PRATTS' DIGEST US she s*^ A. S. PRATT & SONS, NATIONAL BANK AGENTS, WASHINGTON D. C. PRATTS' DIGEST NATIONAL BANK ACT AND OTHER LAWS RELATING TO NATIONAL BANKS FROM THE REVISED STATUTES OF THE UNITED STATES, AMENDMENTS AND ADDITIONAL ACTS, TO WHICH IS APPENDED Information How to Proceed in Organizing National Banks. RULES AND REGULATIONS GOVERNING THE REDEMPTION OF UNITED STATES AND NATIONAL BANK NOTES, AND CIRCU- LARS ISSUED BY THE TREASURY OFFICIALS OF INTEREST TO BANKERS. >» rb«, ' EDITION OF 1886. Revised to June 1st, 1887". PREPARED AND PUBLISHED BY A. S. PRATT & SONS, NATIONAL BANK AGENTS, WASHINGTON, D. C. iP # -y* Entered according to Act of Congress, in the year 1SS6, by A. S. Pratt & Sons, In the Office of the Librarian of Congress, at Washington, D. C. PRESS OF THOMAS MCGlLL &. CO. PREFACE, The original Act creating the National banking system bears date February 25th, 1863. This Act was superseded and modified by the Act of June 3d, 1864, which was amend- ed from time to time by various Acts until December, 1873, when all the statutes of the United States were -revised and embodied in what are now known as the Revised Statutes of the United States. Such Revised Statutes, therefore, contain all laws relating to National banks except those which have been enacted since December, 1873. Several of the Acts passed since the latter date are, how- ever, of the utmost importance, as they materially modified the law previously existing. The following is a compilation of the sections of the Revised Statutes of the United States, containing the laws relating to National banks, to which have been added the Acts having reference to the same passed since December, 1873. Appended to each section will be found references to decisions of the courts, in which the provisions of said section have been commented on or construed. w *'vejt8rry REVISED STATUTES OF UNITED STATES RELATING TO NATIONAL BANKS, WITH AMENDMENTS AND ANNOTATIONS. CHAPTER I. THE COMPTROLLER OF THE CURRENCY. 1. Bureau of Comptroller of the Currency. Section 324. — There shall be in the Department of the Treasury a Bureau charged with the execution of all laws passed by Congress relating to the issue and regulation of a National currency secured by United States bonds; the chief officer of which Bureau shall be called the Comptroller of the Currency, and shall perform his duties under the general direction of the Secretary of the Treasury. Kennedy v. Gibson, 8 Wall., 498 ; Piatt v. Beebe, 57 N. Y., 339 ; Charleston v. People's National Bank, 5 S. C, 103; Case v. Terrill, 11 Wall., 199; United States ex rel. White v. Knox, 102 U. S. 2. Comptroller of the Currency. Section 325. — The Comptroller of the Currency shall be appointed by the President, on the recommendation of the Secretary of the Treasury, by and with the advice and con- sent of the Senate, and shall hold his office for the term of five years unless sooner removed by the President, upon rea- sons to be communicated by him to the Senate ; and he shall be entitled to a salary of five thousand dollars a year. The Comptroller of the Currency is also ex officio Commissioner of the Freedmen'3 Savings Bank, and for this receives an additional $1000 per annum. 3. Oath and Bond of Comptroller. Section 326. — The Comptroller of the Currency shall, within fifteen days from the time of notice of his appoint- ment, take and subscribe the oath of office ; and he shall give to the United States a bond in the penalty of one hundred thousand dollars, with not less than two responsible sureties, to be approved by the Secretary of the Treasury, conditioned for the faithful discharge of the duties of his office. 4. Deputy Comptroller : Duties, &e. Section 327. — There shall be in the Bureau of the Comp- troller of the Currency a Deputy Comptroller of the Currency, to be appointed by the Secretary, who shall be entitled to a salary of two thousand five hundred dollars a year, and who shall possess the power and perform the duties attached by law to the office of Comptroller during a vacancy in the office or during the absence or inability of the Comptroller. The Deputy Comptroller shall also take the oath of office prescribed by the Constitution and laws of the United States, and shall give a like bond in the penalty of fifty thousand dollars. It has been held that when the Deputy Comptroller of the Currency acts in the absence or disability of the Comptroller he must sign as Deputy and Acting Comp- troller, to secure the validity of papers. 5. Clerks. Section 328. — The Comptroller of the Currency shall em- ploy, from time to time, the necessary clerks, to be appointed and classified by the Secretary of the Treasury, to discharge such duties as the Comptroller shall direct. While this section retains the appointing power in the hands of the Secretary of the Treasury, it appears to indicate that the Comptroller was to be the judge of the force necessary to perform the work of his office. 6. Interest in National Banks Prohibited. Section 329. — It shall not be lawful for the Comptroller or the Deputy Comptroller of the Currency, either directly or indirectly, to be interested in any association issuing National currency under the laws of the United States. The spirit of this section is plain, ,but under its strict letter there is nothing to prevent either the Comptroller or the Deputy from being interested in National banks so long as the particular banks in which they are interested do not issue currency. 7. Seal of Office. Section 330. — The seal devised by the Comptroller of the Currency for his office, and approved by the Secretary of the Treasury, shall continue to be the seal of office of the Comp- troller, and may be renewed when necessary. A description of the seal, with an impression thereof, and a certificate of ap- proval of the Secretary of the Treasury, shall be filed in the office of the Secretary of State. See also Act of February 18th, 1875, correcting Revised Statutes, page 97. 8. Rooms, Vaults, &c, for Bureau. Section 331. — There shall be assigned from time to time, to the Comptroller of the Currency, by the Secretary of the Treasury, suitable rooms in the Treasury building for conduct- ing the business of the Currency Bureau, containing safe and secure fire-proof vaults, in which the Comptroller shall deposit and safely keep all the plates not necessarily in the possession of engravers or printers, and other valuable things belonging to his Department; and the Comptroller shall from time to time furnish the necessary furniture, stationery, fuel, lights, and other proper conveniences for the transaction of the busi- ness of his office. 9. Examination of Banks in District of Columbia. Section 332. — The Comptroller of the Currency, in addition to the powers conferred upon him by law for the examination of National banks, is further authorized, whenever he may deem it useful, to cause examination to be made into the con- dition of any bank in the District of Columbia organized under Act of Congress. The Comptroller, at his discretion, may re- port to Congress the results of such examination. The ex- pense necessarily incurred in any such examination shall be paid out of any appropriation made by Congress for special bank examinations. 10. Annual Report of Comptroller. Section 333. — The Comptroller of the Currency shall make an annual report to Congress, at the commencement of its session, exhibiting — First. A summary of the state and condition of every asso- ciation from which reports have been received the preceding year, at the several dates to which such reports refer, with an abstract of the whole amount of banking capital returned by them, of the whole amount of their debts and liabilities, the amount of circulating notes outstanding, and the total amount of means and resources, specifying the amount of lawful money held by them at the times of their several returns, and such other information in relation to such associations as, in his judgment, may be useful. Second. A statement of the associations whose business has been closed during the year, with the amount of their circula- tion redeemed and the amount outstanding. Third. Any amendment to the laws relative to banking by which the system may be improved and the security of the holders of its notes and other creditors may be increased. Fourth. A statement exhibiting under appropriate heads the resources and liabilities and condition of the banks, banking companies, and savings banks organized under the laws of the several States and Territories, such information to be obtained by the Comptroller from the reports made by such banks, banking companies, and savings banks to the legislatures or officers of the different States and Territories, and, where such reports cannot be obtained, the deficiency to be supplied from such other authentic sources as may be available. Fifth. The names and compensation of the clerks employed by him and the whole amount of the expenses of the banking department during the year. See Act of February 18th, 1875, correcting Revised Statutes, page 97. The first report of the Comptroller of the Currency was made for the year 1863 by the Hon. Hugh McCulloch, the first Comptroller. The earlier reports are out of print, and those of some of the later years also, but copies of such as are on hand and can be spared may be obtained on application to the Comptroller of the Currency by bankers and others who are interested in banking matters. 11. When Report May be Printed. Section 3811. — When the annual report of the Comptroller of the Currency upon the National banks and banks under State and Territorial laws is completed, or while it is in pro- cess of completion, if thereby the business may be sooner dis- patched, the work of printing shall be commenced, under the superintendence of the Secretary, and tne whole shall be printed and ready for delivery on or before the first day of De- cember next after the close of the year to which the report relates. See Act of February 18th, 1875, correcting Revised Statutes, page97. The reports of heads of Departments are, as a rule, made to the President of the United States ; the only exception is that of the Secretary of the Treasury Depart- ment, which is made direct to Congress. The reports of heads of bureaus in any Department are usually made to the head of that Department, but the Comptroller of the Currency, as seen above, reports direct to Congress, and not through the President or the Secretary of the Treasury. CHAPTER II. ORGANIZATION AND POWERS OF NATIONAL BANKS. 12. Formation of National Banking Associations. Section 5133. — Associations for carrying on the business of banking under this Title may be formed by any number of natural persons, not less in any case than five. They shall enter into articles of association, which shall specify in general terms the object for which the association is formed, and may contain any other provisions, not inconsistent with law, which the association may see fit to adopt for the regulation of its business and the conduct of its affairs. These articles shall be signed by the persons uniting to form the association, and a copy of them shall be forwarded to the Comptroller of the Cur- rency, to be filed and preserved in his office. The natural persons meant are persons other than artificial persons, such as cor- porations, &c, who, from being of legal age and not otherwise disqualified, can give validity to papers by their signatures. Articles of association are simply a preliminary agreement or contract among the signing parties, by which they associate themselves for the purpose of organizing a bank under the National banking laws. By entering into such articles each person becomes legally responsible to his or her associates. He cannot withdraw and refuse to organize a bank without their consent, unanimously expressed ; although all but one associate desired to withdraw after signing, the remaining associate could legally compel the others to go on with the organization. The Comptroller requires these articles to be signed in duplicate, so that instead of a copy an original can be sent to his office to be filed. They may contain any provisions which the associates may choose to insert relative to the kind of banking they may wish to undertake, but they must not contain anything inconsistent with the provisions of the National banking law. Thus in their articles the associates might prescribe that the bank which they proposed to organize should issue no currency, which the National law permits, but they could not prescribe that the bank could loan money directly on real estate, which the National law forbids. In other words, the articles of association may limit the business of the proposed bank, but they cannot extend it beyond what the law allows. The insertion of illegal provisions in the articles does not vitiate them. The legal provisions stand ; the illegal ones are simply null and void. Section 5142 provides that the maximum limit of increase of capital stock niay be provided for in the articles of association, but such maximum of increase is to be determined by the Comptroller of the Currency. Once so fixed, it has been held by the United States Attorney General that such maximum of increase cannot be changed by the bank, except through the instrumentality of Congress. It is customary to insert in articles of association a provision for their amend- ment. This provision has force only as to those parts of the articles of associ- ation which the associates legally retain control over. Thus the name of the bank and the location can only be changed by Act of Congress, and if these are inserted in the articles they cannot be changed by a mere amendment by vote of associates, nor can the minimum limit of increase of stock be thus changed. 13. Organization Certificate. Section 5134. — The persons uniting to form such an asso- ciation shall, under their hands, make an organization certifi- cate, which shall specifically state: First. The name assumed by such association; which name shall be subject to the approval of the Comptroller of the Cur- rency. Second. The place where its operations of discount and de- posit are to be carried on, designating the State, Territory, or district, and the particular county and city, town, or village. Third. The amount of capital stock and the number of shares into which the same is to be divided. Fourth. The names and places of residence of the share- holders and the number of shares held by each of them. Fifth. The fact that the certificate is made to enable such persons to avail themselves of the advantages of this Title. The articles of association having been duly entered into, the next step is the execution of the organization certificate. In the articles the associates simply agree to form a bank ; in the certificate they form it. The name taken is subject to the approval of the Comptroller. This name, once taken, cannot under present law be changed by the direct action of the bank, but can only be altered by an Act of Congress. A bill is now pending in Congress ■which, if it becomes a law, will enable any National bank to change its name with the approval of the Comptroller. | The location is subject to the same restriction. The bill mentioned will, if it becomes a law. enable National banks to change their location under certain restric- tions. The Comptroller's office has in some cases permitted banks to open offices for the reception of deposits at places other than the location named in the organiza- tion certificate ; but these offices cannot pay checks or make loans. Whether this is correct or not has never been conclusively tested in the courts. The amount of stock and number of shares into which it is to be divided. This is subject to the restrictions of Section 5138, hereafter, (which see.) 14. Acknowledgment of Organization Certificate. Section 5135. — The organization certificate shall be ac- knowledged before a judge of some court of record, or notary- public, and shall be, together with the acknowledgment there- of, authenticated by the seal of such court, or notary, trans- mitted to the Comptroller of the Currency, who shall record and carefully preserve the same in his office. The organization certificate is made in duplicate- by ruling of the Comptroller's office, and thus, while one original can, as required, be sent to the Comptroller's office, the other original can be retained by the bank. The existence of the associa- tion may be legally proved by the production of the original organization certificate, and also by a copy of such original duly certified by the Comptroller and authenti- cated by his seal of office. (See Thompson's National Bank Cases, pp. 145. 612, 622, 724.) 15. Corporate Powers of Associations. Section 5136. — Upon duly making and filing articles of association and an organization certificate, the association shall become, as from the date of the execution of its organization certificate, a body corporate,* and as such, and in the name designated in the organization certificate, it shall have power — First. To adopt and use a corporate seal. Second. To have succession for the period of twenty years f from its organization, unless it is sooner dissolved according to the provisions of its articles of association, or by the act of its shareholders owning two-thirds of its stock, or unless its franchise becomes forfeited by some violation of law. Third. To make contracts. *2 Abb., U. S., 416. fSee Act July 12th, 1882, page 107. JSee Act May 1, 1886, page 115 B. 8 Fourth. To sue and be sued, complain and defend, in any court of law and [or] equity, as fully as natural persons. Fifth. To elect or appoint directors, and by its board of directors to appoint a president, vice-president, cashier, and other officers, define their duties, require bonds of them and fix the penalty thereof, dismiss such officers, or any of them, at pleasure, and appoint others to fill their places. Sixth. To prescribe, by its board of directors, by-laws not inconsistent with law, regulating the manner in which its stock shall be transferred, its directors elected or appointed, its offi- cers appointed, its property transferred, its general business conducted, and the privileges granted to it by law exercised and enjoyed. Seventh. To exercise by its board of directors, or duly au- thorized officers or agents, subject to law, all such incidental powers as shall be necessary to carry on the business of bank- ing, by discounting and negotiating promissory notes, drafts, bills of exchange, and other evidences of debt; by receiving deposits; by buying and selling exchange, coin, and bullion; by loaning money on personal security, and by obtaining, issu- ing, and circulating notes according to the provisions of this Title. But no association shall transact any business except such as is incidental and necessarily preliminary to its organization until it has been authorized by the Comptroller of the Cur- rency to commence the business of banking. This section should be most carefully perused and considered. The articles of as- sociation may be entered into, the organization certificate executed, but until such articles and certificate are properly filed with the Comptroller, the bank is not formed ; but when these papers have been filed, then, from the date of the execu- tion of the organization certificate, the association becomes a body corporate, and as such, and in the name, &c, it has powers, &c. It may be conceived that per- sons might associate, and for a long period defer the execution of an organization certificate. Some of the associates might not wish to carry out their agreement, and the matter might be brought to the courts for decision. Even after both papers are duly executed, there may be delay in filing, and after filing these papers, al- though the association thus becomes a body corporate, and can sue and be sued, &c, the same as a natural person, yet it can transact no business except such as is incidental and necessarily preliminary to its organization until it is authorized by the Comptroller to commence the business of banking. A bank may, therefore, be fully organized as far as subscriptions to its stock, election of directors, appoint- ment of officers, preparation and adoption of by-laws are concerned ; but, as will be seen from the requirements of succeeding sections, if its capital stock be not paid in or United States bonds deposited, it cannot receive deposits, or make loans, or in any way deal with the public. A bank may remain in this inchoate condition for mouths, or possibly years. When it does further comply with the law, so as to se- cure the Comptroller's authority, its period of succession is shortened by just so much, since such period dates from the execution of its organization certificate. The period of succession cannot be for a period longer than twenty years, hut as sociates may limit it to a shorter period, if they so prefer, by so stating in their ar- ticles of association. The first clause of enumerated powers gives the privilege of adopting and using a corporate seal. The Comptroller has required that this power be exercised, in order that important papers sent to his office may be authenticated by such seal. The second clause relates to the period of succession, and has already been com- mented on. Third. To make contracts. This has been held to mean not all contracts, but such contracts only as are natural and germane to the exercise of the other powers granted in the section. Thus, a bank could not legally contract to build a railroad, but it might contract to make a loan at a future date. Fourth clause. The jurisdiction of the courts — Federal, State, and Municipal — over suits brought by and against National banks, is regulated by Sections 5G3, 029, 711, 5198, 5242, 151, 152, and the proviso to Section 4 of the Act of July 12th, 1882. ' (which see.) Fifth clause. Directors may be elected or appointed. They must first be elected, and this in accordance with the requirements of Section 5145, (which see.) The appointment refers to the filling of vacancies, (see Section 5148.) The officers proper are appointed by the directors, who also define their duties, &c. Sixth clause gives power to the board of directors to make provision for the gov- ernment of the internal affairs of the bank within the general provisions of the law. They may, for instance, provide in a by-law that in case of a vacancy in the board of directors the president should exercise the power of appointment in behalf of the board ; but they could not by a by law require a delay of six months before vacan- cies were filled, inasmuch as Section 5148 requires the immediate filling of such vacancies. They might determine that the vice-president and cashier should sign the notes of the bank, and not the president and cashier; but they could not devolve both offices of vice-president and cashier on same person, inasmuch as the law requires each note to be signed by two different persons. Seventh clause. There are two constructions of this section — one that the words " all such incidental powers as may be necessary to carry on the business of bank- ing " are to be taken by themselves, and that they grant the exercise of any power whatever which, by any ingenuity, could be made to appear consistent with a banking business. The other construction, and the one which is sustained by the greatest weight of authority, is that the words quoted are limited by what follows ; in other words, the banking, in which National banks are authorized to exercise incidental powers, is defined as discounting and negotiating promissory notes, drafts. &c. : re- ceiving deposits ; buying and selling exchange, coin, and bullion; loaning money on personal security, and issuing notes; and nothing else It has been held that tin- legal maxim " expressio unius est exclusio alterius" holds; that what is not expressly granted is withheld. Thus there has been grave doubt as to whether it was legal IO for a bank to purchase a note, or rather whether the negotiation of a note includes the purchase. It is doubtful -whether National banks have a right to deal in stocks and bonds, or to act as an agent for the negotiation of stocks and bonds. It is prob- able that the courts in deciding any point as to the powers of National banks, where the exercise of a power is not clearly forbidden by the Banking laws, would, in case the exercise of such power was not clearly granted, be guided very much by the custom of banks. Every oue is aware that business methods change from time to time, and that new methods for accomplishing similar ends are constantly being devised. Banks are intended to meet the wants of the business communities, aud to do so must be swayed by business customs. The courts in banking matters have made custom a very important element in reaching their decisions, and they will doubtless continue to do so. The committal of an act ultra vires by a National bank does not necessarily vitiate that act. The U. S. Supreme Court has held that acts ultra vires can only be taken cognizance of by the Government, whose creature the bank is. Thus, while it is undeniably ultra vires for a National bank to loan money direct on real estate, yet the money can be collected of the borrower, a mortgage taken can be foreclosed, &c. The Government can, however, if it deems best, bring suit as prescribed by law to forfeit the franchises of banks so offending. The most important cases bearing on these points may be found in Thompson's National Bank Cases, 124, 128, 169, 2G4, 314, 317, 333, 379, 466, 486, 533, 724, 854, 637, 590, 715, 728, 794, 824, 836, 864, 875, 882, 905 ; Brown's National Bank Cases, (a continuation of Thompson,) pages 13, 99, 238, 264, 296, 319, 337, 373, 375, 462. 16. Limitation as to Real Estate and Mortgages. Section 5137. — A National banking association may pur- chase, hold, and convey real estate for the following purposes, and for no others : First. Such as shall be necessary for its immediate accom- modation in the transaction of its business. Second. Such as shall be mortgaged to it in good faith by way of security for debts previously contracted. Third. Such as shall be conveyed to it in satisfaction of debts previously contracted in the course of its dealings. Fourth. Such as it shall purchase at sales under judgments, decrees, or mortgages held by the association, or shall pur- chase to secure debts due to it. But no such association shall hold the possession of any real estate under mortgage, or the title and possession of any real estate purchased to secure any debts due to it, for a longer period than five years. In purchasing or conveying real estate, a National bank will, of course, act through its president or cashier, duly authorized by regular action of its board of directors. II Banking house may. perhaps, include portions of building built chiefly for its own use, which the bank rents to others; but it is a question how far a National bank can purchase or improve real estate under color of erecting a banking house. The additions to a building must in some way be necessary to its appearance, safety, or compatibility with its surroundings. The second, third, and fourth clauses make it plain that real estate other than banking house is to be taken, held, &c, only when the personal security which the bank originally held has in some way become inadequate, either before or after the maturity of the debt. The United States Supreme Court has, however, held that real estate security di- rectly taken as the primitive security for a loan can be disposed of or transferred by a National bank, the fact of taking such security being ultra vires not vitiating the transaction in any way, or giving any defense to the borrower, seller, or mort- gagor. The act on the part of the bank may be in violation of its corporate rights, but this violation of law can only be punished by suit for forfeiture of charter, brought in accordance with law by the Comptroller of the Currency. (See Section 5239, par. 118.) It has been a criticism upon the National system that the banks could not loan on real estate security. When it is remembered that loans on good real estate security can be readily obtained for longer time and at less rates of interest than is the case in regard to loans on personal security, the hollowness of this criticism at once ap- pears. Any one can obtain a loan of a National bank under ordinary circumstances by presenting a good endorsement, and a good endorser is readily obtained by giving such endorser the real estate security. The bank, in accordance with law, looks to- the maker and endorser. The limitation as to length of time during which mortgages and real estate can be held is a wise one, as it prevents too great a locking-up of the bauk's resources. Five years is generally a long enough period during which to dispose of real estate of any description to the best advantage. In case, however, a bank may find it difficult to do so, the Comptroller's office has permitted the placing of property in the hands of trustees for the benefit of the bank, thus removing the items from the balance-sheet, and leaving them in the same condition as bad debts charged off". Real estate is the ultimate security in the case of most loans, but good bankers find no difficulty in complying with the law, by treating it as such;only to be taken when all other means of securing a debt fail. (See Thompson's National Bank Cases, pages 2G4, 353, 480, 486, 488, 490, 516, 647, 854, 888, 618, 652, 745, 828, 888; Brown's Cases, pages 13, 222. 224, 227, 228, 237, 278, 280, 293, 300, 311, 424, 426.) 17. Minimum Capital Required. Section 5138. — No association shall be organized under this Title with a less capital than one hundred thousand dollars ; except that banks with a capital of not less than fifty thousand dollars may, with the approval of the Secretary of the Treasury, be organized in any place the population of which does not exceed six thousand inhabitants. Xo association shall be organized in a city the population of which exceeds fifty thou- 12 sand persons with a less capital than two hundred thousand dollars. The population of a place in the United States is legally determined by the last previous census. Thus a bank organized at any time between 1880 and 1890 would generally be bound by the census of 1880. Exceptions might of course arise, as, for instance, where new towns are started in the interval, and other proof of population might then be accepted by the Comptroller. Small variations in population be- tween censuses, the only proof of which is found to consist of estimates or partial counts, would not be regarded. A bank organized with $50,000 capital in a small place might continue with that capital if the population should increase to any number. It thus sometimes happens that we find banks in some towns and cities that appear to have less than the minimum capital required by law. They were either organized when the places were smaller, or were organized in villages after- wards absorbed by cities lying near. When application is made to the Comptroller for a bank with $50,000 capital, he certifies the application, with statement as to population, &c, to the Secretary of the Treasury, who thereupon takes action and approves or not as he deems best. Gen- erally there is no objection, but the Secretary might not give his approval if he thought a bank unnecessary, or if there was a bank already in the place giviug sufficient banking facilities. 18. Stockholders' Rights and Liabilities. Section 5139. — The capital stock of each association shall he divided into shares of one hundred dollars each, and be deemed personal property, and transferable on the books of the association in such manner as may be prescribed in the by-laws or articles of association. Every person becoming a shareholder * by such transfer shall, in proportion to his shares, succeed to all the rights and liabilities of the prior holder of such shares ; and no change shall be made in the articles of association by which the rights, remedies, or security of the existing creditors of the association shall be impaired. The exception to division into shares of $100 each is in case of State banks con- verted. (See Section 5154. par. 36.) If a converted bank desires to change the de- nomination of its shares, the new denomination must be $100. The shares are personal property, transferable on the books of the association in such manner as may be prescribed in the by-laws or articles of association. A bank cannot, how- ever, by a provision in its by-laws prevent the transfer of shares of a stockholder who may be indebted to it. It has no prior lien on the shares of any stockholder, but must proceed by such judgment and execution the same as any other creditor. Shares are property entirely distinct from the capital stock. (See remarks under Section 5219, par. 95.) Shares of National bank stock, it must be remembered, not only initiate a right to a certain proportion of the net property and profits of the *Van Allen v. The Assessors, 3 Wall., 573. i3 bank, and certain rights in controlling its management, but they also imply liabil- ities. A transferrer of shares must see that he transfers not only his rights and privileges, but his liabilities. (See remarks under Section 5151, par. 33.) "What changes may or may not be made in the articles of association of a National bank depends. 1st. as has already been seen, (Section 5133, par. 12,) upon their being in accordance with law ; and, 2d, they must not interfere with the rights of existing creditors — that is, those other than stockholders to whom the bank is indebted. 19. "When Capital Stock must be Paid in. Section 5140. — At least fifty per centum of the capital stock of every association shall be paid in before it shall be author- ized to commence business ; and the remainder of the capital stock of such association shall be paid in installments of at least ten per centum each, on the whole amount of the capital, as frequently as one installment at the end of each succeeding month from the time it shall be authorized by the Comptroller of the Currency to commence business ; and the payment of each installment shall be certified to the Comptroller, under oath, by the president or cashier of the association. The Comptroller's office furnishes blanks upon which to certify payment of capital. Probably the theory of the law is, that each subscriber shall pay half of his sub- scription down, and the remainder in five equal monthly installments. This is- really what a subscriber to National bank stock, who is expected to know the law, agrees to do. and it is only by following this course that the organizers of a National bank can securely hold each subscriber, as will be seen from remarks on next sec- tion. But the Comptroller does not usually require a certificate in detail, but only that capital amounting to fifty per cent., or ten per cent., as the case may be, has in the aggregate been paid in. It is sometimes convenient for some subscribers to pay more at once, and this enables the officers to certify the payments necessary to com- ply with the letter of the law. without waiting for the slower subscribers. The offi- cers certify fifty per cent. paid. This is the certificate of officers required by Section 5168, paragraph 21, post, and is called the first installment. Upon the receipt of this the Comptroller may, if bonds have been deposited, authorize the bank to com- mence business. The date of the Comptroller's certificate of authority to commence business fixes the date of the payment of the succeeding installments. Thus, if in any case this certificate be dated January 1st, the second, third, fourth, fifth, and sixth installments should be paid by the subscribers on or before the first days of February, March, April. May, and June, respectively. The certificate to the Comp- troller of such succeeding payments should be made as soon as practicable in each case; but in this connection bank officers should study Section 5141, paragraph 20, post, and remarks thereon. v 20. Failure to Pay Installments on Stock, &c. Section 5141. — Whenever any shareholder, or his assignee, fails to pay any installment on the stock when the same is re- 14 quired by the preceding section to be paid, the directors of such association may sell the stock of such delinquent shareholder at public auction, having given three weeks' previous notice thereof in a newspaper published and of general circulation in the city or county where the association is located, or if no newspaper is published in said city or county, then in a news- paper published nearest thereto, to any person who will pay the highest price therefor, to be not less than the amount then due thereon, with the expenses of advertisement and sale ; and the excess, if any, shall be paid to the delinquent shareholder. If no bidder can be found who will pay for such stock the amount due thereon to the association, and the cost of adver- tisement and sale, the amount previously paid shall be for- feited to the association, and such stock shall be sold as the directors may order, within six months from the time of such forfeiture, and if not sold it shall be canceled and deducted from the capital stock of the association. If any such can- cellation and reduction shall reduce the capital of the associ- ation below the minimum of capital required by law, the cap- ital stock shall, within thirty days from the date of such can- cellation, be increased to the required amount; in default of which a receiver may be appointed, according to the provis- ions of section fifty-two hundred and thirty-four, to close up the business of the association. * This section is entirely for the direction of bank managers, and points out the proper course to be taken in bringing in the capital of the bank. It must be re- membered that from the time of his subscription a person becomes a shareholder, and that all the shareholders have entered into a contract among themselves, and are mutually responsible to each other. If only five persons start the bank, and subscribe for all the stock, with the purpose of afterwards distributing the same among a number of parties, it is well for each of the five associates to have his dis- tributees selected and to bind them by a form contract with himself to each take the stock he destines for them. The stock doubtless has a legal standing before a single payment is made, and the association may be legally organized and become a body corporate before a single dollar of the capital is paid hi by any one. Thus sales or transfers of stock may take place before any capital is paid in. This is in line with the decision of the United Mates Supreme Court in Van Allen v. Assessors, 3 Wall., 573, which holds a share of stock to be an entity distinct from capital. The actual holder or subscriber, in whose name the stock stands on the books of the bank at the time the directors call for the payment of the first installment of fifty *Section 5142, pagel6. 1 5 per cent., must pay it, and payment can doubtless be compelled by legal proceedings. The section under consideration does not refer to this first installment, but to the subsequent installments, the dates of payment of which were fixed by the preceding section. The whole tenor of Section 5141 implies a previous payment of fifty per cent., which is in the nature of a forfeit, if the stock has to be sold on account of failure to meet the subsequent installments. A new association would, strictly, under this section have the following time to make good its capital before a receiver could be appointed : First, the time until the installment became due ; then three weeks for notice by publication ; then six months from forfeiture to cancellation ; and, finally, thirty days longer in which to bring up capital to required amount. How capital is to be made good in such case is not distinctly stated, but probably by assessment on remaining stockholders. (See Section 5205, par. 83, post.) 21. Comptroller to Determine if Association is entitled to Commence Business. Section 5168. — Whenever a certificate is transmitted to the Comptroller of the Currency, as provided in this Title, and the association transmitting the same notifies the Comptroller that at least fifty per centum of its capital stock has been duly paid in, and that such association has complied with all the provis- ions of this Title required to be complied with before an asso- ciation shall be authorized to commence the business of bank- ing, the Comptroller shall examine into the condition of such association, ascertain especially the amount of money paid in on account of its capital, the name and place of residence of each of its directors, and the amount of the capital stock of which each is the owner in good faith, and generally whether such association has complied with all the provisions of this Title required to entitle it to engage in the business of bank- ing; and shall cause to be made and attested by the oaths of a majority of the directors, and by the president or cashier of the association, a statement of all the facts necessary to enable the Comptroller to determine whether the association is lawfully entitled to commence the business of banking. The certificate described in this section is that known in the Comptroller's office as "Certificate of Officers and Directors." The certificate contains the notification and statements mentioned in the section. The Comptroller has under this and the subsequent section the right to send an examiner before granting certificate of authority to commence business, but usually the deposit of bonds and the certifi- cate of officers and directors, in proper form, are deemed sufficient proof by him. 22. Certificates of Authority to Commence Business. Section 5169. — If, upon a careful examination of the facts so reported, and of any other facts which may come to the i6 knowledge of the Comptroller, whether by means of a special commission appointed by him for the purpose of inquiring into the condition of such association, or otherwise, it appears that such association is lawfully entitled to commence the business of banking, the Comptroller shall give to such association a certificate, under his hand and official seal, that such associa- tion has complied with all the provisions required to be com- plied with before commencing the business of banking, and that such association is authorized to commence such business. But the Comptroller may withhold from an association his cer- tificate authorizing the commencement of business, whenever he has reason to suppose that the shareholders have formed the same for any other than the legitimate objects contemplated by this Title. See remarks on preceding section. 23. Publication of Certificate. Section 5170. — The association shall cause the certificate issued under the preceding section to be published in some newspaper printed in the city or county where the association is located, for at least sixty days next after the issuing thereof ;. or if no newspaper is published in such city or county, then in the newspaper published nearest thereto. This refers to the publication of the Comptroller's certificate of authority to com- mence business. The Comptroller's office requires that a copy of the paper con- taining this notice be sent to that office for filling. 24. Increase of Capital Stock. * Section 5142. — Any association formed under this Title may, by its articles of association, provide for an increase of its capital from time to time, as may be deemed expedient, subject to the limitations of this Title. But the maximum of such increase to be provided in the articles of association shall be determined by the Comptroller of the Currency ; and no in- crease of capital shall be valid until the whole amount of such increase is paid in, and notice thereof has been transmitted to the Comptroller of the Currency, and his certificate obtained specifying the amount of such increase of capital stock, with his approval thereof, and that it has been duly paid in as part of the capital of such association. It is usual for the associates to state in the articles of association that the paid- in capital shall be a specified sum, with the power of increasing to a specified max- *See Act May 1. 1886, page 115B. i7 imum sum. This maximum is agreed to and determined by the Comptroller when lie accepts the articles as sent to him. This maximum, once so fixed, cannot afterwards be changed, as has been decided by the Attorney-General, except by Act of Congress.* It is therefore important that in preparing the articles of association the maximum of increase should be fixed at a sum sufficiently large to meet the future needs of the business of the bank. In the articles of association it is customary to grant to the directors full power to decide when an increase of capital is to be made, and how much it shall be; but they must offer this increased stock pro rata to the existing stock- holders, and not until it has been declined by them can the new stock be offered to outsiders. The proper course for an increase of stock is for the directors to pass a resolution at a regular meeting, and then notify each shareholder that he has the option to subscribe for a certain portion. As subscriptions are paid they are placed to the credit of the subscriber on account of new stock. When a sufficient sum has been paid in, the directors should cause notice of such payment to be sent to the Comptroller, who will then issue his certificate of approval, if the amount is within the limit prescribed by the articles of association. Some have attempted to hold that the directors must specify the amount of the increase, and that the whole amount so specified must be paid in before the Comptroller's approval can be given ; but the better view is, and it has been sustained in the courts, that although the directors may specify a definite sum, yet if, for any reason, they may fail to secure subscriptions for and payment of the whole, they may certify to the Comptroller such portion as is actually paid, and the Comptroller may legally give his approval of such increase. In other words, the law simply means that the increase notified to the Comptroller must have been paid in. This view of the case enables directors and stockholders of National banks to receive subscriptions from time to time on stock in small amounts, which can be kept in a new stock account until a sufficient aggregate has accumulated, when the whole can be notified to the Comptroller, and on his approval it becomes valid stock. Scrip may be issued to such subscribers, but until the Comptroller's certificate of approval is received no certificates of stock should be given to the subscribers; nor should it be carried on the balance-sheet of the bank as capital stock paid in, but simply as subscriptions to new stock. Until the Comptroller's approval is obtained the legal status of such a subscriber is that of a depositor for a special purpose. Proper forms of blanks for notifying the Comp- troller can be obtained at his office. Stockholders need not delegate the power of increase to directors in their articles of association, but can provide therein that the question of increase be referred to the stockholders. 25. Reduction of Capital Stock. Section 5143. — Any association formed under this Title may, by the vote of shareholders owning two-thirds of its capi- tal stock, reduce its capital to any sum not below the amount required by this Title to authorize the formation of associa- tions ; but no such reduction shall be allowable which will re- duce the capital of the association below the amount required for its outstanding circulation, nor shall any such reduction ♦See Act May 1, 188G, page 115B. i8 be made until the amount of the proposed reduction has been reported to the Comptroller of the Currency and his approval thereof obtained. A reduction of stock can only be effected bj r the consenting vote of two-thirds of such stock. A bank in a place where a minimum of $50,000 capital is required cannot reduce below that sum. Nor could a bank which might otherwise legally reduce to $50,000, reduce to that sum until it had reduced its circulation to $45,000, or 90 per cent, of the proposed reduction. The method of retiring circulation will be found elsewhere, in remarks on Section 5167, par. 49; Section 5184, par. 63 ; Section 5222, par. 101 ; Section 5224, par. 103; Section 5232, par. Ill ; Sections 3 and 4, Act of June 20th, 1874, under which this subject is exhaustively treated. The proper course, after a reduction has been determined on as necessary by the managers of the bank, is to call a meeting of the shareholders. This meeting may be called by publication, or by due notification of each stockholder by mail ; registered mail is perhaps best. If by publication, the publication should doubtless be for such time previous to the date of the meeting as constitutes legal notice of publi- cation by the laws of the State where the bank is located. Legally, a stockholder who has been duly notified of a meeting, and who does not attend, gives his assent by implication ; but, as the law requires a vote, the reduction should be agreed to by the votes cast, either by proxy or in person, of two-thirds of the stock. The Comptroller's office furnishes the proper blanks upon which to certify to that office the result of such vote. When the Comptroller's approval is obtained the reduc- tion can be completed by the return of money to stockholders and calling-in of cer- tificates. Each stockholder has a legal right to demand the payment to him of his pro rata share of such reduction. If, however, the capital of the bank is impaired, sufficient of the reduction must be applied to make good such impairment by charg- ing to it the bad assets which have caused the deficiency. The remainder must go pro rata to stockholders. Individual stockholders may agree to permit their portion of the reduction to remain in the bank to be placed to surplus or undivided profits, but a majority of stockholders cannot compel a minority to do this. In making a reduction the old certificates of shares should be called in and new ones issued. If the capital is reduced one-third, or any other proportion, there will necessarily be fractions of shares in some of the new certificates. Fractions of shares are not for- bidden by law ; they can be voted pro tanto the same as whole shares. 26. Rights of Shareholders at Elections. Sectiqn 5144. — In all elections of directors, and in deciding all questions at meetings of shareholders, each shareholder shall be entitled to one vote on each share of stock held by him. Shareholders may vote by proxies duly authorized in writing; but no officer, clerk, teller, or book-keeper of such association shall act as proxy ; and no shareholder whose lia- bility is past due and unpaid shall be allowed to vote. A form of proxy will be found on page 122, this work. A director is, perhaps, not an officer in the sense mentioned in this section, but, to be on the safe side, it will be better to select as proxies parties who are outside of the management of the 19 bank, either as directors, officers, &c. The provision as to shareholders whose lia- bilities are past due and unpaid, is perhaps too laxly observed at meetings for the election of directors. Its observance should be insisted upon, not only as to voters but as to candidates for the director}-. 27. Election of Directors. Section 5145. — The affairs of each association shall be managed by not less than five directors, who shall be elected by the shareholders at a meeting to be held at any time before the association is authorized by the Comptroller of the Cur- rency to commence the business of banking ; and afterward at meetings to be held on such day in January of each year as is specified therefor in the articles of association. The directors shall hold office for one year, and until their suc- cessors are elected and have qualified. The minimum number of directors agrees with the minimum number of natural persons required to start a bank. The first election of directors is to be held after the bank becomes a body corporate, (see Section 5136, par. 15,) but before it is au- thorized to commence business. The number must be fixed in the articles of asso- ciation, and can be changed only by amendment of such articles. The articles must also specify the day of annual election, which must be some day in January of each year. The directors hold office until their successors are elected and have qualified, and it is therefore better at elections always to specify to what retiring director each candidate is to be elected the successor, as in the event of failure to qualify on the part of a newly-elected director, the particular predecessor would hold over. 28. Qualifications of Directors. Section 5146. — Every director must, during his whole term of service, be a citizen of the United States, and at least three- fourths of the directors must have resided in the State, Terri- tory, or District in which the association is located, for at least one year immediately preceding their election, and must be residents therein during their continuance in office. Every director must own, in his own right, at least ten shares of the capital stock of the association of which he is a director. Any director who ceases to be the owner of ten shares of the stock, or who becomes in any other manner disqualified, shall thereby vacate his place. This section is very plain. No one unless he is a citizen of the United Stat be a director. It is therefore a question whether a woman can be a director, aa the term i itizen implies full power to partake in the Government by voting. Women however, acted as directors of National banks and the Comptroller's office has not objected. It is perhaps a matter that more properly belongs to the courts, and 20 when some question arises as to the validity of the acts of women who act as bank directors the question will doubtless be authoritatively settled. The section provides for non-resident directors. (See in this connection remarks under Section 5239, par. 118.) The words "in his own right" mean standing in his own name, and not in his name as executor or guardian, . State Bank. 10 Wall., 604. This section provides for the security of the destruction of notes of banks at a. distance from their principals. The checks provided appear to be adequate. The details of the process are given elsewhere in this work. (See page 172.') 64. National Gold Banks. Section 5185. — Associations may be organized in the man- ner prescribed by this Title for the purpose of issuing notes payable in gold ; and upon the deposit of any United States f bonds bearing interest payable in gold with the Treasurer of the United States, in the manner prescribed for other asso- ciations, it shall be lawful for the Comptroller of the Currency to issue to the association making the deposit circulating notes of different denominations, but none of them of less than five dollars, and not exceeding in amount eighty per centum of the par value of the bonds deposited, which shall express the promise of the association to pay them, upon presentation at the office at which they are issued, in gold coin of the United States, and shall be so redeemable. But no such association shall have a circulation of more than one million of dollars. X There are now no gold banks in existence, although it may again become profit- *Modified by Art of June 23d, 1st l . page 94. fSee Act of February 14th, 1880, page 10G. jSee Act of January 19th, 38 able to organize them. The resumption of specie payments placed all National banks on a gold basis and the special gold banks at a disadvantage in the issue of circulation. 65. Reserve Required of Gold Banks. Section 5186. — Every association organized under the pre- ceding section shall at all times keep on hand not less than twenty-five per centum of its outstanding circulation, in gold or silver coin of the United States ; and shall receive at par in the payment of debts the gold notes of every other such asso- ciation which at the time of such payment is redeeming its circulating notes in gold coin of the United States, and shall be subject to all the provisions of this Title : Provided, That, in applying the same to associations organized for issuing gold notes, the terms ' ' lawful money ' ' and ' ' lawful money of the United States " shall be construed to mean gold or silver coin of the United States ; and the circulation of such association shall not be within the limitation of circulation mentioned in this Title.* See previous section and remarks. 66. Penalty for Imitating National Bank Notes, &c. Section 5188. — It shall not be lawful to design, engrave, print, or in any manner make or execute, or to utter, issue, distribute, circulate, or use, any business or professional card, notice, placard, circular, hand-bill, or advertisement, in the likeness or similitude of any circulating note or other obliga- tion or security of any banking association organized or acting under the laws of the United States which has been or may be issued under this Title, or any Act of Congress, or to write, print, or otherwise impress upon any such note, obligation, or security any business or professional card, notice or advertise- ment, or any notice or advertisement of any matter or thing whatever. Every person who violates this section shall be liable to a penalty of one hundred dollars, recoverable one- half to the use of the informer. This section is to prevent the deluding of igmorant and unwary people, and to avoid bringing the National system into discredit even collaterally. 67. Penalty for Mutilating Notes. &c. Section 5189. — Every person who mutilates, cuts, defaces, *Section 5187, page 76. 39 disfigures, or perforates with holes, or unites or cements to- gether, or does any other thing to any bank-bill, draft, note, or other evidence of debt, issued by any National banking as- sociation, or who causes or procures the same to be done, with intent to render such bank-bill, draft, note, or other evidence of debt unfit to be reissued by said association, shall be liable to a penalty of fifty dollars, recoverable by the association. This is to prevent malicious mischief. REGULATION OP THE BANKING BUSINESS. 68. Place of Business. Section 5190. — The usual business of each National bank- ing association shall be transacted at an office or banking-house located in the place specified in its organization certificate. Merchants' Bank v. State Bank, 10 Wall., G04. The usual business is the business which is usually done in the bank office itself. Some Xational banks have opened offices at places other than those named in their organization certificates for receiving deposits. It is understood that no checks are paid or loans made ; and it is doubtful whether under this section a Xational bank has a right to receive deposits even at any place other than its banking-house in the place named in its organization certificate. 