authorized to be received as security for circulating notes, if he is of opinion that such an exchange can be made without prejudice to the United States; and he may direct the return of any bonds to the bank which transferred the same, in sums of not less than one thousand dollars, upon the surrender to him and the cancellation of a proportionate amount of such circulating notes.

The association making a deposit of bonds as herein provided shall be entitled to receive from the Comptroller of the Currency circulating notes of different 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.

"In order to furnish suitable notes for circulation, the Comptroller of the Currency shall, under the direction of the Secretary of the Treasury, cause plates and dies to be engraved, in the best manner to guard against counterfeiting and fraudulent alterations, and shall have printed therefrom, and numbered, such quantity of circulating notes, in blank, of the denominations of one dollar, two dollars, three dollars, five dollars, ten dollars, twenty dollars, fifty dollars, one hundred dollars, five hundred dollars, and one thousand dollars, as may be required to supply the associations entitled to receive the same. Such notes shall express upon their face that they are secured by United States bonds, deposited with the Treasurer of the United States, by the written or engraved signatures of the Treasurer and Register, and by the imprint of the seal of the Treasury; and shall also express upon their face the promise of the association receiving the same to pay on demand, attested by the signatures of the president or vice-president and cashier; and shall bear such devices and such other statements, and shall be in such form, as the Secretary of the Treasury shall, by regulation, direct."

The expenses of the issuance of such notes shall be paid from the taxes assessed on the circulation of the banks to which they are issued.

The Comptroller of the Currency shall cause to be examined each year, the plates, dies, butt-pieces (bed-pieces), and other material from which the national-bank circulation is printed, and file in his office annually a correct list of the same.

Such material as shall have been used in the printing of the notes of associations which are in liquidation, or have closed business, shall be destroyed under such regulations as shall be prescribed by the Comptroller of the Currency and approved by the Secretary of the Treasury. The expenses of any such examination or destruction. shall be paid out of any appropriation made by Congress for the special examination of national banks and banknote plates.

National banks can only issue notes furnished by the Federal Government. Since specie payments have been resumed no association has been furnished with notes of a less denomination than five dollars.

It may increase or decrease its stock on a two-thirds vote in value of its stockholders, and after notice, subject to the following conditions: In the case of increasing its stock, it must also increase its transfer of bonds to the Treasurer of the United States, so that there may always be in the hands of the Comptroller bonds to the amount of twenty-five per cent. of the capital of such association. In the case of a decrease of capital, it can, after providing for the payment of its outstanding circulating notes, decrease its deposit of bonds with the Comptroller, but never below twenty-five per cent. of its capital.

It may elect directors at its annual meeting, or in the case of a failure then to elect, at some subsequent meeting, of which due notice shall be given. Its affairs shall be managed by not less than five directors, elected by the shareholders, each director being required to be a bonafide owner of at least ten shares of unpledged stock. 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 at the time, and for at least a year previous, have resided in the State, territory, or district, in which the association is located.

Directors are required to take an oath as to their diligent and honest administration of the affairs of the association, and transmit the same to the Comptroller of the Currency, to be filed. The Directors may fill any vacancy occurring in their Board until the next election.

"The shareholders of a national bank are held individually responsible, equally and ratably and not for one another, for all contracts, debts, and engagements of such association to the extent of the amount of their stock therein, at the par value thereof, in addition to the amount invested in such shares ; except that shareholders of any banking association now existing under State laws, having not less than five millions of dollars of capital actually paid in, and a surplus of twenty per centum on hand, both to be determined by the Comptroller of the Currency, shall be liable only to the amount invested in their shares; and such surplus of twenty per centum shall be kept undiminished and be in addition to the surplus provided for in this title; and if at any time there is a deficiency of twenty per centum in such surplus, such association shall not pay any dividends to its shareholders until the deficiency is made good; and in case of such deficiency, the Comptroller may compel the association to close its business and wind up its affairs.

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Executors, administrators, guardians, or trustees holding stock are not personally subject to any liabilities as stockholders, but the estates which they represent are.

A national bank may, upon a further deposit of government bonds with the Secretary of the Treasury, be designated, and act as a depository of public moneys and as the financial agent of the government, and every association so designated as a receiver and depository of public money shall take and receive at par all national currency bills by whatever association issued, which have

been paid into the government for internal revenue or for loans or stocks.

A State bank may reorganize under the provisions of this Act and may retain and keep in operation its branches.

Associations may be organized under the National Banking Act for the purpose of issuing notes payable in gold upon the deposit of any United States bonds bearing interest payable in gold, with the Treasurer of the United States, but none of a smaller denomination than $5, nor can they issue notes in excess of eighty per cent. of the par value of the bonds so deposited.

"Gold Banks," as these are termed, are required to keep on hand twenty-five per cent. of their outstanding circulation in gold and silver coin of the United States, and to receive, at par, in the payment of debts, the gold notes of every other like association which, at the time of such payment, is redeeming its circulating notes in gold coin of the United States.

The words "lawful money" are construed to mean "gold or silver" coin of the United States.

A fine of one hundred dollars is imposed for use of any National Bank bill as a means of advertising, either by writing or printing the name and business thereon, or by sending out an advertisement in the shape of a copy of any such bill. There is also a fine of fifty dollars for defacing or mutilating these bills.

The cities in which national banks are located are divided into three classes: first, ordinary; second, reserve; and third, central reserve cities.

Ordinary cities comprise the great number of cities, neither reserve nor central reserve, in which national banks are required to maintain a reserve of fifteen per cent. of the amount on deposit with them, three fifths of which reserve may be deposited by them in reserve or central reserve banks.

In reserve cities, which are divided into four groups, at

this date (1895) comprising the following cities: Group 1, Boston, Albany, Brooklyn, Philadelphia, and Pittsburg. Group 2, Baltimore, Washington, New Orleans, and Louisville. Group 3, Cincinnati, Cleveland, Detroit, Milwaukee, Des Moines, and Minneapolis. Group 4, Kansas City, St. Joseph, Lincoln, Omaha, and San Francisco. National banks must keep on hand twenty-five per cent. of the amount on deposit with them, one half of which may consist of amounts on deposit to their credit in central reserve banks.

Central reserve cities, consisting in 1895 of New York, Chicago, and St. Louis. In these cities national banks must maintain a reserve of twenty-five per cent. and may act as the depositories of a portion of the reserve of ordinary and reserve city banks. Any city of more than two hundred thousand population may, upon written application to and approval of the Comptroller, signed by three fourths of the national banks, become a "Central Reserve City." Upon like application, any city with a population of fifty thousand or more may be added to the list of reserve cities.

All national banks are required to deposit with the Comptroller a fund equal to five per cent. of their circulating notes, which fund shall be held exclusively for that purpose, but may be considered as a part of their lawful money reserve.

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Clearing-house certificates, representing specie and lawful 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."

When the reserve of any bank falls below the respective percentages above given, such bank shall not increase its liabilities by making new loans or discounts otherwise than by discounting or purchasing bills of exchange payable at sight, nor declare or pay any dividend on its