be cut, registered, bundled, and shipped to the issuing national bank, where each note was supposed to be signed by hand. The U.S. bonds deposited with the Comptroller's office required similar care. When a bank failed or was voluntarily dissolved, the outstanding notes had to be withdrawn and destroyed and the bond security liquidated.

Although the OCC's headquarters operations were initially funded by Congress, national bank examiners were more akin to independent contractors, paid directly by the banks they examined at a rate of $5.00 a day plus $2.00 for every 25 miles traveled. Assessing banks for the cost of their supervision was not only a matter of being frugal with public funds; the assessment system was also designed to insulate examiners from the pressures of the federal budgeting and appropriations process.

This approach, while well intentioned, did not always result in effective supervision. Many examiners were overwhelmed by the number of banks in their supervisory portfolios and by the challenge of getting from one to the next. One OCC examiner in 1887 had responsibility for 90 banks scattered throughout seven states. He could have hired an assistant to help, but that would have been an out-of-pocket expense. Nineteenth-century rail travel was physically grueling; schedules and connections were erratic. Examiners were sometimes tempted to rush through their work to avoid missing the train that could leave them stranded—and unpaid—for days. One Comptroller after the other pleaded with Congress to abolish the fee-based system in favor of regular salaries, but that change was not adopted until 1913.

Who were the people who examined national banks during these early years? Many were attorneys and auditors; others had worked in banks as tellers and cashiers. Some of them stayed with the OCC for life, while for others, the job of national bank examiner became a stepping-stone to other ambitions, especially in banking or politics. For the naturalist John Burroughs, the OCC was a way station to a career in the arts and sciences.

The first generations of national bank examiners were all white males. The first female examiner, Adelia M. Stewart, was not commissioned until the 1920s. African-Americans were hired as messengers and watchmen. Such was the United States in the decades after the Civil War.

The Comptrollers of the Currency in this period were men of accomplishment and distinction befitting the office's broad responsibility for the banking and monetary systems. McCulloch went on to serve two terms as Secretary of the Treasury. Knox, who joined the OCC as a clerk and rose through the ranks to become one of the longest-serving Comptrollers in history, wrote several outstanding treatises on banking and financial history during his tenure. Charles G. Dawes already had published a study on banking when he became Comptroller in 1898. After leaving the OCC in 1901, Dawes ran unsuccessfully for the U.S. Senate, founded a bank, became a brigadier general in World War I, developed the Dawes Plan for the economic recovery of post-war Europe, served as the 30th Vice President of the United States, and was the U.S. Ambassador to the United Kingdom. In his idle time, he was an accomplished musician and composer of popular tunes that enjoyed considerable commercial success.

Congress had established the OCC as a "separate bureau" of the Department of the Treasury under the "general direction" of the Secretary. Other provisions of the National Banking Act underscored the Comptroller's independence by giving the Comptroller a five-year term, a direct reporting line to Congress, and protection against arbitrary removal. But ambiguity about the Comptroller's status existed from the beginning and has persisted throughout the OCC's history. Democratic presidents invariably selected Democrats to serve as Comptroller, Republicans picked Republicans, and, notwithstanding the five-year term, incumbent Comptrollers often were pressured to leave early when the White House changed hands. A break in this tradition came in 1908, when Republican President Theodore Roosevelt appointed Lawrence O. Murray, a Democrat, as the 12th Comptroller.

The law required that Comptrollers report annually to Congress on the condition of the national banking system, making recommendations for improvements as they saw fit. Some of the issues they identified were addressed legislatively, but larger questions about the system's adequacy and fairness remained.

The unexpected resurgence of state banking was an increasing concern for the OCC. State banks had circumvented efforts to tax their notes into oblivion by encouraging customers to pay bills with checks instead of currency. State regulators and legislators eased chartering requirements, reduced lending limits, broadened eligible collateral, and cut the fees that banks paid for examinations. The Comptrollers urged Congress to help national banks compete by easing restrictions and expanding powers. Nonetheless, by 1900, state banks outnumbered national ones.

Fifty years after it was created, one thing was clear: The national banking and national currency system was a vast improvement over the system it had replaced. Yet public dissatisfaction with banking was still keen. There was a perception that the national system was national in name only, that it favored Eastern, urban interests over Western, rural ones. Moreover, the economy was still subject to periodic bouts of extreme instability, when liquidity and loans dried up and banks failed in alarming numbers.

Changes in the nation's financial structure were on their way.