69. Requirements as to Lawful Money Reserve. Section 5191. — Ever}- National banking association in either of the following cities : Albany, Baltimore, Boston, Cincinnati, Chicago, Cleveland, Detroit, Louisville, Milwau- kee, New Orleans, New York, Philadelphia, Pittsburg, Saint Louis, San Francisco, and Washington, shall at all times have on hand, in lawful money of the United States, an amount equal to at least twenty-five per centum of the aggregate amount of its notes in circulation and its deposits ; and even* other asso- ciation shall at all times have on hand, in lawful money of the United States, an amount equal to at least fifteen per centum of the aggregate amount of its notes in circulation, and of its deposits. Whenever the lawful money of any association in any of the cities named shall be below the amount of twenty- five per centum of its circulation and deposits, and whenever the lawful money of any other association shall be below fifteen per centum of its circulation and deposits, such association shall not increase its liabilities by making any new loans or discounts otherwise than by discounting or purchasing bills of ♦See Act March 3, 1887. page 1150. 40 exchange payable at sight, nor make any dividend of its profits until the required proportion, between the aggregate amount of its outstanding notes of circulation and deposits and its law- ful money of the United States, has been restored. And the Comptroller of the Currency may notify any association, whose lawful-money reserve shall be below the amount above required to be kept on hand, to make good such reserve ; and if such association shall fail- for thirty days thereafter so to make good its reserve of lawful money, the Comptroller may, with the concurrence of the Secretary of the Treasury, appoint a receiver to wind up the business of the association, as provided in sec- tion fifty-two hundred and thirty-four. See Act of July 12th, 1882, Section 12, page 76. Section 2 of the Act of June 20th. 1874, page 87, relieves National banks of the necessity of keeping reserve upon circulation. The method of calculating reserve, and the funds available therefor, are fully treated of elsewhere in this work, (see page 137.) 70. Redemption Cities and Reserve Required. * Section 5192. — Three-fifths of the reserve of fifteen per centum required by the preceding section to be kept, may con- sist of balances due to an association, available for the re- demption of its circulating notes, from associations approved by the Comptroller of the Currency, organized under the Act of June three, eighteen hundred and sixty-four, or under this Title, and doing business in the cities of Albany, Baltimore, Boston, Charleston, Chicago, Cincinnati, Cleveland, Detroit, Louisville, Milwaukee, New Orleans, New York, Philadelphia, Pittsburg, Richmond, Saint Louis, San Francisco, and Wash- ington. Clearing-house certificates, representing specie or law- ful money specially deposited for the purpose, of any clearing- house association, shall also be deemed to be lawful money in the possession of any association belonging to such clearing- house, holding and owning such certificate, within the pre- ceding section. See Act of June 20th, 1874, Section 3, page 87. For explanation of lawful-money reserve, see page 137. 71. United States Certificates of Deposit as Reserve. Section 5193. — The Secretary of the Treasury may receive United States notes on deposit, without interest, from any ♦See Act March 3, 1887, page 115 C. 4i National banking associations, in sums of not less than ten thousand dollars, and issue certificates therefor in such form as he may prescribe, in denominations of not less than five thousand dollars, and payable on demand in United States notes at the place where the deposits were made. The notes so deposited shall not be counted as part of the lawful-money reserve of the association ; but the certificates issued therefor may be counted as part of its lawful-money reserve, and may be accepted in the settlement of clearing-house balances at the places where the deposits therefor were made. 72. Issue of Certificates of Deposit. Section 5194. — The power conferred on the Secretary of the Treasury, by the preceding section, shall not be exercised so as to create any expansion or contraction of the currencv. And United States notes for which certificates are issued under that section, or other United States notes of like amount, shall be held as special deposits in the Treasury, and used only for redemption of such certificates. 73. Redemption of Circulating Notes. Section 5195. — Each association organized in any of the cities named in section fifty-one hundred and ninety-one shall select, subject to the approval of the Comptroller of the Cur- rency, an association in the city of New York, at which it will redeem its circulating notes at par; and may keep one-half of its lawful-money reserve in cash deposits in the city of New York. But the foregoing provision shall not apply to asso- ciations organized and located in the city of San Francisco for the purpose of issuing notes payable in gold. Each association not organized within the cities named shall select, subject to the approval of the Comptroller, an association in either of the cities named, at which it will redeem its circulating notes at par. The Comptroller shall give public notice of the names of the associations selected, at which redemptions are to be made by the respective associations, and of any change that may be made of the association at which the notes of any asso- ciation are redeemed. Whenever any association fails either to make the selection or to redeem its notes as aforesaid, the Comptroller of the Currency may, upon receiving satisfactory 42 evidence thereof, appoint a receiver in the manner provided for in section fifty-two hundred and thirty-four, to wind up its affairs. But this section shall not relieve any association from its liability to redeem its circulating notes at its own counter, at par, in lawful money on demand. The provisions of this section having reference to the redemption of circulating notes and the selection of an association at which it will redeem its circulating notes at par, have been superseded by the provisions of Section 3 of the Act of June 20th, 1874. As the provisions for the redemption of notes in New York or other cities did not relieve a National bank from the necessity of redeeming its circulating notes in lawful money at its own counter, so it is held that the present system of redeem- ing circulating notes at the United States Treasury does not relieve National banks of the necessity of redeeming their notes at their own counter. This section gives banks in certain cities permission to keep one-half of their lawful money reserve in cash deposits in New York. It was the custom under this section to select certain associations in New York or other cities as redemption agencies, and obtain the ap- proval of the Comptroller ; and it seems to have been generally acceded to that these approved redemption agencies were the only banks in New York or other re- serve cities where the reserves of National banks could be kept. When the law requiring these redemption agencies was repealed, the Comptroller's office still con- tinued to require banks in the cities named to select particular banks in New York city at which it was the intention to keep their reserves. This action is, as far as banks outside the reserve cities are concerned, sustained by the language of Section 5192; but perhaps the portion of Section 5195, now in force, referring to banks in other reserve cities keeping their reserves in New York, may be construed to allow any cash deposits held in New York city to be counted as lawful reserve. 74. National Bank Notes a Legal Tender. Section 5196. — Every National banking association formed or existing under this Title shall take and receive at par, for any debt or liability to it, any and all notes or bills issued by any lawfully organized National banking association. But this provision shall not apply to any association organized for the purpose of issuing notes payable in gold. This section makes National bank notes legal tender to any National bank. Na- tional bank notes are redeemable in lawful money, that is, in gold, silver dollars or legal-tender notes ; and it will readily be seen that any depreciation of the character of lawful money — as, for instance, the substitution of an inferior dollar for our present standard — is of the utmost importance to National banks, as there are no gold banks now in existence. The last clause of this section has, at present, no importance. 75. Rate of Interest Limited. Section 5197. — Any association may take, receive, reserve, and charge on any loan or discount made, or upon any note, bill of exchange, or other evidences of debt, interest at the 43 rate allowed by the laws of the State, Territory, or district where the bank is located, and no more, except that where by the laws of any State a different rate is limited for banks of issue organized under State laws, the rate so limited shall be allowed for associations organized or existing in any such State under this Title. When no rate is fixed by the laws of the State, or Territory, or district, the bank may take, receive, reserve, or charge a rate not exceeding seven per centum, and such interest may be taken in advance, reckoning the days from which the note, bill, or other evidence of debt has to run. And the purchase, discount, or sale of a bona fide bill of ex- change, payable at another place than the place of such pur- chase, discount, or sale, at not more than the current rate of exchange for sight-drafts in addition to the interest, shall not be considered as taking or receiving a greater rate of interest. In Tiffany r. National Bank of the State of Missouri, 18 Wall., p. 409, it was held that where the rate allowed by State law to be taken by State banks was less than that allowed to be taken by natural persons, National banks were not by this sec- tion restricted to the less rate. This decision was on the ground that the intention of Congress was to place National banks on an equality with State institutions of the same kind, but not to restrict National banks if a State may choose to discriminate in favor of its own institutions. In other words, if State banks are permitted by State law to take more than the common rate of interest, National banks could do the same ; but if State banks are restricted to less than the common rate, this section does not imply that National banks must be restricted to less than the common rate. See remarks on next section. 76. Penalty for Taking Usurious Interest. Section 5198. — The taking, receiving, reserving, or charg- ing a rate of interest greater than is allowed by the preceding section, when knowingly done, shall be deemed a forfeiture of the entire interest which the note, bill, or other evidence of debt carries with it, or which has been agreed to be paid there- on. In case the greater rate of interest has been paid, the person by whom it has been paid, or his legal representatives, may recover back, in an action in the nature of an action of debt, twice the amount of the interest thus paid from the asso- ciation taking or receiving the same; provided such action is commenced within two years from the time the usurious trans- action occurred. Many persons write to the Department at Washington complaining that National banks have charged more than lawful rates of interest, in contravention of this and 44 the preceding section. Section 5198 contains the only penalty, and this penalty can only be enforced by the aggrieved party or his representatives. The following are the results of the most important decisions of the courts : State laws relative to usury do not apply to National banks. No part of the principal is forfeited by charging usurious interest. The entire interest agreed upon is, however, forfeited, and cannot be recovered by the bank. If, however, the usurious interest has been actually paid, twice the sum may be recovered by the borrower, in a suit brought especially for the purpose within two years from the date of the usurious transaction. (Burnett v. National Bank, 98 U. S., p. 555 ; Mechanics' National Bank v. Dearing, 1 Otto, p. 29.) There can be no forfeiture of charter for an act the penalty for which and the method of enforcing such penalty are so clearly set forth. 77. Dividends and Surplus Fund. Section 5199. — The directors of any association may, semi- annually, declare a dividend of so much of the net profits of the association as they shall judge expedient; but each asso- ciation shall, before the declaration of a dividend, carry one- tenth part of its net profits of the preceding half year to its surplus fund until the same shall amount to twenty per centum of its capital stock. This section is permissive, and it is doubtful if under it any other than semi- annual dividends are strictly legal. Some National banks do, however, declare quar- terly dividends, and a few declare dividends monthly. The section also provides for the accumulation of a surplus fund, up to a certain limit. For net profits, see Section 5204, par. 82. The sections intervening between Sections 5199 and 5204 contain provisions which, if strictly observed, insure the sound condition of the bank and prevent the payment of unearned dividends, or the payment of dividends when the bank's business is too extended and the value of its assets in doubt. 78. Liabilities of any Person, &c., to Bank. Section 5200. — The total liabilities to any association of any person, or of any company, corporation, or firm, for money borrowed, including in the liabilities of a company or firm the liabilities of the several members thereof, shall at no time ex- ceed one-tenth part of the amount of the capital stock of such association actually paid in. But the discount of bills of ex- change drawn in good faith against actually existing values, and the discount of commercial or business paper actually owned by the person negotiating the same, shall not be con- sidered as money borrowed. The evident intention of this section is to insure a proper distribution of loans. In practice it is found extremely difficult to avoid infringing its letter, as there are doubtless many loans perfectly safe which banks are by it prevented from taking. It covers all collateral loans as well as others. The only exceptions are those named in the last sentence of the section. A loan on collateral of Government bonds in 45 excess of the limit would be in violation of the letter of the law. There is no spe- cific penalty for violation prescribed in the section itself. The only penalty is the form of proceeding prescribed in Section 5239 for forfeiture of charter. The Comp- troller lias heretofore hesitated to enforce this extreme measure against banks guilty, perhaps, of a violation of the letter more than the spirit. Thus the main reason tor a distribution of loans is safety, and as safety is not jeopardized by a loan on se- cure collateral, such a loan even in excess of the limit does not, perhaps, violate the spirit of the section. Deposits with correspondents other than National banks cannot, under a ruling of the Comptroller's office sustained by an opinion of the Solicitor of the Treasury, exceed this limit. There are some nice questions which arise from the cumulation of liability under the provision that the liabilities of the several members of firms, &c, shall form a part of the total liabilities of the firm. Thus a man may be a. member of more than one firm, all being customers of the bank. The details of these ramifications cannot be gone into here. Each case would call for a specific inquiry. 79. Associations not to Loan upon their own Stock.- Section 5201. — No association shall make any loan or dis- count on the security of the shares of its own capital stock, nor be the purchaser or holder of any such shares, unless such security or purchase shall be necessary to prevent loss upon a debt previously contracted in good faith; and stock so pur- chased or acquired shall, within six months from the time of its purchase, be sold or disposed of at public or private sale, or, in default thereof, a receiver may be appointed to close up the business of the association, according to section fifty-two hun- dred and thirty-four. Bank v. Lanier, 11 Wall.. 369; Ballard v. Bank, 18 Wall., 589. The reasons for the provisions of this section lie at the very root of joint-stock banking. If associations had full power to deal in their own stock, their immedi- ate managers would often be under great temptation to manipulate the affairs of the bank for their own aggrandizement. As against the main body of stockholders, the directors and officers have the advantage of being a small, compact, well-disciplined body within the fortress, against what, to carry out the figure, may be termed a mob without leaders and often divided among themselves. The directors might de- preciate the stock by passing dividends, &c, and then, bidding it in, cancel it, thus in time absorbing the whole bank. The provision that a bank must not take its own stock, except under certain circumstances, and when it so takes it must sell, not cancel, prevents this abuse, although thert; are doubtless other ways in which the same object is reached by unscrupulous managers. 80. Limit of Indebtedness of Association. Section 5202. — No association shall at any time be indebted, or in any way liable, to an amount exceeding the amount of its capital stock at such time actually paid in and remaining 4 6 undiminished by losses or otherwise, except on account of de- mands of the nature following: First. Notes of circulation. Second. Moneys deposited with or collected by the associa- tion. Third. Bills of exchange or drafts drawn against money act- ually on deposit to the credit of the association or due thereto. Fourth. Liabilities to the stockholders of the association for dividends and reserve profits. The exceptions in this section are wide, and allow ample room for all legitimate business. It virtually says to a National bank that if it wishes to take liabilities other than those named in the section, it must meet them from its own capital and not from money intrusted to it either by its own stockholders (surplus and undi- vided profits and unpaid dividends) or the outside public. A lender to a National bank would apparently, under this section, have no redress or power of recovery except against its unimpaired capital. It is doubtful whether the liability of stock- holders could be enforced to pay such a debt. 81. Circulating Notes not to be Hypothecated. Section 5203. — No association shall, either directly or in- directly, pledge or hypothecate any of its notes of circulation for the purpose of procuring money to be paid in on its capital stock, or to be used in its banking operations or otherwise; nor shall any association use its circulating notes, or any part there- of, in any manner or form to create or increase its capital stock. Notes of circulation are to be issued by the bank in ordinary course of business. This section is intended to prevent the organization of more than one National bank with the same capital. Thus it was feared that unscrupulous persons with a small capital, say sufficient to purchase the minimum of bonds required by law, might start an alleged bank, and by dishonestly certifying the capital paid up, secure cir- culation which they could use in procuring additional payments of capital or money in bank. If the notes alone were in the bank, the suspicions of the examiner might be excited ; but by changing them for other money, and with dummy paper to fill up, a bank with very little real capital could make a good showing on its books. This section becomes especially important, since the reduction of the minimum de- posit of United States bonds to one quarter of capital, in case of banks with a cap- ital of $150,000 or less. 82. Withdrawal of Capital ; Dividends ; Bad Debts. Section 5204. — No association, or any member thereof, shall, during the time it shall continue its banking operations, withdraw, or permit to be withdrawn, either in the form of dividends or otherwise, any portion of its capital. If losses have at any time been sustained by any such association, equal 47 to or exceeding its undivided profits then on hand, no dividend shall be made ; and no dividend shall ever be made by any as- sociation, while it continues its banking operations, to an amount greater than its net profits then on hand, deducting therefrom its losses and bad debts. All debts due to any asso- ciations, on which interest is past due and unpaid for a period of six months, unless the same are well secured and in process of collection, shall be considered bad debts within the meaning of this section. But nothing in this section shall prevent the reduction of the capital stock of the association under section fifty-one hundred and forty-three. This section is intended to guard against any impairment of the paid-in capital, especially against that insidious form of impairment so dangerous to stockholders — its withdrawal in the shape of dividends. It has been contended that the undivided profits mentioned in the second sen- tence are undivided profits exclusive of legal surplus, which, if Section 5199 is strictly adhered to, should at all times equal one-tenth of the total net profits of the bank until such one-tenth exceeds one-fifth of the capital, and it is the rule of the Comptroller's office that the legal surplus must never be used to pay dividends, although it can, of course, be used to meet losses that undivided profits other than legal surplus are insufficient to meet. Net profits, both in this section and in Sec- tion 5199, seem to mean profits other than legal surplus which remain at the end of each six months after deducting all expenses, losses, and bad debts. The definition of bad debts is as plain as can be made of a thing so difficult to define. There is one positive sign, viz., interest past due and unpaid for six months, and two quali- fications, that is, even if interest is due and unpaid six months, they are still not bad debts if, 1st, they are well secured, and, 2d, also in process of collection. The indefiniteness of this definition consists in the difference of opinion which may arise as to security. 83. Enforcing Payment of Capital Stock. Section 5205. — Every association which shall have failed to pay up its capital stock, as required by law, and every asso- ciation whose capital stock shall have become impaired by losses or otherwise, shall, within three months after receiving notice thereof from the Comptroller of the Currency, pay the deficiency in the capital stock, by assessment upon the share- holders pro rata for the amount of capital stock held by each ; and the Treasurer of the United States shall withhold the in- terest upon all bonds held by him in trust for any such associa- tion upon notification from the Comptroller of the Currency, until otherwise notified by him. If any such association shall fail to pay up its capital stock, and shall refuse to go into 4 8 liquidation, as provided by law, for three months after receiv- ing notice from the Comptroller, a receiver may be appointed to close up the business of the association, according to the provisions of section fifty-two hundred and thirty-four. Under this section the Comptroller takes the initiatory step in the proceedings to restore an impaired or unpaid capital stock. He discovers this condition of affairs either through reports made to his office by the banks, or from reports made to him by examiners. After the notice is issued the matter of making the assess- ment is in the hands of the directors, whose duty it is to call upon the stockholders. The Comptroller may notify the Treasurer to withhold interest on the bonds of the association with the impaired capital. Section 4 of the Act of June 30th, 1876, page 104. provides how directors may enforce payment of assessment made upon the stock- holders under Section 5205. As this section gives three months, and Section 4 of the Act of June 30th, 1876, grants thirty days longer for notice of sale of stock, the whole process, it seems, takes four months. The Comptroller may, however, in his discretion, appoint a receiver after three months. This, it would seem, makes it a matter of judgment for the directors or others most interested in the bank either to make good the impaired stock of the delinquent stockholders and trust to the sale to reimburse themselves, or to let the bank go into a receiver's hands at the end of three months, if the Comptroller should insist on their appointing a receiver. 84. Associations not to pay out Uncurrent Notes. Section 5206. — No association shall at any time pay out on loans or discounts, or in purchasing drafts or bills of exchange, or in payment of deposits, or in any other mode pay or put' in circulation the notes of any bank or banking association which are not, at any such time, receivable, at par, on deposit, and in payment of debts by the association so paying out or circu- lating such notes; nor shall any association knowingly pay out or put in circulation any notes issued by any bank or banking association which at the time of such paying out or putting in circulation is not redeeming its circulating notes in lawful money of the United States. This section was inserted in the law at a time when there was still a large amount of State bank notes in circulation, and it had reference to these State bank notes as well as to the notes of National banking associations. The refusal on the part of a National bank to-day to redeem its notes, either at the Treasury or its own counter, would render it liable to have its notes refused and thrown out by every National bank in the United States. 85. Penalty for Falsely Certifying Checks. Section 5208. — It shall be unlawful for any officer, clerk, or agent of any National banking association to certify any check drawn upon the association unless the person or com- 49 pany drawing the check has on deposit with the association, at the time such check is certified, an amount of money equal to the amount specified in such check. Any check so certified by duly authorized officers shall be a good and valid obligation against the association; but the act of any officer, clerk, or agent of any association, in violation of this section, shall sub- ject such bank to the liabilities and proceedings on the part of the Comptroller as provided for in section fifty-two hundred and thirty-four. Section 5209, page TT. Legal certification of a check has been defined by the TJ. S. Supreme Court to be a form of acceptance which, from its nature, implies that the reason of the accept- ance is the fact that the drawer of the check has a credit in the accepting bank sufficient to meet the check, and that sufficient of that credit to meet such certified check will be set apart and especially held to meet it. An illegal certification is one where the bank, for any space of time, however short, assumes a liability by certifying a check to be good when the drawer has no bona fide credit on its books. The bank is equally bound by a legal or illegal certification ; but if the certification be illegally made the bank is liable to be placed in the hands of a receiver, and its officers who certify the check are liable to criminal prosecution under Section 13 of the Act of July 12th, 1882. It was alleged that it had become a practice for banks in the large cities to aid speculative dealers by certifying their checks, trusting that their accounts would be made good ere the check could come from the Clearing House; and this allegation was the basis of the action of Congress in enacting Sec- tion 13 of the Act of July 12th, 1882. 86. List of Shareholders. Section 5210. — The president and cashier of every National banking association shall cause to be kept at all times a full and correct list of the names and residences of all the share- holders in the association, and the number of shares held br- each, in the office where its business is transacted. Such list shall be subject to the inspection of all the shareholders and creditors of the association, and the officers authorized to assess taxes under State authority, during business hours of each day in which business may be legally transacted. A copy of such list, on the first Monday of July of each year, verified by the oath of such president or cashier, shall be transmitted to the Comptroller of the Currency. This list must be accurately kept at all times, and the shareholders and creditors and State officers authorized to assess taxes must be afforded free access to it during the business hours of each legal business day — all except Sundays or legal holidays, either National or by the law of the State or Territory where the bank is located. 4 5° A copy of this list as it stands on the first Monday of each year, duly executed, must be sent to the Comptroller. Blanks for this list are sent to all the banks from the Comptroller's office each year, in time to enable the bank to make and send the list. 87. Reports of Associations to Comptroller. Section 521 1. — Every association shall make to the Comp- troller of the Currency not less than five reports during each year, according to the form which may be prescribed by him, verified by the oath or affirmation of the president or cashier of such association and attested by the signatures of at least three of the directors. Each such report shall exhibit, in de- tail and under appropriate heads, the resources and liabilities of the associations at the close of business on any past day by him specified, and shall be transmitted to the Comptroller within five days after the receipt of a request or requisition therefor from him, and in the same form in which it is made to the Comptroller shall be published in a newspaper published in the place where such association is established ; or if there is no newspaper in the place, then in one published nearest thereto in the same county, at the expense of the association ; and such proof of publication shall be furnished as may be required by the Comptroller. The Comptroller shall also have power to call for special reports from any particular association whenever in his judgment the same are necessary in order to a full and complete knowledge of its condition. The blanks for these reports are furnished by the Comptroller of the Currency. The attestation of the directors is an attestation of the correctness of the report. The directors are expected to know the condition of their bank. The Act of Feb- ruary 26th, 1881, provides before whom the verification of these reports may be made. (See page 106, of this work.) The reports, when made, are abstracted and filed in the Comptroller's office. 88. Reports of Dividends, &c. Section 5212. — In addition to the reports required by the preceding section, each association shall report to the Comp- troller of the Currency, within ten days after declaring any dividend, the amount of such dividend, and the amount of net earnings in excess of such dividend. Such reports shall be attested by the oath of the president or cashier of the associa- tion. Full instructions as to making these reports will be found on page 146. 5* 89. Penalty for Failure to make Reports. Section 5213. — Every association which fails to make and transmit any report required under either of the two preceding sections shall be subject to a penalty of one hundred dollars for each day after the periods, respectively, therein mentioned, that it delays to make and transmit its report. Whenever any association delays or refuses to pay the penalty herein imposed, after it has been assessed by the Comptroller of the Currency, the amount thereof may be retained by the Treasurer of the United States, upon the order of the Comptroller of the Cur- rency, out of the interest, as it may become due to the asso- ciation, on the bonds deposited with him to secure circulation. All sums of money collected for penalties under this section shall be paid into the Treasury of the United States. These penalties for failure or delay in making reports are often enforced. 90. Duty on Circulation. Section 5214. — In lieu of all existing taxes, every associa- tion shall pay to the Treasurer of the United States, in the months of January and July, a duty of one-half of one per centum each half year upon the average amount of its notes in circulation, and a duty of one-quarter of one per centum each half year upon the average amount of its deposits, and a duty of one-quarter of one per centum each half year on the average amount of its capital stock, beyond the amount invested in United States bonds. All of this tax. with the exception of the tax on circulation, has now been abated by law. The tax is upon the average amount of notes in circulation — not those held by the bank or in transit between it and the Comptroller's office. The average may be calculated by adding together the amount of circulation outstanding each business day of the semi-annual period, and then dividing by the number of busi- ness days. 91. Semi-Annual Return of Circulation. Section 5215. — In order to enable the Treasurer to assess the duties imposed by the preceding section, each association shall, within ten days from the first days of January and July of each year, make a return, under the oath of its president or cashier, to the Treasurer of the United States, in such form as the Treasurer may prescribe, of the average amount of its notes in circulation, and of the average amount of its deposits, 52 and of the average amount of its capital stock, beyond the amount invested in United States bonds, for the six months next preceding the most recent first day of January or July. Every association which fails so to make such return shall be liable to a penalty of two hundred dollars, to be collected either out of the interest as it may become due such association on the bonds deposited with the Treasurer, or, at his option, in the manner in which penalties are to be collected of other cor- porations under the laws of the United States. The blanks for these returns are sent to the banks by the Treasurer, and contain full instructions as to the proper manner in which to make these reports. 92. Assessment if Return is not Made. Section 5216. — Whenever any association fails to make the half-yearly return required by the preceding section, the duties to be paid by such association shall be assessed upon the amount of notes delivered to such association by the Comp- troller of the Currency, and upon the highest amount of its deposits and capital stock, to be ascertained in such manner as the Treasurer may deem best. It is usually the best plan for the bank to make up its own average, as that made by the Treasurer would necessarily include notes that the bank might hold. 93. How Tax may be Collected. Section 5217. — Whenever an association fails to pay the duties imposed by the three preceding sections, the sums due may be collected in the manner provided for the collection of United States taxes from other corporations ; or the Treasurer may reserve the amount out of the interest, as it may become due, on the bonds deposited with him by such defaulting as- sociation. 94. Refunding excess of Duties. Section 5218. — In all cases where an association has paid or may pay in excess of what may be or has been found due from it, on account of the duty required to be paid to the Treasurer of the United States, the association may state an account therefor, which, on being certified by the Treasurer of the United States, and found correct by the First Comp- troller of the Treasury, shall be refunded in the ordinary man- ner by warrant on the Treasury. There is, however, no special appropriation for this purpose. The claim for re- 53 covery of excessive taxes paid, if presented and found correct in the manner indi- cated in tliis section, is taken into account by the Secretary of the Treasury in mak- ing his estimates to Congress. The amount necessary to pa}* the claim is usually appropriated by Congress, and the claimant will then receive his money, by warrant. &C, as stated in the section. 95. Provisions Relative to State Taxation. Section 5219. — Nothing herein shall prevent all the shares in any association from being included in the valuation of the personal property of the owner or holder of such shares, in as- sessing taxes imposed by authority of the State within which the association is located; but the Legislature of each State may determine and direct the manner and place of taxing all the shares of National banking associations located within the State, subject only to the two restrictions, that the taxation shall not be at a greater rate than is assessed upon other mon- eyed capital in the hands of individual citizens of such State, and that the shares of any National banking association owned by non-residents of any State shall be taxed in the city or town where the bank is located, and not elsewhere. Nothing herein shall be construed to exempt the real property of associations from either State, county, or municipal taxes, to the same ex- tent, according to its value, as other real property is taxed. Shares of National banks are by this section taxable by State or municipal au- thority in the hands of the individual holders. The theory of the section seems to be that while the tax is upon the individual, yet the method of collection may be indicated by the Legislature of the State, and thus it comes through action of the State Legislatures that in most of the States the assessors and collectors of taxes deal only with the bank which is by State law made the representative of its indi- vidual shareholders. The bank thus pays for its stockholders. The real property of a bank is taxed as other real property is taxed, and the fact of the taxation or exemption from taxation of any particular asset of a bank, such as real estate, which is taxable, or United States bonds, legal-tender notes, &c, which are exempt from taxation, does not authorize a bank or an individual shareholder from making any deduction from the par value of his shares. Shares may be assessed for taxation at their par value, and at their market value if it exceeds par; but doubtless if it could be shown that the market value was less than par, the true value so shown would be the basis of assessment. This subject has been treated at length in the last report of the Comptroller of the Currency, and that portion of the report is reproduced here: " The original National Currency Act of February 25th, 1863, contained no pro- vision authorizing the States to tax National banks in any manner whatever. The number of banks organized under this act was, however, comparatively small, and the capital small compared with the capital invested in banks organized under State laws, over which the States had full power of taxation. Much of the oppo- sition to the National system at the time of its inception was manifested by those 54 who regarded it as hostile to the State systems, and as a step toward the removal of one objection, at least, to the State systems becoming merged in the National, Congress seems to have regarded it as necessary to grant to the States the authority to tax National banks. At an early day the Supreme Court of the United States had held that the States had no power to impose taxes on corporations created by Congress, and the same court has since held that the States cannot impose any tax whatever on National banks without the authority of Congress. (Williams v. As- sessors.) " The power to tax National bank shares was granted, and the method of im- posing such tax indicated by three provisos attached to Section 41 of the Act of June 3d, 1864, by which the original Act of February 25th, 1863, was superseded. Under this law shares of National bank stock were made liable to assessment by State authority at the place where the bank was located, but not at a greater rate than was assessed upon other moneyed capital in the hands of individual citizens of such State, and the tax imposed was not to be at a greater rate than was imposed upon the shares of banks organized under State law. Real estate belonging to a National bank was to be taxed as other real estate was taxed. " The question that appears to have first arisen as to the proper construction of the law permitting State taxation of National bank shares, was in regard to the exemption of United States bonds held by National banks, in arriving at the value of the shares liable to taxation. " This point came before the United States Supreme Court for decision in Van Allen v. Assessors, (3 Wall., 573,) and it was decided by the majority of the court that a share of National bank stock was a distinct thing from the capital of the bank, which capital may be invested in United States bonds — that the shares are property in the hands of individuals, while the corporation is the legal owner of all the property of the bank, real and personal. " The interest of the shareholder entitles him to participate in the profits of the corporation while the latter is in existence, and also upon its dissolution to receive his proportionate share of such property as may remain after the payment of its debts. It is this entire interest that Congress has left subject to taxation by the States, and not such portion as might remain were the amount invested in United States bonds deducted from capital. " The court also held in this case that a New York statute, assessing shares of National banks for purposes of taxation at the same rate at which other moneyed capital was assessed, the tax not to exceed the par value of the shares, was void, because it was contrary to the provisions of the Federal law — that taxation of National bank shares was not to be at a greater rate than was imposed on State bank shares. The State banks in New York were not taxed on their shares, but on capital, from which the deduction of the amount invested in United States securities was allowed, while this deduction could not be made to reduce the value of National bank shares. " The question then arose in a new form. Inasmuch as the law provides that shares of National banks shall be assessed at the same rate as other moneyed capital in the hands of individual citizens, and inasmuch as United States bonds and securities are exempt in the hands of individual citizens: when the capital of National banks is invested in United States bonds, is not the State tax on their shares owned by individuals invalid? The United States Supreme Court in People v. Commissioners (4 Wall., 244) decided that under such circumstances the State tax on National bank shares was valid. Under these two decisions it is apparent that no deduction can be made from the value of shares of National banks on account of the exemption from tax of some of the assets in which their capital may be invested. This principle will apply to United States notes and to United States or other securities which may by law be exempt from taxation. "The next important case bearing on this matter, decided in the United States Supreme Court, was that of Lionberger v. Rouse. This turned upon the construction of that portion of the Federal law providing that the tax on National bank shares should not be at a greater rate than was imposed on the shares of State banks. The point raised was that the State of Missouri taxed some State banks less than others. These lightly-taxed banks, holding an inconsiderable portion of the bank- 55 ing capital of the State, were organized under special charters, granted prior to the commencement of the National system, which the State had no power to change. There was no discrimination as between National bank shares and those of State banks not so specially exempted. The court construed the clause of the Federal law in question to mean only that the State, as a condition to the exercise of the power to tax the shares of National banks, shall, as far as it has retained the capacity, tax in like manner the shares of banks of its own creation. " The Act of February 10th, 1868, was passed to further define the place and manner of taxation of National bank shares, amending Section 41 of the Act of June 3d, 1864. It may perhaps be regarded as superseding that section to the ex- tent of dropping out the proviso that shares of National banks shall be taxed at a rate no greater than is imposed on the shares of State banks. This appears to be the view taken by Congress in 1873, when approving the Revised Statutes, as in Section 5219 as it now stands this proviso is net included. " The validity of State taxation on National bank shares is, under this section, to be determined solely by the inquiry whether it is at a greater rate than is assessed upon other moneyed capital in the hands of individual citizens. There has, however, been great difficulty in so regulating the taxation of National bank shares by the States as to conform strictly to the intent of this law. As a consequence, in many of the States, National bank shares, in the assessment and collection of taxes, have, it is alleged, been in different ways subjected to severe and unjust discrimination, as compared with other moneyed capital. Some of the methods of discrimination are as follows : " (1.) Differences are made in the valuation of National bank shares for purposes of assessing taxes as compared with the valuation of other moneyed capital for the same purpose. " (2.) The individual holders of other moneyed capital have been allowed to make deductions on account of certain exemptions, such as debts owed by such individual holders, when holders of National bank shares were not permitted to deduct their debts from the value of such shares. " (3.) In the different States distinctions are made in the taxation of various kinds of moneyed capital, other than National bank shares, in the hands of individual citizens, and the standard by which the taxation of National bank shares is to be legally measured becomes thus confused. " Many forms of moneyed capital in the hands of individual citizens are altogether exempted by law from taxation, while National bank shares are taxed. The diffi- culty arises in deciding by which class of moneyed capital the tax on National bank shares is to be guided ; whether there is to be no tax, as in case of exempted moneyed capital ; a less tax, as in case of the class of moneyed capital taxed at a less rate; or a greater tax, as in case of the class of moneyed capital taxed at a greater rate. "All of these forms of discrimination have been passed on in litigation which has come before the United States Supreme Court. " In Ohio the law provided certain State boards for equalizing the taxation on real estate, on railroad capital, and on capital invested in bank shares ; but there was no State board for equalizing the taxation on personal property other than bank shares, railroad stock, or other moneyed capital. The equalization as to all other personal property assessed ceased with the county boards of equalization, but the county boards throughout the State fixed the valuation of moneyed capital for purposes of taxation at six-tenths of its true value, while the State board fixed the taxable value of bank shares at their actual cash value. The rates of taxation being the same, bank shares were discriminated against to the extent of four-tenths of their value. In New York the law permitted the deduction of just debts of an individual from his personal property, including his moneyed capital, excepting only his bank shares. " In Pelton v. Commercial National Bank of Cleveland, (101 U. S., p. 143,) and in Cummings v. Merchants' National Bank of Toledo, (101 U. S., p. 153,) the United States Supreme Court decided the question of discrimination arising under the laws of Ohio. In those cases it was held that a tax upon National bank shares valued for taxation at a higher rate than other moneyed capital was invalid, and that upon 56 payment of the amount justly assessable a court of equity would enjoin the collec- tion of the residue, but that the bank must pay the portion of the taxes justly due. " In People v. Weaver, (100 U. S., p. 539,) a case arising under the New York law, the Supreme Court decided that the word rate in the provision of Section 5219, United States Revised Statutes, that taxation shall not be at' a greater rate than is assessed upon other moiled capital in the hands of individuals applies to and includes as well the valuation of shares for taxation as the rate of taxes to be imposed, and that the law of the State of New York, which permitted a party to deduct his just debts from the value of all his personal property, except his Na- tional bank shares, was void as to the taxation of such bank shares. The case of Evansville Bank v. Britton, (104 TJ. S., p. 323,) arising under the law of Indiana, taxing National bank shares, supports the same doctrine. These cases disposed of the first two forms of discriminations already mentioned, and pointed out the proper remedy to be pursued by banks in avoiding the payment of taxes illegally assessed. Supervisors v. Stanley (104 U. S., p. 305) decides questions arising as to the recovery of excessive taxes which have been paid by the shareholders of National banks. "Under the third class of discrimination, where doubt as to the proper taxation of National bank shares arises from the fact that under State law a discrimination is made in taxing different classes of other moneyed capital in the hands of indi- vidual citizens, the important cases decided in the United States Supreme Court are Lionberger v. Rouse, (9 Wall.,) already mentioned ; Hepburn v. School Directors, (23 Wall., 480,) and the recently decided case of Boyer v. Boyer. In Lionberger v- Rouse a discrimination was made by the State in taxing shares of banks organized under its own laws, one class of banks being taxed at a higher rate than another. At that time, as has been seen, the law in force measured the taxation of National bank shares by the taxation of State bank shares, and in this case the United States Supreme Court held a tax on National bank shares to be valid which did not ex- ceed the tax imposed upon the larger bulk of State bank shares. In Hepburn v. School Directors (23 Wall., 480) it was held by the United States Supreme Court that the exemption by State law from taxation of a small portion of other moneyed capital in the hands of individual citizens was not a reason for exempting National bank shares from taxation. In this case also it was held that shares of National banks might be taxed at an amount exceeding their par value if their market value exceeded their par value. " In the case of Boyer v. Boyer the Supreme Court decided that if the great bulk of moneyed capital in the hands of individual citizens is exempted by State law from municipal taxation, that under the law of Congress National bank shares must be exempted also. The court says that cases will arise in which it will be difficult to determine whether the exemption of the particular part of moneyed capital in individual hands is so serious or material as to infringe the rules of substantial equality — that a proper construction of the Act of Congress forces the conclusion that capital invested in National bank shares was intended to be placed upon the same footing of substantial equality in respect to taxation by State authority with other moneyed capital in the hands of individual citizens, however invested. "The question is frequently asked whether National bank notes in the hands of individual citizens are liable to State taxation. Section 3707 of the Revised Stat- utes provides that all stocks, bonds, Treasury notes, and other obligations of the United States shall be exempt from taxation by or under State, or municipal, or local authority. In Section 5413, Revised Statutes, the words 'obligation of the United States' is held to include National bank currency. The question of the taxability of National bank currency arose in the case of the Board of Commis- sioners in Montgomery County v. Elston, (32 Ind., 27,) and it was decided by the Supreme Court of the State that National bank currency is not exempt from taxa- tion by the State. The court held that the provision of law making National cur- rency an obligation of the United States only intended to throw around National currency the same guards against counterfeiting that were by law provided for ob- ligations of the United States, and not to generally define National currency, as an obligation of the United States. "In the case of Home v. Greene, in the Supreme Court of the State of Missis- sippi, (52 Miss., 452,) it was decided that the circulating notes of National banks 57 are not subject to State taxes. The question, therefore, still appears to be an open one." It only remains to add that under various decisions a license tax imposed on National banks by State or municipal authority has been decided to be illegal and void, a tax on shares being the exclusive way in which such banks may be taxed by State authority. 96. Bank Examiners : Duties, Powers, &e. Section 5240. — The Comptroller of the Currency, with the approval of the Secretary of the Treasury, shall, as often as shall be deemed necessary or proper, appoint a suitable person or persons to make an examination of the affairs of every bank- ing association, who shall have power to make a thorough ex- amination into all the affairs of the association, and, in doins: so, to examine any of the officers and agents thereof on oath ; and shall make a full and detailed report of the condition of the association to the Comptroller. All persons appointed to be examiners of National banks not located in the redemption cities specified in section five thousand one hundred and nine- ty-two of the Revised Statutes of the United States, or in any one of the States of Oregon, California, and Nevada, or in the Territories, shall receive compensation for such examination as follows : For examining National banks having a capital less than one hundred thousand dollars, twenty dollars ; those having a capital of one hundred thousand dollars and less than three hundred thousand dollars, twenty-five dollars; those hav- ing acapital of three hundred thousand dollars and less than four hundred thousand dollars, thirty-five dollars ; those having a capital of four hundred thousand dollars and less than five hundred thousand dollars, fort}' dollars; those having a capital of five hundred thousand dollars and less than six hundred thousand dollars, fifty dollars ; those having a capital of six hundred thousand dollars and over, seventy-five dollars; which amounts shall be assessed by the Comptroller of the Currency upon, and paid by, the respective associations so examined, and shall be in lieu of the compensation and mileage heretofore allowed for making said examinations; and persons appointed to make examinations of National banks in the cities named in section five thousand one hundred and ninety-two of the" Revised Statutes of the United States, or in any one of the States of Oregon, California, and Nevada, or in the Territories, 58 shall receive such compensation as may be fixed by the Sec- retary of the Treasury upon the recommendation of the Comp- troller of the Currency ; and the same shall be assessed and paid in the manner hereinbefore provided. But no person shall be appointed to examine the affairs of any banking asso- ciation of which he is a director or other officer. See Act of February 19th, 1875, amending Rev. Stats., page 99. Also Act of July 12th, 1882, sec. 3, page 108. The examinations mentioned in this section are, as a rule, made about once a year in the case of each National bank. There is no provision as to the number of persons who may be employed as examiners by the Comptroller, or the number of times he may examine each bank within a given period. In practice, the territory of the United States is laid off into districts, which districts are, however, varied from time to time to suit the convenience of the Comptroller's office, or to conform to its views as to the efficiency of the service. A National bank examiner receives a regular appointment and then awaits orders from the Comptroller. He may be assigned to a district, or may be employed at large. An examiner may be employed steadily in one district, or he may be shifted from one district to another. There is no fixed salary. The amount earned each year depends on the number of banks which each examiner has assigned to him for examination. When the reports are received from the examiners they are scru- tinized in the Comptroller's office, and if they iudicate faults in the management of the banks, letters are addressed usually to the president or cashier calling attention to the points where improvement is necessary ; sometimes, in bad cases, the directors are addressed either singly or collectively. The examiners from time to time send in their bills to the Comptroller, who, finding such bills correct, assesses each bank of which examination has been made according to the legal rule. When the money is paid in to the Comptroller by the banks it is sent to the examiner. The exam- iner has no right to ask a bank for any money in any way, shape, or form. His dealings are with the Comptroller, from whom he receives his directions and to whom he renders his bills. 97. Limitation of Visitorial Powers. Section 5241. — No association shall be subject to any vis- itorial powers other than such as are authorized by this Title, or are vested in the courts of justice. Section 5242, page 70. The only visitorial powers mentioned in the Act are those mentioned in the pre- ceding section and in Section 5210, which permits officers authorized to assess taxes under State authority to inspect list of stockholders during business hours. There are, also, the general visitorial powers of the Comptroller of the Currency. The courts of justice have of course the same power as they have over other persons or corporations, and subject to the same limitations of jurisdiction. 98. Use of the word "National" in the Title. Section 5243. — All banks not organized and transacting 59 business under the National currency laws, or under this Title, and all persons or corporations doing the business of bankers, brokers, or savings institutions, except savings banks author- ized by Congress to use the word ' ' national " as a part of their corporate name, are prohibited from using the word ' ' national ' ' as a portion of the name or title of such bank, corporation, firm, or partnership; and any violation of this prohibition com- mitted after the third day of September, eighteen hundred and seventy-three, shall subject the party chargeable therewith to a penalty of fifty dollars for each day during which it is com- mitted or repeated. The penalty under this section is a general one. If any one has knowledge of a violation of this provision he can lay a complaint before a United States commis- sioner, or the attention of the United States attorney of the district where the offense has been committed can be called to it. DISSOLUTION AND RECEIVERSHIP. 99. Voluntary Liquidation. Section 5220. — Any association may go into liquidation and be closed by the vote of its shareholders owning two-thirds of its stock. Stockholders owning two-thirds of the stock of a National bank have it in their power to close their association at any time. As a vote is necessary a meeting must be held. Due notice of a meeting for this purpose should be given to each stock- holder. Legal notice under the laws of the State where the bank is located is all that is required. This may be by mail or by publication. A stockholder who re- ceives legal notice and who does not attend the meeting, either in person or by proxv, cannot protest against anything legally done at that meeting. Two-thirds of the stock must vote for the liquidation, and it is best to keep a complete and accurate record of the proceedings of the meeting. In the conduct of the meeting the by-laws of the bank, if any have been adopted, should be strictly observed. There is no need of consulting the Comptroller's office in regard to this action ; it is one that can be taken by the stockholders of their own volition. 100. Notice of Intention to go into Liquidation. Section 5221. — Whenever a vote is taken to go into liqui- dation it shall be the duty of the board of directors to cause notice of this fact to be certified, under the seal of the associa- tion, by its president or cashier, to the Comptroller of the Currency, and the publication thereof to be made for a period of two months in a newspaper published in the city of New York, and also in a newspaper published in the city or town in which the association is located, or if no newspaper is there 6o published, then in the newspaper published nearest thereto, that the association is closing up its affairs, and notifying the holders of its notes and other creditors to present the notes and other claims against the association for payment. Blanks for certifying the notice to the Comptroller of the Currency are furnished by that office, and can be obtained on application there; also form to be used in making the publication required by the section. The liquidation takes effect on the date of the vote and not on the receipt of the notice by the Comptroller, or it may take effect on some future date fixed in that notice. Thus two-thirds of the stock may vote to liquidate ; the vote may be taken on the third of the month ; the notice maybe sent on the sixth and be received by the Comptroller on the ninth. The books of the Comptroller's office will place the association in liquidation on the third, but if the vote be taken on the third to commence to liquidate the associ- ation on the twentieth, then, although the Comptroller as before may receive notice on the ninth, yet the date of liquidation will be the twentieth. Insertion of notice in weekly papers, both in New York and at home, is regarded as fulfilling the re- quirement of the law. The notice should appear in each issue of the paper within the two months from the date of the first issue in which the notice appears. Associations in voluntary liquidation retain their corporate existence, and can sue or be sued until their affairs are finally liquidated. The process of liquidation may be conducted by the directors and officers of the bank, or the directors may appoint a committee from their own number for the purpose. In any event it is better to keep up the board of directors by regular annual elections until the liquidation is complete. The usual course is to pay depositors in full, and then, as funds are realized from assets, pay pro rata dividends to stockholders. Usually there is a residue of deposits which are not called for. Before dividends are paid to stockholders funds to meet this residue if called for should be set aside. Doubtless, after due published notice of liquidation, the statute of limitations in the State where the bank is located would begin to run perhaps from the date of the last published notice. This may be a question. In the case of a going bank it runs from the date of demand; but it would seem that where a bank closes its affairs and notifies the public to make demand the statute should begin to run at furthest from the last published notice. Profit on notes not presented for redemption appar- ently goes to the Government. A bank in voluntary liquidation is still subject to the inspection of the Comptroller of the Currency. He can require reports from it and cause examination to be made of its affairs. If it fails to pay its depositors he may appoint a receiver. (See Section 1, Act of June 30th, 1876, page 101.) 101. Deposit to Redeem Circulation. Section 5222. — Within six months from the date of the vote to go into liquidation, the association shall deposit with the Treasurer of the United States lawful money of the United States sufficient to redeem all its outstanding circulation. The Treasurer shall execute duplicate receipts for money thus de- posited, and deliver one to the association and the other to the Comptroller of the Currency, stating the amount received by 6i him, and the purpose for which it has been received; and the money shall be paid into the Treasury of the United States, and placed to the credit of such association upon redemption account. If not otherwise determined, the vote to liquidate takes effect immediately, and the six months run from that date; but if the vote itself is that the liquidation shall take place at a future date, then that future date is the actual date on which the vote takes effect, and the six mouths run therefrom. Lawful money is United States gold coin, silver dollars, or legal-tender notes. The usual method is to make the deposit either directly or through a correspondent or agent with the Treasurer of the United States at Washington, or an Assistant Treasurer. When the deposit is made with an Assistant Treasurer, he issues certificate of deposit, which is sent to Washington. When the deposit is made, and the bank has paid to the United States Treasurer all amounts due for taxes on circulation and all amounts due for expenses of redeeming notes, its bonds on deposit will be surrendered to it. 102. Consolidating Banks need not Make Deposit. Section 5223. — An association which is in good faith wind- ing up its business for the purpose of consolidating with an- other association shall not be required to deposit lawful money for its outstanding circulation ; but its assets and liabilities shall be reported by the association with which it is in process of consolidation. Although this section still stands on the statute-book, it has been regarded as ob- solete by a ruling of the Comptroller's office. That office has required liquidating banks, no matter for what purpose they are winding up, to deposit lawful money in all cases. The reasoning appears to be that this section was intended to enable banks to retain all their circulation at a time when the law fixed a limit, viz. r $354,000,000, on the aggregate circulation, and when such circulation was appor- tioned according to wealth and population among the States and Territories. As there is now no limit on the circulation which may be issued in any State, there is not the same necessity of banks adopting the plan provided for in this section to retain in the consolidated bank the circulation issued to each of the two banks en- tering into the consolidation. There are many other considerations why this plan is not a good one, even if legal, at the present time; such as the rights of stock- holders, &c. The best plan, if two banks desire to consolidate, is to increase (sec Section 5142) the capital of No. 1 to the extent necessary to equal the stock of both ; put No. 2 in liquidation in the regular way, and sell out its assets to No. 1, paying for them in the increased stock to be distributed among stockholders of No. 2. The circulation of No. 2 being provided for by a deposit of lawful money, its bonds can be trans- ferred to account of No. 1, which last will receive circulation thereon. The whole tion in regard to circulation need not occupy over ten days. The lawful money can doubtless be borrowed for the necessary time. 62 103. Reassignment of Bonds, Redemption of Notes, &c. Section 5224. — Whenever a sufficient deposit of lawful monev to redeem the outstanding circulation of an association proposing to close its business has been made, the bonds de- posited by the association to secure payment of its notes shall be reassigned to it, in the manner prescribed by section fifty- one hundred and sixty-two. And thereafter the association and its shareholders shall stand discharged from all liabilities upon the circulating notes, and those notes shall be redeemed at the Treasury of the United States. And if any such bank shall fail to make the deposit and take up its bonds for thirty days after the expiration of the time specified, the Comptroller of the Currency shall have power to sell the bonds pledged for the circulation of said bank, at public auction in New York city, and, after providing for the redemption and cancellation of said circulation, and the necessary expenses of the sale, to pay over any balance remaining to the bank or its legal repre- sentative. See Act of February 18th, 1875, correcting Revised Statutes, page 9T. After deposit of lawful money has been made and bonds withdrawn and re- assigned, the notes become a liability of the United States. It will be observed that this section grants thirty days beyond the six months mentioned in Section 5222 before the bonds can be sold by the Comptroller. The bank will probably, as a rule, find it more advantageous to dispose of its own bonds. 104. Destruction of Redeemed Notes. Section 5225. — Whenever the Treasurer has redeemed any of the notes of an association which has commenced to close its affairs under the six [five] preceding sections, he shall cause the notes to be mutilated and charged to the redemption ac- count of the association; and all notes so redeemed by the Treasurer shall, every three months, be certified to and burned in the manner prescribed in section fifty-one hundred and eighty-four. See Act of June 23d, 1874, page 94. Although the preceding section (5224) relieves the bank of all liability on account of its circulating notes, yet this section provides that every three months such of its notes as have been redeemed by the Treasurer of the United States shall be certified to and burned in the manner prescribed in Section 5184. Section 5184, as modified by custom, provides that redeemed and mutilated notes shall be destroyed in the presence of four persons, who must sign a certificate to that e'ffect. a duplicate of which must be forwarded to the association. 63 105. Mode of Protesting Notes. Section 5226. — Whenever any National banking association fails to redeem in the lawful money of the United States any of its circulating notes, upon demand of payment duly made during the usual hours of business, at the office of such asso- ciation, or at its designated place of redemption, the holder may cause the same to be protested, in one package, by a notary public, unless the president or cashier of the association whose notes are presented for payment, or the president or cashier of the association at the place at which they are redeemable, offers to waive demand and notice of the protest, and, in pur- suance of such offer, makes, signs, and delivers to the party making such demand an admission in writing, stating the time of the demand, the amount demanded, and the fact of the non- payment thereof. The notary public, on making such protest, or upon receiving such admission, shall forthwith forward such admission or notice of protest to the Comptroller of the Cur- rency, retaining a copy thereof. If, however, satisfactory proof is produced to the notary public that the payment of the notes demanded is restrained by order of any court of compe- tent jurisdiction, he shall not protest the same. When the holder of any notes causes more than one note or package to be protested on the same day, he shall not receive pay for more than one protest. It is, perhaps, open to dispute whether a bank, after it has deposited lawful money to retire a portion of its circulation under the Act of June 20th, 1874, page 87, is obliged to redeem its notes at its own counter until the deposit of lawful money is exhausted by presentation of notes at the Treasury. In other words, it is held by some that while lawful money remains on deposit in the Treasury the bank might refuse to redeem a note presented at its own counter, and refer the presenter to the Treasury. However this may be, while Section 5226 is in force, a bank might place itself in a very disagreeable position, and perhaps injure its credit, by refusing to redeem any of its notes at its own counter, that is, as long as it continues a going bunk. 106. Examination by Special Agent. Section 5227. — On receiving notice that any National bank- ing association has failed to redeem any of its circulating notes, as specified in the preceding section, the Comptroller of the Currency, with the concurrence of the Secretary of the Treas- ury, may appoint a special agent, of whose appointment im- 6 4 mediate notice shall be given to such association, who shall immediately proceed to ascertain whether it has refused to pay its circulating notes in the lawful money of the United States, when demanded, and shall report to the Comptroller the fact so ascertained. If from such protest, and the report so made, the Comptroller is satisfied that such association has refused to pay its circulating notes and is in default, he shall, within thirty days after he has received notice of such failure, declare the bonds deposited by such association forfeited to the United States, and they shall thereupon be so forfeited. The first penalty for duly-proved failure to redeem circulating notes is forfeiture of bonds deposited to secure the same. The penalty in this section seems to be aimed particularly at a bank which, while not insolvent in the sense of insufficient assets, had through mismanagement permitted its lawful money to run short. A bank might have many available assets, and even money in the shape of notes of other banks, and yet not have gold, silver dollars, or legal-tender notes to redeem its own notes. This section also had in view the accrediting of legal-tender notes by compelling the banks to keep them on hand. 107. Not to do Business after Protest of Notes. Section 5228. — After a default on the part of an association to pay any of its circulating notes has been ascertained by the Comptroller, and notice thereof has been given by him to the association, it shall not be lawful for the association suffering the same to pay out any of its notes, discount any notes or bills, or otherwise prosecute the business of banking, except to receive and safely keep money belonging to it, and to de- liver special deposits. See Act of February 18th, 1875, correcting Revised Statutes, page 97. The next penalty is stoppage of all business. The exceptions are the taking in of money in payment of notes and other obligations due the bank, and the delivery of special deposits. As this section provides for the delivery of special deposits, the United States Supreme Court has decided that National banks have power to receive such deposits. (See National Bank v. Graham, 100 U. S., 699.) Doubtless a National bank has a right to establish a department within itself for the receipt of special deposits, and can thus secure to itself a part of the business of the National safe deposit com- panies. This is the proper course to pursue, making a charge for the accommo- dation which will insure proper safeguards, and at the same time separating the special deposit business from its regular business. 108. Redemption of Notes at Treasury. Section 5229. — Immediately upon declaring the bonds of an association forfeited for non-payment of its notes, the Comp- 65 troller shall give notice, in such manner as the Secretary of the Treasury shall, by general rules or otherwise, direct, to the holders of the circulating notes of such association, to pre- sent them for payment at the Treasury of the United States ; and the same shall be paid as presented in lawful money of the United States ; whereupon the Comptroller may, in his discre- tion, cancel an amount of bonds pledged by such association equal at current market rates, not exceeding par, to the notes paid. 109. Sale of Bonds; the U. S. to have a Lien upon Assets. Section 5230. — Whenever the Comptroller has become satis- fied, by the protest or the waiver and admission specified in section fifty-two hundred and twenty-six, or by the report provided for in section fifty-two hundred and twenty-seven, that any association has refused to pay its circulating notes, he may, instead of canceling its bonds, cause so much of them as may be necessary to redeem its outstanding notes to be sold at public auction in the city of New York, after giving thirty days' notice of such sale to the association. For any deficiency in the proceeds of all the bonds of an association, when thus sold, to reimburse to the United States the amount expended in paying the circulating notes of the association, the United States shall have a paramount lien upon all its assets ; and such deficiency shall be made good out of such assets in prefer- ence to any and all other claims whatsoever, except the neces- sary costs and expenses of administering the same. Instead of canceling the bonds, the Comptroller may sell at public auction to re- imburse the United States, giving thirty days' notice to the association. This and Sections 5226, 5227, 5228, and 5229 do not necessarily presume insolvency, but only neglect, wilful or otherwise, to redeem their notes. Thus the managers of a solvent bank might deem it to their advantage to suspend payment of notes in lawful money for a time. Such a course is removed by these sections from the discretion of the directors or management. 110. Sale of Bonds at Private Sale. Section 5231. — The Comptroller may, if he deems it for the interest of the United States, sell at private sale any of the bonds of an association shown to have made default in paying its notes, and receive therefor either money or the circulating notes of the association. But no such bonds shall be sold bv 66 private sale for less than par, nor for less than the market value thereof at the time of sale; and no sales of any such bonds, either public or private, shall be complete until the transfer of the bonds shall have been made with the formalities prescribed by sections fifty-one hundred and sixty-two, fifty-one hundred and sixty-three, and fifty-one hundred and sixty-four. This section gives the further discretion to the Comptroller of selling bonds of de- faulting associations at private sale at full uuuket price, not less than par. 111. Disposition to be made of Notes redeemed by Treasurer. Section 5232. — The Secretary of the Treasury may, from time to time, make such regulations respecting the disposition to be made of circulating notes after presentation at the Treas- ury of the United States for payment, and respecting the per- petuation of the evidence of the payment thereof, as may seem to him proper. This section was originally part of Section 47 of the Act of June 3d, 1864, and had application only to notes of banks in default, the bonds of which were forfeited, and which notes were redeemed, under a further provision of the same Section 47, (now Section 5229 ante,) at the Treasury of the United States. This section leaves to the discretion of the Secretary of the Treasury the disposition to be made of this particular class of notes. If Section 5232 as it now stands is construed to apply solely to the notes of banks in default redeemed at the Treasury, then a certificate of destruction of all other classes of notes redeemed at the Treas- ury, whether of banks in liquidation or of banks retiring circulation, must be fur- nished to the respective associations issuing the notes, as the mode of destruction of all other classes of notes is fixed in the various sections of the law regarding the same by reference to Section 5184. (See Section 5225, R. S. ; Section 3 of the Act of June 20th, 1874; Sections 6 and 7 of the Act of July 12th, 1882, pp. 109, 110, and Section 5184, p. 36.) 112. Cancellation of Notes. Section 5233. — All notes of National banking associations presented at the Treasury of the United States for payment shall, on being paid, be canceled. See Act of June 20th, 1874, Section 3, p. 88, modified as to notes fit for circula- tion redeemed from the five per cent, redemption fund, by the Act of June 20th, 1874, which permits such notes to be returned to the banks for reissue. 113. Appointment and Duties of Receivers. * Section 5234. — On becoming satisfied, as specified in sec- tions fifty-two hundred and twenty-six and fifty-two hundred and twenty-seven, that any association has refused to pay its circulating notes, as therein mentioned, and is in default, the ♦See Act March 29, 1886. page 115 A. 67 Comptroller of the Currency may forthwith appoint a receiver, * and require of him such bond and security as he deems proper. Such receiver, under the direction of the Comptroller, shall take possession of the books, records, and assets of every description of such association, collect all debts, dues, and claims belonging to it, and, upon the order of a court of record of competent jurisdiction, may sell or compound all bad or doubtful debts, and, on a like order, may sell all the real and personal property of such association, on such terms as the court shall direct, and may, if necessary to pay the debts of such association, enforce the individual liability of the stock- holders. Such receiver shall pay over all money so made to the Treasurer of the United States, subject to the order of the Comptroller, and also make report to the Comptroller of all his acts and proceedings. Kennedy v. Gibson, 8 Wall., 498; Bank of Bethel v. Pahquioque Bank, 14 Wall., 383 ; Bank v. Kennedy, 1G Wall., 10 ; in re Piatt, receiver, &c., 1 Ben., 534. In addition to the penalties of stoppage of business and forfeiture of bonds, the Comptroller may in addition place the bank in the hands of a receiver. A receiver stands in the same relation legally to a bank as that previously occupied by the board of directors. He is responsible for the interests of the corporation, its depositors, creditors, and stockholders. He is under the direction of the Comptroller of the Currency. Appointed by that officer, he can be removed by him. He acts gener- ally under orders of court in all matters outside of collection. He turns over all moneys collected to the Treasurer of the United States subject to the order of the Comptroller of the Currency. 114. Advertisement of Comptroller to Creditors. Section 5235. — The Comptroller shall, upon appointing a receiver, cause notice to be given, by advertisement in such newspapers as he may direct, for three consecutive months, calling on all persons who may have claims against such asso- ciation to present the same, and to make legal proof thereof. It does not, however, constitute a bar to a just claim that it is not presented within the three months. Claims may be so plain as to be at once acknowledged by the receiver and Comptroller; otherwise they must be established by judgment. A claim established by judgment is no better in any respect than one allowed by the receiver and Comptroller. 115. Dividends to Creditors. Section 5236. — From time to time, after full provision has *See Section 1, Act of June 30th, 1876, page 101- 68 been first made for refunding to the United States any deficiency in redeeming the notes of such association, the Comptroller shall make a ratable dividend of the money so paid over to him by such receiver on all such claims as may have been proved to his satisfaction or adjudicated in a court of com petent juris- diction, and, as the proceeds of the assets of such association are paid over to him, shall make further dividends on all claims previously proved or adjudicated; and the remainder of the pro- ceeds, if any, shall be paid over to the shareholders of such association, or their legal representatives, in proportion to the stock by them respectively held. Bank of Bethel v. Pahquioque Bank, 14 Wall., 383. The claimants must be first paid in full, that is, including interest. When claims are allowed all interest, if the subject of the claim bore interest, is allowed up to the date of the suspension of the bank, when, the courts have decided, demand is technically made. The claim as allowed then bears interest to the date of the last payment, and, if the assets are sufficient, dividends to claimants must continue until interest and compound interest have been paid. The dividends are to be treated as partial payments according to the United States Supreme Court rule. When a judg- ment is obtained, although interest up to date of decision may have been allowed in the judgment, dividends are paid only on the principal with interest, if any, up to date of suspension of bank. When a dividend is declared by the Comptroller it is paid on all proved claims and reserved on all claims unproved or in dispute, and as unproved or disputed claims are either proved or established the reserved dividends are paid to the claimants. 116. Injunction upon Receivership. Section 5237. — Whenever an association against which pro- ceedings have been instituted, on account of any alleged re- fusal to redeem its circulating notes as aforesaid, denies having failed to do so, it may, at any time within ten days after it has been notified of the appointment of an agent, as provided in section fifty-two hundred and twenty-seven, apply to the near- est circuit, or district, or territorial court of the United States to enjoin further proceedings in the premises; and such court, after citing the Comptroller of the Currency to show cause why further proceedings should not be enjoined, and after the decision of the court or finding of a jury that such association has not refused to redeem its circulating notes, when legally presented, in the lawful money of the United States, shall make an order enjoining the Comptroller, and any receiver 69 acting under his direction, from all further proceedings on ac- count of such alleged refusal. See Section 736. page 84. This section gives a bank opportunity to disprove mistaken charges, and a method of stopping unwarranted proceedings. 117. Receivership Pees, Expenses, &c. Section 5238. — All fees for protesting the notes issued by any National banking association shall be paid by the person procuring the protest to be made, and such association shall be liable therefor; but no part of the bonds deposited by such association shall be applied to the payment of such fees. All expenses of any preliminary or other examinations into the condition of an} 7 association shall be paid by such association. All expenses of any receivership shall be paid out of the assets of such association before distribution of the proceeds thereof. Expenses of receivership are a first lien upon all assets except bonds to secure circulation. 118. Violation of Title. Penalty : how determined, &c. Section 5239. — If the directors of any National banking association shall knowingly violate, or knowingly permit any of the officers, agents, or servants of the association to violate any of the provisions of this Title, all the rights, privileges, and franchises of the association shall be thereby forfeited. Such violation shall, however, be determined and adjudged by a proper circuit, district, or territorial court of the United States, in a suit brought for that purpose by the Comptroller of the Currency, in his own name, before the association shall be declared dissolved. And in cases of such violation, every di- rector who participated in or assented to the same shall be held liable in his personal and individual capacity for all damages which the association, its shareholders, or any other person, shall have sustained in consequence of such violation. Sections 5240 and 5241, pages 57 and 58. This section contains a general penalty for any violation of the banking laws of the United States, and is held to apply in all cases where there is no special penalty provided for a particular violation. Thus the National Bank Act provides that in case of default in payment of notes a receiver may be appointed, (see Section 5234,) or, if a National bank charges usurious interest, such interest may be recovered. (Section 5198.) The penalty for neglect to make reports is a fine, (Section 5213,) &c, &c. But for violations of many other sections of the law no special penalty is pro- vided. Section 5239 covers all these omissions. It applies more especially to solv- 7^ ent institutions which are doing business. To such alone could the franchises, &c, be of any value. The franchise of a bank that has become insolvent and been placed in the hands of a receiver is of little or no value. The suit must be brought by the Comptroller to forfeit the charter. It can be conceived that the directors of a solvent bank might engage in a class of business forbidden by the National Bank- ing Laws ; for instance, they might persist in loaning directly upon real estate security. These transactions might result in no loss to the bank, or to any one con- nected with or dealing with it, yet the Comptroller might, to compel obedience to law, bring the suit mentioned in the section, and the charter of the bank might be declared forfeited. One can conceive that the stock of the bank might, under the circumstances, decline in value and cause loss to its stockholders, while its cus- tomers might suffer from the stoppage of business. For such damages the directors, who knowingly consented to the violation, &c, would be personally liable. The forfeiture of the charter is one consequence of the violation of the law attended with indirect losses. But if the violation itself is also attended with direct loss, distinct from that growing out of the forfeiture, the directors would doubtless be liable under the section for this loss also. It might, therefore perhaps, be made to apply to banks which became insolvent through transactions in violation of law, which the directors knowingly carried on, but, apparently, only after a suit for for- feiture of charter successfully brought by the Comptroller. In the case of an in- solvent bank placed in the hands of a receiver, it has been found much better in practice not to bring a suit against the directors under this section, as they can much more readily be made liable for losses which have occurred through their mis- management in a suit brought against them in equity by the receiver representing the bank, its creditors, and stockholders. For many other reasons, it is much pref- erable to retain the corporate franchises in closing up banks in the hands of receivers. 119. Insolvent Banks : Transfers, Assignments, &e., void. Section 5242.* — All transfers of the notes, bonds, bills of exchange, or other evidences of debt owing to any National banking association, or of deposits to its credit; all assignments of mortgages, sureties on real estate, or of judgments or de- crees in its favor; all deposits of money, bullion, or other val- uable thing for its use, or for the use of any of its shareholders or creditors, and all payments of money to either, made after the commission of an act of insolvency, or in contemplation thereof, made with a view to prevent the application of its as- sets in the manner prescribed by this chapter, or with a view to the preference of one creditor to another, except in payment of its circulating notes, shall be utterly null and void. The object of the laws placing a bank in the hands of a receiver, and controlling his action, is to secure a fair pro rata distribution of such assets as remain when the *For part of Section 5242, see page 84, under head of -'Suits and Jurisdiction." 7i bank becomes insolvent. It is plain that a bank is bankrupt at the moment that it cannot pay legitimate demands upon it in current funds; and the very fact that when a demand is made a bank offers something other than current funds, would appear to be presumptive evidence of insolvency. It is expected from the very nature of the business that a bank will always conduct its business so as to be pre- pared to meet all demands by immediate payment in money. In practice, however, it is often very difficult to determine the exact date of the insolvency, inasmuch as a bank may be really insolvent and yet be able to meet demands to some small extent in current funds, and it may be able, by disposing of its more easily liquidated assets, such as bonds or the best of its bills receivable, to supply itself with current funds to meet considerable demands. But while the exact moment of insolvency is ex- tremely difficult to fix theoretically, still practically, in each actual case, there comes a time when the officers are aware they cannot continue business. Usually, when they come to this conclusion, the institution closes its doors, and this act is the act of insolvency mentioned in the section. It may, however, happen that a bank closes its doors, but it subsequently appears, by competent evidence, that for days, weeks, or months prior to the actual closure the officers must have been aware that there was no hope for the institution, and they are not excusable because they permitted themselves to be misled by false hopes, but it is presumed that things appeared to them as they would appear under like circumstances to competent busi- ness men. If it can be proved that after the institution was in such condition that competent bankers would have closed its doors, the officers paid out moneys, &c. all such acts would be null and void, and when creditors were paid in other than current funds, say in bills receivable or other unliquidated assets, such creditors would doubtless be considered to have been put on notice, and could be compelled to refund and await pro rata distribution. TAX ON UNAUTHORIZED CIRCULATION. 120. Capital of State Bank converted into National Bank. Section 3410. — The capital of any State bank or banking association which has ceased or shall cease to exist, or which has been or shall be converted into a National bank, shall be assumed to be the capital as it existed immediately before such bank ceased to exist or was converted as aforesaid. The Act of March 3d. 1863, repealed laws taxing capital of both State and Na- tional banks. 121. Circulation : When Exempted from Tax. Section 341 1. — Whenever the outstanding circulation of any bank, association, corporation, company, or person is re- duced to an amount not exceeding five per centum of the chartered or declared capital existing at the time the same was issued, said circulation shall be free from taxation; and whenever any bank which has ceased to issue notes for cir- culation deposits in the Treasury of the United States, in law- 72 fill money, the amount of its outstanding circulation, to be re- deemed at par, under such regulations as the Secretary of the Treasury shall prescribe, it shall be exempt from any tax upon such circulation. See Act of July 12th, 1882, Sections 6 and 8, pages 109. 111. This section refers to State as well as National banks. State bank circulation has now been mostly retired, and National banks ceasing to issue circulation generally deposit lawful money. 122. Tax on "Notes of State Banks, &c., used for Circulation. Section 3412. — Every National banking association, State bank, or State banking association shall pay a tax of ten per centum on the amount of notes of any person, or of any State bank or State banking association, used for circulation and paid out by them. See Act of February 8th, 1875, Sections 19 and 20, pages 97. This prevents the circulation of notes issued by persons or State banks. 123. Tax on Notes of Cities, &e., used for Circulation. Section 3413. — Every National banking association, State bank or banker, or association shall pay a tax of ten per centum on the amount of notes of any town, city, or municipal cor- poration paid out by them. See Act of February 8th, 1875, Sections 19 and 20, pages 97. This section is intended to prevent the issue of notes by cities, towns, or munic- ipal corporations. 124. Monthly Returns of Notes of State Banks, Cities, &c., Used. Section 3414. — A true and complete return of the monthly amount of circulation, of deposits, and of capital, as aforesaid, and of the monthly amount of notes of persons, town, city, or municipal corporation, State banks, or State banking associ- ations paid out as aforesaid for the previous six months, shall be made and rendered in duplicate on the first day of Decem- ber and the first day of June, by each of such banks, associ- ations, corporations, companies, or persons, with a declaration annexed thereto, under the oath of such person, or of the presi- dent or cashier of such bank, association, corporation, or com- pany, in such form and manner as may be prescribed by the Commissioner of Internal Revenue, that the same contains a true and faithful statement of the amounts subject to tax, as aforesaid ; and one copy shall be transmitted to the collector 73 of the district in which any such bank, association, corporation, or company is situated, or in which such person has his place of business, and one copy to the Commissioner of Internal Revenue. See Act of February 8th, 1875, Section 21, page 97. It is believed that very few notes of the description mentioned are now issued. 125. In Default of Returns, Commissioner to Estimate. Section 3415. — In default of the returns provided in the preceding section, the amount of circulation, deposit, capital, and notes of persons, town, city, and municipal corporations, State banks, and State banking associations paid out, as afore- said, shall be estimated by the Commissioner of Internal Rev- enue, upon the best information he can obtain. And for any refusal or neglect to make return and payment, any such bank, association, corporation, company, or person so in default shall pay a penalty of two hundred dollars, besides the additional penalty and forfeitures provided in other cases. 126. Returns for Converted State Bank. Section 3416. — Whenever any State bank or banking asso- ciation has been converted into a National banking association, and such National banking association has assumed the lia- bilities of such State bank or banking association, including the redemption of its bills, by any agreement or understanding whatever with the representatives of such State bank or bank- ing association, such National banking association shall be held to make the required return and payment on the circu- lation outstanding, so long as such circulation shall exceed five per centum of the capital before such conversion of such State bank or banking association. Probably there are now no cases under this section. 127. Provisions for Tax on Deposits, Capital, and Circulation not to apply to National Banks. Section 3417. The provisions of this chapter, relating to the tax on the deposits, capital, and circulation of banks, and to their returns, except as contained in sections thirty-four hundred and ten, thirty-four hundred and eleven, thirty-four hundred and twelve, thirty-four hundred and thirteen, and thirty-four hundred and sixteen, and such parts of sections VOfA thirty-four hundred and fourteen and thirty-four hundred and fifteen as relate to the tax of ten per centum on certain notes, shall not apply to associations which are taxed under and by virtue of Title "National Banks." See Act of February 18th, 18T5, correcting Revised Statutes, page 97. Section 3418, page 74. 128. United States Securities Exempt from Local Taxation. Section 3701. — All stocks, bonds, Treasury notes, and other obligations of the United States shall be exempt from taxation by or under State or municipal or local authority.* Bank v. Supervisors, 7 Wall., 26. National bank currency is defined by Section 5413 to be an obligation of the United States. From this it is to be inferred that National bank notes in the hands of banks or individuals are exempt from State or municipal or local authority. Section 5413, however, from its connection with the laws inflicting penalties for counterfeiting, can be construed to make National bank currency an obligation of the United States only in the sense that it is to be protected from counterfeiting, &c, in the same manner as United States notes. This is the view taken by the Supreme Court of Indiana in the case of Commis- sioners of Montgomery County v. Elston (Thompson's National Bank Cases, 425). The judge there held that National bank notes were taxable. The Supreme Court of Mississippi, however, in Home v. Green, (Thompson's National Bank Cases, 643,) held that under Section 5413 National bank notes are obligations of the United States, and as such not subject to State, municipal, or local taxation. The question is therefore still an open one, never having been decided in the United States Su- preme Court. CHAPTER VII. STAMP TAX ON BANK CHECKS. 129. Tax on Bank Checks. Section 3418. — There shall be levied, collected, and paid for and in respect of every bank check, draft, or order for the payment of money, drawn upon any bank, banker, or trust company, at sight or on demand, by any person who makes, signs, or issues the same, or for whose use or benefit the same is made, signed or issued, two cents. See Act of February 8th, 1875, Section 15, page 96. Obsolete. ♦See also in this connection Section 5413 on page 78. 75 130. Official Checks Exempt from Tax. Section 3420. — All bank checks, drafts, or orders, as afore- said, issued by the officers of the United States Government, or by officers of any State, county, town, or other municipal cor- poration, are exempt from taxation : Provided, That it is the intent hereby to exempt from liability to taxation such State, county, town, or other municipal corporations in the exercise only of functions strictly belonging to them in their ordinary governmental and municipal capacity. 131. Unstamped Checks not Admissible in Evidence. Section 3421. — No bank check, draft, or order, required by law to be stamped, which is issued without being duly stamped, nor any copy thereof, shall be admitted or used in evidence in any court until a legal stamp, denoting the amount of tax, is affixed thereto, as prescribed by law. * Obsolete. 132. Unstamped Checks, &c. ; Penalty ; How made Valid. Section 3422. — Any person or persons who shall make, sign, or issue, or who shall cause to be made, signed, or issued, any instrument, document, or paper of any kind or description whatsoever, or shall accept, negotiate, or pay, or cause to be accepted, negotiated, or paid, any draft, or order, for the pay- ment of money, without the same being duly stamped, or having thereupon an adhesive stamp for denoting the tax chargeable thereon, and canceled in the manner required by law, with intent to evade the provisions of this Title, shall, for every such offense, forfeit the sum of fifty dollars, and such instrument, document, or paper, draft, [or] order, not being stamped according to law, shall be deemed invalid and of no effect: Provided, That hereafter, in all cases where the party has not affixed to any instrument the stamp required by law thereon, at the time of making or issuing the said instrument, and he or they, or any party having an interest therein, shall be subsequently desirous of affixing such stamp to said instru- ment, or, if said instrument be lost, to a copy thereof, he or they shall appear before the collector of the revenue of the *See also, in this connection, Section 5413, on page 78. 7 6 proper district, who shall, upon the payment of the price of the proper stamp required by law, and of a penalty of double the amount of tax remaining unpaid, but in no case less than five dollars, and where the whole amount of the tax denoted by the stamp required shall exceed the sum of fifty dollars, on payment also of interest, at the rate of six per centum on said tax from the day on which such stamp ought to have been affixed, affix the proper stamp to such instrument or copy, and note upon the margin thereof the date of his so doing, and the fact that such penalty has been paid; and the same shall there- upon be deemed and held to be as valid, to all intents and purposes, as if stamped when made or issued. * * * 133. Stamps to be Canceled; Penalty for Fraudulent Use. Section 3423. — In all cases where an adhesive stamp is used for denoting any tax imposed under this chapter, except as hereinafter provided, the person using or affixing the same shall write thereon the initials of his name and the date on which such stamp is attached or used, so that it may not again be used. And every person who fraudulently makes use of an adhesive stamp to denote any tax imposed by this chapter without so effectually cancelling and obliterating such stamp, •except as before mentioned, shall forfeit the sum of fifty dol- lars. * * * 134. Method of Cancellation. Section 3424. — The Commissioner of Internal Revenue is authorized to prescribe such method for the cancellation of stamps as substitute for, or in addition to the method pre- scribed in this chapter, as he may deem expedient and ef- fectual. * * * CHAPTER Yin. CRIMES AND MISDEMEANORS. 135. Penalty for Unlawfully Countersigning Notes. Section 5187. — No officer acting under the provisions of this Title shall countersign or deliver to any association, or to 77 any other company or person, any circulating notes contem- plated by this Title, except in accordance with the true intent and meaning of its provisions. Every officer who violates this section shall be deemed guilty of a high misdemeanor, and shall be fined not more than double the amount so counter- signed and delivered, and imprisoned not less than one year and not more than fifteen years. This applies to officers of the Government. No cases have arisen under it since the National banking law went into force. 136. U. S. or National Bank Notes as Security; Penalty. Section 5207. — No association shall hereafter offer or re- ceive United States notes or National bank notes as security or as collateral security for any loan of money, or for a con- sideration agree to withhold the same from use, or offer or receive the custody or promise of custody of such notes as security, or as collateral security, or consideration for any loan of money. Any association offending against the provisions of this section shall be deemed guilty of a misdemeanor, and shall be fined not more than one thousand dollars and a further sum equal to one-third of the money so loaned. The officer or officers of any association who shall make any such loan shall be liable for a further sum equal to one-quarter of the money loaned ; and any fine or penalty incurred by a violation of this section shall be recoverable for the benefit of the party bringing such suit. This was designed to prevent the locking up of money. It was aimed at a favorite method of accomplishing this at one time put in practice in New York city, and perhaps elsewhere. 137. Penalty for Embezzlement. Section 5209. — Every president, director, cashier, teller, clerk, or agent of any association, who embezzles, abstracts, or wilfully misapplies any of the moneys, funds, or credits of the association ; or who, without authority from the directors, issues or puts in circulation any of the notes of the association ; or who, without such authority, issues or puts forth any cer- tificate of deposit, draws any order or bill of exchange, makes any acceptance, assigns any note, bond, draft, bill of exchange, mortgage, judgment, or decree ; or who makes any false entry in any book, report, or statement of the association, with intent,. 78 in either case, to injure or defraud the association or any other company, body politic or corporate, or any individual person, or to deceive any officer of the association, or any agent ap- pointed to examine the affairs of any such association ; and every person who with like intent aids or abets any officer, clerk, or agent in any violation of this section, shall be deemed guilty of a misdemeanor, and shall be imprisoned not less than five years nor more than ten. 138. Obligations of the United States Defined. Section 5413. — The words "obligation or other security of the United States ' ' shall be held to mean all bonds, certifi- cates of indebtedness, National bank currency, coupons, United States notes, Treasury notes, fractional notes, certificates of deposit, bills, checks, or drafts for money, drawn by or upon authorized officers of the United States, stamps and other rep- resentatives of value, of whatever denomination, which have been or may [be] issued under any Act of Congress. See Act of February 18th, 1875, page 97, correcting Revised Statutes. 139. Penalty for Counterfeiting National Bank Notes. Section 5415. — Every person who falsely makes, forges, or counterfeits, or causes or procures to be made, forged, or coun- terfeited, or willingly aids or assists in falsely making, forging, or counterfeiting, any note in imitation of, or purporting to be in imitation of, the circulating notes, issued by any bank- ing association now or hereafter authorized and acting under the laws of the United States ; or who passes, utters, or pub- lishes, or attempts to pass, utter, or publish, any false, forged, or counterfeited note, purporting to be issued by any such as- sociation doing a banking business, knowing the same to be falsely made, forged, or counterfeited, or who falsely alters, or causes or procures to be falsely altered, or willingly aids or assists in falsely altering any such circulating notes, or passes, utters, or publishes, or attempts to pass, utter, or publish as true, any falsely altered or spurious circulating note issued, or purporting to have been issued, by any such banking associa- tion, knowing the same to be falsely altered or spurious, shall be imprisoned at hard labor not less than five years nor more 79 than fifteen years, and fined not more than one thousand dol- lars. 140. Penalty for using Plates, False Plates, Notes. &c. Section 5430. — Every person having control, custody, or possession of any plate, or any part thereof, from which has been printed, or which may be prepared by direction of the Secretary of the Treasury for the purpose of printing, any ob- ligation or other security of the United States, who uses such plate, or knowingly suffers the same to be used for the purpose of printing any such or similar obligation, or other security, or any part thereof, except as may be printed for the use of the United States by order of the proper officer thereof ; and every person who engraves, or causes or procures to be en- graved, or assists in engraving, any plate in the likeness of any plate designed for the printing of such obligation or other se- curity, or who sells any such plate, or who brings into the United States from any foreign place any such plate, except under the direction of the Secretary of the Treasury or other proper officer, or with any other intent, in either case, than that such plate be used for the printiug of the obligations or other securities of the United States ; or who has in his control, custody, or possession any metallic plate engraved after the similitude of any plate from which any such obligation or other security has been printed, with intent to use such plate, or suffer the same to be used in forging or counterfeiting any such obligation or other security, or any part thereof; or who has in his possession or custody, except under authority from the Secretary of the Treasury or other proper officer, any obli- gation or other security, engraved and printed after the simili- tude of any obligation or other security issued under the au- thority of the United States, with intent to sell or otherwise use the same ; and every person who prints, photographs, or in any other manner makes or executes, or causes to be printed, photographed, made, or executed, or aids in printing, photo- graphing, making, or executing any engraving, photograph, print, or impression in the likeness of any such obligation or other security, or any part thereof, or who sells any such en- graving, photograph, print, or impression, except to the United 8o States, or who brings into the United States from any foreign place any such engraving, photograph, print, or impression, except by direction of some proper officer of the United States, or who has or retains in his control or possession, after a dis- tinctive paper has been adopted by the Secretary of the Treas- ury for the obligations and other securities of the United States, any similar paper adapted to the making of any such obligation or other security, except under the authority of the Secretary of the Treasury or some other proper officer of the United States, shall be punished by a fine of not more than five thousand dollars, or by imprisonment at hard labor not more than fifteen years, or by both. 141. Penalty for Passing, Selling, &c., Counterfeits. Section 5431. — Every person who, with intent to defraud^ passes, utters, publishes, or sells, or attempts to pass, utter, publish, or sell, or brings into the United States with intent to pass, publish, utter, or sell, or keeps in possession or con- ceals with like intent any falsely made, forged, counterfeited, or altered obligation, or other security of the United States, shall be punished by a fine of not more than five thousand dollars, and by imprisonment at hard labor not more than fif- teen years. 142. Penalty for Taking Impressions of Implements, &e. Section 5432. — Every person who, without authority from the United States, takes, procures, or makes, upon lead, foil, wax, plaster, paper, or any other substance or material, an impression, stamp, or imprint of, from, or by the use of any bed-plate, bed-piece, die, roll, plate, seal, type, or other tool, implement, instrument, or thing used or fitted or intended to be used, in printing, stamping, or impressing, or in making other tools, implements, instruments, or things, to be used, or fitted, or intended to be used, in printing, stamping, or im- pressing any kind or description of obligation or other security of the United States, now authorized or hereafter to be author- ized by the United States, or circulating note or evidence of debt of any banking association under the laws thereof, shall be punished by imprisonment at hard labor not more than ten 8i years, or by a fine of not more than five thousand dollars, or both. 143. Penalty for Having Impression of Implements, &e. Section 5433. — Every person who, with intent to defraud, has in his possession, keeping, custody, or control, without authority from the United States, any imprint, stamp, or im- pression, taken or made upon any substance or material what- soever, of any tool, implement, instrument, or thing, used or fitted, or intended to be used, for any of the purposes men- tioned in the preceding section ; or who, with intent to defraud, sells, gives, or delivers any such imprint, stamp, or impression to any other person, shall be punished by imprisonment at hard labor not more than ten years, or by a fine of not more than five thousand dollars. 144. Penalty for Buying or Selling Counterfeits, &c. Section 5434. — Every person who buys, sells, exchanges, transfers, receives, or delivers, any false, forged, counterfeited, or altered obligation or other security of the United States, or circulating note of any banking association organized or act- ing under the laws thereof, which has been or may hereafter be issued by virtue of any act of Congress, with the intent that the same be passed, published, or used as true and genuine, shall be imprisoned at hard labor not more than ten years, or fined not more than five thousand dollars, or both. 145. Penalty for Officers Using Notes, &c., of Closed Banks. Section 5437. — In all cases where the charter of any cor- poration which has been or may be created by Act of Congress has expired or may hereafter expire, if any director, officer, or agent of the corporation, or any trustee thereof, or any agent of such trustee, or any person having in his possession or under his control the property of the corporation for the pur- pose of paying or redeeming its notes and obligations, know- ingly issues, reissues, or utters as money, or in any other way knowingly puts in circulation any bill, note, check, draft, or other security purporting to have been made by any such cor- poration whose charter has expired, or by any officer thereof, or purporting to have been made under authority derived there- 6 82 from, or if any person knowingly aids in any such act, he shall be punished by a fine of not more than ten thousand dollars, or by imprisonment not less than one year nor more than five years, or by both such fine and imprisonment. But nothing herein shall be construed to make it unlawful for any person, not being such director, officer, or agent of the cor- poration, or any trustee thereof, or any agent of such trustee, or any person having in his possession or under his control the property of the corporation for the purpose hereinbefore set forth, who has received or may hereafter receive such bill, note, check, draft, or other security, bona fide and in the ordinary transactions of business, to utter as money or otherwise circu- late the same. This section was an Act originally passed in 1837 to apply to the second Bank of the United States, the charter of which had then just expired. For some reason or other the compilers embodied this old Act in the Revised Statutes. 146. Receiving Public Moneys unless Depositary; Penalty. Section 5497. — Every banker, broker, or other person not an authorized depositary of public moneys, who knowingly receives from any disbursing officer, or collector of internal revenue, or other agent of the United States, any public money on deposit, or by way of loan or accommodation, with or with- out interest, or otherwise than in payment of a debt against the United States, or who uses, transfers, converts, appropri- ates, or applies any portion of the public money for any pur- pose not prescribed by law, and every president, cashier, teller, director, or other officer of any bank or banking association, who violates any of the provisions of this section, is guilty of an act of embezzlement of the public money so deposited, loaned, transferred, used, converted, appropriated, or applied, and shall be punished as prescribed in section fifty-four hun- dred and eighty-eight. See Sections 3639 and 3651 of U. S. Revised Statutes. It will be seen from this section that all banks other than public depositaries arc put on notice in regard to dealings with disbursing officers, &c, of the United States. If the provisions of this section are violated, such violation constitutes embezzlement. Sections 3639 and 3651 of the Revised Statutes are also of impor- tance to bankers. They have reference to public moneys. §3 CHAPTER IX. * SUITS, JURISDICTION, AND EVIDENCE. 147. National Bank Suits in Jurisdiction of District Courts. Section 563. — The District Courts shall have jurisdiction as follows: $ J|e # s|c j|e s|c :|i Fifteenth. Of all suits by or against any association estab- lished under any law providing- for National banking associa- tions within the district for which the court is held. Kennedy v. Gibson, 8 Wall., 506. The general subject of jurisdiction will be treated at length at the close of Section 380, page 84. 148. National Banks; Suits in Circuit Courts; to Enjoin Comptroller, &c. Section 629. — The Circuit Courts shall have original juris- diction as follows: Tenth. Of all suits by or against any banking association established in the district for which the court is held, under any law providing for National banking associations, f Eleventh. Of all suits brought by any banking association established in the district for which the court is held, under the provisions of Title "The National Banks," to enjoin the Comptroller of the Currency, or any receiver acting under his direction, as provided by said Title. X 149. Exclusive Jurisdiction of U. S. Courts in Suits for Penalties, &c. Section 711. — The jurisdiction vested in the courts of the * Jurisdiction of courts amended by proviso in Section 4 of Act of July 12th, 1882, page 108. f Kennedy v. Gibson, 8 Wall., 506. J See Act of February 18th, 1875, correcting Revised Statutes, page 97. 8 4 United States, in the cases and proceedings hereinafter men- tioned, shall be exclusive of the courts of the several States: * * * * * * * Second. Of all suits for penalties and forfeitures incurred under the laws of the United States. * * * ^ ^ * ;fc 150. In what Courts Suits may be Brought. Section 5198.* — Suits, actions, and proceedings against any association under this Title may be had in any circuit, district, or territorial court of the United States held within the district in which such association may be established, or in any State, county, or municipal court in the county or city in which said association is located, having jurisdiction in similar cases. See Act of February 18th, 1875, correcting Revised Statutes, page 97. 151. No Attachment before Final Judgment in State Court. Section 5242.* — No attachment, injunction, or execution shall be issued against such association or its property before final judgment in any suit, action, or proceeding, in any State, county, or municipal court. 152. Proceedings to Enjoin Comptroller, where had. Section 736. — All proceedings by any National banking association to enjoin the Comptroller of the Currency, under the provisions of any law relating to National banking associ- ations, shall be had in the district where such association is located. See Section 5237, page 68. 153. United States District Attorney to Conduct Suits. Section 380. — All suits and proceedings arising out of the provisions of law governing National banking associations, in which the United States or any of its officers or agents shall be parties, shall be conducted by the district attorneys of the several districts under the direction and supervision of the Solicitor of the Treasury. Jurisdiction. — In the original Act of February 25th, 1863, the only provisions in regard to suits brought by or against National banks were contained in Sections 11, 29, 55, and 59. Section 11 provided that National banking associations may *For parts of Sections 5198 and 5242, see also pages 43 and 70. sue and be sued, complain and defend in any court of law or equity as fully as natural persons. Section 29 provided that where proceedings against any association had been commenced by the Comptroller, on account of failure to redeem its circulating notes, such association may apply to the nearest circuit or district or territorial court of the United States to enjoin further proceedings. Section 55 was the same as Sec- tion 360 of the Revised Statutes, (above.) Section 59 provided that suits, actions, and proceedings by or against any associ- ation may be had in any circuit, district, or territorial court of the United States, held within the district in which such association may be established. The original Act, therefore, placed National banks on the same footing as natural persons before all courts, and in addition gave them the right to sue and be sued in the United States courts of their several districts, even where such actions might not otherwise be under the jurisdiction of those courts. The Act of June 3d, 18G4, superseded the Act of February 25th, 1863. Section 8 embodied Section 11 of previous Act. Section 50 repeats Section 29 of the original law, and Section 56 continues Section 55. Section 57, which takes the place of Section 59 of the older Act, reads as follows : •• That suits, actions, and proceedings against any association under this Act may be had in any circuit, district, or territorial court of the United States held within the district in which such association may be established; or in any State, county, or municipal court in the county or city in which said association is located, having jurisdiction in similar cases : Provided, That all proceedings to enjoin the Comp- troller under this Act shall be had in a circuit, district, or territorial court of the United States held in the district in which the association is located.'' The proviso is to prevent conflict with Section 50. The object in enlarging the terms of the previous law in Section 57 appears to have been to avoid the danger that the law as it previously stood might be construed to confine National banks to the United States courts, notwithstanding the provisions of Section 8, which would have been exceedingly inconvenient, both to the National banks and their opponents. The United States Supreme Court in Kennedy v. Gibson, 8 Wall., 498, held that the word "by "was accidentally omitted from Section 57, and that it should read '• suits, actions, and proceedings by and against" associations. The section restricts suits, &c, to the district, city, or county where the bank is located. (See Manu- facturers' National Bank v. Black, 2 Abb. U. S., 232.) The court held that a National bank located in one State could bring an action in the Circuit Court sitting within another State against a citizen thereof. In the United States Revised Statutes the provisions of Sections 8, 50, 50, and 57 of the Act of June 3d, 1864, are embodied with other matter not relating to National banks in Sections 563, 629, 5198, 736, and 380. Sections 563 and 629 establish the jurisdiction of the United States Circuit and District Courts over suits brought by or against any National banking association located in the district for which the court is held. The provisions of Section 8 are repeated in the fourth clause of Section 5136, page 7, which see. Sections 629 and 736 establish the jurisdiction of United States Circuit Courts over actions to enjoin the Comptroller, but such action must be had in the district where the bank is located. Section 5198, how- ever, while repeating the provision giving United States Circuit and District Courts jurisdiction over suits against National banks located in their several districts, also provides that suits against (omitting " by ") National banks may be brought in any 86 State, county, or municipal court in the county or city in which the bank is located, having jurisdiction in similar cases. Under this revision of the statutes, National banks could apparently bring suits in the United States courts only, They could, however, be sued in appropriate cases in the State, county, and municipal courts. A proviso attached to Section 4 of the Act of July 12th, 1882, makes the jurisdiction in all suits by or against National banks, except suits between them and the United States, the same as the jurisdiction for suits by or against banks other than National banks, which do or might do business where such National banks may be doing business when such suits are begun. This proviso 1 also repeals all laws and parts of laws inconsistent with itself. This places National banks on the same general footing as other banking corporations. They no longer are compelled to sue in the United States courts, nor can they sue in those courts merely in virtue of their cor- porate rights. But National banks, like other banks and citizens, may sue in such courts whenever the subject-matter of litigation involves some matter of Federal jurisdiction. (Union National Bank v. Miller, C. C. S. D. Ohio, Fed. Rep., Vol. XV, 1703.) Under this decision the United States courts would evidently take jurisdiction in any matter involving a Federal law. Section 5242, as to attachments before judgment in State courts, is probably not affected by the proviso to Section 4 of the Act of July 12th, 1882, nor is Section 380. The following cases bear on the question, and will repay investigation, although most of them were decided prior to passage of Act of July 12th, 1882 : Pettilon v. Noble, Thompson's National Bank Cases, 120, U. S. C. C. A State court cannot enforce the removal of a cause to the Federal court on the ground of exclusive jurisdiction. Mitchell v. Walker, Thompson, 180, U. S. C. C. A Federal court has uncondi- tional jurisdiction of all suits to which a National bank is a party, irrespective of amount or citizenship. Shoemaker v. National Mechanics' Bank, 2 Abb. U. S., 416; Missouri River Tele- graph Company v. First National Bank of Sioux City, 74 Ills., 217. The courts of one State have no jurisdiction in an action against a National bank located in another State to recover the penalty imposed by Act of Congress for taking unlawful interest. Newell v. National Bank of Somerset, 12 Bush., 57 ; Ordway v. Central National Bank, Thompson's National Bank Cases, 559 ; State v. Fuller, 34 Conn., 280 ; National Bank of Winterset v. Eyre, Brown's National Bank Cases, 224 ; Bank of Bethel v. Pahquioque Bank, 14 Wall., 389; Manufacturers' National Bank v. Bank, 2 Abb. U. S., 232 ; Main, Assignee, v. Second National Bank of Chicago, 6 Bissell, 26 ; Cadle v. Tracy, 11 Blatch., 101 ; Cook v. State National Bank, 52 N. Y., 962 ; Crocker v. Marine National Bank, 101 Mass., 240 ; Commercial National Bank v. Simmons, 10 Albany Law Journal, 155; Davis v. Cook, 9 Nevada, 134; Chatham National Bank of New York v. Merchants' National Bank of West Virginia, 4 Thompson & Cook, 196; Southwick v. First National Bank of Memphis, 7 Hun., 96; Ocean National Bank v. Earle, 7 Hun., 237; St. Louis National Bank v. Brinkman, 1 Fed. Rep.. 45 ; New Orleans Banking Association v. Adams, 3 Woods, 21 ; Dow v. Trasburg National Bank of Orleans, 50 Vt., 112. 154. Instruments certified by Comptroller may be Evidence. Section 884. — Every certificate, assignment, and convey- ance executed by the Comptroller of the Currency, in pursu- 87 ance of law and sealed with his seal of office, shall be received in evidence in all places and courts; and all copies of papers in his office, certified by him and authenticated by the said seal, shall in all cases be evidence equally with the originals. An impression of such seal directly on the paper shall be as valid as if made on wax or wafer. Certified copies of papers are usually furnished by the Comptroller's office upon affidavit setting forth what they are required for, and that the evidence can be pro- cured in no other way, provided the parties requesting are entitled to receive them, and if the giving of the copies would not be detrimental to the public service. 155. Certified copies of Organization Certificate Evidence. Section 885. — Copies of the organization certificate of any National banking association, duly certified by the Comptroller of the Currency and authenticated by his seal of office, shall be evidence in all courts and places within the jurisdiction of the United States of the existence of the association, and of every matter which could be proved by the production of the orig- nal certificate. AMENDMENTS AND ADDITIONAL ACTS. An Act approved June 20th, 1874. 156. "The National Bank Act." Section i. That the Act entitled "An Act to provide a national currency secured by a pledge of United States bonds, and to provide for the circulation and redemption thereof," approved June third, eighteen hundred and sixty-four, shall hereafter be known as the "National Bank Act." The change in name from National Currency Act to National Bank Act was doubt- less the result of a radical change in the policy of Congress since the date of the enactment of the National Currency Act. At the date of the passage of the Legal Tender Acts Congress regarded the issue of legal-tender notes as a war measure. The original Legal Tender Act provided that the holders of the notes might at any time fund them into 5.20 six per cent, bonds. The second Legal Tender Act was to the same purport. But the Act of March 3d, 18G3, provided that the right to fund legal-tender notes into bonds bearing six per cent, interest was to cease on and after the 1st day of July, 1863. This was the first step in the perpetuation of the legal-tender note, which, in its first conception, was to disappear with the war. The National currency was to be National bank notes, which were to take the place of the funded legal-tender notes and all other forms of the paper money. When 88 the original plan was changed by the retention of the legal-tender notes, to call National bank notes the National currency became an absurdity, and the name National Currency Act was, therefore, changed to National Bank Act. It indicated the fall of the National banking system from the place of primary importance and usefulness in National finances, and a retrograde in the soundness of the average financial views of the members of the National Congress. 157. Lawful Money Reserve on Circulation Abolished. Section 2. — That section thirty-one of the " National Bank Act" be so amended that the several associations therein pro- vided for shall not hereafter be required to keep on hand any amount of money whatever by reason of the amount of their respective circulations; but the moneys required by said sec- tion to be kept at all times on hand shall be determined by the amount of deposits in all respects, as provided for in the said section. See Section 5191, page 39. . This was a measure of apparent convenience and benefit to the banks, permitting them to keep a less reserve. It indicates, however, a change of policy, which doubtless makes the banks less independently strong and more dependent on the Government. It is in fact a centralizing policy which assimilates the National bank note more and more to the likeness of a Government note. 158. Redemption Fund; Redemption of Notes, &c. Section 3. — That every association organized, or to be or- ganized, under the provisions of the said Act, and of the sev- eral Acts amendatory thereof, shall at all times keep and have on deposit in the Treasury of the United States, in lawful money of the United States, a sum equal to five per centum of its circulation, to be held and used for the redemption of such circulation, which sum shall be counted as a part of its lawful reserve, as provided in section two of this Act; and when the circulating notes of any such associations, assorted or un- assorted, shall be presented for redemption, in sums of one thousand dollars or any multiple thereof, to the Treasurer of the United States, the same shall be redeemed in United States notes. All notes so redeemed shall be charged by the Treas- urer of the United States to the respective associations issuing the same, and he shall notify them severally on the first day of each month, or oftener, at his discretion, of the amount of such redemptions ; and whenever such redemptions for any as- sociation shall amount to the sum of five hundred dollars, such §9 association so notified shall forthwith deposit with the Treas- urer of the United States a sum in United States notes equal to the amount of its circulating notes so redeemed. And all notes of National banks, worn, defaced, mutilated, or other- wise unfit for circulation, shall, when received by any Assistant Treasurer, or at any designated depository of the United States, be forwarded to the Treasurer of the United States for redemp- tion, as provided herein. And when such redemptions have been so reimbursed, the circulating notes so redeemed shall be forwarded to the respective associations by which they were is- sued; but if any of such notes are worn, mutilated, defaced, or rendered otherwise unfit for use, they shall be forwarded to the Comptroller of the Currency and destroyed, and replaced as now provided by law: Provided, That each of said associations shall reimburse to the Treasury the charges for transportation and the costs for assorting such notes, ::< and the associations here- after organized shall also severally reimburse to the Treasury the cost of engraving such plates as shall be ordered by each association respectively, and the amount assessed upon each association shall be in proportion to the circulation redeemed, and be charged to the fund on deposit with the Treasurer: And provided further, That so much of section thirty-two of said National Bank Act requiring or permitting the redemp- tion of its circulating notes elsewhere than at its own counter, except as provided for in this section, is hereby repealed, f This section requires, instead of the reserve ou circulation abolished by the pre- ceding section, a deposit equal to five per cent, of its circulation by each bank, in lawful money, with the United States Treasurer for the redemption of its circula- tion. The deposit so made may be counted as a part of the bank's lawful money reserve. When National bank notes of one or more associations are presented in lots of $1000, or any multiple thereof, the Treasurer may redeem the same. The Treas- urer has no authority in law for redeeming a lot less than $1000, or any lot unless it is in even thousands. The object of this was undoubtedly to avoid a multiplicity of accounts with the outside public. The notes are charged to the respective asso- ciations issuing them until the notes so redeemed for and charged to any one asso- ciation amount to $500, when that association is notified and required to deposit £ lawful money equal to the amount redeemed. Theoretically the five per cent, re- *See Act of July 12th, 1882, Section 8, page 111. ■[See Sections 5102, 5105, and 5226, pages 40, 41, and 63. % See Decisions of Attorney General. 9 o demption fund is never touched. It remains intact, and this explains why it can consistently be counted as a part of the lawful money reserve of a bank. When a hank first makes its five per cent, deposit it receives a credit on the books of the Treasury. The cash goes into the general fund and becomes indistinguishably mingled therewith. The Treasury redeems the notes as they appear from its own funds, and in tho contemplation of law no charge is made to the five-per-cent. account of the bank, but when the redemptions made for it reach $500, then it is notified and required to reimburse the Treasury for the sum paid on its behalf. The requirement that National bank notes unfit for circulation shall be sent in by the Assistant Treasurers and designated depositaries of the United States is intended to keep the circula- tion up to a fair standard of newness and cleanliness. Notes redeemed at the Treasury fit for circulation are sent back to the banks ; unfit notes are destroyed as provided in Section 5184, (which see, as well as remarks under Section 5232.) The associations are, according to the amount of notes redeemed for each, to pay all the expenses of this process of redemption, such expense to be charged to the five-per-cent. account. Prior to the passage of this section the expense of the plates and all expense of preparing the notes of National banks were paid out of the proceeds of the tax on circulation ; but plates ordered after the date of this sec- tion are to be paid for by the banks themselves. (See Section 5173, and also Section 8, Act of July 12th, 1882.) Banks are not relieved from redeeming their own notes at their own counters. (See remarks under Section 5227, page 63.) The detailed regulations governing the redemption of National bank notes will be found on page 167, this work. 159. Retiring Circulation and Withdrawing Bonds. Section 4. — That any association organized under this Act, or any of the Acts of which this is an amendment, desiring to withdraw its circulating notes, in whole or in part, may, upon the deposit of lawful money with the Treasurer of the United States in sums of not less than nine thousand dollars, take up the bonds which said association has on deposit with the Treasurer for the security of such circulating notes, which bonds shall be assigned to the bank in the manner specified in the nineteenth section of the National Bank Act; and the out- standing notes of said association, to an amount equal to the legal-tender notes deposited, shall be redeemed at the Treasury of the United States, and destroyed as now provided by law: Provided, That the amount of the bonds on deposit for circu- lation shall not be reduced below fifty thousand dollars. See Section 5167, page 29. See Act of July 12th, 1882, Section 9, page 111. See Sections 5159, 5160, and 5167, pages 26 and 29. Prior to the enactment of this section the only method by which National bank3 not in liquidation could withdraw any portion of their bonds was by gathering up Of THt j VNIYER8/TY 9i their own circulation, and surrendering the same for cancellation and destruction to the Comptroller of the Currency. (See Section 5167, page 29.) This section also reduces the minimum of bonds to be kept from an amount equal to one-third of the capital stock, and not less than $30,000 to $50,000 in each case. (See Sections 5150 and 51 GO, page 2G.) The Revised Statutes did not become law until two days after the passage of the Act of June 20th, 1874, viz., on June 22d, and therefore the re- quirement that notes redeemed under this section be destroyed as then provided by law must refer to the then existing law, now embodied in Section 5184. The mini- mum of bonds required to be kept on deposit by National bauks is in certain cases — banks with a capital of $150,000 and less — further reduced by the provisions of Section S of the Act of July 12th, 18S2, page 111. 160. The Charter Number of Banks to be on Notes. Section 5. — That the Comptroller of the Currency shall, under such rules and regulations as the Secretary of the Treasury may prescribe, cause the charter numbers of the association to be printed upon all National bank notes which may be hereafter issued by him. This is for convenience in assorting notes. 161. Amount of United States Notes Allowed for Circulation. Section 6. — That the amount of United States notes out- standing and to be used as a part of the circulating medium shall not exceed the sum of three hundred and eighty-two million dollars, which said sum shall appear in each monthly statement of the public debt, and no part thereof shall be held or used as a reserve. "Section 8 of the Act of January 14th, 1875, authorized an increase of the circu- lation of the National banks in accordance with existing law without respect to the limit previously existing, but required the Secretary of the Treasury to retire legal-tender notes to an amount equal to eighty per cent, of the National bank notes thereafter issued, until the amount of such legal-tender notes outstanding should be 300 millions, and no more. Under the operation of this Act $35,318,984 of legal-tender notes were retired, leaving the amount in circulation on May 31st, 1878, the date of the repeal of this provision, $346,681,016, which is the amount now outstanding.'' (From United States Notes, by Hon. John Jay Knox, page 140.) 162. Relative to Withdrawal of $55,000,000 Circulation. Section 7. — That so much of the Act entitled "An Act to provide for the redemption of the three per cent, temporary- loan certificates, and for an increase of National bank notes," as provides that no circulation shall be withdrawn under the pro- visions of section six of said Act, until after the fifty-four millions granted in section one of said Act shall have been taken up, is hereby repealed ; and it shall be the duty of the Comptroller 02 of the Currency, under the direction of the Secretary of the Treasury, to proceed forthwith, and he is hereby authorized and required, from time to time, as applications shall be duly made therefor, and until the full amount of fifty-five million dollars shall be withdrawn, to make requisitions upon each of the National banks described in said section, and in the man- ner therein provided, organized in States having an excess of •circulation, to withdraw and return so much of their circula- tion as by said Act may be apportioned to be withdrawn from them, or, in lieu thereof, to deposit in the Treasury of the United States lawful money sufficient to redeem such circula- tion ; and upon the return of the circulation required, or the deposit of lawful money, as herein provided, a proportionate amount of the bonds held to secure the circulation of such as- sociation as shall make such return or deposit shall be sur- rendered to it. Obsolete. See Section 3, Act of January 14th, 1875, page 94. See Section 5179, p. 34. Superseded by Act of January 14th, 1875, Section 3, page 94. 163. Bonds to be Sold on Failure to Return Circulation. Section 8. — That upon the failure of the National banks upon which requisition for circulation shall be made, or of any of them, to return the amount required, or to deposit in the Treasury lawful money to redeem the circulation required within thirty days, the Comptroller of the Currency shall at once sell, as provided in section forty-nine of the National Currency Act, approved June third, eighteen hundred and sixty-four, bonds held to secure the redemption of the circula- tion of the association or associations which shall so fail, to an amount sufficient to redeem the circulation required of such association or associations, and with the proceeds, which shall be deposited in the Treasury of the United States, so much of the circulation of such association or associations shall be re- deemed as will equal the amount required and not returned ; and if there be an excess of proceeds over the amount required for such redemption, it shall be returned to the association or associations whose bonds shall have been sold. And it shall be the duty of the Treasurer, Assistant Treasurers, designated depositaries, and National bank depositaries of the United 93 States, who shall be kept informed by the Comptroller of the Currency of such associations as shall fail to return circulation as required, to assort and return to the Treasury for redemp- tion the notes of such associations as shall come into their hands until the amount required shall be redeemed, and in like manner to assort and return to the Treasury, for redemp- tion, the notes of such National banks as have failed, or gone into voluntary liquidation for the purpose of winding up their affairs, and of such as shall hereafter so fail or go into liqui- dation. Obsolete. Superseded by Act of January 14tb, 18~5, Section 3, page 94. See Sec- tion 5231, page 65. 164. Issue of New Notes for $55,000,000 Withdrawn, &c. Section 9. — That from and after the passage of this Act it shall be lawful for the Comptroller of the Currency, and he is hereby required, to issue circulating notes, without delay, as applications therefor are made, not to exceed the sum of fifty- five million dollars, to associations organized, or to be organ- ized, in those States and Territories having less than their proportion of circulation, under an apportionment made on the basis of population and of wealth, as shown by the returns of the census of eighteen hundred and seventy ; * and every asso- ciation hereafter organized shall be subject to, and be governed by, the rules, restrictions, and limitations, and possess the rights, privileges, and franchises, now or hereafter to be pre- scribed by law as to National banking associations, with the same power to amend, alter, and repeal provided by the ' ' Na- tional Bank Act :" Provided, That the whole amount of cir- culation withdrawn and redeemed from banks transacting busi- ness shall not exceed fifty-five million dollars, and that such circulation shall be withdrawn and redeemed as it shall be necessary to supply the circulation previously issued to the banks in those States having less than their apportionment : * And provided further, That not more than thirty million dol- lars shall be withdrawn and redeemed as herein contemplated during the fiscal year ending June thirtieth, eighteen hundred and seventy-five. * Obsolete. Superseded by Act of January 14th, 1875, Section 3, page 94. 94 Extract from an Act approved June 23d, 1874. 165. Notes to be Destroyed by Maceration. For the maceration of National bank notes, United States notes, and other obligations of the United States authorized to be destroyed, ten thousand dollars; and that all such issues hereafter destroyed may be destroyed by maceration instead of burning to ashes, as now provided by law; and that so much of sections twenty-four and forty-three of the National Currency Act as requires National bank notes to be burned to ashes is hereby repealed. See Sections 5184 and 5225, pages 36 and 62. An Act approved January 14th, 1875. 166. Silver Coins to Redeem Fractional Currency. That the Secretary of the Treasury is hereby authorized and required, as rapidly as practicable, to cause to be coined, at the mints of the United States, silver coins of the denominations of ten, twenty-five, and fifty cents, of standard value, and to issue them in redemption of an equal number and amount of frac- tional currency of similar denominations, or, at his discretion, he may issue such silver coins through the mints, the sub- treasuries, public depositaries, and post-offices of the United States ; and, upon such issue, he is hereby authorized and re- quired to redeem an equal amount of such fractional currency, until the whole amount of such fractional currency outstanding shall be redeemed. 167. Charge for Coining Gold Bullion Repealed. Section 2. — That so much of section three thousand five hundred and twenty-four of the Revised Statutes of the United States as provides for a charge of one-fifth of one per centum for converting standard gold bullion into coin is hereby re- pealed ; and hereafter no charge shall be made for that service. 168. Repeal of Limit of Circulation &c ; Redemption of Legal Tenders. Section 3. — That section five thousand one hundred and seventy-seven of the Revised Statutes, limiting the aggregate 95 amount of circulating notes of National banking associations, be, and is hereby, repealed ; and each existing banking asso- ciation may increase its circulating notes in accordance with existing law without respect to said aggregate limit ; and new banking associations may be organized in accordance with ex- isting law without respect to said aggregate limit ; and the provisions of law T for the withdrawal and redistribution of Na- tional bank currency among the several States and Territories are hereby repealed. And whenever, and so often, as circula- ting notes shall be issued to any such banking association, so increasing its capital or circulating notes, or so newly organized as aforesaid, it shall be the duty of the Secretary of the Treasury to redeem the legal-tender United States notes in excess only of three hundred million of dollars, to the amount of eiehtv per centum of the sum of National bank notes so issued to anv such banking association as aforesaid, and to continue such redemption as such circulating notes are issued until there shall be outstanding the sum of three hundred million dollars of such legal-tender United States notes, and no more. * And on and after the first day of January, anno Domini eighteen hundred and seventy-nine, the Secretary of the Treasury shall redeem, in coin, the United States legal-tender notes then out- standing, on their presentation for redemption at the office of the Assistant Treasurer of the United States in the city of New York,t in sums of not less than fifty dollars. And to enable the Secretary of the Treasury to prepare and provide for the redemption in this Act authorized or required, he is authorized to use any surplus revenues, from time to time, in the Treasury not otherwise appropriated, and to issue, sell, and dispose of, at not less than par, in coin, either of the descriptions of bonds of the United States described in the Act of Congress approved July fourteenth, eighteen hundred and seventy, entitled "An Act to authorize the refunding of the National debt/' with like qualities, privileges, and exemptions, to the extent neces- sary to carry this Act into full effect, and to use the proceeds * Subsequent Act of May 31st, 1878. forbui further retirement of legal-tender notes and fixed limit at amount then outstanding, $346,681,016. f Amended by Act March 3, 1S3T, page L15B. 9 6 thereof for the purposes aforesaid. And all provisions of law- inconsistent with the provisions of this Act are hereby repealed. See Sections 5177 to 5181, pages 33 and 35. See Act of June 20th, 1874, Sections 7, 8, and 9. This Act removed from the statute book any restriction as to the aggregate amount of National bank circulation. It was plain to Congress at this time that with the resumption of specie payments the legal-tender notes would finally disap- pear. They provided a method for the gradual reduction of such notes during the period anterior to the date selected for resumption, and contemplated that National bank notes would more than fill the void left by the retired legal-tender notes, cal- culating about 20 per cent, of the contemplated new issues of National bank notes would meet the demands of the gradually-increasing business of the country. If this policy had been adhered to, it is probable that with the resumption of specie pay- ments the legal-tender notes would have been presented for redemption, and would have been canceled and not reissued, National bank notes taking their place, and, with the gold coin issued in redemption of the legal-tender notes, have formed the circulating medium of the United States. The Act of May 31st, 1878, indicated the ascendancy of another spirit in the councils of the Nation fixing, it has been seen, a limit below which legal-tender notes should not be reduced. Even with the resumption of specie payments no reduction of the aggregate of legal-tender notes has occurred, inasmuch as such notes are reissued as soon as redeemed in order to fulfill the requirements of the Act of May 31st, 1878. The previous Act of February, 1878, authorizing the issue of silver certificates, was a chip of the same block, and the aggregate issue of National bank notes instead of increasing, as was contemplated by the Act of January 14th, 1875, has dwindled instead in competition with these two forms of Government currency. It is a maxim in finance that the inferior currency will always drive out the superior. An Act approved January 19th, 1875. 169. Repeal of Limit of National Gold Bank Circulation. That so much of section five thousand one hundred and eighty- five of the Revised Statutes of the United States as limits the cir- culation of banking associations, organized for the purpose of issuing notes payable in gold, severally to one million dollars, be, and the same is hereby, repealed ; and each of such existing banking associations may increase its circulating notes, and new banking associations may be organized, in accordance with existing law, without respect to such limitation. See Section 5185, page 37. There are at present no gold banks. Extract from an Act approved February 8th, 1875. 170. Tax on Checks ; Notes of State Banks, &c. Section 15. — That the words "bank check, draft, or order 97 for the payment of an}- sum of money whatsoever, drawn upon any bank, banker, or trust company, at sight or on demand, two cents, ' ' in Schedule B of the Act of June thirtieth, eighteen hundred and sixty-four, be, and the same is hereby, stricken out, and the following paragraph inserted in lieu thereof : "Bank check, draft, order, or voucher for the payment of any sum of money whatsoever, drawn upon any bank, banker, or trust company, two cents. ' ' * Section 19. — That every person, firm, association other than National bank associations, and every corporation, State bank, or State banking association, shall pay a tax of ten per centum on the amount of their own notes used for circulation and paid out by them, f 171. Tax on Notes of State Banks, Cities, &c. Section 20. — That every such person, firm, association, corporation, State bank, or State banking association, and also every National banking association, shall pay a like tax of ten per centum on the amount of notes of any person, firm, asso- ciation other than a National banking association, or of any corporation, State bank, or State banking association, or of any town, city, or municipal corporation, used for circulation and paid out by them. See Sections 3412 and 3413, page 72. 172. Returns to Commissioner of Internal Revenue. Section 21. — That the amount of such circulating notes, and of the tax due thereon, shall be returned, and the tax paid at the same time, and in the same manner, and with like pen- alties for failure to return and pay the same, as provided by law for the return and payment of taxes on deposits, capital, and circulation, imposed by the existing provisions of internal revenue law. See Section 3414, page 72. Extracts from an Act approved February i8th, 1875 173. Correcting Errors in Revised Statutes. That for the purpose of correcting errors and supplying * Section 15 obsolete. fSee Sections 3412, 3413, 3418, pages 72, 74. 9 8 omissions in the Act entitled "An Act to revise and consoli- date the statutes of the United States in force on the first day of December, anno Domini one thousand eight hundred and seventy-three," so as to make the same truly express such laws, the following amendments are hereby made therein :* Section three hundred and thirty is amended by adding thereto the following: "A description of the seal, with an im- pression thereof, and a certificate of approval by the Secretary of the Treasury, shall be filed in the office of the Secretary of State." Section three hundred and thirty-three is amended by in- serting, after the word ' ' Congress, ' ' in the second line, the words " at the commencement of its session." Section six hundred and twenty-nine is amended by striking out, in the first line of paragraph eleven, the words ' ' or against. ' ' Section three thousand four hundred and seventeen is amended by inserting, in the fourthf line, after the word " twelve," the words " thirty-four hundred and thirteen." Section three thousand eight hundred and eleven is amended by striking out " Secretary of the Treasury," and inserting ' ' Comptroller of the Currency ; ' ' also, by adding, after the word ' ' banks, ' ' in the second line, the words ' ' and banks un- der State and Territorial laws." Section five thousand one hundred and eighty-three is amended by inserting, after the word "issue," in the second line, the words ' ' post-notes or. ' ' Section five thousand one hundred and ninety-eight is amended by adding thereto the following : ' ' That suits, ac- tions, and proceedings against any association under this Title may be had in any circuit, district, or territorial court of the United States held within the district in which such associa- tion may be established, or in any State, county, or municipal court in the county or city in which said association is located having jurisdiction in similar cases." Section five thousand two hundred and twenty-four is *The corrections indicated have been made in the text, f Fifth line of this work. 99 amended by adding thereto the following : "And if any such bank shall fail to make the deposit and take up its bonds for thirty days after the expiration of the time specified, the Comp- troller of the Currency shall have power to sell the bonds pledged for the circulation of said bank, at public auction in New York city, and, after providing for the redemption and cancellation of said circulation and the necessary expenses of the sale, to pay over any balance remaining to the bank or its legal representative. ' ' Section five thousand two hundred and twenty-eight is amended by striking out, in the third line, the words u of for- feiture of the bonds," and inserting the word "thereof." Section five thousand four hundred and thirteen is amended by inserting, in the third line, after the word " National," the word "bank." An Act approved February 19th, 1875. 174. Compensation of National Bank Examiners. That section five thousand two hundred and forty of the Re- vised Statutes of the United States be so amended* that the lat- ter clause of said section, after the word " Comptroller" in the eighth t line of said section, be amended so that the same shall read as follows, namely: "That all persons appointed to be examiners of National banks not located in the redemption cities specified in section five thousand one hundred and ninety- two of the Revised Statutes of the United States, or in any one of the States of Oregon, California, and Nevada, or in the Ter- ritories, shall receive compensation for such examination as follows : For examining National banks having a capital less than one hundred thousand dollars, twenty dollars; those hav- ing a capital of one hundred thousand dollars and less than three hundred thousand dollars, twenty-five dollars ; those having a capital of three hundred thousand dollars and less than four hundred thousand dollars, thirty-five dollars; those having a capital of four hundred thousand dollars and less than five hundred thousand dollars, forty dollars; those having a capi- * This amendment has been incorporated into the text, f Ninth line of this work. IOO tal of five hundred thousand dollars and less than six hundred thousand dollars, fifty dollars ; those having a capital of six hundred thousand dollars and over, seventy-five dollars; which amounts shall be assessed by the Comptroller of the Currency upon, and paid by, the respective associations so examined, and shall be in lieu of the compensation and mileage heretofore allowed for making said examinations; and persons appointed to make examination of National banks in the cities named in section five thousand one hundred and ninety-two of the Revised Statutes of the United States, or in any one of the States of Oregon, California, and Nevada, or in the Territories, shall receive such compensation as may be fixed by the Secre- tary of the Treasury upon the recommendation of the Comp- troller of the Currency; and the same shall be assessed and paid in the manner hereinbefore provided. ' ' See page 57. An Act approved June 23d, 1874. 175. Stamping Unstamped Checks. &c. ; Limit. That all instruments, documents, and papers heretofore made, signed, or issued, and subject to a stamp-duty or tax under any law heretofore existing and remaining unstamped, may be stamped by any person having an interest therein, or, where the original is lost, a copy thereof, at any time prior to the first of January, eighteen hundred and seventy-six. And said instru- ments, documents, and papers, and any record thereof, shall be as valid, to all intents and purposes, as if stamped when made, signed, or issued; but no right acquired in good faith shall in any manner be affected by such stamping as aforesaid : Provided, That to render such stamping valid, the person de- siring to stamp the same shall appear with the instrument document, or paper, or copy thereof, before some judge or clerk of a court of record, and before him affix the proper stamp; and the said judge or clerk shall indorse on such writing or copy a certificate, under his hand when made by said judge, and under his hand and seal when made by said clerk, setting forth the date at which, and the place where, the stamp was so affixed, the name of the person presenting said writing or IOI copy, the fact that it was thus affixed, and that the stamp was duly canceled in his presence. Section 2. — That all laws or parts of laws in conflict with the above are hereby repealed. See Section 3422, page 75. Extract from an Act approved February 18th, 1875. 176. Unstamped Instruments. Section three thousand four hundred and twenty-two is amended by inserting, after the word "issued," in the twenty- seventh* line, the following : "And provided further, That where it shall appear to said collector, upon oath or otherwise, to his satisfaction, that any such instrument has not been duly stamped at the time of making or issuing the same, by reason of accident, mistake, inadvertence, or urgent necessity, and without any willful design to defraud the United States of the stamps, or to evade or delay the payment thereof, then, and in such case, if such instrument, or, if the original be lost, a copy thereof, duly certified by the officer having charge of any records in which such original is required to be recorded, or otherwise duly proven to the satisfaction of the collector, shall, within twelve calendar months after the making or issuing thereof, be brought to the said collector of revenue to be stamped, and the stamp-tax chargeable thereon shall be paid, it shall be lawful for the said collector to remit the penalty aforesaid, and to cause such instrument to be duly stamped." An Act approved June 30th, 1876. 177. Receiver,— for Violation of Law, Insolvency, &c. Section i. That whenever any National banking associa- tion shall be dissolved, and its rights, privileges, and fran- chises declared forfeited, as prescribed in section fifty-two hundred and thirty-nine of the Revised Statutes of the United States, or whenever any creditor of any National banking association shall have obtained a judgment against it in any court of record, and made application, accompanied by a certificate from the clerk of the court stating that such * Thirty-second line of this work. 102 judgment has been rendered and has remained unpaid for the space of thirty days, or whenever the Comptroller shall be- come satisfied of the insolvency of the National banking asso- ciation, he may, after due examination of its affairs, in either case, appoint a receiver, who shall proceed to close up such association, and enforce the personal liability of the sharehold- ers, as provided in section fifty-two hundred and thirty-four of said statutes. See Sections 5234 and 5239, pages 66 and 69. This section makes insolvency due cause for the appointment of a receiver by the Comptroller, either insolvency indicated by unpaid judgment or satisfaction on the Comptroller's part of insolvency. In either case an examination of the bank's af- fairs must first be made. It also provides that the Comptroller may appoint a re- ceiver to take charge of the affairs of a bank whose franchises, &c, have been for- feited after proceedings under Section 5239. 178. Enforcement of Individual Liability of Shareholders. Section 2. — That when any National banking association shall have gone into liquidation under the provisions of section five thousand two hundred and twenty of said statutes, the in- dividual liability of the shareholders provided for by section fifty-one hundred and fifty-one of said statutes may be enforced by any creditor of such association, by bill in equity in the nature of a creditor's bill, brought by such creditor on behalf of himself and of all other creditors of the association, against the shareholders thereof, in any court of the United States having original jurisdiction in equity for the district in which such association may have been located or established. This enables creditors of banks which have gone into voluntary liquidation to protect themselves and enforce the liability of shareholders through the courts without reference to the Comptroller of the Currency. Under this section the court might appoint a receiver. 179. Agent to Manage Affairs of Failed Bank ; Election, Powers, &e. Section 3. — That whenever any association shall have been or shall be placed in the hands of a receiver, as provided in section fifty-two hundred and thirty-four and other sections of said statutes, and when, as provided in section fifty-two hun- dred and thirty-six thereof, the Comptroller shall have paid to each and every creditor of such association, not including shareholders who are creditors of such association, whose claim 103 or claims as such creditor shall have been proved, or allowed as therein prescribed, the full amount of such claims and all expenses of the receivership, and the redemption of the circu- lating notes of such association shall have been provided for by depositing lawful money of the United States with the Treasurer of the United States, the Comptroller of the Cur- rency shall call a meeting of the shareholders of such associa- tion by giving notice thereof for thirty days in a newspaper published in the town, city, or county where the business of such association was carried on, or if no newspaper is there published, in the newspaper published nearest thereto, at which meeting the shareholders shall elect an agent, voting by ballot, in person or by proxy, each share of stock entitling the holder to one vote; and when such agent shall have received votes representing at least a majority of the stock in value and num- ber of shares, and when any of the shareholders of the associ- ation shall have executed and filed a bond to the satisfaction of the Comptroller of the Currency, conditioned for the pay- ment and discharge in full of any and every claim that may hereafter be proved and allowed against such association by and before a competent court, and for the faithful performance and discharge of all and singular the duties of such trust, the Comptroller and the receiver shall thereupon transfer and de- liver to such agent all the undivided or uncollected or other assets and property of such association then remaining in the hands or subject to the order or control of said Comptroller and said receiver, or either of them; and for this purpose, said Comptroller and said receiver are hereby severally empowered to execute any deed, assignment, transfer, or other instrument in writing that may be necessary and proper; whereupon the said Comptroller and the said receiver shall, by virtue of this Act, be discharged and released from any and all liabilities to such association, and to each and all of the creditors and share- holders thereof; and such agent is hereby authorized to sell, compromise, or compound the debts due to such association upon the order of a competent court of record or of the United States Circuit Court for the district where the business of the association was carried on. Such agent shall hold, control, and dispose of the assets and property of any association which 104 he may receive as hereinbefore provided for the benefit of the shareholders of such association as they, or a majority of them in value or number of shares, may direct, distributing such assets and property among such shareholders in proportion to the shares held by each; and he may, in his own name, or in the name of such association, sue and be sued, and do all other lawful acts and things necessary to finally settle and dis- tribute the assets and property in his hands. In selecting an agent as hereinbefore provided, administrators or executors of deceased shareholders may act and sign as the decedent might have done if living, and guardians may so act and sign for their ward or wards. This section provides for disposition of assets of National banking associations placed in the hands of receivers, remaining after all creditors other than stock- holders have been paid in full. They are to be turned over to an agent of the stockholders for the benefit of the latter. (See, also, Section 5236, page 67.) 180. Sale of Stock of Shareholder not Paying Assessment. Section 4. — That the last clause of section fifty-two hun- dred and five of said statutes is hereby amended by adding to the said section the following proviso : "And provided, That if any shareholder or shareholders of such bank shall neglect or refuse, after three months' notice, to pay the assessment, as provided in this section, it shall be the duty of the board of directors to cause a sufficient amount of the capital stock of such shareholder or shareholders to be sold at public auction (after thirty days' notice shall be given by posting such notice of sale in the office of the bank, and by publishing such notice in a newspaper of the city or town in which the bank is located, or in a newspaper published nearest thereto,) to make good the deficiency; and the balance, if any, shall be returned to such delinquent shareholder or shareholders. ' ' See Section 5205, page 4*7. 181. Stamping Counterfeit Notes. Section 5. — That all United States officers charged with the receipt or disbursement of public moneys, and all officers of National banks, shall stamp or write in plain letters the word 1 ' counterfeit, " " altered, " or " worthless, ' ' upon all fraudulent notes issued in the form of, and intended to circulate as money i°5 which shall be presented at their places of business ; and if such officers shall wrongfully stamp any genuine note of the United States, or of the National banks, they shall, upon pre- sentation, redeem such notes at the face value thereof. 182. Savings Banks. &c to make Reports. Section 6. — That all savings banks or savings and trust companies organized under authority of any Act of Congress shall be, and are hereby, required to make, to the Comptroller of the Currency, and publish, all the reports which National banking associations are required to make and publish under the provisions of sections fifty-two hundred and eleven, fifty- two hundred and twelve, and fifty-two hundred and thirteen of the Revised Statutes, and shall be subject to the same pen- alties for failure to make or publish such reports as are therein provided ; which penalties may be collected by suit before any court of the United States in the district in which said savings banks or savings and trust companies may be located. And all savings or other banks now organized, or which shall here- after be organized, in the District of Columbia, under any Act of Congress, which shall have capital stock paid up in whole or in part, shall be subject to all the provisions of the Revised Statutes, and of all Acts of Congress applicable to National banking associations, so far as the same may be applicable to such savings or other banks : Provided, That such savings banks now established shall not be required to have a paid-in capital exceeding one hundred thousand dollars. See Sections 5211-5213, pages 50, 51. Extract from an Act approved March i, 1879. 183. Abating Semi-Annual Duty of Insolvent Banks. That whenever and after any bank has ceased to do business by reason of insolvency or bankruptcy, no tax shall be assessed or collected, or paid into the Treasury of the United States, on account of such bank, which shall diminish the assets thereof necessary for the full payment of all its depositors ; and such tax shall be abated from such National banks as are found by the Comptroller of the Currency to be insolvent ; and the Commissioner of Internal Revenue, when the facts io6 shall so appear to him, is authorized to remit so much of said tax against insolvent State and savings banks as shall be found to affect the claims of their depositors. Johnston v. United States, Court of Claims Reports, volume 17, page 178. An Act approved February 14th, 1880. 184. Conversion of National Gold Banks. That any National gold bank organized under the provisions of the laws of the United States, may, in the manner and sub- ject to the provisions prescribed by section fifty-one hundred and fifty-four of the Revised Statutes of the United States, for the conversion of banks incorporated under the laws of any State, cease to be a gold bank, and become such an association as is authorized by Section fifty-one hundred and thirty-three, for carrying on the business of banking, and shall have the same powers and privileges, and shall be subject to the same duties, responsibilities, and rules, in all respects, as are by law pre- scribed for such associations : Provided, That all certificates of organization which shall be issued under this act shall bear the date of the original organization of each bank respectively as a gold bank. All the existing gold banks have either gone out of existence or have been con- verted into ordinary National banking associations under this Act. An Act approved February 26th, 1881. 185. Verification of Returns of National Banks. That the oath or affirmation required by section fifty-two hun- dred and eleven of the Revised Statutes, verifying the returns made by National banks to the Comptroller of the Currency, when taken before a notary public properly authorized and commissioned by the State in which said notary resides and the bank is located, or any other officer having an official seal, authorized in such State to administer oaths, shall be a suffi- cient verification as contemplated by said section fifty-two hun- dred and eleven: Provided, That the officer administering the oath is not an officer of the bank. See Section 5211, page 50. IOJ An Act approved July 12th, 1882. 186. To Extend Corporate Existence, &e. That any National banking association organized under the Acts of February twenty-fifth, eighteen hundred and sixty- three, June third, eighteen hundred and sixty-four, and Febru- ary fourteenth, eighteen hundred and eighty, or under sections fifty-one hundred and thirty-three, fifty-one hundred and thirtv- four, fifty-one hundred and thirty-five, fifty-one hundred and thirty-six, and fifty-one hundred and fifty-four of the Revised Statutes of the United States, may, at any time within the two years next previous to the date of the expiration of its corporate existence under present law, and with the approval of the Comptroller of the Currency, to be granted as herein- after provided, extend its period of succession by amending its articles of association for a term of not more than twenty years from the expiration of the period of succession named in said articles of association, and shall have succession for such extended period, unless sooner dissolved by the act of shareholders owning two-thirds of its stock, or unless its fran- chise becomes forfeited by some violation of law, or unless hereafter modified or repealed. Section 2. — That such amendment of said articles of asso- ciation shall be authorized by the consent in writing of share- holders owning not less than two-thirds of the capital stock of the association; and the board of directors shall cause such consent to be certified under the seal of the association, by its president or cashier, to the Comptroller of the Currency, ac- companied by an application made by the president or cashier for the approval of the amended articles of association by the Comptroller; and such amended articles of association shall not be valid until the Comptroller shall give to such associa- tion a certificate, under his hand and seal, that the association has complied with all the provisions required to be complied with, and is authorized to have succession for the extended period named in the amended articles of association. See manner of carrying out the provisions of these sections, on page 1 30, this work. io8 187. Special Examination of Extended Banks. Section 3. — That upon the receipt of the application and certificate of the association provided for in the preceding sec- tion, the Comptroller of the Currency shall cause a special examination to be made, at the expense of the association, to determine its condition ; and if after such examination or otherwise it appears to him that said association is in a satis- factory condition, he shall grant his certificate of approval provided for in the preceding section, or if it appears that the condition of said association is not satisfactory, he shall with- hold such certificate of approval. Upon receipt of the application and papers, they are examined in the Comptroller's office, and if found satisfactory the association is notified that the papers are placed on file, and that the examination required by this section will be made in due course. The examination is usually made shortly before the date of expiration of first period •of succession, and as soon as the examiner's report is received. If satisfactory, the certificate approving the extension is issued a few days before the date of the ex- piration. This certificate of approval is required to be published by regulation of the Comptroller's office. 188. Privileges, Liabilities, &c, of Extended Banks; Jurisdiction of Suits. * Section 4. — That any association so extending the period of its succession shall continue to enjoy all the rights and privileges and immunities granted, and shall continue to be subject to all the duties, liabilities, and restrictions imposed by the Revised Statutes of the United States and other Acts having reference to National banking associations, and it shall continue to be in all respects the identical association it was before the extension of its period of succession : Provided, however, That the jurisdiction for suits hereafter brought by or against any association established under any law providing for National banking associations, except suits between them and the United States, or its officers and agents, shall be the same as, and not other than, the jurisdiction for suits by or against banks not organized under any law of the United States which do or might do banking business where such National banking associations ma) 7 be doing business when such suits may be begun. And all laws and parts of laws of the United *See Act March 3, 1887, 115 E. 109 States inconsistent with this proviso be, and the same are hereby, repealed. The provisions of this section in reference to the jurisdiction of the courts have been fully treated under Section 380, page 84. 189. Withdrawal of Shareholders; Preference in Allotment. Section 5. — That when any National banking association has amended its articles of association as provided in this Act, and the Comptroller has granted his certificate of approval, any shareholder not assenting to such amendment may give notice in writing to the directors, within thirty days from the date of the certificate of approval, of his desire to withdraw from said association, in which case he shall be entitled to re- ceive from said banking association the value of the shares so held by him, to be ascertained by an appraisal made by a com- mittee of three persons, one to be selected by such shareholder, one by the directors, and the third by the first two ; and in case the value so fixed shall not be satisfactory to any such shareholder, he may appeal to the Comptroller of the Currency, who shall cause a reappraisal to be made, which shall be final and binding ; and if said reappraisal shall exceed the value fixed by said committee, the bank shall pay the expenses of said reappraisal, and otherwise the appellant shall pay said expenses ; and the value so ascertained and determined shall be deemed to be a debt due, and be forthwith paid, to said shareholder, from said bank ; and the shares so surrendered and appraised shall, after due notice, be sold at public sale, within thirty days after the final appraisal provided in this section : Provided, That in the organization of any banking association intended to replace any existing banking associ- ation, and retaining the name thereof, the holders of stock in the expiring association shall be entitled to preference in the allotment of the shares of the new association in propor- tion to the number of shares held by them respectively in the expiring association. 190. Extended Banks— Old & New Notes : Lawful Money Deposit. Section 6. — That the circulating notes of any association so extending tbe period of its succession, which shall have been issued to it prior to such extension, shall be redeemed at no the Treasury of the United States, as provided in section three of the Act of June twentieth, eighteen hundred and seventy- four, entitled "An Act fixing the amount of United States notes, providing for redistribution of National bank currency, and for other purposes, ' ' and such notes when redeemed shall be forwarded to the Comptroller of the Currency and destroyed, as now provided by law; and at the end of three years from the date of the extension of the corporate existence of each bank the association so extended shall deposit lawful money with the Treasurer of the United States sufficient to redeem the remainder of the circulation which was outstanding at the date of its extension, as provided in sections fifty-two hundred and twenty-two, fifty-two hundred and twenty-four, and fifty- two hundred and twenty-five of the Revised Statutes; and any gain that may arise from the failure to present such circulating notes for redemption shall inure to the benefit of the United States; and from time to time, as such notes are redeemed or lawful money deposited therefor as provided herein, new cir- culating notes shall be issued as provided for by this act, bear- ing such devices, to be approved by the Secretary of the Treas- ury, as shall make them readily distinguishable from the cir- culating notes heretofore issued : Provided, however, That each banking association which shall obtain the benefit of this Act shall reimburse to the Treasury the cost of preparing the plate or plates for such new circulating notes as shall be issued to it. 191. Requirements of Banks not Extending. Section 7. — That National banking associations whose cor- porate existence has expired, or shall hereafter expire, and which do not avail themselves of the provisions of this Act, shall be required to comply with the provisions of sections fifty-two hundred and twenty-one and fifty-two hundred and twenty-two of the Revised Statutes in the same manner as if the shareholders had voted to go into liquidation, as provided in section fifty-two hundred and twenty of the Revised Statutes; and the provisions of sections fifty-two hundred and twenty- four and fifty-two hundred and twenty-five of the Revised Stat- utes shall also be applicable to such associations, except as modified by this Act; and the franchise of such association is Ill hereby extended for the sole purpose of liquidating their affairs until such affairs are finally closed. Blanks are sent to expiring associations to enable them to give the notice to the Comptroller's office required by Section 5222. Such expiring associations must, within six months from the date of their expiration, deposit lawful money to retire their circulation. 192. Minimum Bonds of Banks of $150,000 Capital or Less, &c. Section 8. — That National banks now organized, or here- after organized, having a capital of one hundred and fifty thou- sand dollars or less, shall not be required to keep on deposit, or deposit with the Treasurer of the United States, United States bonds in excess of one-fourth of their capital stock as security for their circulating notes, but such banks shall keep on de- posit, or deposit with the Treasurer of the United States, the amount of bonds as herein required; and such of those banks having on deposit bonds in excess of that amount are author- ized to reduce their circulation by the deposit of lawful money, as provided by law: Provided, That the amount of such cir- culating notes shall not exceed in any case ninety per centum of the par value of the bonds deposited as herein provided : Provided further, That the National banks which shall here- after make deposits of lawful money for the retirement in full of their circulation shall, at the time of their deposit, be assessed for the cost of transporting and redeeming their notes then outstanding a sum equal to the average cost of the redemption of National bank notes during the preceding year, and shall thereupon pay such assessment; and all National banks which have heretofore made, or shall hereafter make, deposits of law- ful money for the reduction of their circulation, shall be as- sessed and shall pay an assessment in the manner specified in section three of the Act approved June twentieth, eighteen hundred and seventy-four, for the cost of transporting and re- deeming their notes redeemed from such deposits subsequently to June thirtieth, eighteen hundred and eighty-one. 193. Retiring Circulation and Reissue. Section 9. — That any National Banking association now organized, or hereafter organized, desiring to withdraw its cir- culating notes, upon a deposit of lawful money with the Treas- 112 urer of the United States, as provided in section four of the Act of June twentieth, eighteen hundred and seventy-four, entitled "An Act fixing the amount of United States notes, providing for a redistribution of National bank currency, and for other purposes," or as provided in this act, is authorized to deposit lawful money and withdraw a proportionate amount of the bonds held as security for its circulating notes in the order of such deposits; and no National bank which makes any deposit of lawful money in order to withdraw its circu- lating notes shall be entitled to receive any increase of its cir- culation for the period of six months from the time it made such deposit of lawful money for the purpose aforesaid: Pro- vided, That not more than three millions of dollars of lawful money shall be deposited during any callendar month for this purpose: And provided further, That the provisions of this section shall not apply to bonds called for redemption by the Secretary of the Treasury, nor to the withdrawal of circulating notes in consequence thereof. 194. Amount of Circulation on United States Bonds. Section io. — That upon a deposit of bonds as described by sections fifty-one hundred and fifty-nine and fifty-one hundred and sixty, except as modified by section four of an Act entitled "An Act fixing the amount of United States notes, providing for a redistribution of the National bank currency, and for other purposes," approved June twentieth, eighteen hundred and seventy-four, and as modified by section eight of this act, the association making the same shall be entitled to receive from the Comptroller of the Currency circulating notes of dif- ferent denominations, in blank, registered and countersigned as provided by law, equal in amount to ninety per centum of the current market value not exceeding par, of the United States bonds so transferred and delivered, and at no time shall the total amount of such notes issued to any such association exceed ninety per centum of the amount at such time actually paid in of its capital stock;* and the provisions of section fifty-one hundred and seventy-one and fifty-one hundred and seventy-six of the Revised Statutes are hereby repealed. *See also proviso in Section 8, page 74. "3 195. Concerning Three-Per-cent. Bonds. Section ii. — That the Secretary of the Treasury is here- by authorized to receive at the Treasury any bonds of the United States bearing three and a half per centum interest, and to issue in exchange therefor an equal amount of registered bonds of the United States of the denominations of fifty, one hundred, five hundred, one thousand, and ten thousand dollars, of such form as he may prescribe, bearing interest at the rate of three per centum per annum, payable quarterly at the Treas- ury of the United States. Such bonds shall be exempt from all taxation by or under State authority, and be payable at the pleasure of the United States: Provided, That the bonds herein authorized shall not be called in and paid so long as any bonds of the United States heretofore issued bearing a higher rate of interest than three per centum, and which shall be redeemable at the pleasure of the United States, shall be outstanding and uncalled. The last of the said bonds originally issued under this Act, and their substitutes, shall be first called in, and this order of payment shall be followed until all shall have been paid. 196. Gold and Silver Certificates ; Clearing House Restrictions. Section 12. — That the Secretary of the Treasury is author- ized and directed to receive deposits of gold coin with the Treasurer or Assistant Treasurers of the United States, in sums not less than twenty dollars, and to issue certificates therefor in denominations of not less than twenty dollars each, corre- sponding with the denominations of United States notes. The coin deposited for or representing the certificates of deposit shall be retained in the Treasury for the payment of the same on demand. Said certificates shall be receivable for customs, taxes, and all public dues, and when so received may be reis- sued ; and such certificates, as also silver certificates, when held by any National banking association, shall be counted as part of its lawful reserve ; and no National banking associa- tion shall be a member of any clearing-house in which such certificates shall not be receivable in the settlement of clearing- 8 ii 4 house balances : Provided, That the Secretary of the Treasury shall suspend the issue of such gold certificates whenever the amount of gold coin and gold bullion in the Treasury reserved for the redemption of United States notes falls below one hun- dred millions of dollars ; and the provisions of Section fifty- two hundred and seven of the Revised Statutes shall be appli- cable to the certificates herein authorized and directed to be issued. 197. Penalty for Illegal Issue of Certified Checks. Section 13. — That any officer, clerk, or agent of any Na- tional banking association who shall wilfully violate the pro- visions of an Act entitled "An Act in reference to certifying checks by National banks," approved March third, eighteen hundred and sixty-nine, being Section fifty-two hundred and eight of the Revised Statutes of the United States, or who shall resort to any device, or receive any fictitious obligation, direct or collateral, in order to evade the provisions thereof, or who shall certify checks before the amount thereof shall have been regularly entered to the credit of the dealer upon the books of the banking association, shall be deemed guilty of a misdemeanor, and shall, on conviction thereof in any circuit or district court of the United States, be fined not more than five thousand dollars, or shall be imprisoned not more than five years, or both, in the discretion of the court. 198. Congress may Amend. Section 14. — That Congress may at any time amend, alter, or repeal this Act and the Acts of which this is amendatory. In further reference to the workings of this Act the following quotation from the last annual report of the Comptroller of the Currency is given : " The provisions of the Act for the extension of the corporate existence of Na- tional banks in the main appear to be admirably suited for that purpose. Those of the first and second sections, which provide that the period of succession may be extended by simply amending the articles of association by the consent in writing of shareholders owning not less than two-thirds of the capital stock, are simple and easily carried out by the banks. "Section 3, which provides for a special examination of the association in order to determine its condition, is also well adapted for the purpose. " The part of Section 4 which provides that the extended bank shall continue to be in all respects the identical association it was before the extension of its period of succession prevents any break or disturbance in its business, enables the bank to retain its surplus fund, and is especially useful in the matter of any litigation for collection of assets, title to property, &c. " It would, however, appear that some of the provisions of Section 5 might be amended with advantage to the public. "5 " Provision is made to ascertain the value of shares of non-assenting shareholders, by an appraisal to be made by a committee of three persons, one to be selected by the non-assenting shareholder, oue by the directors, and a third by the tirst two. But if the bank does not heed the notice of withdrawal and declines to appoint a person to serve on the committee of appraisal, there is no penalty for such neglect, and apparently the shareholder's only remedy is by a suit in some court of compe- tent jurisdiction. I therefore conclude that some provision should be made for the enforcement of this section. Provision is also made, in case the value of the shares fixed by the committee of appraisal is not satisfactory to the shareholder, that he may appeal to the Comptroller of the Currency, who shall cause a reappraisal to be made, which shall be final and binding. No provision is, however, made for an appeal on the part of the bank, where the valuation fixed by the committee is not satisfactory to it. I have to recommend, therefore, that the section be amended to obviate this defect. " Provision is further made that after the appraised value has been paid to the shareholder, as provided by law. and the shares surrendered, the same shall, after due notice, be sold at public sale within thirty days after the final appraisal. It appears that in many cases thirty days is not sufficient time for the bank to realize a fair price for shares which it is thus compelled under the law to purchase, and inasmuch as section 5201 of the Revised Statutes provides that stock purchased or acquired to prevent loss upon a debt previously contracted in good faith may be sold at any time within six months from the date of its purchase, at public or pri- vate sale, it would seem that the law should grant at least as long a period for the sale of the stock which an association is compelled to take from a retiring stock- holder under the Act of extension, and the Comptroller recommends an amendment to this effect. • • It is respectfully submitted that more than the three years granted in Section 6 should be granted within which to deposit lawful money to retire the remainder of the circulation outstanding at the date of extension. If this period should be extended to six years the necessary deposit would then be comparatively small. In the natural course of redemption the outstanding circulation of old design of ex- tended associations is constantly being decreased, as all such notes redeemed are retired without regard to their fitness for circulation, notes of a new design, as pro- vided by law. being issued in their place. • If the only object of Section G is to enable the United States to gain the benefit from lost or destroyed notes, this object might have been accomplished by simple enactment to this effect, without the expense of the issuance of new notes and the deposit of lawful money. " The extension of the franchises of expiring associations for the sole purpose of liquidating their affairs until closed, as provided for in Section 7, appears to an- swer its purpose. "At this date but two reappraisals have been made of the stock of non-assenting shareholders, under Section 5, by the Comptroller of the Currency." Extract from an Act approved March 3d, 18S3. 199. Repealing Tax on Capital and Deposits of Banks. That the taxes herein specified imposed by the laws now in force be, and the same are hereby, repealed, as hereinafter pro- vided, namely: On capital and deposits of banks, bankers, and National banking associations, except such taxes as are now due and payable ; and on and after the first day of July, eighteen hundred and eighty-three, the stamp tax on bank checks, drafts, orders, and vouchers. See decision Attorney General of the United States. May 13th, 1883. 115 A An Act approved March 29th, 1886. 200. Receivers to Protect Equities in Real Estate, &c. Section i. That whenever the receiver of any National bank duly appointed by the Comptroller of the Currency, and who shall have duly qualified and entered upon the discharge of his trust, shall find it in his opinion necessary, in order to fully protect and benefit his said trust, to the extent of any and all equities that such trust may have in any property, real or personal, by reason of any bond, mortgage, assignment, or other proper legal claim attaching thereto, and which said property is to be sold under any execution, decree of fore- closure, or proper order of any court of jurisdiction, he may certify the facts in the case, together with his opinion as to the value of the property to be sold, and the value of the equity his said trust may have in the same, to the Comptroller of the Currency, together with a reqtiest for the right and authority to use and employ so much of the money of said trust as may be necessary to purchase such property at such sale. Under Section 5234 of the Revised Statutes of the United States, the receiver of a National bank is required to pay over all money collected by him to the Treasurer of the United States. It often occurred that real estate of the bank or other assets might be incumbered by mortgages or claims. The law of March 29th, 1886, was passed to provide a way in which these incumbrances might be removed, by paying them off with money derived from the collection of other assets. The first section provides for bringing the necessity of action to the knowledge of the Comptroller. 201. Receiver's Report must be Approved. Section 2. That such request, if approved by the Comp- troller of the Currency, shall be, together with the certificate of facts in the case, and his recommendation as to the amount of money which, in his judgment, should be so used and employed, submitted to the Secretary of the Treasury ; and if the same shall likewise be approved by him, the request shall be by the Comptroller of the Currency allowed, and notice thereof, with copies of the request, certificate of facts, and indorsement of approvals, shall be filed with the Treasurer of the United States. This section requires the Comptroller to make certificate of the facts, the amount of money required, &c, to the Secretary of the Treasury. If the Secretary approves the matter, all the papers are turned over to the Treasurer, so that he has evidence before him of the nature of the draft about to be drawn upon the funds deposited with him bv the receiver. II 5 B 202. Payment for Property to be Made by Comptroller. Section 3. That whenever any such request shall be allow- ed as hereinbefore provided, the said Comptroller of the Cur- rency shall be, and is, empowered to draw upon and from such funds of any such trust as may be deposited with the Treasurer of the United States for the benefit of the bank in interest to the amount as may be recommended and allowed and for the purpose for which such allowance was made: Provided, kow- ever, That all payments to be made for or on account of the purchase of any such property and under any such allowance shall be made by the Comptroller of the Currency direct, with the approval of the Secretary of the Treasury, for such pur- pose only and in such manner as he may determine and order. This section provides that the money necessary for the purchase or relief of any property, after the transaction shall have been allowed by the Secretary of the Treasury, shall be drawn by the Comptroller of the Currency. The proviso is to prevent the Comptroller from using the money for any other purpose than that specifically allowed. Ax Act approved May 1st, 1886. 203. Increase of Capital Stock. Section i. That any National banking association may, with the approval of the Comptroller of the Currency, by the vote of shareholders owning two-thirds of the stock of such association, increase its capital stock, in accordance with exist- ing laws, to any sum approved by the said Comptroller, not- withstanding the limit fixed in its original articles of associa- tion and determined by said Comptroller ; and no increase of the capital stock of an}- National banking association, either within or beyond the limit fixed in its original articles of asso- ciation, shall be made except in the manner herein provided. See Section 5142. (page 1G.) under which it is provided that the maximum limit of increase of capital must be fixed and determined in the original articles of a-- - ciatioD by the Comptroller. The Attorney-General decided that the maximum limit having once been fixed, could not be changed except by act of Congress. The Act of May 1st. 1886, is a general act: gives the power to the Comptroller to change the maximum limit of increase of capital, and also makes a change in the manner of such increase which could previously be made by the directors without consulting the stockholders 204. Change of Name and Location. Section 2. That any National banking association may change its name or the place where its operations of discount and deposit are to be carried on to any other place within the 115 c same State not more than thirty miles distant, with the ap- proval of the Comptroller of the Currency, by the vote of shareholders owning two-thirds of the stock of such associa- tion. A duly-authenticated notice of the vote and of the new name or location selected shall be sent to the office of the Comptroller of the Currency ; but no change of name or loca- tion shall be valid until the Comptroller shall have issued his certificate of approval of the same. This section provides for change of the name and location of a National bank with the approval of the Comptroller. Previously this could not be effected by any bank without a special act of Congress. 205. Liabilities, &c, under Old Name. Section 3. That all debts, liabilities, rights, provisions, and powers of the association under its old name shall devolve upon and inure to the association under its new name. 206. New Name or Location not to Release from Liabilities, &c. Section 4. That nothing in this Act contained shall be so construed as in any manner to release any National banking association under its old name or at its old location from any liability, or affect any action or proceeding in law in which said association may be or become a party or interested. An Act approved March 3d, 1887. 207. Requirements to become Reserve City. Section i. That whenever three-fourths in number of the National banks located in any city of the United States having a population of fifty thousand people shall make application to the Comptroller of the Currency, in writing, asking that the name of the city in which such banks are located shall be added to the cities named in Sections fifty-one hundred and ninety-one and fifty-one hundred and ninety-two of the Re- vised Statutes, the Comptroller shall have authority to grant such request, and every bank located in such city shall at all times thereafter have on hand, in lawful money of the United States, an amount equal to at least twenty-five per centum of its deposits, as provided in Sections fifty-one hundred and ninety-one and fifty-one hundred and ninety-five of the Re- vised Statutes. The Comptroller requires that the application of the banks shall in each case be regularly approved by the action of its board of directors. The office furnishes blanks for use in making such application. II5D 208. Requirements to become a Central Reserve City. Section 2. That whenever three-fourths in number of the National banks located in any city of the United States having a population of two hundred thousand people shall make appli- cation to the Comptroller of the Currency, in writing, asking that such city may be a central reserve city, like the city of New York, in which one-half of the lawful-money reserve of the National banks located in other reserve cities may be deposited, as provided in Section fifty-one hundred and ninety- five of the Revised Statutes, the Comptroller shall have author- ity, with the approval of the Secretary of the Treasury, to grant such request, and every bank located in such city shall at all times thereafter have on hand, in lawful money of the United States, twenty-five per centum of its deposits, as pro- vided in Section fifty-one hundred and ninety-one of the Revised Statutes. It is somewhat doubtful whether a dissenting bank can, by the votes of three- fourths of the associations in the place it is located, be compelled to keep more reserve or in a different manner than the law required it to do at the date of its organization. The Comptroller of the Currency holds, that Congress having reserved the power to amend, alter, or repeal the banking laws, this amendment coming under that reservation, no bank concerned can claim exemption therefrom on the ground of charter rights. 209. Redemption of TJ. S. Notes at San Francisco. Section 3. That Section three of the Act of January four- teenth, eighteen hundred and seventy-five, entitled "An Act to provide for the resumption of specie payments, ' ' be, and the same is hereby, amended by adding after the words "New York" the words "and the city of San Francisco, California." This section permits legal-tender notes presented in sums of not less than fifty dollars at the sub-treasury at San Francisco to be redeemed there in coin, which by Section 12 of the Act of June 12th, 1882, is interpreted to mean gold coin. Extract from an Act approved March 3d, 1887. 210. National Banks deemed Citizens of States in which Located. Section 4. That all National banking associations estab- lished under the laws of the United States shall, for the purposes of all actions by or against them, real, personal, or mixed, and all suits in equity, be deemed citizens of the States in which they are respectively located ; and in such cases the Circuit and District Courts shall not have jurisdiction other 115 E than such as they would have in cases between individual citizens of the same State. By this. National banks become citizens of the States in which they are located, and can sue and be sued precisely the same as citizens. This may modify the effect of the proviso in Section 4 of the Act of July 12th, 1882, (page 108,) which placed National banks on a footing with State banks, unless the latter are, by the law or decisions of the courts in the State where they are located, declared to be citizens. 211. Limitation of Banking under Territorial Law. [Revised Statutes, Title XXIII.] Section 1889. The legislative assemblies of the several Territories shall not grant private charters or especial privi- leges, but they may, by general incorporation acts, permit persons to associate themselves together as bodies corporate for mining, manufacturing, and other industrial pursuits, or the construction or operation of railroads, wagon roads, irri- gation ditches, and the colonization and improvements of lands in connection therewith, or for colleges, seminaries, churches, libraries, or any benevolent, charitable, or scientific association. Extract from an Act approved July 30, 1886. Section 5. That section eighteen hundred and eighty-nine, title twenty-three, of the Revised Statutes of the United States be amended to read as follows : "The legislative assemblies of the several Territories shall not grant private charters or special privileges, but they may, by general incorporation acts, permit persons to associate them- selves together as bodies corporate for mining, manufacturing, and other industrial pursuits, and for conducting the business of insurance, banks of discount and deposit (but not of issue), loan, trust, and guarantee associations, and for the construction or operation of rail-roads, wagon-roads, irrigating ditches, and the colonization and improvements of lands in connection therewith, or for colleges, seminaries, churches, libraries, or any other benevolent, charitable, or scientific association." INFORMATION HOW TO PROCEED IN Organizing National Banks either de novo or by Conversion from State Banks and Private Banks, with Forms and In- structions ; also in regard to the Increase a7id Reduction of Capital, Voluntary Liquidation, and Extension of Cor- porate Existe7ice, with Suggestions for their Management, and a General Form for By-Laws, Compiled from "Instruc- tions and Suggestions in Regard to the Organization and Management of National Banks," Issued by the Hon. Hugh McCulloch, Comptroller of the Currency, soon after the Or- ganization of the National Banking System in 1864. Information as to Organization. 1. — The first step to be taken for the organization of a Na- tional bank is to apply to the Comptroller of the Currency for his consent. The application should be made by letter, and should specify the title desired, as it must be approved by the Comptroller, the locality, capital, and names of at least five persons who will be stockholders of the proposed organization, and should also have a favorable endorsement, or a letter recommending that it be granted, from the Member of Congress for the dis- trict in which the bank is to be located, together with similar letters from gentlemen of well-known character and reputa- tion, vouching for the responsibility of the parties, and that the proposed bank is likely to be useful to the community. 2. — On approving the application, the Comptroller will fur- nish all necessary forms, in blank, to be used in perfecting the organization, which contain all requisite instructions for their proper execution. 3. — After an application to organize a National bank has been approved by the Comptroller of the Currency, the title selected will be held for the applicants until the organization is completed, provided it be within sixty days from the time (116) "7 the same is approved. An extension of time will no doubt be granted for good reasons. 4. — The organization papers having been duly executed, (and it is suggested that they be executed in duplicate, so that the bank may be enabled to have originals of these important papers,) filed with the Comptroller, and at least one-half of the capital paid in and duly certified by certificate of officers and directors, (see Section 5168, page 15, and page 121 for form of certificate,) the next step is to deposit the amount of United States bonds required by law to perfect the organization; whereupon the Comptroller will, if satisfied that the law has been properly complied with, and that the bank has been organized in good faith for legitimate objects, give to it his "Certificate of Authority" to commence business, for which preparations should have previously been made by providing a suitable banking office, with a secure vault or safe, and all necessary books and papers. The " Certificate of Authority" must be published for sixty days, in a newspaper where the bank is located. 5. — The names of the persons executing the organization papers of a bank should be written in full, and the signatures to the different papers must be the same in all cases, and sim- ilarly written ; and the papers must be executed before a no- tary public or judge of a court of record, and the acknowledg- ment authenticated by the seal of the notary or court. 6. — Inasmuch as the laws of the various States differ greatly as to the rights of married women with respect to their estates and property, and as to the effect of covenants and agreements made by them, and as to forms of acknowledgment of instru- ments executed by them, they should not be made parties to the organization papers of National banks, in order to avoid the serious questions that may arise as to the legality of or- ganizations founded upon papers executed in part by them. They can become stockholders of a bank, if it be desired, by transfer of stock to them after the organization shall be perfected. 7. — Under the Act of July 12th, 1882, any National bank having a capital of $150,000, or less, is not required to keep on deposit with the Treasurer of United States bonds in excess n8 of one-quarter of its capital stock, as security for circulation; therefore a bank of $50,000 capital can organize on deposit of $12,500 in United States bonds, and receive circulation to the extent of ninety per cent, of face of bonds. Any National bank may reduce its bonds deposited with the Treasurer of the United States to $50,000, without regard to the amount of its capital. 8. — A National bank cannot be organized with a less capital than $100,000, without the especial approval of the Secretary of the Treasury, and then only in places having less than 6000 inhabitants; and in cities with population of 50,000, the capi- tal must be at least $200,000. 9. — The Comptroller of the Currency authorizes the payment to the bank of the interest on bonds deposited by it. 10. — When a bank wishes an agent or correspondent to col- lect its interest-checks, a letter must be addressed to the Reg- ister of the Treasury, Washington, D. C, directing that the checks be forwarded to such agent, and a resolution of the board of directors, authenticated by the seal of the bank, au- thorizing such agent to endorse the checks, must be filed with the First Auditor of the Treasury, Washington, D. C. 11. — The interest on all the United States registered bonds, except the " currency sixes," (Pacific R. R. bonds,) is paid by check to the order of the bank owning the bonds, and payable at any United States A ssistant Treasury or U. S. depository. 12. — When a National bank desires to withdraw any surplus of bonds it may have on deposit as security for circulation, or to substitute other bonds for those previously deposited for that purpose, a form of authority for such transaction will be furnished on application to the Comptroller of the Currency, to whom the receipts of the Treasurer of the United States for the bonds to be withdrawn must be returned with the request for withdrawal. 13. — If a National bank has occasion to sell United States registered stock issued in its name, a form of authority for an officer of the bank or an attorney to make the necessary assign- ments will be furnished on application to the Comptroller of the Currency. 14. — The Act of Congress approved June 20th, 1874, requires II 9 National banks organized after that date to reimburse to the Treasury the cost of engraving the plates for their circulating notes; and the Act of Jul}' 12th, 1882, provides that banks whose charters are extended under said Act shall also reim- burse the Treasury the cost of preparing the new plates required for such banks. No charge is made for paper, or for printing of circulation. For banks of $50,000 capital we advise a plate of 10, 10, io> 20. The cost of the plates is as follows : Plate 5, 5, 5, 5 $75 " 10, 10, 10, 20 75 " 50. IO ° 50 We refer also, in connection with this subject, to our com- ments upon Sections 5133, 5134, 5135, and 5136 on pages 5, 6, and 7 of this work. Organizing Blanks. The following are copies of forms furnished by Comptrol- ler's office. That office prefers that banks should use the blanks furnished by it, and therefore it is not worth while to make out the papers in manuscript. Legally, however, organ- izers of banks can insert any provisions they wish, not incon- sistent with law, although they may not be in the office blanks: Form for Articles of Association. For the purpose of organizing an association to carry on the business of banking, under the laws of the United States, the undersigned subscribers for the stock of the association hereinafter named do enter into the following articles of association : First. The name and title of this association shall be "The ." Second. The place where its banking house or office shall be located, and its operations of discount and deposit carried on, and its general business conducted, shall be . Third. The board of directors shall consist of shareholders. The first meeting of the shareholders for the election of directors shall be held at , on the , or at such other place and time as a majority of the undersigned share- holders may direct. Fourth. The regular annual meetings of the shareholders for the election of directors shall be held at the banking house of this association on the second Tues- day of January of each year ; but if no election shall be held on that day, it may be held on any other day, according to the provisions of Section 5149 of the Re- vised Statutes ; and all elections shall be held according to such regulations as may be prescribed by the board of directors, not inconsistent with the aforesaid provis- ions of the said Section 5149 of the Revised Statutes. 120 Fifth. The capital stock of the association shall be thousand dollars, to be divided into shares of one hundred dollars each ; but the capital may be increased, according to the provisions of Section 5142 of the Revised Statutes, to any sum not exceeding thousand dollars ; and in case of the increase of the capital of the association, each shareholder shall have the privilege of subscribing for such num- bers of shares of the proposed increase of the capital stock as he may be entitled to according to the number of shares owned by him before the stock is increased. Sixth. The board of directors, a majority of whom shall be a quorum to do busi- ness, shall elect one of their number to be president of this association, who shall hold his office (unless he shall be disqualified, or be sooner removed by a two-thirds vote of all the members of the board) for the term for which he was elected a director ; and they shall have power to elect a vice-president, who shall also be a member of the board of directors, and who shall be authorized, in the absence or inability of the president from any cause, to perform all acts and duties pertaining to the office of president except such as the president only is authorized by law to perform, and to elect or appoint a cashier and such other officers and clerks as may be required to transact the business of the association ; to fix the salaries to be paid to them, and continue them in office, or to dismiss them, as, in the opinion of a majority of the board, the interests of the association may demand. They shall also have power to define the duties of the officers and clerks of the association ; to require bonds from them and to fix the penalty thereof; to regulate the manner in which elections of directors shall be held ; and to appoint judges of the elections ; to provide for an increase of the capital of the association, and to regulate the manner in which such increase shall be made ; and, generally, to do and perform all the acts that it may be legal for a board of directors to do under the Revised Statutes aforesaid ; and they shall also have the power to make all by- laws that it may be proper and convenient for them to make, not inconsistent with law, for the general regulation of the business of the association and the manage- ment and administration of its affairs. Seventh. This association shall continue for the period of twenty years from the date of the execution of its organization certificate, unless sooner placed in volun- tary liquidation by the act of its shareholders owning at least two-thirds of its stock, or otherwise dissolved by authority of law. Eighth. These articles of association may be changed or amended at any time by shareholders owning a majority of the stock of the association, in any manner not inconsistent with law ; and the board of directors or any three shareholders may call a meeting of the shareholders for this or any other purpose not inconsist- ent with law, by publishing notice thereof for thirty days in a newspaper published in the town, city, or county where the bank is located, or by notifying the share- holders in writing. In witness whereof, we have hereunto set our hands, this day of , eighteen hundred and eighty . 1. I certify that the articles of association of the were executed in dupli- cate, and that one of the instruments so executed is the foregoing ; and that the other, in all respects like the foregoing, is on file with said bank. , Cashier or President. , 188-. 121 Instead of providing, as in the third article, for the election of the first board of directors, the names of the directors might be given in the article. This, when the stockholders are agreed at the time as to the persons who are to constitute the directors, might be much more convenient than to hold an election. In this event the third article should read as follows : The board of directors shall consist of stockholders, and the following per- sons [here insert their names] are hereby appointed directors of this association to hold their offices as such until the regular annual election takes place pursuant to the fourth article of these articles of association, and until their successors are chosen and qualified. Form of Organization Certificate. We, the undersigned, whose names are specified in article fourth of this certifi- cate, having associated ourselves for the purpose of organizing an association for carrying on the business of banking, under the laws of the United States, do make and execute the following organization certificate : First. The name of the association shall be The . Second. The said association shall be located in the of , county of , and State of , where its operations of discount and deposit are to be carried on. Thibd. The capital stock of this association shall be dollars, ($ ,) and the same shall be divided into shares of one hundred dollars each. Fourth. The name and residence of each of the shareholders of this association, with the number of shares held by each, are as follows : Name. Residence. No. of Shares. Fifth. This certificate is made in order that we may avail ourselves of the ad- vantages of the aforesaid laws of the United States. In witness whereof, we have hereunto set our hands, this day of , 188-. State of County of ■ ,}< On this, the day of — : , A. D. 188-, before me, a of , per- sonally came , to me well known, who severally acknowledged that they executed the foregoing certificate for the purposes therein mentioned. Witness my hand and seal of office the day aud year aforesaid. [seal of notary or court.] 122 Directors. After the execution of the organization certificate, if the di- rectors are not designated in the articles of association, the stockholders should proceed to elect directors as provided in Section 5145, who should, after election, take oath as required by Section 5147. Form of Joint Oath of Directors. State op , 1 County of We, the undersigned, directors of the , of , of the State of do each of us solemnly swear that we are citizens of the United States, and resi- dents of the State of , and that we will severally, so far as the duty devolves on us, diligently and honestly administer the affairs of said bank ; and that we will not knowingly violate, or willingly permit to be violated, any of the provisions of the Revised Statutes of the United States under which this bank has been organized ; and that each of us is the bona-fide owner, in his own right, of the number of shares of stock required by said Revised Statutes, subscribed by him or standing in his name on the books of the said bank ; and that the same is not hypothecated, or in any way pledged as security for any loan or debt. Subscribed and sworn to this day of , 188-, before the undersigned, a of said county. Form of Proxy for use at Stockholders' Meeting for Election of Directors. I do hereby constitute and appoint , of — — — , in the county of and State of , my lawful proxy, for me and in my name to vote shares of the stock of the National Bank of , owned by me and standing in my name on the books of said bank, at the annual meeting of the stockholders thereof to be held for the election of directors on the day of , A. D. 188-, pursuant to law, and at all future meetings of stockholders which shall be held for a similar purpose until this authority shall be revoked, hereby ratifying and confirming whatsoever the said may lawfully do by virtue hereof; and I hereby revoke and annul any and all authority heretofore given by me, authoriz- ing any person for me, or in my name, to vote my stock in said bank. In witness whereof I have hereunto set my hand and seal this day of , A. D. 188-. , [l. s.] Proxies to be used at meetings of stockholders held for other than election purposes can be made in general form like to the above, specifying the object for which the meeting at which they are to be used is to be held. No officer, clerk, teller, or book-keeper of a National bank 123 can legally act as proxy to vote any of its stock, but directors who are not executive officers, and are not filling any of the above-named positions in their bank, can act when properly authorized. See comments under Section 5144, page 18 of this work. Form of Certificate of Officers and Directors. The undersigned, , president, , cashier, and , organized under the sections of the Revised directors of the Statutes of the United States, approved June 22, 1874, which authorize the organi- zation of National banking associations, and of subsequent acts in addition to and amendatory thereof, do hereby certify that dollars have been paid into said bank, on account of its capital stock, as permanent capital; that the residence of each director, and the amount of stock of which each director is the bona fide owner, are as follows : Name of Director. Place of Residence. Shares of Stock. And that this bank has in good faith complied with all the provisions of said Act required to be complied with before receiving authority to commence the busi- ness of banking. , President. , , Cashier. Directors. State of >ss: County of — On this day of , 188-, before the undersigned, a of , personally appeared , president, , cashier, and directors of the -, and made oath that the foregoing certificate and the matters and things therein set forth are true to the best of their knowledge and belief. Subscribed and sworn to before me, this day of -, 188-. The oath of a majority of the directors of an association is sufficient for this purpose. Payment of Capital. The certificate of officers and directors is the certificate of the payment of the first instalment of the capital. The five 124 remaining instalments must be paid in and certified to the Comptroller, one on each successive thirty days from the date of the Comptroller' 's certificate of authority to co7nmence business. The form usual for these certificates is as follows: Certificate of Payment of Capital Stock. Bank, , 188— Sir: It is hereby certified that the instalment, amounting to dollars, ($ ,) has been paid in on account of the capital stock of the , making the total amount paid in on the capital stock of this bank $ . [seal of bank.] , Cashier. To the Comptroller of the Currency, Washington, D. 0. State of , \ . County of , j Subscribed and sworn to before the undersigned of the said county, this day of , 188-. N. B. — Banks are requested not to report the payment of any one instalment twice, except as included in total amount paid in. In reference to the legal method of enforcing the payment of subscriptions to capital stock, see Section 5 141 Revised Statutes, page 13 of this work. Conversion of State Banks. For law, see Section 5154, page 24. As an indication of the assent of stockholders required, they should execute the following paper, which should be made in duplicate, one copy to be filed with the Comptroller of the Currency: Authority of Stockholders to Directors for the Conversion of a State into a National Bank. We, the undersigned, stockholders of the [here insert the name of the bank], located in the of , county of and State of , having a capital of dollars, do hereby authorize and empower the directors thereof to change and convert said bank into a National banking association, under the general banking laws of the United States, and according to the provisions of Section 5154, Revised Statutes of the United States, and we do also authorize the said directors, or a majority thereof, to make and execute the articles of association and organiza- tion certificate required to be made or contemplated by said laws, and also to make and execute all other papers and certificates, and to do all acts necessary to be done to convert said into a National association, and also to do and perform all such acts as may be necessary to transfer the assets of every description and char- 125 acter of said to the National banking association into which it is to be con- verted, so that the said conversion may be absolute and complete. And we do hereby assume, and authorize the said directors to assume, as the name of the National banking association into which the said is to be converted, 41 The [here insert the name of the association] ;" and we do hereby appoint [here insert the names of the directors], who are now the directors of the said [here insert the name of the State bank about to be converted], to be directors of the said [here insert the name of the association], to hold their offices as such directors until the regular annual election of directors is held, pursuant to the provisions of said laws, and until their successors are chosen and qualified. And we do hereby authorize the said directors to continue in office the officers of the said [here insert the name of the State bank about to be converted], or to appoint or select others, as to them may seem best. In witness whereof, we have hereunto set our hands, and written against our names the number of shares owned by us respectively, this day of , A. D. 18—. Names of Stockholders. Stock owned by each. The directors, thus authorized, may then proceed to execute articles of association and an organization certificate. These are similar in form to those already given, only being modified inasmuch as they are executed by the authorized directors. Blanks are furnished by the Comptroller's office. From this point there will no difference between a National bank con- verted from a State bank and one organized de novo in the papers and proceedings. Conversion of Private Banks. There is nothing in the National banking laws which will enable a private bank or banking firm to convert into a Na- tional bank in the same manner as Section 5154 permits the conversion of State banks organized under the banking laws of the several States. The partners or owners of a private bank or banking firm desiring to become a National bank can, however, make application to the Comptroller of the Cur- rency for permission to organize under the National Banking- laws. The Comptroller becoming informed that the applicants are private bankers will require them to furnish a statement setting forth the condition of their institution. If they ap- 126 plied simply as citizens desiring to organize de novo this re- quirement would not be made. The Comptroller's office will not permit any assets or liabilities to be turned over directly to the National bank. The latter must be organized as a new institution in good faith. Good paper or other good assets be- longing to the private bankers can doubtless be taken by the National bank after it has commenced business ; but there must be technically no merging of the one into the other; the line between the two institutions must be a decided one. The requirement of the Comptroller, that private bankers applying as such to organize a National bank shall furnish a statement of the condition of their private institution, seems to imply that the officer believes it to be the purpose of the private bankers to avail themselves of the assets of the private bank in starting the National bank. This must be done, however, in due and legal form. The good assets of the private bank must be taken by the directors of the new National bank as from outside parties. Real estate, other than such as might be required by the new bank for banking-house, cannot be taken, nor can real estate or mortgage paper become an asset of the new institution. An examiner is always sent shortly after the organization of a new National bank to report on the character of its assets. If the assets of the private bank are good there can be little difficulty in securing an advance of money upon them, which will enable the owners to pay up their subscriptions to the stock of the National bank taken by them, or at least the fifty per centum required to be paid in of such stock before the National bank can commence business. (See Sections 5140 and 5141 and comments thereon, pages 13, 14.) After it has commenced business it can purchase the assets, &c. , as it will then have the money derived from payments on stock, less such portion as may have been invested in United States bonds deposited with the United States Treasurer, in lieu of which portion it will also have in due time its circulating notes. 127 GENERAL FORM FOR BY-LAWS.* The directors of every National bank should adopt by-laws, which must be consistent with the Banking laws, for the gov- ernment and conduct of the business of their bank, and should have them recorded in the minute-book. The following is submitted as a suitable form, to be modified according to cir- cumstances and the views of directors : By-laws of the \Jiere insert the title of the bank] organized under the laws of the United States, and authorized by the Comptroller of the Currency to carry on the business of banking. i. — The regular annual meetings of stockholders of this bank for the election of directors and for the transaction of other legitimate business shall be held between the hours of ten o'clock a. m. and four o'clock p. m. on the day specified in the articles of association, and the thirty days' notice of the time and object of such meetings thereby required shall be given by the president, vice president, or cashier by publication in [here insert name of paper in wliicJi publication is to be made.] The board of directors shall, within one month previous to the date fixed for such meetings, appoint three stockholders to be judges of the election for directors, who shall hold and conduct the same, and who shall, under their hands, notify the person acting as cashier of this bank of the result thereof as soon as ascertained, and of the names of the directors-elect. 2. — The person acting as cashier shall thereupon cause the returns made by the judges of election to be recorded upon the minute-book of the bank, and shall notify the directors chosen of their election, and of the time for them to meet at the bank- ing-house for the organization of the new board. If at the time fixed for such meetings there should be no quorum in at- tendance, the directors-elect present may adjourn from time to time until a quorum shall be obtained. 3. — The directors-elect shall meet for organization, upon the ♦See comments upon clause G, Section 513G, page 7 of this work. 128 notification given in accordance with law 2, within one week from the time of their election, but shall not do any business whatever prior to qualifying by taking the oath of office as required by law. 4. — If the annual election for directors should not be held on the day fixed by the articles of association, the directors in office shall order a special election, of which notice shall be given, judges appointed, and returns made and recorded upon the minute-book; and the directors chosen thereat shall be certified to the cashier, and notified as provided by laws 1 and 2. 5. — The officers of this bank shall be a president, vice presi- dent, cashier, teller, and book-keeper, and such other officers as may be required from time to time for the prompt and or- derly transaction of its business; and all officers, clerks, and agents shall be elected, appointed, or employed by the board of directors, or with the consent thereof, and their several duties may be prescribed by the board. 6. — The president shall hold his office for the current year for which the board of which he shall be a member was elected, unless he shall resign, become disqualified, or be removed; and any vacancy occurring in the office of president or in the board of directors shall be filled by the remaining members. 7. — The cashier and the subordinate officers and clerks shall be appointed to hold their offices respectively during the pleas- ure of the board of directors. 8. — The cashier of this bank shall be responsible for all the moneys, funds, and valuables of the bank, and shall give bond, with security to be approved by the board, in the penal sum of dollars, conditioned for the faithful and honest dis- charge of his duties as such cashier, and that he will faithfully apply and account for all such moneys, funds, and valuables, and deliver the same to the order of the board of directors of this bank, or to the person or persons authorized to receive them. 9. — The president of this bank shall be responsible for all such sums of money and property of every kind as may be intrusted to his care or placed in his hands by the board of directors or by the cashier, or otherwise come into his hands 129 as president, and shall give bond, with security to be approved by the board, in the penal sum of dollars, conditioned for the faithful discharge of his duties as such president, and that he will faithfully and honestly apply and account for all sums of money and other property of this bank that may come into his hands as such president, and pay over and deliver the same to the order of the board of directors, or to any other person or persons authorized by the board to receive the same. 10. — The teller shall be responsible for all such sums of money, property, and funds of every description as may from time to time be placed in his hands by the cashier, or other- wise come into his possession as teller, and shall give bond, with security to be approved by the board of directors, in the penal sum of dollars, conditioned for the honest and faithful discharge of his duties, and that he will faithfully apply, account for, and pay over all moneys, property, and funds of every description pertaining to this bank that may come into his hands by virtue of his office as teller, to the or- der of the board of directors, or to such person or persons as ma)- be authorized by the board to receive the same. ii. — The bonds of the officers shall be placed in the cus- tody of a stockholder of this bank, to be designated b}' the board of directors, who shall not be one of the bonded offi- cers, to be surrendered by him only upon the order of the board. 12. — The impression made below is an impression of the seal adopted by the board of directors of this bank. \_Impression of Seal, .] 13. — All transfers and conveyances of real estate shall be made by the bank, under the seal thereof, in accordance with the orders of the board of directors, and shall be signed by the president or cashier. 14. — Whenever an increase of stock shall be determined upon in accordance with the articles of association of this bank, it shall be the duty of the board of directors to cause all the stockholders to be notified thereof, and a subscription to be opened therefor, specifying the terms of payment agreed upon by subscribers. Each stockholder shall be entitled to subscribe 9 13° for shares of the new stock in proportion to the number of shares he already owns; but if any stockholder shall fail to subscribe for such new stock as he may be entitled to, or to pay his subscription according to agreement, the board of direct- ors shall determine what disposition shall be made of the priv- ileges of subscribing for the new stock not taken. 15. — This bank shall be open for business from o'clock A. m. to o'clock p. m. each day, except Sundays and days recognized by the laws of this State as holidays. 16. — The board of directors of this bank shall hold regular meetings at the banking-house for the transaction of business on of each week, and should that day in any year fall upon a holiday, the regular meeting for that week shall be held on such other day as the directors at the preceding meeting may order. The board may also hold special meetings upon the call of the president, cashier, or any three or more members, and when- ever there shall not be a quorum at a regular or special meet- ing, the members present may adjourn the meeting from day to day until a quorum shall be obtained; and any meeting may be adjourned from time to time by a vote of a majority of a quorum present, but no business except adjournment shall be transacted in the absence of a quorum. 17. — There shall be a committee, to be known as the ex- change committee, consisting of the president, directors, and cashier, who shall have power to discount and purchase bills, notes, and other evidences of debt, and to buy and sell bills of exchange; and who shall, at each regular meeting of the board of directors, make a report of all bills, notes, and other evidences of debt discounted and purchased by them for the bank since their last previous report. 18. — The board of directors may appoint one of its members or an officer of the bank to act as clerk at its meetings. 19. — No officer or clerk of this bank shall pay any check drawn upon it, or pay out money on any order, unless the drawer of such check or order shall, at the time of the presenta- tion thereof, have on deposit in the bank funds sufficient to meet such check or order. 20. — The earnings of this bank shall be disposed of accord- i3i ing to orders of the board of directors, made at regular or spe- cial meetings, and no dividend shall be paid to stockholders, or other disposition of earnings made, except upon order of the board. 21. — The organization papers of this bank, as executed and filed with the Comptroller of the Currency, the returns of judges of the elections, the proceedings at all regular and special meetings of the board of directors, the by-laws, and all changes and all amendments thereof, and the report of examin- ing committees of directors, made according to law 28, shall be recorded in the minute-book; and the minutes of each meeting of the board shall be signed by the president and attested by the cashier. 22. — The board of directors shall have power to prescribe and, when expedient, to change the form of books and ac- counts to be used in the transaction of the business of this bank, and to prescribe the general or particular manner in which its affairs shall be conducted. 23. — The stock of this bank shall be assignable and trans- ferable only on the books of this bank, subject to the restric- tion and provisions of the banking laws, and a transfer book shall be provided, in which all assignments and transfers of stock shall be made. 24. — Transfers of stock shall not be suspended preparatory to the declaration of dividends; and unless an agreement to the contrary shall be expressed in the assignments, dividends shall be paid to the stockholders in whose name the stock shall stand at the date of the declaration of dividends. 25. — Certificates of stock signed by the president and cashier shall be issued to stockholders, and the certificates shall state upon their face that the stock is transferable only on the books of the bank. 26. — All the current expenses of this bank shall be paid by the cashier, who shall, every six months, or oftener if required, make to the board of directors a detailed statement thereof. 27. — All contracts, checks, drafts, &c, for this bank, and all receipts for circulating notes received from the Comptroller of the Currency, shall be signed by the president or cashier. 28. — There shall be appointed by the board of directors a 132 committee of members thereof, whose duty it shall be to examine every three months the affairs of this bank, to count its cash, and compare its assets and liabilities with the accounts of the general ledger, ascertain whether these accounts and all others are correctly kept, whether the condition of the bank corresponds therewith, and whether the bank is in a sound and solvent condition, and to recommend to the board such changes in the manner of doing business, &c. , as shall seem to be desirable, the result of which examination shall be reported to the board at the next regular meeting thereafter. 29. — A majority of the directors, including the president, (or in his absence the vice-president,) shall be a quorum to do business. 30. — A copy of the by-laws of this bank as in force shall be kept in a convenient place in the bank, to which any stock- holder shall have free access during the regular hours of busi- ness. 31. — These by-laws may be changed or amended by the vote of two-thirds of the directors. Where there is any conflict between the law and articles of association, or between the by-laws and either of the other two, the law takes precedence, the articles of association stand next, and the by-laws must give way to both. Increase of Capital. For the law in regard to this, see Section 5142, page 16 of this work. The following is the form of notice required by the Comptroller's office: Certificate of Increase of Capital. National Bank of , _ 188-. To the Comptroller of the Currency, Washington, D. C. It is hereby certified that the capital stock of "The National Bank of " has been increased, pursuant to the articles of association of said bank, in the sum of dollars, all of which has been paid in, and that the paid-up cap- ital stock of said bank now amounts to dollars. [bank seal.] , Cashier. i33 State of , County of , sj .• I, , cashier of " The National Bank of ," in the State of , do solemnly swear that the foregoing certificate, by me subscribed, is true. Cashier. Subscribed and sworn to before me this day of , 188— Reduction of Capital. For the legal requirements in regard to this, see Section 5143, page 17 of this work. The following is the form of notice re- quired by the Comptroller's office: National Bank op , , 188- To the Comptroller of the Currency, Washington, D. C. It is hereby certified that the capital stock of " The National Bank of " has been reduced by the vote of shareholders owning two-thirds of the stock of the association, in accordance with the provisions of Section 5143 of the Revised Statutes of the United States, in the sum of dollars, and that the paid-up capital stock of said bank since said reduction is dollars. [bank seal.] , Cashier. State op County of ■ I, , cashier of " The National Bank of ," in the State of , do solemnly swear that the foregoing certificate, by me subscribed, is true. Cashier. Subscribed and sworn to before me this day of , 188-. A record of the vote of stockholders should be kept and forwarded with the notice of reduction of capital. Voluntary Liquidation. For law, see Sections 5220, 5221, 5222, and 5224, and com- ments thereon. The following letter of instructions is sent to banks con- templating voluntary liquidation, from the Comptroller's office: •' Under Section 5220 of the Revised Statutes of the United States, any association may go into voluntary liquidation and be closed by the vote of shareholders owning two- thirds of its stock ; and, under Section 5221, whenever this vote is taken it shall be the duty of the board of directors to cause notice of this fact to be certified, 134 under the seal of the association, by its president or cashier, to the Comptroller of the Currency. A blank is inclosed for this purpose. You will see on the lower portion of this blank a form of the notice to note-holders and other creditors, and you will please observe the directions printed upon it as to publication. One copy of one issue of each of the papers containing this notice, together with the pub- lisher's certificate, must be sent to this office. " The law provides that at any time after the vote to go into liquidation, the bank may, but within at least six months from that date must deposit, through this office, with the U. S. Treasurer, lawful money sufficient to retire its outstanding circula- tion, and withdraw its bonds. •'A blank form for authorizing the withdrawal of the bonds is also inclosed, which, when the bank determines to retire its circulation, should be filled out and for- warded to this office, together with the Treasurer's duplicate receipts for the bonds to be withdrawn. Before the Treasurer will release the bonds, however, all ac- counts due for semi-annual duty and for expense of redemption of notes must be paid. " No business should be done after the vote to go into liquidation, except such as is necessary to pay creditors and close up the affairs of the association. " If the bank is closing business as a National bank for the purpose of reorganiza- tion as an institution under State law, no deposits should be transferred from the National bank to the new organization without the consent of depositors, mani- fested by checking out their deposits from the old bank and re-depositing them in the new. ; 'A complete record of the meeting of the stockholders and of the vote should be kept and forwarded with the notice of liquidation mentioned above." The form of certificate of liquidation to the Comptroller of the Currency is as follows: National Bank , ( 188-. To the Comptroller of the Currency, Washington, D. C. Sir: It is hereby certified, in pursuance of Sections 5220 and 5221 of the Revised Statutes of the United States, that at a meeting of the stockholders of the , located at , in the State of , duly notified and held pursuant to law and the articles of association of said bank, at the office of said association at aforesaid, on the day of , 18 — , it was voted by the stockholders of said association, owning more than two-thirds of its stock, that said association go into liquidation and be closed. In testimony whereof, I have, by instruction of the board of directors of said association, hereto subscribed my name and affixed the seal of said association at aforesaid, the day and year above written. [seal of the bank.] President or Cashier. NOTICE. The National Bank , located at , in the State of closing up its affairs. All note-holders and others, creditors of said association, are (5 1 35 therefore hereby notified to present the notes and other claims against the associa- tion for payment. President or Cashier. Dated , 18S-. Note. — The above notice to be published for a period of two months in a news- paper in the city of New York, and also in a newspaper published in the place in. which the bank is located. (See Section 5221, Revised Statutes.) A certificate of the publisher that the required publication has been made, together with a slip con- taining notice from one issue of each paper, should be sent to the office of the Comptroller of the Currency. Withdrawal of Bonds. The law under which this may be done is contained in Sec- tions 5160, page 26; 5167, page 29; 5222, page 60; Section 3, Act of June 20th, 1874, page 87, and Section 7, Act of July 12th, 1882, page 107. Bonds can only be withdrawn by furnishing a power of attorney to the Comptroller of the Currency for the purpose. The following is the usual form of such power of attorney: At the meeting of the board of directors of the Bank of , held at their banking house, , 188-, the following resolution was adopted: Resolved, That the Comptroller of the Currency be, and he is hereby, authorized to withdraw $ U. S. bonds, deposited with the Treasurer of the United States by this bank to secure circulation, and described as follows : $ of the loan of ; and that be, and is hereby, authorized to sell, assign, and transfer the same, and to appoint one or more attorneys for that purpose. I hereby certify that the above is a true extract from the minutes of said meeting. [seal of bank.] , Cashier, and Secretary of the Board of Directors. Note. — The Treasurer's receipts for the bonds proposed to be withdrawn must be forwarded (with this form properly filled) to the Comptroller ofthe Currency. 136 Synopsis of Circulars to Officers of National Banks, by the Comptroller of the Currency. Synopsis of Instructions as to Reports of Condition. GENERAL. All organized associations, including those that have not commenced business, must promptly report their condition when called upon, using the latest ' ' Forms ' ' supplied by the Comptroller of the Currency. The penalty prescribed by Section 52 11, page 50, will be duly enforced if reports are not promptly made. Receipt of reports is not acknowledged, but due notice of non-receipt is given. Affidavits must be made before a notary public, justice of the peace, or other officer duly authorized to take acknowledg- ments of oaths. Such notary, or officer, however, must not be an officer of the bank. (See Act of February 26th, 1881, page 106.) DETAILS. I. '■'■Notes and bills discounted.' 1 '' — Here include only dis- counted paper and notes for loans. II. "Suspended and bad debts." — All paper past due, and all with interest unpaid for six months, as denned in Section 5204. III. ' ' Indebtedness of directors. ' ' — Loans for their use or ben- efit and debts for which they are responsible. IV. "Overdrafts.' 1 '' — To be stated as such, and not deducted from deposits. V. "Premiums.'''' — Premium or interest paid on United States and other bonds and securities, specie, &c, should be reported as such, and not included as part of their face value. VI. "Bonds and securities.'''' — Enter «//, whether State or National, at their par value, without regard to premium or in- terest. (See Premiums, par. 5. ) If held below par, enter at cost i37 price. Report no bonds as "deposited with the United States Treasurer to secure circulating notes," or for other purposes, before bank has received Treasurer's receipt for same. VII. "Specie." — Report precise amount; if any be muti- lated or uncurrent, enter at cost price. VIII. "Capital stock." — Until all the requirements of Sec- tion 5140, page 13, as to payments of original capital stock, or those of Section 5142, page 16, as to increase thereof, are re- spectively complied with, do not report payments thereon as "capital stock paid in," but enter them so as to show amount of capital stock officially acknowledged, and amount paid but not acknowledged by the Comptroller separately. IX. "Stirplus fund." — Section 5199, page 44, must be com- plied with, and requisite amount carried to "surplus fund," and so reported. X. "Circulating notes." — The total amount of notes re- ceived from Comptroller of Currency must be stated, and all on hand, whether signed or not, entered as indicated on blanks furnished. XL " Stale circulation outstanding." — This item is only for banks converted from State to National with any of the old cir- culation unredeemed. XII. "Lawful money reserve." — Banks are reminded that the provisions of law as to keeping their reserve of lawful money good are explicit and absolute, that disregard of them is an open violation of law, and that it is the Comptroller's duty to enforce the penalties of the law for such violation. Reserve. The law now regulating the reserves which National banks are required to keep on hand to protect their deposits is found in Sections 5191, 5192 and 5195 of the Revised Statutes as modified by Section 2, part of Section 3 of the Act of June 20th, 1874, and part of Section 12 of the Act of July 12th,' 1882. Section 5191 (see page 39) names sixteen cities, each bank located in any one of which is required to have on hand at all times lawful money of the United States, equal at least to 25 per cent, of the aggregate amount of its circulation and de- i33 posits; and that each bank located elsewhere than in the cities named is required to have on hand lawful money at least equal to 15 per cent, of its aggregate circulation and deposits. There are thus banks of two classes — 25 per cent, banks and 15 per cent, banks. That the words on hand in this section do not mean in the bank itself — in its own vault or till — may be seen from sections 5192 and 5195. Section 5192 provides that three-fifths of the reserve which 15 per cent, banks are required to keep may con- sist of balances, available for redemption of circulating notes, due to the association from National associations approved by the Comptroller of the Currency, located in any of the sixteen cities named, the other two-fifths being in bank. Section 5195 provides that 25 per cent, banks outside of New York may each keep one-half of their lawful reserve in a National bank approved by the Comptroller located in New York city. The provisions in the sections mentioned having reference to the redemption of circulating notes of National banks at redemp- tion agencies in New York and other reserve cities have been repealed by Sections 1 and 2 of the Act of June 20th, 1874, leaving still in force the right to keep a certain portion of their required reserve with banks in those cities. Sections 1 and 2 of the Act mentioned also repeal all provisions requiring re- serve on circulating notes. Instead of reserve on circulation, each National bank is re- quired to keep at all times with the Treasurer of the United States, in lawful money, a sum equal to 5 per cent, of its circulation. This 5 per cent, fund is also permitted to be counted as a portion of the reserve on deposits. The 25 per cent, banks are divided into two classes: those in New York city and those in the other reserve cities. In New York city the required reserve is 25 per cent, of deposits, all of which must be in bank. In the other reserve cities the required reserve is also 25 per cent, of deposits, only one-half or 12^2 per cent, of which need be kept in bank; the remaining 12^ per cent, can be deposited in New York with approved reserve agents. Outside of New York and the reserve cities the reserve is i39 15 per cent, of deposits, two-fifths to be kept in bank and three-fifths in New York, or in any of the other reserve cities. These various percentages must be computed on the aggre- gate deposits, that is, on all deposits which appear on the balanced statement of the bank. It is very doubtful whether National banks have power either to take time deposits or to borrow money and create bills payable. At all events it is believed that whatever agreement may be made with a depos- itor or party from whom money is received on time, or bor- rowed, the bank would be obliged to pay on demand if the other parties did not choose to adhere to their agreement. For this reason all time deposits or bills payable reported by Na- tional banks are held to require a reserve the same as other deposits. All other deposits are held to include "dividends unpaid;" ''individual deposits subject to check;" "demand certificates of deposit;" "time certificates of deposit;" "certified checks;" "cashiers' checks outstanding;" "United States deposits;" "deposits of United States disbursing officers;" "bills paya- ble." Deposits are divided for purposes of computing reserve into two classes, viz. : bank deposits — that is, amounts due to banks — in one class, and all other deposits in the other. Cer- tain deductions are allowed from the gross deposits. First, checks in exchanges can be deducted from deposits of any class; but, second, amounts due from banks can only be de- ducted from amounts due to banks, and this must be particu- larly noted. * Any excess with approved reserve agents over and above the proportion of reserve which may be lawfully kept with them must not be regarded as reserve, but may be treated as if simply due from banks, and deducted from amounts due to banks. In a bank belonging to or dealing through a clearing-house, the clearing-house exchanges are the only checks which can properly be deducted from deposits; but in a bank located where there is no clearing-house it is allowable to reduce the deposits by checks on banks in same town or city. If banks desire to have checks on banks in same place *The allowance of any deduction whatever is a ruling of the Comptroller's office. 140 allowed as a deduction, such checks must be separated in the schedule of checks and cash items on the back of the report. Reserve in Bank. The funds available for reserve in bank are comprised under the general term lawful money, which has been held to mean gold coin of the United States, silver dollars, and legal-tender notes. By special statute clearing-house certificates are avail- able for reserve. (Section 5192, R. S.) In the same way are available United States gold and silver certificates (Sec. 12 of Act July 12th, 1882,) and United States certificates of deposit of legal-tender notes. (Section 5193, R. S.) There were formerly many other forms of certificates and Treasury notes available as reserve under various statutes. These are, how- ever, now obsolete. All the forms in which reserve may now be kept have been mentioned. Some of these obsolete forms were the compound-interest notes, seven-thirty notes, three per cent, certificates, &c. Reserve Outside of Bank. With the 15 per cent, banks an amount with an approved reserve agent in any reserve city equal to but not exceeding three-fifths of the total reserve required, is available for reserve. With 25 per cent, banks not located in New York city an amount with an approved reserve agent not exceeding one-half of the total reserve required, is available for reserve. The 5 per cent, fund, to an amount not exceeding 5 per cent, of the circulation of the bank, is allowed to protect deposits. In the twenty-five per cent, banks it will protect 4 times, and in the 15 per cent, banks 6^3 times its own amount of deposits. In all computations given hereafter allowance is made at these rates for this fund. No amount with the Treasurer of the United States in excess of 5 per cent, of circulation can count as reserve. Computation of Reserve. The division of reserve into reserve with approved agents and reserve at home, and the different requirements of law as to banks in New York city, banks in other reserve cities, and country * banks, have somewhat complicated an otherwise ♦This is simply a convenient term for banks outside of the reserve cities. 141 simple matter; and the method of computing reserve will vary with the class to which the bank belongs, the amount with re- serve agents, and the amounts due to and from banks. It is believed, however, that all cases which can arise are included in the following seven rules for the computation of reserve : I. For banks located in New York city. Rule. — Deduct amounts due from banks from amounts due to the same, and also deduct exchanges for clearing-house from all other deposits; add together the results of the sub- tractions and deduct from the sum four times the five per cent, redemption fund. Twenty-five per cent, of the remainder is the required reserve, which must all be in bank, in one of the forms of lawful money or certificates available for reserve, heretofore described. If amounts due from banks equal or exceed amounts due to the same, both amounts are omitted from the computation. II. For banks located in reserve cities other than New York, when there is no excess with approved reserve agents in New York city. Rule. — Deduct amounts due from banks from amounts due to the same, and also deduct exchanges for clearing-house from all other deposits; add together the results of the subtractions, and deduct from the sum four times the five per cent, redemp- tion fund. Twenty-five per cent, of the remainder is the total required reserve ; one-half at least of this total reserve must be in bank, in lawful money. The remaining half may be with approved reserve agents. There is no limit on the amount of reserve which may be kept in bank. If amounts due from banks equal or exceed amounts due to the same, both amounts must be omitted from the computation. III. For banks located in reserve cities other than New York, when the home reserve is close, and there is an excess over the permitted one-half held with reserve agents, and when the amounts due to banks are so great that it is apparent they will exceed all amounts due from the same, even including all excess with reserve agents. Rule. — Deduct amounts due from banks, not including ex- 142 cess with reserve agents, from amounts due to the same, and also deduct exchanges for clearing-house from all other de- posits. Add together the results of the subtractions and deduct from the sum four times the five per cent, redemption fund. From the result take the whole amount due from reserve ao-ents. One-seventh of the remainder will be the reserve re- quired at home. The preceding rule is a short method of arriving at a result which might otherwise take considerable computation. The mathematical explanation of the reasons for this rule are too long to be given here. The rule is only applicable where the amounts due to banks are in excess of amounts due to banks added to the excess with reserve agents. IV. For banks located in reserve cities other than New York, where the home reserve is very close, and there is an excess over the permitted one-half with reserve agents. The amounts due to banks are, however, exceeded by the amolmts due from the same added to the excess with reserve agents. Rule. — Omit amounts due to and from banks from the com- putation. Deduct exchanges for clearing-house from all other deposits. Deduct from the remainder four times the amount of the five per cent, redemption fund. Twenty-five per cent. of the result is the total reserve required. One-half of the total reserve may be kept with reserve agents, and the remain- ing one-half must be in bank. No amount in the hands of re- serve agents can directly make up for a deficiency in home reserve. An excess in home reserve can, on the contrary, always count, since, if a bank sees fit, it can keep all its reserve in its own vaults. V. For country banks, when there is no excess with approved reserve agents. RULE. — Deduct amounts due from banks from amounts due to the same, and also deduct exchanges for clearing-house, if there is a clearing-house in the place where the bank is located, or, if not, checks on banks in the same town, from all other deposits; add together the results of the subtractions, and from the sum deduct 6 2 / 3 times the five per cent, redemption fund. Fifteen per cent, of the remainder is the total reserve required, i43 two-fifths, at least, of which must be at home. The remaining three-fifths may be with approved agents. VI. For country banks, when the home reserve is close and there is an excess over the permitted three-fifths with reserve agents, and when the amounts due to banks are so great that it is apparent that the excess with reserve agents added to the amounts due from banks will not exceed such amount due banks. Rule. — Deduct amounts due from banks, not including ex- cess with reserve agents, from amounts due to banks, and also deduct exchanges for clearing-house, or checks on banks in same town, from all other deposits; add together the results of these subtractions, and deduct from the sum 6% times the five per cent, redemption fund. From the remainder take the whole amount with approved reserved agents. Six-ninety- firsts of the result is the home reserve required. By this process, as well as by the process in Rule III, nothing but the excess over permitted reserve with reserve agents is used to reduce the amount due to banks, although it might appear otherwise from the fact that the whole amount is de- ducted. In reality, a sum with reserve agents equal in the one case to one-half, and in the other to three-fifths of the total reserve required, is retained for that purpose. VII. For country banks, when the home reserve is close, but when excess with reserve agents added to amounts due from banks exceeds amounts due to banks. Rule. — Omit amounts due to and from banks from the com- putation and proceed as in Rule V. AVERAGE RESERVE. The average reserve for any given period may be obtained by computing, by the methods heretofore shown, the net de- posits requiring reserve for each day in that period, and adding the results together for a divisor. In the same way the reserves held on the same days should be added together for a dividend. The quotient will be the percentage of average reserve for the period. FIFTEEN PER CENT. BANKS IN RESERVE CITIES. There are two or three instances of banks now located in 144 reserve cities which are only required to keep a total reserve of 15 per cent. This anomaly arises from the fact that when these banks were organized they were situated in a suburb which has since been absorbed by the growing city. Thus Birmingham was taken into Pittsburgh, Pa. The National bank in Birmingham, organized there before that town became a part of Pittsburgh, still retains, under a decision of the At- torney-General of the United States, the exact status it had at organization, and will retain it until its charter expires. Among other rights retained is that of keeping a reserve of 15 per cent. only. In the same situation are banks in Dorchester, Roxbury, and Charlestown, now parts of Boston, Mass., and in Georgetown, now part of Washington, D. C. APPROVED RESERVE AGENTS. Approved reserve agents have been frequently mentioned in the foregoing pages. Any bank outside of the reserve cities can select any National bank within any of such cities as a depositary for its funds, and such funds so deposited are, when the selection is approved by the Comptroller, allowed to be counted as a part of the required reserve of the depositing bank. In the same way banks in reserve cities can select for approval banks in New York city. The bank making the se- lection writes to the Comptroller of the Currency and asks his approval of the chosen bank. The approval is usually given, and the necessary entries made in the books of the Comp- troller's office. The bank is advised that the selection is ap- proved, and thenceforth all balances due from this approved bank are counted as available for reserve under the law. RICHMOND AND CHARLESTON. Richmond and Charleston, although named in Section 5192 among the cities wherein 15 per cent, banks are permitted to deposit three-fifths of their reserves, are not named in Section 5191 among the cities wherein banks are required to keep the larger reserve of 25 per cent. — this larger reserve being prin- cipally required because of the greater responsibility incurred by receiving the deposit of bank reserves. For this reason no banks located in Richmond or Charleston have ever been ap- proved as reserve agents by the Comptroller. i 4 4 a NEW FORM FOR COMPUTING RESERVE. The following is the substance of the new form which the banks will be required in future to fill out in their report of condition : Bank Directors should bear in mind that Section 5 191 U. S. Revised Statutes forbids a Bank to increase its liabilities by new loans or discounts, or to declare any dividend when its Reserve is below the legal requirement. Form B. — Calculation of the Lawful Money Reserve of National Banks Located Elsewhere than in Reserve Cities and Central Reserve Cities. No. of Bank Report of the state of lawful money reserve of the bank, located at State of at o'clock M., 188 . N. B. — If this accompanies a Report of Condition it should be signed by , Cashier. If it accompanies a Report of Examination it should be signed by , Examiner. ITEMS ON WHICH RESERVE IS TO BE COMPUTED. Liabilities. Due to National banks, $ Due to State banks and bankers, $ Total, $ Less due from other National banks, $ Due from State banks and bankers, $ Total, $ Add to difference: 1st. Dividends unpaid; 2d. Individual deposits; 3d. United States deposits ; 4th. Deposits of U. S. Disbursing officers. And from the gross amount of these items deduct — 1st. Exchanges for clearing house ; 2d. Checks on other banks in the same place ; 3d. National bank notes. And 15 per cent, of the remainder is the entire reserve required, namely $ Deduct from this the five-per-cent. redemption fund with Treasurer U. S., and the balance will be the net reserve to be held, $ Note. — Should the aggregate " due from " exceed the aggregate " due to " banks, both items must be omitted from the calculation. i 4 4 b ITEMS COMPOSING THE NET RESERVE, AND THE DISTRIBUTION OF THE SAME. Three-fifths of the net reserve is $■ Items making up the same may consist of * balances with following approved reserve agents, viz.: $ Total. Showing an excess or deficien- cy with reserve agents of..... $■ Two-fifths of the net reserve is . Items in bank which may law- fully make up the same, viz. : Fractional silver $ Silver dollars Silver Treasury Cer- tificates Gold coin Gold Treasury certifi- cates Legal-tender notes U. S. certificates of de- posit for legal ten- ders Clearing-House cer- tificates for coin and legal tenders Total $ Showing an excess or deficien- cy in the § reserve held of.. RECAPITULATION. Excess in the entire reserve held : Deficiency in entire reserve held * If reciprocal accounts are kept with reserve agents, only the net amount due from such agents is available for reserve. Bank officers will always insert in their Reports of Condition one of these forms properly filled in, and bank examiners will do the same in their Reports of Examination. Form A is for the banks required to keep a reserve of twenty- five percent., and is, of course, the same as Form B, excepting that twenty-five per cent. , instead of fifteen per cent. , of the gross amount of liabilities, less deductions allowed, is the entire reserve required ; and one-half, instead of three-fifths of the net reserve held is to be compared with the balances with approved agents, to show excess or deficiency with them, and one-half, instead of two-fifths, compared with items in bank, to show excess or deficiency in them. Attention is called to the fact that in N. Y. city and the new central reserve cities the banks must keep the whole net reserve required, when ascertained as above, in their own possession. 145 PUBLICATION OF REPORTS. Each bank must publish its reports, in precisely the same form as made to the Comptroller, in a newspaper published in the place where the association is established, or, if there be none in the place, in the one nearest in the same county, and furnish such proof of the publication as the Comptroller may require. (See Section 521 1, page 50.) PROOF OF PUBLICATION. To secure uniformity in the proof of publication of reports, the form of affidavit required for proof is furnished to the banks when reports are called for, and the instructions there- with must be strictly complied with, or banks will be put to the additional expense of publishing reports a second time. EXCHANGE OF BONDS. The Comptroller of the Currency furnishes the necessary forms and instructions for the exchange of bonds deposited to secure circulating notes, under the provision of Section 5167, page 29, upon terms prescribed by the Secretary of the Treasury. U. S. BONDS. CHARGING OFF PREMIUMS. It has been the impression that under a ruling of the Comp- troller of the Currency banks must retire the premium paid by them on U. S. bonds deposited to secure circulation before dividends can be paid, or that said premium must be retired within five years in semi-annual instalments. They are thus supposed to be precluded from securing circulation with high- priced bonds without a suspension of dividends. Under present requirements the amount of premium paid for U. S. bonds can be counted as an asset so long as such amount does not exceed the market price for said bonds. Redemption and Destruction of Mutilated Notes of National Banks. Mutilated notes forwarded direct to the Comptroller bv the banks that issued them, under the provisions of Sections 5160, 5167, or 5184, pages 26, 29, and 36, should be addressed to the "Comptroller of the Currency, Treasury Department, Wash- ington, D. C," with express charges prepaid, and accompanied 10 146 by a letter stating contents of package in detail, name of agent authorized to witness their destruction, and the denominations of new notes desired in return. Packages must not contain less than $500, and always even hundreds of dollars, each de- nomination to be separately strapped, the amount plainly marked thereon, and the whole effectively canceled by cutting out officers' signatures; otherwise the notes will be returned for cancellation at the bank's expense. Bank officers must decide as to the propriety of redeeming mutilated notes at their face value, and are advised always to do so on satisfactory evidence of the total destruction of the missing portions. When otherwise redeemed, the fragments should be held until the fractions amount to dollars. All notes will be accepted for the value at which the bank redeemed them. Bank officers will please paste together the fragments of the same note before transmitting it for redemption. Each bank must authorize, by power of attorney, under the provisions of Section §184., page 36, some person unconnected with the Treas- ury Department to witness the destruction of its notes, or must send one of its officers, duly accredited, to do so. Reports of Dividends and Earnings. The Comptroller forwards to each National bank suitable blank forms on which to make reports, semi-annually, of their dividends and earnings; and by observing the following in- structions, errors in making such reports will be avoided. The reports are required by Section 5212, Revised Statutes, to be made to the Comptroller within ten days after declaring a dividend, and reports of earnings and the disposition thereof must be made whether dividends are declared or not. The number prefixed to each paragraph corresponds to an item having the same number on the forms for the reports. 1. Undivided Prof Is. — Enter the total earnings on hand at the commencement of the period covered by the report, whether to the credit of Profit and Loss, Discount, Interest, Exchange, Contingent Fund, or any other account on the books of the bank, but do not include the surplus fund accumulated accord- ing to the provisions of Section 5199 of the Revised Statutes. 2. Gross Earnings. — Enter the total amount earned during M7 the period covered by the report before any deductions what- ever have been made therefrom. 3. Other Profits. — Enter any amount that may have been re- covered, during the period covered by the report, from matters previously charged off, any premium received on stock of the bank, in cases of increase of capital, or where the stock- holders originally pay a premium for stock, &c. 4. Withdrawn from Surplus. — Enter any amount that may have been withdrawn from the surplus fund during the period covered by the report. When a dividend is declared the surplus fund must not be reduced below an amount equal to one-tenth of the net earn- ings of the bank since its organization. If it be necessary to use so much of the fund to meet losses, &c. , as will reduce it below the proportion named, the dividend must be passed. 5. Premiums charged off. — Enter the amount, if any, charged off during the period covered by the report on account of pre- miums previously paid by the bank, the valuation of which, debited on the books, must be reduced to a sum commensurate with the market value of the bonds owned by the association before the declaration of a dividend, and should be wholly charged off as rapidly as possible. 6. Losses. — Enter the amount of any losses charged off dur- ing the period covered by the report. 7. Expenses, &c. — Enter the sum of the amounts charged off during the period covered by the report on account of expenses, taxes, and other items. Enter the amount of the taxes as- sessed against the bank, whether paid, or set apart but not yet paid. Taxes assessed against the individual shareholders, but paid by the bank for them, should not be entered in this item, but should be treated as part of the dividend. The sum of items 5, 6, and 7 is to be carried out opposite item 7 and deducted from the sum of items 1, 2, 3, and 4 car- ried out opposite item 4, which deduction will give the net earnings at the disposal of the bank, to be accounted for in items 8, 9, and 10, as follows: 8. Dividend. — Enter the rate per cent, of the dividend, if any, for the period covered by the report, the capital of the bank, and the amount of the dividend at the rate given. 148 9. Surplus Fund. — Enter the amount, if any, carried to sur- plus fund for the period covered by the report. The amount carried to surplus fund whenever a dividend is made must be equal to at least one-tenth of the net earnings of the bank since its last dividend until the fund shall equal twenty per cent, of the capital. (Sec. 5199, R. S.) 10. Undivided Profits. — Enter the amount of earnings, other than the surplus fund, remaining after providing for the divi- dend and the requisite addition to the surplus fund. The sum of items 8, 9, and 10 is to be carried out opposite item 10, and must equal the amount previously carried out op- posite item 7. (See above.) 11. Total Profits. — Enter the amount of the net earnings of the bank since its organization as a National bank, which must equal the sum of the dividends paid, added to the surplus fund, and the undivided earnings on hand. 1 2. Profits ofi Old Organization. — Enter the amount of profits transferred to the National bank by its predecessor, if any, if a previously existing association was converted into the Na- tional bank. 13. Total Dividends. — Enter the total amount of all divi- dends made since the organization of the National bank, but do not include any dividends made by an association converted into the National bank prior to such conversion. 14. Total Surplus. — Enter the amount to the credit of the surplus fund at the date of the report. 15. Total Profits. — Enter the amount of all earnings on hand at the date of the report, other than the surplus fund, which amount will equal that of item 10 above. The sum of items 13, 14, and 15 is to be carried out oppo- site item 15, and must equal the amount entered for item n, or if there be an amount entered for item 12, it must equal the sum of items 11 and 12, which is to be carried out opposite item 12. 16. Net Profits. — Enter the amount of the net earnings of the bank since its last previous report. Reports of dividends and earnings must be verified by the oath or affirmation of the president or cashier and the acknowl- edgment made before an officer duly authorized to administer 149 oaths, as indicated by the forms furnished. If acknowledged before a notary public, his notarial seal must be attached to or stamped upon the report. The reports should be promptly made out, and forwarded to the Comptroller immediately after the expiration of the periods for which he has been previously notified that the dividends and earnings of the bank will be reported, as the law imposes a penalty of $100 for each day's delay. (Section 5213, R. S.) Appointments and Changes of Officers of National Banks. It is necessary that the name and official signature of every National bank officer shall be known in the office of the Comp- troller, and, therefore, the following rule has been adopted : RULE. No attention will be given to any order, direction, or com- munication received in this office, signed by any person as an officer of a National bank, unless this office has been officially notified of the appointment or election of such person as an officer of the bank ; and all communications from this office to National banks will be directed to the persons of whose elec- tion or appointment notice was last received. Notices of election or appointment of officers must be sepa- rate from all other communications, and authenticated by the seals of the banks, and, so far as possible, by the signatures of the retiring officers, and accompanied by the official signatures of the new officers. The following is the form in which information of changes of officers is to be given, and to secure uniformity it is re- quested that notices of changes be given on the blanks pre- pared by the Comptroller, which will be furnished whenever desired and whenever he shall become aware of the necessity of doing so: Fo7-m of Notice of Change of Officers. Below appear the official signatures of the president, vice-president, cashier, and assistant cashier of The National Bank of (made at the regular an- nual meeting of the stockholders for the year ). :: [Signatures of new officers.] [Signatures of retiring officers.] Note. — The signatures of vice-president and assistant cashier must be given, if there be such an officer. "•The words in parenthesis can be stricken out when any change of officers is made at a time other than the annual meeting of stockholders. 150 Extension of Charters. The Act of July 12th, 1882, provides for the extension of the corporate existence of National banking associations whose periods of succession are about to expire. All National banks now in existence which have not already extended under this Act, were originally organized under the provisions of the Act of June 3d, 1874. Section 8 of the last-named Act, and Sec- tion 5136 of the Revised Statutes of the United States, pro- vides that all associations organized under it shall have suc- cession for twenty years from the date of the execution of their organization certificates. The officers of a National bank can therefore tell the date of expiration of their association by taking that of the execution of its organization certificate and adding twenty years thereto. If the paper is lost, or the date in any way uncertain, information can be obtained on appli- cation to the Comptroller of the Currency. Under the Act of July 12th, 1882, and the regulations of the Comptroller's office, banks are permitted to file their application for extension with the proper papers at any time within six months prior to their expiration, and the necessary blank will be sent from that office a sufficient time in advance to enable them to do so. The following are copies of the forms : Amendment to Articles of Association. National Bank . In accordance with and in pursuance of the provisions of "An Act to enable Na- tional Banking Associations to extend their corporate existence, and for other pur- poses," approved July 12th, 1882, we, the undersigned, shareholders of " The ," located at , in the county of and State of , owning the shares of the capital stock of said association set opposite our respective names, aggregat- ing not less than two-thirds of the stock of said association, the total number of shares representing the capital stock of said National banking association being shares, do hereby consent and agree that the article of the articles of association of said National banking association be, and is hereby, amended to read as follows : "This association shall continue until , 19 — , unless sooner placed iu vol- untary liquidation by the act of its shareholders owning at least two-thirds of its stock, or otherwise dissolved by authority of law." In witness whereof, we, the undersigned, have hereto set our hands. Date of Signing. Name. Address. No. of Shares. i5i National Bank Sir: I do hereby certify, in pursuance of the provisions of 'An Act to enable National Banking Associations to extend their corporate existence, and for other purposes," approved July 12th, 1882, that the amendment of the articles of association to which this certificate is attached of " The ," and the consent to the same in writing, was executed in duplicate by shareholders owning not less than two-thirds of the stock of said bank; and I do further certify that the signatures of the share- holders to said consent and said amendment of the articles of association are the true and correct signatures of said shareholders or of their lawfully appointed attor- neys ; and that one of the instruments so executed is the foregoing, and that the other, in all respects like the foregoing, is on file in said bank. [seal of bank.] , President or Cashier. To the Comptroller of the Currency, Washington, D. C. It Sir : I certify that the said amendment to the articles of association of " The " was duly recorded upon the minute-book of said association on the day of , 18 — , and that the above certificate was certified under the seal of the association in accordance with a resolution of its board of directors, duly adopted at a meeting of said directors on the — day of , 18 — . [seal of bank.] , Cashier. To the Comptroller of the Currency, Washington, D. C. National Bank , 188-. Sir : I hereby request the Comptroller of the Currency to approve the enclosed amendment of the articles of association of this bank, extending its corporate existence for twenty years, pursuant to the provisions of the Act of Congress entitled <: An Act to enable National Banking Associations to extend their corporate existence, and for other purposes," approved July 12th, 1882. The amendment is accompanied by the certificate required by law. Very respectfully, , President or Cashier. To the Comptroller of the Currency, Washington, D. C. The law does not require that a meeting of the stockholders shall be held; it is sufficient to secure the consent of those representing two-thirds of the stock, and this may be done by- sending in advance to each stockholder a power of attorney to be signed and returned by him, some person other than any VNIYERSfTY ) . . ■ 152 officer of the bank being empowered to act as attorney. The following form may be used for this purpose: Know all men by these presents : That I, , of , hereby constitute and appoint irrevocably my true and lawful attorney, for me and in nay name and stead to sign all necessary papers in connection with the extension of the corporate existence of the , under the Act of Congress approved July 12th, 1882, and I hereby consent that the article of the articles of association of The be so amended as to read as follows : " This association shall continue until close of business on , unless sooner placed in voluntary liquidation by the act of its shareholders owning at least two- thirds of its stock, or otherwise dissolved by authority of law." Hereby granting unto my said attorney full power and authority to act in and concerning the premises as fully and effectually as I might do if personally present. In witness whereof I have hereunto set my hand and seal this day of 1 in the year one thousand eight hundred and eighty-two. Signed and sealed in presence of These powers of attorney, signed by the stockholders, should be sent to the Comptroller with the amendment to the articles of association on which their names, signed by their authorized attorneys, appear. If preferred, a stockholders' meeting may be called for a convenient date in order to vote for the extension and to sign the necessary papers. Notice of the meeting should be sent by mail to each stock- holder, and may also be announced by publication. At this meeting the stockholders may appear in person or by attorney, the power given to the latter being similar in form to that inserted above. In executing and forwarding the papers the following instructions must be strictly observed: The certificate of the president or cashier, certifying that stockholders owning at least two-thirds of the stock have con- sented, in writing, to the amendment, should be executed, in duplicate, and one copy transmitted to the Comptroller, together with the letter applying for approval of the Comptroller, at least one month previous to the expiration of the corporate existence of the bank, in order that the Comptroller may have sufficient time to cause the special examination to be made, as required by Section 3 of the Act. If any shares of the bank stand in the name of administrat- ors, executors, trustees, or guardians, and it becomes necessary *53 to have the vote of these shares to make up the majority re- quired to authorize the amendment, duly certified copies of the legal appointment of such administrators, executors, trust- ees, or guardians should be forwarded to the Comptroller. When stock voted for the amendment stands in the name of an assignee there must be evidence showing that the shares of stock have been regularly transferred to him, as such assignee, on the books of the bank. When the amendment is si°med by an attorney acting for shareholders, properly executed powers of attorney must be furnished. Soon after the papers, properly executed, have been received in his office, the Comptroller will order the special examina- tion required by Section 3. This examination must be paid for by the bank, and if the report is favorable the Comptroller will issue his certificate of extension. After the extension has been granted, the law requires that all circulating notes issued to the bank after the date at which the new period of succes- sion begins shall be of different devices from those issued be- fore; and this necessitates the procuring of new plates, which will be prepared at the expense of the bank. This expense will be $50 for each plate of two impressions and $75 for each plate of four. (See page 119.) A blank to enable banks to order the preparation of plates for the printing of new circulation will be furnished, and the order should be made out and sent with the application for extension. No transfers of bonds are necessary, as the extended asso- ciation is in all respects identically the same as before exten- sion, and is merely placed in the same position as if the law had allowed it at the outset forty years from the date of its organization, of which twenty have expired. The new circu- lating notes will be issued as the old come in by the usual course of redemption, until the end of three years from the date of extension, when the law requires the bank to deposit lawful money for the redemption of such portion of the old circulation as may then remain outstanding. As new circula- tion will be immediately issued in place of that for which law- ful money is thus deposited, there need be little inconvenience on this account. All that is necessary is to see that the print- i54 ing of circulation in blank is ordered in advance, so that it may be ready when wanted. officers' bonds. Although the bank is the same bank after extension as be- fore, it is necessary to renew the bonds of the officers, tellers, &c. If this is not done, it would be difficult to hold the sure- ties, as bondsmen signing before the extension could not be held to have contemplated the existence of the bank for a longer term than twenty years. STOCKHOLDERS NOT DESIRING TO EXTEND THE ASSOCIATION. Some stockholders may not vote for the extension, and some may wish to withdraw the amount of their stock. Section 5 of the Act of July 12th, 1882, provides what shall be done in such cases. (See p. 107.) The foregoing instructions apply to the extension of the bank on a condition which legally is in all respects identical to what it was at its first organization. It may, however, be deemed best by those principally inter- ested in National banking associations about to expire not to avail themselves of the foregoing method. The reasons for this are obvious. In a twenty years' life the personnel of the stockholders of an association undergoes great changes. The stock which was originally in the hands of active resident business men, who brought custom and business to the bank, by various vicissitudes falls into the possession of widows, heirs, and non-residents, whose only interest in the institution is to draw dividends. The active stockholders remaining in such associations will doubtless prefer in many instances to let the old association expire, and, with their proportion of the capital, joining with themselves other new capitalists such as they may think will add strength, form a new association to occupy the place vacated by that which has expired. A pro- viso in Section 5 of the Act of July 12th, 1882, prevents the use of the old name for such a new association unless all the stockholders in the old bank are assigned shares in the new bank proportionately to those they held in the old. It will therefore be necessary to take a new name in such cases. The new associates should make application to the Comp- 155 troller, obtain the new name desired, execute articles of asso- ciation and an organization certificate, and file these papers, with an order for circulation, in the office of the Comptroller of the Currency about a month prior to the expiration of the existence of the old bank. Fifty per cent, of the capital should be paid in, so as to be certified to the Comptroller at the same time bonds are deposited, which should be done a few days before the old bank expires. Everything being ready, the new bank can be authorized to commence business not later than the day of the expiration of the old association. The Act of July 12th, 1882, also provides that the liquida- tion of the old association may be legally continued after its expiration, and its franchise is extended for this sole purpose until all its assets are sold and the proceeds distributed among its creditors or stockholders. The liquidation is to be super- intended by its board of directors, and the board should be kept up in the same manner as in a bank doing business, until all moneys have been collected and distributed. The stockholders of the new bank can put into it such moneys as they derive from the old. The assets of the old bank can be sold in such manner by its directors as will realize the most for its stockholders, and in many instances it is ad- vantageous to sell to the new bank such portion as can be legally taken by it. It cannot take any real estate except banking house. It is likewise forbidden to take real estate paper or mortgages, or mortgage paper; and it cannot, of course, take any paper or assets of any kind known to be bad or worth- less. No old stockholder can be compelled to take stock in the new bank, and no transfers of deposits can be made from the books of the old bank to those of the new without the con- sent of the depositors, manifested by their deposit of checks on the old bank. A complete set of new books must be opened by the new institution. Banks permitting their corporate existence to expire without extension are required to furnish the following notice to the Comptroller's office. (See Section 7, Act of July 12th, 1882, page 107.) 156 National Bank ( 188- To the Comptroller of the Currency, Washington, D. C. Sir: It is hereby certified, in pursuance of Sections 5220 and 5221 of the Revised Statutes of the United States, that the corporate existence of " The ," located at , in the State of , having expired at close of business on the day of , 188-, the bank is now closing its affairs under the provisions of Sec- tion 7 of the Act of July 12th, 1882. In testimony whereof, I have, by instruction of the board of directors of said asso- ciation, hereto subscribed my name and affixed the seal of said association at ^—^— aforesaid, the day and year above written. [seal of the bank.] , President or Cashier. NOTICE. The National Bank , located at , in the State of , is closing up its affairs, its corporate existence having expired at close of business on the day of , 188-. All noteholders and others, creditors of said associa- tion, are therefore hereby notified to present the notes and other claims against the association for payment. President or Cashier. Dated , 188-. Note. — The above notice to be published for a period of two months in a news- paper in the city of New York, and also in a newspaper published in the place in which the bank is located. See Sec. 5221, R. S. SUGGESTIONS FOR THE MANAGEMENT OF NATIONAL BANKS. Have the organization papers and the proceedings of stock- holders in the first election of directors fully recorded in the minute-book, so that there may be in permanent form a com- plete history of the organization of the bank. The by-laws and all proceedings at meetings of directors and of stockholders should also be recorded in the minute- book. These records should set forth the appointment of the judges of elections for directors, the returns of the judges, the fact that the directors qualified by taking the prescribed oath, the appointment of officers, the bonds required of them, and the approval thereof by the directors; and, in short, all mat- ters pertaining to the original organization of the bank, and i57 the subsequent proceedings of the directors for the supervision and management of its affairs. The business of the bank should be carefully and promptly conducted, the cash carefully assorted, and all accounts so kept and balanced as to show the condition of the bank at the close of each day, in order that the reports required by the Comp- troller of the Currency may at all times be prepared for. As often as every quarter a committee of directors, appointed for the purpose, should make a careful examination of the affairs of the bank, and a report thereof should be entered upon the minute-book. The officers, other than the president, should be appointed to hold their offices indefinitely, and their bonds should be executed accordingly, so as to obviate the necessity of requiring annual bonds from them, and to prevent the occurrence of a time when they will not be under bond. Presidents being annually appointed, should be required to give annual bonds; and whenever any officer is appointed or reappointed a bond should be required of him. It will be found the best policy to pay all officers and other employees liberal but not extravagant salaries, so as to remove from them the temptation of speculating with or otherwise wrongly using the bank's funds. Require ample and undoubted security, of a readily con- vertible character if in the shape of collaterals, for all loans. Do nothing to foster or encourage speculation, but give facili- ties only to legitimate business operations. Make loans and discounts on as short time as the needs of customers will per- mit, and insist upon the payment of all paper at maturity, if possible, whether the bank needs the money or not. Bor- rowers should not be encouraged to expect extensions and re- newals of their paper to suit their own convenience. Such favors are not the attributes of good banking, the proper foundation of which is impartiality of treatment, and the ex- action of the performance of contracts. Never renew a note or bill, or allow it to lie unpaid, merely because the money cannot for the moment be placed with equally good advantage, for it is only by always requiring prompt settlements that the discount line can be controlled, and made at all times reliable. 153 Distribute the accommodations of the bank as widely as possi- ble, rather than concentrate them in a few hands; for large loans, though sometimes proper, are generally injudicious, and frequently unsafe, for large borrowers are apt to dictate their own terms as regards payment; and when this is the relation between a bank and xts customer, the former is pretty sure to be the sufferer. Every dollar of depositors' money loaned by a bank is owed for, and its managers are therefore under the strongest obliga- tions to its creditors as well as to stockholders to keep its dis- counts under their own control. Treat customers as liberally as may be consistent with pru- dence and strict compliance with law, bearing in mind that a bank usually prospers as its customers prosper, but never per- mit them to dictate the policy to be pursued in the manage- ment, and never so extend accommodations to them as to trench upon the requirements of law in any respect. If there be any doubt as to the security or the propriety of discounting any paper offered, give the bank the benefit of the doubt and re- fuse it. If there be reason to doubt the integrity of a customer, close his account; for the risk of dealing with persons of doubt- ful integrity is seldom or never compensated by the profits of their business. Treat all customers with strict impartiality, and in fixing the line of accommodation to be extended to any one, be governed solely by the value of his account. Do not let political or other prejudices influence the conduct of the affairs of the bank, but manage it as a business institu- tion, for the benefit of the community and the profit of the stockholders. The capital of a bank should be a reality and not a fiction, and it should be owned by those who have money to lend and not by borrowers. No bank can have a prosperous career if its stockholders take out in loans the money they have put in as capital, for such a bank, being rendered unable to accom- modate the business public outside of its owners, loses one of the principal elements of success. It should be the chief aim of bank managers to make their respective institutions strong, and to keep them free from un- available and undesirable assets. Not only should the capital 159 be kept unimpaired, but a surplus fund should be created from the earnings that will be a protection to the capital and to creditors in the trying times that sooner or later overtake all banking institutions. There are few items, if any, that look better upon a balance sheet of a bank than a large surplus, and none that is so well calculated to secure for it public confi- dence; and it is therefore on all accounts the best policy to accumulate such a fund as rapidly as possible, even if dividends to stockholders have to be kept down to a low rate for a time. Do a straightforward, legitimate and upright business, and never be tempted by the prospect of large gains to engage in operations not sanctioned by prudence, or by the provisions of the laws for the government of National banks. REGULATIONS OF U. S. TREASURY GOVERNING ISSUE AND REDEMPTION OF CURRENCY AND COINS OF UNITED STATES, AND REDEMPTION OF NATIONAL BANK NOTES. I. — ISSUE OF UNITED STATES NOTES. i. The Treasurer will forward new United States notes to Assistant Treasurers of the U. S. upon their making requisi- tions, which are to be approved by him, for such denomina- tions as may be needed in the current business of their offices. 2. Upon receiving U. S. notes unfit for circulation, National bank notes, fractional silver coin, or minor coin, the Treasurer will forward new U. S. notes by express, at the expense of the consignee, or by registered mail, free of charge, at the risk of the consignee. II. — ISSUE OF GOLD COIN. 3. Upon receiving an original certificate of the Assistant Treasurer in New York for a deposit of $100, or any multiple of $100, in U. S. notes, made for the credit of the Treasurer in general account, the Treasurer will cause a like amount in gold coin to be sent from the mint at Philadelphia, at the con- signee's expense. III. — ISSUE OF STANDARD SILVER DOLLARS. 4. Upon the receipt of currency or gold coin, the Treasurer or an Assistant Treasurer will cause to be paid to applicants i6o in cities where their respective offices may be situated stand- ard silver dollars in any desired amount. 5. Standard silver dollars are forwarded to applicants out- side of cities in which the Treasurer or an Assistant Treasurer may be situated, at the expense of the Government, in sums or multiples of $500 — I. Upon the receipt by the Treasurer of an original certifi- cate issued by any Assistant Treasurer or National bank de- positary that a deposit of currency or gold coin has been made to the credit of the Treasurer in general account. Deposits with the Assistant Treasurer in New York may be made by drafts payable to his order, and collectible through the clearing- house, forwarded directly to him, with instructions to deposit the amounts on account of standard silver dollars, and to for- ward the certificates therefor to the Treasurer. Upon the receipt by the Treasurer of gold coin, U. S. notes, silver certificates, or National bank notes. II. By the Treasurer or any Assistant Treasurer, by regis- tered mail, free of charge, in sums or multiples of $65, at the risk of the party to whom sent, upon receipt of gold coin, U. S. notes, silver certificates, or National bank notes. IV. — ISSUE OF FRACTIONAL SILVER COIN. 6. The Treasurer and Assistant Treasurers of the U. S. will pay out fractional silver coin, in any sum desired, for lawful money of the U. S. 7. Fractional silver coin will be forwarded from the office nearest to the place of its destination, by express, at the ex- pense of the Government, in sums or multiples of $500 — I. Upon receipt of an original certificate issued by the Treasurer, an Assistant Treasurer, or National bank depositary, that a deposit of currency or gold coin has been made to the credit of the Treasurer in general account. Deposits with the Assistant Treasurer in New York may be made by drafts paya- ble to his order, and collectible through the clearing-house, forwarded directly to him, with instructions to deposit the amounts on account of fractional silver coin, and to forward the certificates to the office nearest the destination of the coin. II. By the Treasurer or any Assistant Treasurer, by regis- i6i tered mail, free of charge, in sums or multiples of $70, at the risk of the party to whom sent, upon the receipt of currency or gold coin. V. — ISSUE OF MINOR COIN. 8. The Treasurer and Assistant Treasurers will pay out, for lawful money, any minor coin not needed in the current busi- ness of their offices. VI. — ISSUE OF THE TREASURER'S TRANSFER CHECKS. 9. The Treasurer will issue transfer checks, in payment for redemptions, on such Assistant Treasurer as may suit the con- venience of the Treasury, payable to the order of the sender or his correspondent — I. For U. S. notes sent to the Treasurer, with the express charges prepaid at private rates, or by mail, in sums of $5 or more. II. For National bank notes sent to the Treasurer. For notes sent from a city where there is an Assistant Treasurer, checks will be issued only on the Assistant Treasurer in that city. III. For fractional silver coin sent in multiples of $20 to the Treasurer, and for minor coin sent to the Treasurer or an Assistant Treasurer. VII. — REDEMPTION OF U. S. NOTES, GOLD CERTIFICATES (1882), SILVER CERTIFICATES, AND FRACTIONAL CURRENCY. 10. U. S. notes, each exceeding nine-tenths of its original proportions in one piece, are redeemable at their full face value in other U. S. notes by the Treasurer and the several Assistant Treasurers of the United States, and are redeemable in coin, in sums not less than $50, by the Assistant Treasurer in New York. 11. Fractional notes, each exceeding four-fifths of its origi- nal proportions in one piece, are redeemable at their full face value in U. S. notes, in sums not less than $3, by the Treas- urer and the several Assistant Treasurers of the U. S. 12. Gold certificates, each exceeding nine-tenths of its orig- inal proportions in one piece, are redeemable at their full face value by the Treasurer and the several Assistant Treasurers of the U. S. 11 l62 13. Silver certificates, each exceeding nine-tenths of its original proportions in one piece, are redeemable at their full face value in standard silver dollars by the Treasurer and the several Assistant Treasurers of the U. S. 14. U. S. notes, gold certificates, and silver certificates are redeemable, by the Treasurer only, when mutilated to the ex- tent of one-tenth, but not two-tenths, at nine-tenths of their face value; two-tenths, but not three-tenths, at eight-tenths of their face value; three-tenths, but not four-tenths, at seven- tenths of their face value; four- tenths, but not one-half, at six- tenths of their face value. Fragments of notes, each consti- tuting clearly one-half, are redeemable at one-half the full face value of such whole notes. 15. Fractional currency notes are redeemable, by the Treas- urer only, when mutilated to the extent of one-fifth, but not two-fifths, at four-fifths of their full face value; two-fifths, but not one-half, at three-fifths of their face value. 16. Fragments less than one-half are redeemed only when accompanied by an affidavit executed in accordance with the requirements of the following paragraph. 17. Notes and certificates mutilated as described in the pre- ceding paragraphs, accompanied by an affidavit from the owner, or from such other persons as have knowledge of the facts, that the missing portions have been totally destroyed, are, if the proof furnished is satisfactory, redeemed at their full face value. The affidavit must state the cause and manner of the mutilation, and must be sworn and subscribed before an officer qualified to administer oaths, who must affix his official seal thereto, and the character of the affiants must be certified to be good by such officer or some other having an official seal. The Treasurer will exercise such a discretion under this regulation as may seem to him needful to protect the United States from fraud. 18. Fragments not redeemable are rejected and returned; counterfeit notes are branded and returned. VIII. — REDEMPTION OF NATIONAL BANK NOTES. 19. National bank notes are redeemable by the Treasurer of the U. S. , in sums of $1000 or any multiple thereof. i63 20. Notes equalling or exceeding three-fifths of their origi- nal proportions, and bearing the name of the bank and the signature of one of its officers, are redeemable at their full face value. 21. Notes of which less than three-fifths remains, or from which both signatures are lacking, are not redeemed by the Treasurer, but should be presented for redemption to the bank of issue. Fragments less than three-fifths are accepted from the bank of issue for face value by the Treasurer only when accompanied by evidence, as required by paragraph 17, that the missing portions have been entirely destroyed. 22. Fragments redeemed by the bank of issue for less than face value are accepted by the Treasurer only when their val- uation is equal to the face value of a note of some denomina- tion issued by the bank or some multiple thereof. The required valuation may be made up of several fragments of notes of the same or different denominations, provided the total valuation of the fragments of each denomination be $1 or some multiple thereof. Fragments not clearly more than two-fifths are ac- ceptable only when accompanied by evidence, as required by paragraph 17, that the missing portions have been entirely destroyed. 23. It having been decided that National bank notes stolen when unsigned, and put in circulation with forged signatures, are not obligatory promissory notes of the banks under section 5182 of the Revised Statutes, they are not redeemed by the Treasurer. 24. Notes of National banks that have failed are redeemed in the same manner and on the same terms as U. S. notes. IX. — REDEMPTION OF FRACTIONAL SILVER COIN AND MINOR COIN. 25. Fractional silver coin and minor coin may be presented,, in separate packages, in sums or multiples of $20, assorted by denominations, to the Treasurer or any Assistant Treasurer, for exchange into lawful money. 26. No mutilated coin will be redeemed. Reduction by natural abrasion is not considered mutilation. 164 X. — TRANSMISSION TO THE TREASURER. 27. The several kinds of paper currency should be forwarded separately. Remittances should be made up into packages of not more than 8000 notes each. The notes in a package should be assorted by denominations and enclosed in paper straps con- taining not more than 100 notes each, and the straps should be marked with the amount of the contents. 28. A letter of advice, giving the amount of each denomi- nation of notes, the total amount in the package, the address of the party sending, and the disposition to be made of the proceeds, should be enclosed with each package, and a copy of the letter sent by mail. 29. The package, if it be sent by express, should be sealed up in stout paper and addressed to the Treasurer of the U. S. , Washington, D. C. There should be plainly marked on the outside the owner's name and address, the amount and kind of currency enclosed, the disposition to be made of the proceeds, and the statement that the package is forwarded under the Government contract, if such be the case. 30. It is the duty of postmasters to register free of charge all letters on which the postage has been fully prepaid, ad- dressed to the Treasurer, containing currency of the U. S. for redemption. It is recommended that all such letters be regis- tered as a protection against loss. 31. Remittances of money by mail should be addressed to the Treasurer of the U. S., Washington, D. C. Such remit- tances and returns therefor by mail are invariably at the risk of the owners. All communications to the Treasurer in regard to packages lost in the mail are referred for investigation to the Chief Post-Office Inspector, Post-Office Department, Wash- ington, D. C, to whom any subsequent inquiry on the subject should be addressed. XI. — EXPRESS CHARGES PAID BY THE GOVERNMENT. 32. Express charges are paid by the Government — I. On standard silver dollars and fractional silver coin sent from the Mint, the Treasury, or the sub-Treasuries, in sums or multiples of $500. i6 5 II. On National bank notes sent to the Treasurer for re- demption, in sums or multiples of $1000. EXPRESS CHARGES NOT PAID BY THE GOVERNMENT. 33. On lawful money of the U. S. sent for redemption or for credit of the five per cent, redemption fund, and on National bank notes sent for redemption in other amounts than multi- ples of $1000, the charges, if not prepaid, are deducted from the proceeds at contract rates. 34. On fractional silver coin and minor coin sent for redemp- tion, the charges must be prepaid by the sender. 35. On U. S. notes returned for U. S. notes or National bank notes redeemed, the charges are deducted at contract rates. 36. On gold coin sent from the Mint on orders from the Treasurer in return for deposits with the Assistant Treasurer in New York, the charges are deducted at contract rates. 37. On transfers of funds from National bank depositaries, under letters of instruction, the charges must be paid by the depositaries. THE GOVERNMENT CONTRACT WITH THE ADAMS EXPRESS COMPANY. 38. The Government contract extends to all points accessi- ble through established express lines reached by continuous railway communication, but does not embrace sea or river transportation of an)- kind, and does not extend westward be- yond Omaha and Nebraska City, Nebraska, and Atchison and Leavenworth, Kansas. 39. The contract rates for the transportation of U. S. notes to the Treasurer for redemption, and U. S. notes sent in return, are 25 cents per $1000 to or from points within the territory of the Adams Express Company, and 60 cents per $1000 to or from points within the territory of any other express company, except points in Kansas west of Atchison and Leavenworth, in Nebraska west of Omaha and Nebraska City, in Arkansas and Texas, to or from which the rate is 85 cents per $1000. .When the remittance does not exceed $500, the rate is half of that for $1000. 40. The rates for the transportation of National bank notes to the Treasurer for redemption are 37^2 cents per $1000 to i66 each express company over whose lines the remittances pass, and for U. S. notes sent in return, 25 cents per $1000 to points within the territory of the Adams Express Company, and 60 cents per $1000 to points within the territory of any other ex- press company, except points in Kansas west of Atchison and Leavenworth, in Nebraska west of Omaha and Nebraska City, in Arkansas and Texas, for which the rate for both classes of shipments is $1.50 per $1000. Sums less than $1000 are paid for as $1000. 41. The contract rate for the transportation of gold coin is rVV of a cent per mile per $1000, with a minimum rate of 50 cents per $1000 to each express carrying, when the distance at the prescribed rate does not equal that sum. Parts of $1000, not exceeding $500, are charged half the price for $1000, with a minimum rate of 25 cents to each express carrying. 42. The contract rate for the transportation of silver coin is A°(j of a cent per mile per $1000, with a minimum rate of $1 per $1000 to each express carrying, when the distance at the prescribed rate does not equal that sum. Parts of $iooo, not exceeding $500, are charged half the price for $1000, with a minimum rate of 50 cents to each express carrying. 43. The Treasurer has no control over rates exacted when the charges are prepaid or when remittances come from points without the limits of the contract. 44. No charge is made for the amount of express charges enclosed with a remittance of even thousands of dollars, when separately noted on the wrapper. Packages should always be marked with the exact amount of the contents. XII. — GENERAL INFORMATION. 45. Assistant Treasurers elsewhere than in New York are not authorized to receive drafts of banks and bankers under this circular. 46. The Act of June 30th, 1876, (19 Stats. , 64,) requires "that all United States officers charged with the receipt or disburse- ment of public moneys, and all officers of National banks, shall stamp or write in plain letters the word 'counterfeit,' 'altered,' or ' worthless ' upon all fraudulent notes issued in the form of, and intended to circulate as money, which shall be presented i6 7 at their places of business; and if such officers shall wrongfully stamp any genuine note of the United States, or of the Na- tional banks, they shall, upon presentation, redeem such notes at the face value thereof. ' ' 47. When the total amount of dues in any one payment to the Government cannot be paid entirely in lawful money of denominations of one dollar or greater, because involving a fractional part of a dollar, such fractional part may be paid in silver coins of denominations of less than one dollar; but when the total amount of such dues does not exceed ten dollars, such total amount may be paid in the silver coins of denominations of less than one dollar. 48. In case of the loss or destruction of one of the Treasurer' s checks, and upon application for a duplicate, payment of the original check is stopped, and the applicant is furnished with a form of bond of indemnity, upon return of which, properly executed, a duplicate is issued. Compliance with the foregoing regulations is enjoined on all officers of the Department, and observance of them will be ex- pected of all making remittances to this office. REDEMPTION OF NATIONAL BANK NOTES AT THE NATIONAL BANK REDEMPTION AGENCY. Disposition of National Bank Notes. I. Packages of National bank notes received for redemption are charged to, and receipted for, by the counters, with the seals unbroken ; and the counters are required to count, return, and obtain a receipt for the contents of each package before re- ceiving another. An inventory of the contents according to the amounts marked on the straps is made immediately on opening the package, and the contents of each strap are sepa- rately proved. Discrepancies are noted on the proper strap, which is returned to the owner. "Shorts" are at once re- ported and verified by the teller in charge. The packages are charged to the counters by the amounts on the wrappers, and any discrepancy between these amounts and the contents is reported as an " over " or a " short ' ' by inventory. 1 68 2. The redeemed notes of the several National banks are assorted, prepared for delivery, and charged to their five per cent, accounts, and advices of redemption are forwarded to them, in regular rotation, following an alphabetical arrange- ment; and no departure from this practice can be made for the accommodation of any bank. 3. If the amount due does not exceed the five per cent, de- posit of the bank, the notes fit for circulation are forwarded to it by express, and the notes unfit for circulation are delivered to the Comptroller of the Currency, on the same day that the advice of redemption is issued. If the bank's five per cent, account is overdrawn by the redemption, a sufficient amount of the notes to cover the overdraft is held until it is made good. 4. The law requires the return of the redeemed notes fit for circulation to the respective associations by which they were issued, and the delivery of those unfit for circulation to the Comptroller of the Currency for destruction, and no other dis- position can be made of them. 5. All of the redeemed notes of banks which have made a deposit of United States notes for the retirement of all or a portion of their circulation are charged to that deposit until it is exhausted. 6. Upon a change in the title of a National bank all of the redeemed notes issued under the former title are destroyed, and the same course is pursued with notes of the old issue of banks whose charters have been extended. Five Per Cent. Redemption Fund. 7. Every newly-organized National bank is required, im- mediately upon the receipt of its circulation from the Comp- troller of the Currency, to deposit in the Treasury of the United States a sum equal to five per centum thereof, in lawful money of the United States, " to be held and used for the redemption of such circulation." 8. A similar deposit is required on all additional circulation issued to National banks. 9. In estimating the circulation upon which the deposit is required, the bank must include all notes of its issue in its possession, as well as those in actual circulation. 169 io. Upon receipt of the advices of redemption, National banks are required to remit forthwith an amount sufficient to make good their five per cent, deposits, without awaiting the receipt of the notes fit for circulation, or the certificate of the destruction of the notes unfit for circulation. 11. Banks which have made deposits of lawful money of the United States for the retirement of a portion of their circula- tion, and those whose notes have been destroyed without re- issue, are required to maintain the five per cent, deposit only on the remainder. The excess over the required amount is surrendered immediately on receipt from the Comptroller of the Currency of advice of the amount retired. Only reductions of circulation which are accompanied by a release of bonds are regarded. 12. Banks which have resolved to go into liquidation must maintain the full five per cent, deposit, until lawful money of the United States is deposited for the retirement of their cir- culation ; but all of their notes redeemed, whether fit or unfit for circulation, are destroyed. When the deposit is made, the excess of the five per cent, deposit over the amount required to cover the expenses of redemption is surrendered. 13. Banks may keep with the Treasurer any amount they choose in excess of the required five per cent., but they are not permitted to count such excess as a part of their lawful money reserve. It should be entered on their reports of their condi- tion, under item 23 : " Due from United States Treasurer (other than five per cent, redemption fund.)" 14. Remittances for credit of the five per cent, redemption fund may be made in any of the following ways: I. By a check drawn on New York, payable to the order of the Assistant Treasurer U. S. in New York, and collectible through the clearing-house, forwarded directly to that officer, with instructions to deposit the amount on account of the five per cent, fund, and to forward the certificate of deposit therefor to the Treasurer U. S. II. By a deposit of lawful money of the United States with the Assistant Treasurer U. S. in Baltimore, Boston, Chicago, Cincinnati, New Orleans, New York, Philadelphia, Saint Louis, or San Francisco, on account of the five per cent. fund. Banks 170 not situated in one of the above-named cities should make the deposit through their correspondents. The certificate of de- posit must be forwarded directly to the Treasurer U. S. by the bank making the deposit, as credit cannot be given until it is received. III. By a remittance of lawful money of the United States, addressed to the Treasurer U. S. , Washington, D. C. , marked with the amount and nature of the contents, and the fact that it is "for credit of the five per cent, fund." The express charges, if not prepaid, will be deducted from the proceeds of the remittance at Government contract rates. 15. National bank depositaries are not authorized to receive deposits for credit of the five per cent. fund. 16. Assistant Treasurers are not authorized to receive remit- tances by express on account of the five per cent, fund; and only the Assistant Treasurer in New York is authorized to re- ceive checks on that account. 17. It is not necessary to advise the Treasurer of remittances on account of the five per cent, fund, unless they are made directly to him. 18. National banks should make only such deposits on ac- count of the five per cent, fund as they desire to have applied in the redemption of their notes, or in payment of the expenses of redemption. 19. Acknowledgments of remittances made by one bank for credit of the five per cent, account of another are sent only to the bank whose account is credited. 20. National banks should charge the original five per cent, deposit, and all subsequent remittances for credit of the five per cent, account, to an account designated as the ' ' five per cent, redemption fund." 21. On receipt of the advice of redemption "circulation outstanding " should be charged with the amount of both fit and unfit notes reported as redeemed, and the redemption fund credited. When the redemption is reimbursed the redemption fund should be charged. When the notes fit for circulation are received by the bank, the circulation account should be credited; and the same course should be pursued when the I 7 I incomplete currency, received from the Comptroller of the Currency in place of the unfit notes, is made ready for issue. 22. Remittances for redemption and returns should not be charged to the five per cent, redemption fund. Assessment for Expenses. 23. The expenses incurred for "the charges for transporta- tion and the costs for assorting ' ' the redeemed notes of Na- tional banks are assessed upon the several banks, including those which have made deposits of lawful money for the re- duction of their circulation in proportion to the amount of their circulation redeemed, and are charged to them in their five per cent, accounts. The assessment is made by fiscal years, and is levied as soon after the end of each fiscal year (June 30th) as the accounts can be settled and the computations made. 24. Under Section 8 of the Act of July 12th, 1882, National banks making deposits of lawful money for the retirement in full of their circulation are assessed at the time of their deposit for the cost of transporting and redeeming their notes then outstanding a sum equal to the average cost of the redemption of National bank notes during the preceding year. Any notes which may have been redeemed for their five per cent, deposits during the year then current are included in the assessment. 25. Remittance should be made for the amount of the assess- ment immediately on receipt of the notice thereof, in the same manner as for notes redeemed, unless there is a sufficient excess to the credit of the bank in the five per cent, fund to cover it. Incomplete Currency. 26. The issue of new circulating notes to National banks is under the control of the Comptroller of the Currency, and all inquiries and requests in regard thereto should be addressed to him. 27. New currency is ordered to be printed only on requisi- tions from the banks, specifying the amounts and denomina- tions desired. Banks should keep an account of the amount of their incomplete currency in the Comptroller's office, and should make requisitions on him for the printing of additional supplies a sufficient time in advance of the exhaustion of those 172 previously ordered to cover the time required for the prepara- tion of the new notes by the engravers. 28. Banks are charged with the full amount of their notes unfit for circulation delivered to the Comptroller, whether the exact amount is reissued by him or not. Sometimes the exact amount is not sent, because it cannot be made up of full sheets of notes. The amount due should appear on the bank's books as a deficit in its circulation account, and not as an excess in its five per cent, account. Final Count and Destruction of Notes. 29. The currency unfit for circulation, after being assorted and counted in the National Bank Redemption Agency, is can- celled by cutting off the signatures of the president and cashier. It is then done up in sealed packages and delivered daily to the Comptroller of the Currency, who has it examined, count- ed, and schedules made for the banks of what is to be destroyed each day. It is then delivered to clerks from the office of the Secretary of the Treasury occupying a room for the time being in the Comptroller's office, to be examined and counted. After this count the notes are further cancelled by punching, and then delivered to the agent of the bank in the same room, who examines and counts them and verifies the amount. The pack- age is then checked off from the schedules in the presence of the four witnesses, deposited in locked boxes and, accompanied by the witnesses, taken to the macerator and is ground into pulp. PURCHASE, EXCHANGE, AND REDEMPTION OF THE MINOR COINS OF THE UNITED STATES. The minor coins of the United States are established by Section 3515, Revised Statutes, as follows: A five-cent piece, a three-cent piece, and a one-cent piece. By Section 3529 minor coins are redeemed in lawful money, and are exchangeable at par at the Philadelphia mint for any other coins of copper, bronze, or copper-nickel of the United States. i?3 Purchase of Minor Coins. Persons desiring to purchase the minor coins issued under Section 3515, are informed that they will be issued to them in exchange, at par, for lawful money of the United States, in sums of twenty dollars or multiples thereof. Applications for these coins must be made, in all cases, to the Superintendent of the Mint of the United States at Phila- delphia, Pa., accompanied by the necessary funds; on the re- ceipt of which, or as soon thereafter as practicable, such minor coins, to the amount of the remittance, will be forwarded, at the cost of the mint, to any of the principal towns or cities of the United States as desired. Remittances for this purpose may also be made in post-office money orders or sight drafts, payable in Philadelphia or New York, to the order of said superintendent. Persons making application for these minor coins will state particularly the denomination required — whether one or five cent pieces — and will write plainly the address to which the coins are to be forwarded. The Treasurer or any Assistant Treasurer of the United States is also authorized to pay out for legal tender notes any minor coins held by him and not needed for the current busi- ness of his office. Exchange of Minor Coins. The minor coins of copper, bronze, or copper-nickel, referred to in Section 3529, are as follows, viz: Large copper cents issued prior to 1857; nickel-copper cents issued from 1857 to 1864; bronze cents issued from 1864 to T 873) bronze two-cent pieces; copper-nickel three-cent pieces; and copper-nickel five- cent pieces. Persons holding these coins and desiring their exchange for the minor coins authorized to be issued by Section 3515, above published, may present or forward them for this purpose to the Superintendent of the Mint of the United States at Phila- delphia, Pa., in packages containing twenty dollars or multi- ples thereof, properly assorted and separated by the denomina- tions and issues above specified. Each package must be accompanied by a list setting forth J 74 the aggregate amount of coin which the package contains, and the amount of each denomination and issue, together with the name and post-office address of the party sending it, who will also advise the Superintendent of the Mint of the amount and denomination of minor coins desired in return, and designating the city or town most convenient to him to which he desires such coins to be sent. Redemption of Minor Coins. Persons holding coins of copper, bronze, or copper-nickel authorized by law, and desiring their redemption in lawful money, may forward or present them for this purpose to any of the offices of redemption hereinafter specified, putting the coins in packages of twenty dollars each or multiples thereof, assorted and separated by denominations and issues, as above directed in cases of forwarding for exchange, and, if forwarded, advising the officer to whom sent of the amount and kind of coin shipped, and the place (New York, Philadelphia, Boston, New Orleans, or San Francisco) at which the transfer check to be drawn by the Treasurer of the United States shall be made payable. Upon the receipt of the minor coins thus forwarded or pre- sented fer redemption, the officer receiving them will carefully count and examine the same, and thereupon, unless payment therefor can be made over the counter, will issue a certificate, to be at once transmitted by him to the Treasurer of the United States at Washington, D. C. ; which certificate shall state the amount of coin received, the name and address of the person, company, corporation, or firm making the remittance, and the place at which the transfer check shall be made payable. The Treasurer of the United States will, upon the receipt of this certificate, transmit to the owner of the coin a transfer check payable to his order, in United States currency, for the amount specified in the certificate, the check to be drawn upon the Assistant Treasurer of the United States in New York, Philadelphia, Boston, New Orleans, or San Francisco, at the option of the party forwarding the coin. A detailed register of purchases and exchanges is hereby di- 175 rected to be kept in the mint at Philadelphia, and a register of redemptions in each office of redemption. The expenses of transportation of the old coins thus for- warded for exchange or redemption must be paid by the parties forwarding them. The coin in return will be forwarded at the expense of the United States. Minor coins so mutilated that they cannot be identified, or materially reduced in value by clipping or otherwise, will not be exchanged or redeemed. Silver coins will not, in any case, be received for redemption or exchange under the provisions of this circular. All instructions heretofore issued by this Department in re- lation to the purchase, exchange, and redemption of minor coins, in conflict with these instructions, are hereby abrogated. The offices of redemption herein referred to are as follows: The Treasurer of the United States, Washington, D. C. The Assistant Treasurers of the United States at Boston, Mass. ; New York City, N. Y. ; Philadelphia, Pa. ; St. Louis, Mo.; New Orleans, La.; Cincinnati, Ohio; Chicago, 111.; San Francisco, Cal. ; Baltimore, Md. ; and United States Deposit- ary, Tucson, Arizona. PURCHASE OF MUTILATED SILVER COINS. The superintendents of the United States mints at Philadel- phia, San Francisco, Carson, and New Orleans have been au- thorized to purchase mutilated and uncurrent United States silver coin of standard fineness at the rate of one dollar per ounce troy-weight, when presented in sums of three dollars and upward. Coins can be forwarded to those mints by registered mail or by express, (charges prepaid,) and the value will be returned, at the seller's risk and expense, by express, registered mail, check, or draft. Persons sending full weight United States subsidiary silver coins would receive, at the rate authorized, eighty cents per 176 dollar of their face value, but for mutilated coins a less amount, proportioned to their deficiency in legal weight. At the rates paid, mutilated silver coins will be worth at the mints — Per ounce, troy $1 00 " avoirdupois about 91 u dollar, face value, (approximately) 70 to 76 INDORSEMENT AND PAYMENT OF TREASURY DRAFTS AND POST-OFFICE DEPARTMENT WARRANTS. Treasury drafts and Post-office warrants must not be paid until the indorsements conform to the following regulations: 1. The name of the payee, as indorsed, must correspond in spelling with that on the face of the draft; no guarantee of an indorsement, imperfect in itself, can be accepted. If the name of a payee, as written on the face of a draft, is spelled incor- rectly, the draft should be returned to the Treasurer U. S. for correction. 2. Indorsements by mark (X) must be witnessed by two per- sons who can write, giving their places of residence. 3. Indorsements by executors, administrators, guardians, or other fiduciaries must be accompanied by certified copies, under seal, of letters testamentary, letters of administration, of guardianship, or other evidence of fiduciary character, as the case may be. 4. Payees and endorsees must indorse by their own hands; officials, officially with full title; firms, the usual firm-signature by a member of the firm, not by a clerk or other person for the firm. 5. Every indorsement must be by the proper written (not printed) signature of the person whose indorsement is required. 6. Powers of attorney for the indorsement of drafts in pay- ment of claims must state the number, date, and amount of draft, and number and kind of warrant, and be dated subse- quently to the date of the drafts; must be witnessed by two persons, and must be acknowledged by the constituent before i 7 7 the Treasurer of the United States or an Assistant Treasurer, a judge or clerk of a District Court of the United States, a collector of customs, a notary public under his seal, or a justice of the peace in those States only in which such justice has authority to take acknowledgments of deeds, or commissioner of deeds; if before either of the two latter, the certificate and seal of the county clerk as to the official character and signa- ture of the justice or commissioner is required. If executed in a foreign country, the acknowledgment must be made be- fore a notary public, with his seal attached, or a U. S. Consul or Minister. The officer taking the acknowledgment must certify that the letter of attorney was read and fully explained to the constituent at the time of acknowledgment, and that said constituent is personally well known to him to be the identical person named in and who subscribed his name to said power of attorney. (See Revised Statutes, Sees. 1778 and 3477.) 7. Evidence of authority to indorse for incorporated or unincorporated companies must accompany drafts drawn or indorsed to the order of such companies or associations. Such evidence should be in the form of an extract from the by-laws or records of the company or association, showing the au- thority of the officer to indorse and receive and receipt for moneys for the company, and giving his name and the date of his election or appointment, which extract must be verified by a certificate under seal signed by the president and secretary, or by one of these officers and not less than two of the directors; which certificate must state that such authority remains un- revoked and unchanged. If the company have no seal, the extract should be certified as correct by a notary public or other competent officer under his seal. When a resolution is adopted at a special meeting of directors, it must be shown that all had notice of the time and place of such meeting, and that a quorum assented to the resolution. 8. In cases where an individual or a copartnership is doing business under a company title, the affidavit of the owner or of the members of the copartnership will be required, showing the fact of ownership and naming the person who is authorized to indorse and receive and receipt for moneys for the owners. 12 i;8 9. The indorsement of all the joint holders or co- trustees, executors, administrators, guardians, or other fiduciaries will will be required on drafts, and in the execution of a power to a third party to collect, all must join. In case of death of either, the survivors will be recognized as having full authority, upon due proof of such death and survivorship. REGULATIONS RESPECTING THE SEMI-ANNUAL RETURNS AND PAYMENT OF DUTIES BY NATIONAL BANKS. 1. By Section 5215, Revised Statutes, it is made the duty of the Treasurer of the United States to prescribe the form for making return by each National bank of the average amount of its notes in circulation for each half year. 2. This Return, with each blank filled with the proper amount as indicated, and subscribed and sworn to by the presi- dent or cashier of the bank before an officer qualified to admin- ister oaths, must be sent to the Treasurer of the United States within ten days from the first days of January and July, respect- ively, in each year, under a penalty of two hundred dollars, and payment must be made within the months of January and July. 3. Payment may be made by deposit of the amount of duty to the credit of the Treasurer of the United States, with him, or with any Assistant Treasurer or National Bank Depositary. Triplicate certificates should be issued therefor, the ' ' original ' ' of which must be forwarded to the Secretary of the Treasury, the ' ' duplicate ' ' to the Treasurer, and the ' ' triplicate ' ' held by the bank making the deposit as its voucher therefor. No other receipt will be issued. The certificate must state that the deposit is on account of semi-annual duty. 4. If there is no depository convenient, payment may be made by draft on New York, (collectible through the Clearing House,) to the order of the Treasurer, or by remittance to him in lawful money of the United States or notes of National banks, for which the Treasurer will issue his certificate of de- posit, and send the triplicate to the bank. i 7 9 5. The duty on circulating notes is one-half of one per centum on the average amount outstanding for the six months. 6. Liability begins on the first days of January and July in each year, unless a bank had at that time no circulation out- standing, in which case it begins with the date of the first issue of notes, and terminates on the 30th day of June or the 31st day of December, (as the case may be,) date of commencement and termination both included. 7. Banks that have heretofore made returns will report for the full semi-annual term of 181, 182, or 184 days, as the case may be ; and banks that have not heretofore made returns will report their circulating notes from and including the date of their first issue. 8. To ascertain the average amount, add together the dai Im- balances of the notes in circulation from the proper date of the commencement of the liability to duty (including for each Sunday and holiday the balance of the first preceding business day) to and including the 30th day of June or the 31st day of December, as the case may be. The aggregate of daily balances for the first six months of any year will be divided by 181 — the number of days from January 1st to June 30th, except in leap year, when the sum will be divided by 182. The aggregate of daily balances for the last six months of any year will be divided by 184 — the number of days from July 1st to Decem- ber 31st. 9. Banks not making daily statements, and obtaining their averages from weekly statements, should add together the weekly balances, including for each day in any fractional part of a week one-seventh of the weekly balance next preceding such fractional part. The aggregate of balances for the first six months of any year will be divided by the number of weeks from January 1st to June 30th, (25? or 26, as the case may be.) The aggregate of balances for the last six months will be di- vided by 26? — the number of weeks from July 1st to Decem- ber 31st. 10. Banks having circulation subject to duty for a period less than a half year, which make their estimates from daily balances, will divide the aggregate of the balances of the item for the time for which it is liable to duty by the number of i8o days in the half year; and banks which make their estimates from weekly balances, by the number of weeks and the frac- tions thereof in the half year. The quotient thus found will be the average amount subject to duty for each six months, respectively, and should be entered in the Return, and duty computed thereon at the full semi-annual rate. n. A bank which has gone into liquidation, in making its final return must estimate duty upon circulation to the time of making the deposit of lawful money with the Treasurer U. S. to redeem the same. The item should be averaged for the full six months, according to the foregoing rule, and the duty calculated at the prescribed rate. The amount thus deter- mined is the correct proportion for the time for which the item is liable. I«I REGULATIONS OF THE TREASURY DEPARTMENT IN RELATION TO UNITED STATES BONDS. Bonds of the United States. The original issues of bonds of the United States under the several authorizing Acts of Congress are divided into Coupon and Registered Bonds. Of these issues the following are the Bonds Outstanding and Bearing Interest March 15th, 1886. Title of loan and date of authorizing act. Currency 6's Pacific Railroad ; July I, 1862, and July 2, 1864 — $2,}62,CCO 640,000 1,600,000 ' Registered. 1,600,000 \ 1,440,000 > 640,000 J Denominations. ime're'sr When redeemable or payable. iooo; 5000; 10,000.. 6 p-r ct. Payable thirty years after is- sue. (Dates of issue, 1865 to. 1869.) January 16, 189;. November I, 1895. January I, 1S96. 4,320,000 February I, 1896. 9,712,000 ; ' ' January I, 1897. 29,904,952 J January I, 1898. 14,004,560 ' ' January 1, 1899. $64,625,512 Fundbd Loan of 1891 : July 14, 1870, and Jan. 20, 1S71 — Coupon 50,020,750 I 50; 100 ; 500; 1000.. Registered 199,979,250 50;ico;500; 1000; 5000 ; IO,O0O ; 250,000,000 20,000; 50,000. Consols of 1907 : July 14, 1870, and Jan. 20, 1871- Coupon 129,915,300 505100; 500; IOOO... Registered 607,834,700 50; 100; 500; IOOO; 5000 ; 10,000 ; 737,750,000 Funded Loan of 1882: July 12, 1882— Registered $174,092,350 20,000; 50,000. 50; lOO; 500 ; IOOO; I0,000. 4^ per ct.. 4 per ct. 3 per ct. Redeemable after September I, 1891. Redeemable after July I, 1907. Redeemable at the pleasure of the Government. The following are the Bonds which have Matured and Ceased to Bear Interest. Loan of 1858: 5 per ct Redeemable after fifteen yean from January I, 1859. Fives of i860: 5000. IOOO; 5000. from January I, 1861. Payable after December ]I, 1880. Sixes of 1880 : IOOO; 5000 ; 10,000. g Oregon War Loan: Redeemable twenty years from July 1, 1861. 182 Bonds which have Matured and Ceased to Bear Interest. — (Continued.) Title of loan and date of authorizing act. Denominations. Rate of interest. When redeemable or payable Sixes of 1881 : July 17 and August 5, 1861 — 50; 100; 500; 1000 ; SO ; IOO ; 500 ; IOOO ; 5000; 10,000. 50; IOO; 500; IOOO; ;o; IOO; 500 ; IOOO; 5000 ; IO,COO. 50; IOO ; 500 ; IOOO.. 50; IOO; SOO, IOOO ; 5000 ; 10,000. IOO; 500; IOOO; COOO. 50 ; IOO; 500; IOOO.. CO; IOO; 500 ; IOOO; 5000 ; I0,OO0. 50 ; IOO ; 500 ; IOOO... JO; IOO; 500; IOOO; 5000 ; I0,OO0. 50 ; IOO ; JOO ; IOOO... 50 ; IOO; 500 ; IOOO; 5000; I0,OO0. 50; IOO; 500; IOOO... 50 ; 100 ; 500; iooo; 5000 ; I0,OO0. 50; IOO; 500 ; IOOO... JO; IOO; 500; IOOO; 5000; 10,000. 50; IOO; 500 J IOOO... 500 ; IOOO ; 5000 ; 10,000. 50 ; IOO ; 500 ; IOOO ; 5000 ; I0,OOO. 50; IOO; 500 ; IOOO; 5000 ; I0,O0O ; 20,oCO; 50,000. 50; IOO; 500; IOOO; JOOO; 10,000. 50 ; IOO ; 500; IOOO; 5000; IO,OCO. 50; IOO ; SOO; IOOO ; SOOO ; I0,OOO ; 2O,OO0; 50,000. 6 per ct 6 per ct j}4 per ct.... 1% per ct.... 1 Redeemable after June 50, 1881. Five-twenties of 1862: Redeemable after five and pay- able twenty years from May 1, 1S62. Registered SlMES OF l88l : Five-twenties of 1864: 1881. Redeemable after five and pay- able twenty years from No- vember 1, 1864. Redeemable after ten and pay- able forty years from March 1, 1864. Redeemable after five and pay- able twenty years from No- vember 1, 1864. Redeemable after five and pay- able twenty years from No- vember 1, 1865. Redeemable after five and pay- able twenty years from Julv 1, 1865. Redeemable after five and pay able twenty years from July 1, 1867. Redeemable after five and pay- able twenty years from Julv 1, 1868. Redeemable after May 1, 1881. Ten-forties : Five-twenties of 1864: Five-twenties of 1865: Consols of 1865 : Consols of 1867- Consols of 1S6S : Funded Loan of 1881 : July 14, 1S70, and January 20, 1S71, Sixes of 1881 : July 17 and August 5, 1S61, (con- tinued under Department Circu- lar No. 42, dated April II, 1881) Redeemable at the pleasure of the Government. Redeemable at the pleasure of the Government. Redeemable at the pleasure of the Government. Sixes of 1S81 : March J, 1863, (Continued under Department Circular No. 42, da- ted April II, 1SS1) — Funded Loan of 1881 : July 14, 1870, and January 20, 1871, (continued under Depart- ment Circular No. 52, dated May i8 3 Coupon Bonds. Coupon bonds of the United States are payable to bearer, and pass by delivery, without endorsement. They are con- vertible into registered bonds of the same loan, but the law does not authorize the conversion of registered into coupon bonds. . Coupon bonds forwarded to the Department for exchange into registered bonds should be addressed to the Secretary of the Treasury, Division of Loans and Currency. There is no expense attending the exchange at the Depart- ment; but when bonds are sent by express the charges must be paid by the party transmitting them. Form of Letter for Conversion of Coupon Bonds into Registered Bonds. , , , 18—. Hon. Secretary op the Treasury, Washington. D. C. Sir : Herewith I send $ U. S. coupon bonds of the Act of July 14th, 1870, per cent, loan of ; which please exchange into registered bonds in the name of . Please send the new bonds to the subscribed address. Mail checks for the interest to , , . Very respectfully, . Eegistered Bonds. Registered bonds of the United States differ from coupon bonds in the following respects, namely: (i) They have in- scribed or expressed upon their face the names of the parties who own them, denominated payees ; (2) they are payable only to such payees or their assigns ; and (3) the property or owner- ship in them can be transferred only by assignment. For the purpose of assigning them, there are forms printed on the backs of the bonds, together with directions to be followed in the execution of such assignments. A ledger account is opened in the Department with each holder of one or more registered bonds; and in this account each bond is fully described. All recognized transfers must be made upon the loan books in the office of the Register of the Treasurv. 1 84 Assignment of Bonds. The directions printed on the backs of the bonds should be carefully followed in the execution of assignments, and the name of the assignee should be written plainly in the space left for that purpose. Assignments must be dated and prop- erly acknowledged. If a bond is to be divided among two or more parties, their names and the amount to each should be stated in the assign- ment. If only a part of a bond is assigned, a new issue for the remainder will be made to the former payee of the whole bond : Provided, however, That the amount assigned shall correspond with one or more of the denominations in which the bonds are issued. Registered bonds should not be assigned in blank, as such assignment would make them payable to bearer and render them available to any holder thereof ; in other words, under an assignment in blank the title to the bonds would pass by delivery. A detached assignment should never be resorted to, except when the blank form for an assignment which is printed on the bond shall have been already used ; and in this case only when there shall not be sufficient space on the back of the bond for another assignment. The payee should sign his name to the assignment as the name is written on the face of the bond. If the bond be issued to a firm, the assigment must be subscribed in the name of the firm by a member thereof who shall be possessed of authority to sign for the firm, of which authority the officer witnessing the signature must be satisfied ; if issued to joint owners, co- trustees, executors, administrators, or guardians, each person must sign for himself ; if to a corporation or company, the official character of the person executing the assignment, and the authority of such person to dispose of the bond or bonds in question, should be duly verified by vote or resolution of the board of directors of the corporation or company, certified un- der its seal. Where such officer is authorized by virtue of his office to execute the assignment, a certificate, under seal, of this fact and of his election to the office, and that he still holds and exercises ^uch office, must be furnished, together with a certi- fied copy of the charter or by-laws of such corporation or com- pany, showing the authority claimed thereunder. All such evidence of authority will be placed on file in the Department, and, if general and permanent in its character, need not be reproduced in subsequent transactions under the same power, if proper reference be made thereto. ASSIGNMENTS BY REPRESENTATIVES AND SUCCESSORS. In case of death or successorship, the representative of the deceased person, or the successor, must furnish official evidence of such decease or successorship, and of his own appointment, authority, or power. An executor or administrator may assign bonds standing in the name of the deceased person in whose stead such executor or administrator shall be acting. Where there are two or more legal representatives, all must unite in the assignment, unless by a decree of court or testamentary provision some one or more of them is or are designated and empowered to dispose of the bonds. If the bonds had been held by the deceased in the capacity of a fiduciary or trustee, a court having jurisdiction must appoint a successor, who should execute the assignment in order to secure the transfer- or payment of the bonds. An executor, administrator, trustee, guardian, or attorney cannot assign bonds to himself, unless he be specially author- ized to do so by a court possessing jurisdiction of the matter. FOREIGN SUCCESSORSHIP ASSIGNMENTS. Where a payee, at the time of his death, was a resident of a foreign country, the party claiming to direct and execute the transfer must furnish an exemplified copy of the will or other instrument conveying the requisite authority, duly certified under the hand and seal of the proper officer, attested by the certificate of a United States minister, charge, consul, vice- consul, or commercial agent, or, if there be none such acces- sible, (which fact shall, in such case, be certified,) by that of a notary public, to the effect that such exemplified copy is executed and granted by the proper tribunal or officer, and is in due form and according to the laws of that country. The assignment should be executed as hereinbefore directed. i86 ASSIGNMENTS BY ATTORNEY. Persons entitled to assign bonds may appoint for that pur- pose an attorney, who, by virtue of the authority so conferred, can execute the assignment in the same manner as provided for the constituent. No officer of the Treasury of the United States should be selected as such attorney. Powers of attorney authorizing the assignment of bonds should be sent, for record, to the Register of the Treasury. Form of Power of Attorney. Know all men by these peesents : That I, , do hereby appoint my attorney to assign any and all United States bonds now standing (or which may hereafter stand) in my name on the books of the Treasury Department, granting to said attorney full power to appoint one or more substitutes for that purpose, hereby ratifying and confirming all that may be lawfully done by virtue hereof. Witness my hand and seal this the day of , A. D. 18 — . [seal.] Executed before me this the day of , A. D. 18 — . [Official seal.] Note. — To be verified in accordance with instructions contained on page 18*7, under head of acknowledgments. Form of Authority by Resolution. At a regular meeting of the board of directors of the 1 , of , , held , 18 — , it was, on motion, " Resolved, That A. B., president, and 0. D., cashier, are, or either of them is, here- by authorized and empowered to assign any and all United States bonds now standing (or which may hereafter stand) in the name of this bank [or institution]." I certify that the above is a true copy from the minutes. [Corporate seal.] Secretary of the Board. Note. — This resolution should be certified by some officer of the institution other than the one empowered to assign the bonds. It is recommended that resolutions be adopted only at regu- lar meetings. But when passed at a special meeting, the certificate may be as follows: We certify that at a special meeting of the board of directors of , duly held at , on the day of , at — o'clock — M., 18 — , the fore- going resolution was adopted, and is now in full force. And we certify that notice was duly given, personally, to all the members of the said board of directors of the time and place of said meeting, and of the object thereof, for more than days prior thereto, and in time to enable all to attend said meeting; and that at such meeting so held a quorum of all the members of said board was present and voted for the adoption of said resolution. Form of Authority under By-laws. At the annual meeting of the stockholders of the , of . , held , 18 — , was duly elected president, and was duly elected cashier ; and as such they are jointly or severally em- powered by the by-laws (a certified copy of which is hereto annexed) to sell and assign any and all United States bonds now standing [or which may hereafter stand) in the name of this bank [or institution]. , Secretary. [Seal of bank or institution.] ACKNOWLEDGMENTS of assignments, when not made at this Department, must be made either before an Assistant Treasurer of the United States, a United States judge or district attorney, clerk of a United States court, collector of customs or internal revenue, or presi- dent or cashier of a National bank. A notary public is authorized to take acknowledgments only on the Pacific Railroad bonds and on the 3 per cent, bonds of 1882. The witnessing officer should append his official title and affix his seal of office, if he have one; if he have no seal of office, he should certify such to be the fact. The president or cashier of a National bank must append the title and affix the seal of the bank. The impress of the seal must in every case be made upon the bond. FOREIGN ACKNOWLEDGMENTS may be made before a United States minister, charge, consul, vice consul, or commercial agent. A notary public, or other competent officer, in a foreign country may take acknowledg- ments; but his official character and jurisdiction must be prop- erly verified. * The official seal, where there is one, should in all cases be affixed, as per foregoing direction; and where there is none this fact should be made known and attested. EXECUTION OF POWERS. Powers of attorney for the transfer of bonds must be ac- knowledged in the presence of some one of the officers author- *See under head "Foreign successorship assignments," page 185. i88 ized to take acknowledgments of assignments; and where such officer has an official seal, it must be affixed; where he has none he should so state. POWERS OF SUBSTITUTION must be executed and acknowledged in the same manner as powers of attorney, and should likewise follow the same gen- eral form. TRANSMISSION OF BONDS. When registered bonds are properly assigned, they should be transmitted to the Register of the Treasury for reissue, and should be accompanied by a letter of explicit instructions, stating the amount enclosed, the loan to which the bonds belong, the denominations of the bonds desired in exchange therefor, the name and residence of each assignee, and the post- office address to which it is desired the interest checks shall be mailed. When bonds of different loans are forwarded in one remit- tance, a separate letter of instructions should accompany the bonds of each loan. When coupon and registered bonds are transmitted at the same time, the former should be sent to the Secretary of the Treasury, and the latter to the Register of the Treasury. Form of Letter Transmitting Registered Bonds for Transfer. Hon. Register of the Treasury, Washington, D. C. Sir : Herewith you will receive $ U. S. registered bonds of the per cent, loan of , which please transfer, as per assignment, to of Please send the new bonds to the subscribed address. Mail checks for the interest to , Very respectfully, NEW BONDS. Registered bonds received for transfer are cancelled, and new bonds in their stead are issued in the name of the assignee. These bear interest from the first day of the quarter or half year (as their interest term may run) in which the transfer shall have been made. As a rule, returns are made on the same day that the bonds are received, and made invariably by registered i8g mail unless otherwise instructed. When bonds are sent or returned by express the entire expense thus incurred must be borne by the party desiring the transfer. NO FKES will be charged by a United States minister, charge, consul, vice-consul, or commercial agent for witnessing and certifying an assignment of, or power to assign, bonds, or collect interest thereon. No charge is made by the Department for trans- ferring registered bonds. Interest on Registered Bonds. The interest on registered bonds of the existing loans falls due upon the following dates, respectively : Currency sixes, Pacific Railroad January 1 ; July 1. Four-and-a-half per cent, funded loan of 1891....March 1 : June 1 : Sept. 1 ; Dec. 1. Four per cent, consols of 1907 January 1 ; April 1 ; July 1 : October 1. Three per cent, funded loan of 1882 February ] : May 1 : Aug. 1 : Nov. 1. Interest on registered bonds of the above-described loans is paid by checks drawn at this Department. These checks will be sent by mail when the post-office address is known ; when this is not known they will be held by the Treasurer of the United States until called for by the payees thereof. The checks are payable, when properly indorsed, on pre- sentation at the United States Treasury or at the office of any Assistant Treasurer of the United States. Holders of these bonds should notify the Register of the Treasury of any change in their post-office address at least fifteen days before the interest falls due ; and in case of the appointment of an attorney to indorse the interest checks, no- tice of this fact should likewise be given to the Register. Such holders should also transmit to the First Auditor of the Treas- ury all powers of attorney authorizing the indorsement of in- terest checks, and advise him specifically, at which of the offices referred to above it is desired that the interest checks, under such powers, shall be paid. CLOSING OF TRANSFER BOOKS. For the purpose of preparing the interest schedules, the transfer books are closed during the month immediately pre- ceding the date of payment of the interest. 190 If bonds forwarded for transfer be not received prior to or upon the day fixed for closing the transfer books, the transfer •will not be effected until after the reopening of the books ; and consequently the interest for that quarter or half year (as the interest term may be) will be declared in favor of the parties whose names appear upon the face of the old bonds, and to them the assignees must look for any interest claimed. Form of Power of Attorney to Collect Interest Checks. Know all men by these presents, that , of , do appoint attorney to receive lrom the proper officer and to indorse checks for interest* in name on the books of the Treasury Department of the United States ; granting to said attorney power to appoint one or more substitutes for the purposes herein expressed ; hereby ratifying and confirming all that may lawfully be done by virtue hereof. Witness hand- and seal- this day of , 18 — . Signed, sealed and acknowledged in the presence of — [L. S.] [L. S.] (To be acknowledged as directed below.) ♦When intended to be special, insert [due on the day of , 18 — , on all bonds standing in .] When general, insert [now due and which may here- after accrue on all bonds standing, or which may hereafter stand, in .] EXECUTION OF POWERS OF ATTORNEY TO INDORSE INTEREST CHECKS. Powers of attorney must be acknowledged either before the Treasurer or an Assistant Treasurer of the United States, a United States judge, United States district attorney, clerk of the United States court, collector of customs, collector of internal revenue, president or cashier of a National bank, or a notary public. If in a foreign country, powers must be acknowl- edged either before a United States minister, charge, consul, vice-consul, commercial agent, or notary public. If before the latter, his official character and the genuineness of his signa- ture must be properly verified. The acknowledging officer must add his official designation, residence, and seal, if he have one; if he have no seal of office, he should certify such to be the fact. Powers of attorney and testamentary evidence designed as authority to collect interest checks should be filed with the First Auditor of the Treasury. 191 Form of Authority by Resolution for the Indorsement of Interest Checks. At a regular meeting of , held at , in the State of , on the day of . 18 — , a quorum being present, it was, on motion, Resolved, That be, and is hereby, authorized to receipt for and to indorse checks for interest due, or to become due, on all United States bonds regis- tered in the name of on the books of the Treasury Department, with power to appoint one or more substitutes for the purposes herein expressed, until such authority is officially revoked, and notice of revocation is properly given to the Treasury Department. A true copy of the minutes. (Signed.) , President. [seal.] Attest : , Secretary. Note.— Where the society or institution has no seal, it will be requisite to ac- knowledge the instrument before a notary or some other competent ofEcer having an official seal. If the president, cashier, secretary, or treasurer be authorized to indorse the checks, the instrument must be certified by an officer other than the one empowered to make the indorsement. The First Auditor of the Treasury should be advised where interest checks in- dorsed by attorneys will be presented for payment. INTEREST TO JOINT HOLDERS OF REGISTERED BONDS. Interest will be paid to any one of several joint holders, or cotrustees, executors, administrators, or guardians; but in the execution to a third party of a power to collect interest checks all must join. In case of the death of any such joint holders, co-trustees, &c, the survivor or survivors will be recognized as having full authority, upon due proof of such death and survivorship. Payment of Interest on United States Registered Bonds In- scribed in the Names of Minors. The following synopsis of the decision of the First Comp- troller of the Treasury, of February 4th, 1881, respecting the payment of interest on United States registered bonds in- scribed in the names of minors, is published for the informa- tion and guidance of the officers of this Department: 1. When Government bonds are registered in the names of infants, interest checks issued in payment of interest thereon will be delivered and paid only to the proper guardian of such infants, when the Secretary of the Treasury has been notified of such infancy. 2. Neither the father nor mother of an infant has the right, as a general rule, to indorse or collect such interest checks. 192 3. The guardian of an infant, in order to indorse and collect interest checks in favor of his ward, is required to file with the First Auditor evidence (1) of guardianship, (2) of his authority- being in force, and (3) of the identity of his ward as the payee in the bonds. 4. The Government is not liable to refund to an infant, on his arriving at the age of majority, money paid to him on his indorsement of interest checks during minority, when the Secretary of the Treasury had not been notified of the fact of infancy. ^ Department Circular No. 6, dated February 7th, 1881.) UNCLAIMED INTEREST. The interest on registered bonds of the loans authorized previously to the funded loans, (Act of July 14th, 1870,) which has been returned to the Treasury as unclaimed, can be col- lected only in person or by attorney at the office of the Treasurer of the United States, in Washington. For the convenience of the public, and to save charges, powers to collect specified unclaimed interest may be made in favor of the Chief of the Division of Loans and Currency of the Secretary's office, under authority of the following order : " Treasury Department, '•Office of the Secretary. May 1, 1879. " Ordered : That from and after this date, the pro forma receipt on the books of this Department for interest on registered bonds of the United States, due claimants who do not desire to employ resident attorneys, may be signed by the Chief of the Division of Loans and Currency of this office, or, in his absence, by the acting chief of said division, as attorney for the claimants. " That checks in payment of such interest drawn by the Treasurer of the United States in favor of the claimants be transmitted to their address by the officer acting as attorney. '•JOHN B. HAWLEY, " Acting Secretary." TRANSLATIONS. Powers of attorney, and all other legal documents executed in the United States, must be in the English language. If executed abroad in any other language, such powers must be accompanied by an accurate translation into English, and by a sworn certificate of the person who made such translation, properly acknowledged before a notary public or other com- i93 petent officer having a seal, to the effect that the translation is correct and complete. Lost Registered Bonds. In case of the loss of registered bonds, the Secretary of the Treasury should be promptly notified, in order that a caveat may be entered against the transfer of the missing bonds, on the books of the Department. Form of Request for Caveat. -, . , 18—. Hon. Secretary of the Treasury, Washington, D. C. Sir: The registered bonds described below, standing in my name, were stolen from the undersigned on or about the of last. Please enter a caveat against their transfer: No. , for $ , Act of , 18 — , percent., and No. . for $ , Act of , 18 — , per cent. Very respectfully, Lost Coupon Bonds, Notes, and Coupons. In consequence of the increasing trouble, wholly without practical benefit, arising from notices which are constantly re- ceived at the Department, respecting the loss of coupon bonds, which are payable to bearer, and of Treasury notes issued and remaining in blank at the time of loss, it becomes neces- sary to give this public notice, that the Government cannot protect, and will not undertake to protect, the owners of such bonds and notes against the consequences of their own fault or misfortune. Hereafter all bonds, notes, and coupons, payable to bearer, and Treasury notes issued and remaining in blank, will be paid to the party presenting them in pursuance of the regula- tions of the Department, in the course of regular business; and no attention will be paid to caveats which may be filed for the purpose of preventing such payment. (Department Circular of April 2'7th, 1867.) 13 i 9 4 DESTROYED AND DEFACED BONDS AND LOST REGISTERED BONDS OF THE UNITED STATES. The following provisions of the Revised Statutes of the United States, and the regulations thereunder, concerning re- lief in cases of bonds of the United States which have been defaced, destroyed, or lost, are published for the information and guidance of all concerned. Duplicates for Destroyed or Defaced Bonds. Section 3702. — Whenever it appears to the Secretary of the Treasury, by clear and unequivocal proof, that any interest- bearing bond of the United States has, without bad faith upon the part of the owner, been destroyed, wholly or in part, or so defaced as to impair its value to the owner, and such bond is identified by number and description, the Secretary of the Treasury shall, under such regulations and with such restric- tions as to time and retention for security or otherwise as he may prescribe, issue a duplicate thereof, having the same time to run, bearing like interest as the bond so proved to have been destroyed or defaced, and so marked as to show the origi- nal number of the bond destroyed and the date thereof. But when such destroyed or defaced bonds appear to have been of such a class or series as has been or may, before such applica- tion, be called in for redemption, instead of issuing duplicates thereof, they shall be paid, with such interest only as would have been paid if they had been presented in accordance with such call. Section 3703. — The owner of such destroyed or defaced bond shall surrender the same, or so much thereof as may remain, and shall file in the Treasury a bond in a penal sum of double the amount of the destroyed or defaced bond, and the interest which would accrue thereon until the principal becomes due and payable, with two good and sufficient sureties, residents of the United States, to be approved by the Secretary of the Treasury, with condition to indemnify and save harmless the 195 United States from any claim upon such destroyed or defaced bond. Duplicates for Lost Registered Bonds. Section 3704. — Whenever it is proved to the Secretary of the Treasury, by clear and satisfactory evidence, that any duly registered bond of the United States, bearing interest, issued for valuable consideration in pursuance of law, has been lost or destroyed, so that the same is not held by any person as his own property, the Secretary shall issue a duplicate of such registered bond, of like amount, and bearing like interest and marked in the like manner as the bond so proved to be lost or destroyed. Section 3705. — The owner of such missing bond shall first file in the Treasury a bond in the penal sum equal to the amount of such missing bond, and the interest which would accrue thereon, until the principal thereof becomes due and payable, with two good and sufficient sureties, residents of the United States, to be approved by the Secretary of the Treas- ury, with condition to indemnify and save harmless the United States from any claim because of the lost or destroyed bond. Parties presenting claims on account of a coupon or regis- tered bond of the United States which has been destroyed wholly, or in part, or on account of a registered bond which has been lost, will be required to present evidence showing — 1st. The number, denomination, date of authorizing act, and rate of interest of such bond; whether coupon or registered ;. and, if registered, the name of the payee. In the case of a registered bond, it should also be stated whether it had been assigned or not previous to, or since, the alleged loss or destruc- tion, and, if assigned, by whom, and whether assigned in blank or to some person specifically by name; and if assigned in the latter manner the name of the assignee should be given. 2d. The time and place of purchase, of whom purchased, and the consideration paid. 3d. The place of deposit of the missing bond; whether or not any person or persons, other than the owner, had access thereto; and in the event of its having been accessible to other parties, their affidavits, in addition to that of the owner, should 196 be furnished, showing their knowledge of the existence of the bond, and of the fact of its loss or destruction. 4th. The material facts and circumstances connected with the loss or destruction of the bond. 5th. It should be shown by the affidavits of credible persons, if practicable by United States officers, that the statements of the claimant as set forth in his affidavit are worthy of the con- fidence of the Department, and that he is the identical person named in the application. In all cases the evidence should be as full and clear as possi- ble, that there may be no doubt of the good faith of the claim- ant. Proofs may be made by affidavits duly authenticated, and by such other competent evidence as may be in the possession of the claimant. General Form of Affidavit. Personally appeared before me, a notary public in and for the city of , county •of and State of , the subscriber, , who, being duly sworn according to law, deposes and says that is the lawful owner of the follow- ing described registered bonds of the United States, viz.: No. , for $ , Act of , 18 — , per cent., and No. . for $ , Act of , 18 — , per cent., registered in name on the books of the Treasury Department, , 18 — ; that no assignment or transfer of said bonds [or cither of them] has been made by or attorney, either in blank or by a specific assignment, or in any manner whatever; that said bonds have not, nor has either of them, by hypothecation, pledge, loan, or otherwise, passed from the custody or control of said with [his or her] knowledge or consent ; that the said bonds were stolen from , the said , at . ou the , by some person or persons unknown to ; and that due diligence has been exercised in endeavoring to recover the said bonds, without success. £State what has been done.] Sworn to and subscribed before me this the day of , A. D. 18 — . And I certify that said is personally well known to me to be the identical person mentioned in the foregoing affidavit. [notarial seal.] , Notary Public. Affidavits and other evidence pertaining to the claim should be transmitted to the Secretary of the Treasury. Upon re- ceipt of such documentary evidence it will be referred to the First Comptroller of the Treasury Department for his decision i 9 7 as to its sufficiency. The applicant will be advised of the decision as soon as it is reached. If it be favorable to such applicant, a blank indemnity bond will be forwarded to him for execution; and when this indemnity bond shall have been duly executed, returned to the Department, and approved by the First Comptroller and the Secretary, the relief desired will be granted. A duplicate in lieu of a lost registered bond will not be issued within six months from the time of the alleged loss. The interest on an uncalled registered bond will be paid to the payee thereof even though the bond has been lost or de- stroyed. Under a decision of the Attorney-General of the United States of January 29th, 1878, the Secretary of the Treasury cannot give relief in cases where coupons previously detached from the bonds have been destroyed. The decision makes a distinction between coupons destroyed when still attached to the bond and those detached and afterwards destroyed. In the former case it would amount to a partial destruction or defacement of the bonds themselves ; in the latter, the coupons form no part of the bonds, but are then the basis for inde- pendent claims, possessing all the essential attributes of com- mercial paper. That is, a claimant for relief for a coupon de- stroyed while still attached to bond can get it from the Secre- tarv of the Treasury, under the provisions of Section 3702 \ but if destroyed after detachment, the claimant must present his claim in the usual manner, and await action of Congress. Called Bonds. All United States called bonds forwarded for redemption should be addressed to the Secretary of the Treasury, Division of Loans and Currency. When registered bonds are so for- warded they should be assigned to "the Secretary of the Treasury for redemption." Assignments must be dated and properly acknowledged, as prescribed in the note printed on the back of each bond. Where checks in payment of registered bonds are desired in favor of any one but the payee, the bonds should be assigned to the "Secretary of the Treasury for redemption for account 198 of" — (here insert the name of the person or persons to whose order the check should be made payable.) Regulations in regard to Coupons Detached from Called Bonds. When coupons detached from bonds that have been called in for redemption are presented for payment, the Department will pay such portion of the interest specified in such coupons as had accrued at the day fixed in the call for the redemption of the bonds, and no more, unless the party presenting them claims payment of their nominal value, in which case the De- partment will retain the coupons until the bonds from which they were detached shall have been presented and the conflict- ing claims adjusted. When a called bond is presented for redemption from which a coupon, maturing after the day fixed in the call for such redemption, shall have been detached, the nominal value of such coupon shall be deducted from the sum due upon the bond, unless the coupon shall have been paid as above ; the sum thus deducted to be retained to await the presentation of the coupon and a settlement. All correspondence in relation to bonds that have been called in for redemption, or coupons belonging thereto, should be addressed to the "Loan Division," Secretary's Office. (Department Circular No. 48, dated May 9th, 18T2.) Exemption of United States Bonds from Taxation. Section 3701 of the Revised Statutes provides as follows : ■"All stocks, bonds, Treasury notes, and other obligations of the United States shall be exempt from taxation by or under State or municipal or local authority. ' ' This section makes the exemption from taxation binding only upon "State or municipal or local authority ; " but, according to the express terms of the Act of Congress of July 14th, 1870, the bonds and the interest thereon of the funded loans which are thereby authorized — namely, the loan of 1881, the loan of 1891, and the four-per-cent. consols of 1907 — "shall be exempt from the payment of all taxes or duties of the United States, as well as from taxation in any form by or under State, municipal, or local authority ; and the said bonds shall have set forth and expressed upon their face the above-specified conditions. ' ' (See also pages 53 and 54 of this work.) i 9 9 NATIONAL BANKS AS U. S. DEPOSITARIES. Division of Public Moneys, Office of Secretary of the Treasury. The Secretary of the Treasury is authorized under Section 5153, page 23, to designate National banks as depositaries of Government funds. Application should be made to him in writing for such designation. The Secretary is governed in this matter by the necessities of the public service. Banks so designated are required to deposit U. S. bonds with the Treasurer of U. S. as security, in such amounts as the Sec- retary may deem proper, but in no case is the amount required less than $50,000. Under the provisions of Section 3620 money advanced to dis- bursing officers of the U. S. may be deposited in a National bank other than a U. S. depositary, when in the opinion of the Secretary it is essential to the public interests. The desig- nation is made by the Secretary. Disposition of Certificates of Deposit. 1 . The originals of certificates of deposit for all public moneys, except as stated in paragraph 2, should be forwarded to the Secretary of the Treasury by the depositors immediately upon their issue, and it should be seen that the amounts are correct. 2. Exceptions: Originals of certificates issued to disbursing officers for funds deposited to their official credit, and subject to the payment of their checks, should be retained by them. Those issued for the transfer of funds from one Government depository to another, and on account of the five per cent. National bank redemption fund, should be forwarded to the Treasurer of the United States. Those issued for the deposit of moneys pertaining to the Post Office Department should be forwarded to the Third Assistant Postmaster General. 3. Those in favor of customs officers where naval officers are located, should be issued in triplicate, the duplicates trans- mitted to the naval officer, and the triplicates retained by the depositors. Those in favor of customs officers at other ports 200 should be issued in duplicate, and the duplicates retained by the depositors. 4. Those in favor of collectors of internal revenue, or of other persons, on account of internal revenue collections, inter- nal revenue stamps, or repayments of disbursing funds, should be issued in triplicate, the duplicates transmitted to the Com- missioner of Internal Revenue, and the triplicates retained by the depositors. 5. Those in favor of the Secretary of the Treasury, in cases of moneys accruing to the United States from violations of the internal revenue and direct tax laws, should be issued in triplicate, the duplicates forwarded to the Commissioner of Internal Revenue, and the triplicates retained by the depositors. In all other cases, both originals and duplicates should be forwarded to the Secretary of the Treasury, and the triplicates retained by the depositors. 6. Those issued on account of patent fees should be in trip- licate, the duplicates transmitted to the Commissioner of Patents, and the triplicates retained by the depositors. 7. Those issued on account of surveys of public lands should be in triplicate, the duplicates forwarded to the General Land Office direct, or through the local land office or Surveyor Gen- eral's Office, and the triplicates retained by the depositors. 8. Those in favor of receivers of public moneys on account of sales of public lands, &c. , should be issued in duplicate ; the duplicates to be retained by the depositors. 9. Those issued to military or naval officers, either on ac- count of repayments, sales of public property, or otherwise, should be in duplicate, and the duplicates retained by the depositors. 10. Those issued on account of semi-annual duty should be in triplicate ; the duplicates transmitted to the Treasurer of the United States, and the triplicates retained by the depos- itors. 11. Those issued to judicial officers, district attorneys, marshals, clerks of courts, &c. , should be in duplicate, and the duplicates retained by the depositors. 12. Those issued on account of coupons missing from bonds forwarded for redemption, or otherwise, should be in tripli- 201 cate ; the originals and duplicates forwarded to the Secretary of the Treasury, and the triplicates retained by the depositors. 13. Those issued on account of subscriptions to any loan, repayments of interest on the public debt, civil repayments, except as hereinbefore otherwise provided for, consular fees, miscellaneous and other receipts, should be in duplicate, and the duplicates retained by the depositors. 14. Certificates of deposit are not required to be filed with accounts rendered by Government officers to the accounting officers of the Treasury Department, and so filing them does not secure to such officers proper credits in their accounts, which are only given upon warrants issued by the Secretary of the Treasury, based upon the original certificates of deposit. In taking credit in their accounts current, however, for de- posits made, officers should state specifically the date of the deposit, and the designation and location of the depository, as well as the source, &c. Original certificates of deposit in favor of military, naval, and other officers, which are required to be recorded in the bureaus of other executive departments, will be duly for- warded to the head of the department to which the deposits respectively pertain for designation of the proper appropria- tion, &c. Regulations for the Deposit of Public Moneys. COLLECTIONS. Collectors and surveyors of customs, collectors of internal revenue, and receivers of public moneys where there is an Assistant Treasurer or designated depositary, must deposit their receipts at the close of each day. Officers at such a distance from a depository that daily deposits are impractica- ble, must forward their receipts as often as they amount to $1000, and at the end of each month, without regard to the amount accumulated. Collections must be deposited to the credit of the Treasurer of the United States, except moneys received by collectors of internal revenue from sales under Section 3460, Revised Stat- utes of the United States, or from offers of compromise, when 202 received prior to the acceptance of the offer, which must be de- posited to the credit of the Secretary of the Treasury. District attorneys, marshals, and clerks of courts who re- ceive money accruing to the United States will deposit it in accordance with the foregoing paragraphs, except money ac- cruing from customs and internal revenue cases, which should be paid to the collector or surveyor of customs, or collector of internal revenue of the district in which the case arose, and money accruing from post-office suits, which should be deposited to the Treasurers credit, for the use of the Post Office Department. Deputy collectors and agents should deposit directly with a depositary in the name of their principals, and take certifi- cates of deposit in the names of the officers for whom they are acting. DISBURSING FUNDS. All moneys received by any Government officer or agent from the Treasury for disbursement, or coming into his hands, must be deposited to his official credit, and drawn upon only in his official capacity. Deposits of such moneys may be made with the Treasurer, an Assistant Treasurer, or any Designated Depositary of the U. S. specially authorized by the Secretary of the Treasury, under Section 3620, Revised Statutes, and not otherwise. In case special authority has not been given to a convenient depositary, application should be made to the Secretary of the Treasury therefor. RECEIPTS. Those given to district attorneys, marshals, or clerks for moneys paid by them to collectors or surveyors of customs should be sent to the Solicitor of the Treasury, and similar receipts from collectors of internal revenue should be sent to the Commissioner of Internal Revenue. Those given to officers, for deposits of disbursing funds to their own credit, should be retained by them. Reference is made to Sections 3216, 3218, 3617, 3620, 3621, 3625, and 5481 to 5505, inclusive, Revised Statutes. INDEX. A Paqb. Acknowledgment — Of organization certificate 7 Assignment of bonds 187 Foreign assignment of bonds 187 Adams Express Company — Government contract with 164 Administrators Holding Stock not Personally Liable 23 Agent — Of association to examine bonds annually JO To witness destruction of mutilated notes 37 Appointment of special, by Comptroller.. 16, 63 Redemption, selection of. 41 Of insolvent National bank 103 Agency — Redemption at Treasury 88, 167 Aiding or Abetting in Misdemeanors 77 Apportionment of Circulation to States and Territories 33 Appraisal of Stock 109 Committee for 109 Articles of Association 5, 119 Form of 119 Proceedings in regard to 5, 119 Amendment of 107, 150 Assessment — Upon shareholders to pay deficiency in capital stock 83, 104 Of penalty for failure to report 51 United States taxes 52 State taxes 53 Compensation of examiner 57 Cost of redemption of circulation 89, 111, 171 Transportation of notes 89, 111, 171 Assets — Of consolidated bank 61 Failed bank, U. S. to have paramount lien on 65 How reported 67 Disposition of 67 Surplus of, how treated 68, 103 Assignment — Of bonds to secure circulation 26, 27 Registered bonds 184, 187 Assets of association after insolvency void 70 Executed by Comptroller to be evidence 86 Association — (See National Banking Association.) Attachment — Not to issue from State court before final judgment 84 Attorney-General — Decision of, in regard to lost or destroyed coupons 17, 197 ( 203) 204 Page. Auction, Sale at — Of delinquent stock 13, 14 Bonds 34, 62, 65 Stock taken to secure debt 45 Stock taken from retiring stockholders 109 B Bad Debts — Denned 47 Bank Check — Repeal of law requiring stamp on 115 Banks in District op Columbia — Must report to Comptroller 105 Comptroller shall examine 3 Bill in Equity to Enforce Stockholders' Liability 102 Bills of Exchange — Discount of, not usurious 43 Not considered money borrowed 44 Blanks for Organization 119 Bonds, Official — Of Comptroller 2 Deputy Comptroller 2 Receiver 67 Bank officers 128, 129, 154 To be given by stockholders of failed bank 103 Bond, Indemnity 195, 197 Bonds, U. S. — Defined 2& Deposited with Treasurer by public depositaries 23, 199 Deposited by banks commencing and continuing business, 26,31, 90, 111 How transferred to Treasurer 27 How withdrawn and assigned 28, 184 Limitation of amount to be deposited 26, 31, 90, 111 Coupon, how changed for registered 27, 183- Comptroller to have access to 29 To be examined annually by bank 29 Collection of interest on 29, 189 1 When interest may be withheld 47, 51, 52 "When strengthened by further security 29 Exchange of 30 Ratio of circulating notes to 31, 112 Reassignment of, to closed association 62, 103 When sold by Comptroller 62, 65, 92 Forfeiture of 64 Cancellation of 65 Sale at auction or private sale 65 Proportion of, to capital 26, 111, 90- Regulations of Treasury in regard to 181 Interest bearing, outstanding 181 Non-interest bearing, outstanding 181 Method of assigning registered 183-187 Interest on registered 189-191 Lost registered 1 9 v 205 Page. Bonds, U. S. — Lost coupon 193 Duplicates, how obtained 194 Called 197 Burning — (See Destruction of Notes.) Business — Usual place of C. 39 Proceedings and requirements before commencing 15 Branches — State banks converted to National may retain 25 By-Laws — Effect of. 8, 9, 21 Form of 127, 132 c Cancellation — Of stock 13 Coupon bonds 27 Forfeited bonds 65 Circulating notes 66 Capital Stock — Minimum 11)24, 105 Maximum for gold banks 37, 96 Transfer and denomination of shares 12, 24 Shares personal property 12 When paid in 13 Proceedings as to payment 13, 124 Of delinquent stockholders 14 Must be kept up to minimum 14 Increase of 16. 132, 115B Reduction of 17> 133 Amount held by directors 19 Proportion of bonds to 26, 90, 111 Creation of or increase of by use of circulating notes prohibited.. 46 Proportion of circulation to 31, 33, 111, 112 Proportion of loans to 44 Associations not to loan on 45 Proportion of indebtedness to 45 Withdrawal in dividends prohibited 46 When impaired to be made good 47 Tax on 52, 115 Of savings banks in District of Columbia 105 Of converted State bank 24 Cashier — Appointment of 8 Duties of. 13. 16, 17. 27, 31, 36. 48, 49, 50, 51, 59, 63, 72, 107 Oath of. I 5 Cannot act a3 proxy 18 When may be examined on oath 57 Cannot be examiner of own bank 58 Not to loan money on United States or National bank notes 77 Embezzlement by 77 Forbidden to reissue notes of closed bank 81 Cavxat — For lost bonds, form of. I 93 206 Page. Certificate — Of approval of Comptroller's seal by Secretary of Treasury 3 Officers and directors to payment of capital stock 15, 123 Installments of capital stock 13, 124 Comptroller approving increase of capital 16 Reduction of capital 18 Agent of association of examination of bonds 29 Destruction of notes 37, 62, 66 Authority to commence business 15 Extension of corporate existence 108 Amendment to articles of association 107, 150 (See also Organization Certificate.) — Executed and sealed by Comptroller to be evidence 86 Clearing-house 41 Gold and silver 113, 161 Of deposit of United States notes 41, 71 Increase of capital by bank 16, 132 Reduction of capital by bank 17, 133 Deposits of public money 199 Certification of Checks — When forbidden 48, 114 Penalty for 48, 114 Certified Copies of Papers Evidence 87 Charter Number of Association — To be printed on notes 91 Circulars of Comptroller's Office — Synopsis of. 136 Circulating Notes — Of National banks to be taken by depositaries 23 Converted State bank with branches 25 Ratio of, to bonds deposited 31, 33, 112 Bonds deposited as security for 26, 27, 28, 29, 90, 111 Ratio of, to capital 31, 112 How retired and bonds withdrawn 30, 34, 60, 61, 62, 90, 112, 135 Form, denominations and printing of. 31, 89, 109 Tax on 51, 52, 178 Limitation on, is of denominations less than five dollars... 33 No limit on aggregate amount 94 How signed 32 Payable on demand 32 For what receivable 35 Issue of other notes than prohibited 36 Destruction and replacement of mutilated 37 Redemption of mutilated 167 Banks must redeem at own counters 89 Penalty for issuing imitations of 78 Penalties for counterfeiting, &c 78, 79 Lawful money reserve on, abolished 88 Use of, to pay in capital stock forbidden 46 Depreciated or uncurrent, not to be paid out 48 Of closed banks to be retired 60, 65 Consolidating banks 61 2o; Paqi. Circulating Notes — Mode of protesting for non-payment 63 Five per cent, redemption fund 88, 1G8 Redemption of. by Treasurer; regulations concerning 167 Treatment of mutilated, in office of Comptroller 17 J To be sent to Treasurer by Assistant Treasurers and De- positaries 89 Destruction of, of extended associations 110 Gain from lost and destroyed 110 New designs of, for extended associations 109 Cost of plates for printing, hew paid 32, 89, 110, 119 Cost of redemption, how paid 89, 111 Cost of transportation 89, 111 Cities — Where reserve may be kept 39 Claims — Against insolvent banks 67 For lost bonds or coupons 194, 195 Clearing House Certificates 41, 113 Closed Associations — In voluntary liquidation 59, 133 By failure 66 By expiration of corporate existence 110, 156 Commercial Paper — Discount of, not deemed borrowed money 44 Comptroller op Currency — Appointment, term of office, and salary of. 1 Bond, oath, and office of 2 Must not be interested in National bank 2 Seal and annual report of. 3 When maybe enjoined 68 Duties of, in regard to transfer and assignment of bonds 27, 28, 29 Issue of certificate of authority to commence busi- ness by 15 Duties connected with circulating notes, 29, 30, 31, 32, 33, 34, 35, 89, 93, 94, 95, 112 To approve increase of capital 16 Approve reduction of capital 18 Appoint special commissioners 16,63 Appoint examiners 57 Appoint witness of destruction of notes 37 Appoint receivers... 14, 22, 40, 41, 48, 49, 67, 101 Approve reserve agents 42 Call for reports 50 Demand more security for circulating notes... 30 Forfeit, cancel, or sell bonds 64. 65 Give notice to creditors of insolvent banks ... 67 Give power of attorney to receive interest 29 Have access to Treasurer's books and to bonds. 29 Have control and direction of plates 132 Pay dividends to creditors of insolvent banks. 67 Pay residue of assets to shareholders 69, 103 208 Page. Comptrollbr of Currency — To notify banks deficient in reserve 40 Receive and destroy mutilated notes 37 Call meeting of stockholders of insolvent Na- tional banks 103 Grant extension of corporate existence 108 Cause special examination to be made 108 Make re-appraisal of value of stock 109 May enforce liability of stockholders 22, 67 Take bond from stockholders 103 Computation of Reserve 137-144 Conversion of State Banks 24 Information in regard to 124 Conversion of Private Banks • 125 Corporate Existence — Extension of 107, 150 Corporate Rights and Powers 7 Cost of Plates to Banks 11!' Counterfeiting 78, 79, 80 Coupons — Lost, defaced, or detached 197, 198 Coupon Bonds — May be changed to registered 183 Lost 193 Courts — Jurisdiction of 84 Creditors of Association — Holders of notes only preferred 65 D Deficiency — In reserve 40 Capital stock .'. 14, 47, 104 Proceeds of bonds to pay circulating notes 65 Security for circulation 29 Definition — Of National banking associations 26 United States bonds 26 Lawful money as applied to gold banks 38 Bad debts 47 Obligations of United States 78 Denominations — Of notes prescribed 32, 33 Notes of gold banks 37 United States certificates of deposit 41 Gold certificates 113 Depositaries of Public Money — Regulations concerning 23, 199 Information in regard to 199 Duties of. 23 Deposits — Reserve to be kept on 39, 40, 140, 142 Tax on 51, 115 Of public money receipts for 202 Public money, how made 201 Deputy Comptroller — Appointment and duties of. 2 Destruction of Mutilated Notes — Of banks doing business 37 Banks in liquidation 62 209 Paok. Destruction of Mutilated Notes — Of notes redeemed by Treasurer 6'.* Notes retired by deposit of lawful money 93 Failed banks 62 Extended banks L10 Maceration substituted lor burning 94 Destroyed and Defaced Bonds axd Coupons 1U4, 198 Directors — Election and appointment of 19, 20 Qualifications and duties of 19 Oath of, and proceedings in regard thereto 20, 122 Liability for violations of law 09 Penalty for embezzlement by 77 President must be a 21 Of closed bank forbidden to reissue notes. &c 81 State banks' duties in conversion 24 Form of oath of 122 Of proxy for election of 122 Duties of, connected with impaired capital 13. 47, 104 Resolution of, for assignment of registered bonds 186, 187 District Attorneys — To conduct suits 84 District of Columbia — Banks in. to be examined by the Comptroller :; Savings banks in 105 Disbursing Funds — How to be deposited 202 Dividends — When disclosed 44 When forbidden 40. 40 Limitation on 4G Reports of 50, 146 Duplicates — Of lost or destroyed bonds 194, 195 E Earnings, Net — Must be reported 50 What constitutes 44, 47 Election of Directors 8, 18, 19, 20, 21 Proceedings at meetings for 18, 122 Failure to hold 21 Form of proxy for use in 122 Embezzlement — Penalties for 7 7 Evidence — Of payment of notes of closed banks 66 Copies of papers certified by Comptroller to be 86 Certified copy of organization certificate to be evidence of existence of bank 87 Required to obtain duplicate for lost or destroyed bond or interest... 195 'Execution — Of powers of attorney for assignment of bonds 188 Powers of substitution 188 Power of attorney to collect interest 190 Reports of condition 50. 106 Amendment extending corporate existence 150 15 2IO Paob. Execution— Of organization papers 119 Not to issue from State court before final judgment 84 Examination — Of associations before granting authority to commence business.. 15 Bonds deposited by association 29 Plates and dies by Comptroller 32 Association by bank examiner 57 Expense of, to be paid by association 57 Special for extension of corporate existence 108, 153 Examiners — Appointment, powers, duties, and pay of. 57 Special 16, 03, 108 Exchange of Bonds 27, 30, 183 Executors holding Stock 23,104 Expenses — Of special examination _ 108 Examinations 57 Reappraisal of stock 109 Redemption of notes retired by deposit of lawful money 89, 111 Transportation of notes Ill, 89 Examination of banks in District of Columbia 3 The Bureau of Currency 32 Plates and dies 32, 89, 110, 119 Destroying plates and dies of closed bank 33 Sale of bonds of closed bank 65 Receivership 65 Expiring Associations — Proceedings by, required 110, 156 Extending Associations — Proceedings to extend 107, 150 Circulating notes of 109, 115 Succession of, for twenty years 107 Rights and privileges 108 Liabilities and restrictions on 108 Continue identical associations 108 Extension of Corporate Existence 107, 150 F Fee — For protest of notes 63 None for witnessing assignment of bonds by United States Minister, Charge, Consul, &c 189 Fine — For certifying checks unlawfully 114 For various crimes and misdemeanors 77, 78, 79, 80 Forfeitures 43, 64, 69 Suits for 69, 84 Of franchise, how determined 69 Forms — Of articles of association 119 Organization certificate 121 Oath of directors 122 Proxies 122, 124 211 Paok. Forms — Of certificate of officers and directors 125 Payment of installment of capital stock 123 By-laws UT Certificate of increase of capital 132. Certificate of reduction of capital 133 Certificate of liquidation 134 Power of attorney for withdrawal of bonds 135- Notice of changes of officers ]■!:» Amendment extending corporate existence ] 50 Request for extension ].",] Notice of expiration of charter 156- Letter requesting conversion of coupon bonds 183 Power of attorney for assignment of bonds 186- Resolution of directors authorizing assignment of bonds 186, 187 Letter transmitting bonds 183 Power of attorney to collect interest on bonds 190 Resolution of directors authorizing collection of interest 191 Caveat for lost bond 193 Affidavit for lost bond 196 Fraudulent Notes — To be stamped 104 Fractional Currency — Redemption of 161 Fractional Silver Coin — Issue of 160> Purchase of mutilated 175 G Gold Banks — Law and regulations in regard to 37, 33 Conversion of 106 Gold Certificates — Issue and denominations of 113 Counted as reserve 113 When issue suspended 114 Guardians — Liability as stockholders 23, 104 Government Contract — For transportation 164 H Hand-bills — In imitation of bank notes prohibited 38 Hypothecation — Of circulating notes unlawful 46- I Impairment of Capital — To be made good 14,47, 104 Incidental Powers — Of associations 9> Incomplete Currency — How treated 171 Unlawfully delivering 76 Increase of Capital Stock — How made 16, 132 Increase of Security for Circulation — When to be deposited 30> Indebtedness to Bank — For money borrowed 44 Of association, limit on 45 Indorsement — Of Treasury drafts and Post-Office Department warrants 176 212 Page. Injunction — Not to issue against National bank before final judgment 84 Of Comptroller by bank 68 Insolvent Banks — Agent of stockholders of 103 Insolvency — Appointment of receiver for 101 Acts and proceedings in contemplation of, void 70 Installments of Capital Stock — Payment of, how certified to Comptroller.. 13, 124 Interest — On bonds deposited, how collected by association 29 Public debt not payable in National bank notes 36 Legal rate for National banks 43 Penalty for taking usurious 43 When withheld on bonds deposited to secure circulation 47, 51, 52 On registered bonds 180 Form of power of attorney to collect 190 Checks for, how indorsed 190 How paid to joint holders of registered bonds 191 Standing in name of minors 191 Unclaimed 192 Issue — Of U. S. notes, gold coin, and standard silver dollars 159 Fractional silver coin 160 Duplicates for lost bonds 194 Judgment — Must be final in State court before certain proceedings 84 Purchase of real estate under 10 Jurisdiction op Courts 83 Lawful Money — When and how to be deposited 30, 60, 90, 109, 111 Limit on aggregate amount to be deposited in any one month.. 112 Lawful Money Reserve — Amount of. 39 How to compute 140-144 Abolished on circulating notes 88 Agents with whom may be held 40, 42 Five per cent, redemption fund to count as 88 Liability — Individual liability of 22 How enforced 67, 102 Limitation — Of capital of banks 11, 24, 105 Bonds to be kept on deposit 27, 90, 111 Circulating notes in proportion to capital 31, 33, 111, 112 Circulating notes in proportion to bonds 31, 112 On increase of capital stock 16, 17 Of reduction of capital stock 18 On taking real estate 10 Of issue of notes less than $5 33 Legal rate of interest 42 Right of action for usury 43 213 Page- Limitation — Of liabilities of association 44. 45 Dividends 40, 4T Visitorial powers 58 Aggregate of circulation 33, 95 Lawful monej- deposit 112 Reissue of notes retired by lawful money deposit 112 Time for deposit of lawful money GO, 110 Liquidation — Voluntary 59, 133 Of failed bank CG. GT. 101-103 List — Of shareholders , 49 Loans — Limit on 44. 45 When forbidden 10, 39, 45 Location — Change of 1 15 B Lost or Destroyed Notes — How replaced 36 Profit on to inure to Government 110 Lost, Defaced, or Destroyed Bonds 193, 194 Form of affidavit to recover 196 Indemnity bond to be given 197 Lost. Defaced, or Destroyed Coupons 198 M Maceration — Destruction of notes by 94 Maximum — Of monthly deposit of lawful money 112 Increase of capital 16 Circulation to bonds and capital 27. 31. 33, 90, 111. 112 Legal rate of interest 42 Aggregate circulation 33, 95 Lawful money with reserve agents 40, 41 Meeting of Stockholders — Annual, for election of directors 19, 21 Of closed bank to elect agent 103 Minimum — Of capital stock 11, 24, 105 Capital of converted State bank 24 Bonds to be deposited 27, 90, 111 Minors — Bonds standing in name of, interest on, how paid 191 Minor Coins — Purchase, exchange, and redemption of. 173, 174 Misdemeanors, Crimes, &c 77, 82 Money — Uncurrent. not to be paid out 48 Borrowed by association, limit of. 44 Mortgage — Real estate, how taken and held 10 Mutilated Notes — How replaced 36 How destroyed 36, 62, 66 Process of destruction of. 94, 167, 172 Redemption of fragments of. 162 Mutilated Silver Coin — Purchase of 175 Name of Association — Must be approved by tin- Comptroller 13, 116 Change of. 115 B National — As part of title, limited to National banks 58 214 Pa4 5 Stamping counterfeit notes 181 104 6 Savings banks, &c, to make reports 182 105 Extract from Act of March 1, 1879. 22 Abating semi-annual duty of insolvent banks 183 105 Act of February 14, 1880. Conversion of National gold banks 184 106 Act of February 26, 1881. Verification of returns of National banks 185 106 Act of July 12, 1882. 1,2 To extend corporate existence 186 107 3 Special examination of extended banks 187 108 4 Privileges, liabilities, &c, of extended banks; jurisdiction of suits 188 103 5 Withdrawal of shareholders; preference in allotment of new shares 189 109 6 Extended banks; old and new notes, lawful money deposit 190 109 7 Requirements as to banks not extending 191 110 8 Minimum bonds for banks with capital of $150,000 or less 192 111 9 Retiring circulation and reissue * 193 111 10 Amount of circulation on U. S. bonds 194 112 11 Concerning three per cent, bonds 195 113 12 Gold and silver certificates, clearing-house restrictions 196 113 13 Penalty for illegal issue of certified checks 197 114 14 Congress may alter and amend 198 114 Extract from Act of March 3, 1883. 1 Repealing tax on circulation and deposits of banks 199 115 22 approved Starch 29, 1886. Section. Par. Page. 1 Receivers to protect equities in real estate, &c 200 115A Receiver's report must be approved 201 115A 3 Payment for property to be made by Comptroller '202 115 B Act of May 1, 1886. 1 Increase of capital stock 203 11 jB 2 Change of name and location 204 llu B 3 Liabilities, &c, under old name 205 L15C 4 New name or location not to release from liabilities 206 115C Act approved March 3, 188T. 1 Requirements to become reserve city 207 115C 2 Requirements to become a Central Reserve City 208 115D 3 Redemption of U. S. notes at San Francisco 209 115D 4 National banks deemed citizens of States in which located... 210 115D Extract from an Act approved July 30. 1886. 5 Limitation of banking under Territorial law 211 115E A. S. PRATT & SONS, National Bank Agents, WASHINGTON, D. C. BANK AGENCY. Established in 1867, we have for twenty years acted as Agents of National Banks at the U. S. Treasury Department in examining Bonds and count- ing and witnessing the destruction of Mutilated Notes to the entire satisfaction of those we represent. GOVERNMENT BONDS. We buy and sell Government Bonds at Market rates; substitute new U. S. for "Called" bonds, or deposit legal tender notes to retire all or any portion of a Bank's circulation. COLLECTIONS. Collections made and remitted at usual rates. CLAIMS. Special attention given to claims and business be- fore the various Departments of the Government. WE SOLICIT CORRESPONDENCE WITH PARTIES CONTEM- PLATING ORGANIZING NATIONAL BANKS. 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