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ing a rate of interest greater than aforesaid shall be held -pepaitics in and adjudged a forfeiture of the entire interest which the curred.

note, bill, or other evidence of debt carries with it, or which has been agreed to be paid thereon. And in case a greater rate of interest has been paid, the person or persons paying the same, or their legal representatives, may recover back, in any action of debt, twice the amount of the interest thus paid from the association taking or receiving the same: Provided, That such action is commenced within two years

from the time the usurious transaction occurred. Exchange may be But the purchase, discount, or sale of a bona fide bill of charged.

exchange, payable at another place than the place of such purchase, 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.

LEGAL RESERVES REQUIRED.

Banks to hold

Sec. 31. And be it further enacted, That every association certain reserves. in the cities hereinafter named 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 every other association 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. 10

And whenever the lawful money of any association in any ciency

of the cities hereinafter 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 de

In case of defi

10. By the act of March 2, 1867, chapter 194, the temporary loan certificates, or three per cent. certificates, authorized by that act, may be held as part of the national bank reserves, subject to the limitation that not less than two-fifths of the entire reserve of any bank shall consist of lawful money of the United States.

And by act of June 8, 1872, chapter 346, the certificates of deposit therein provided for, to be issued in exchange for United States notes, may be held as part of the legal reserves of banks, and may be accepted in the settlement of clearing-house balances. (Sec pp. 27, 28.)

pasits, such association shall not increase its liabilities by certain restricmaking any new loans or discounts otherwise than by dis- tions imposed. counting or purchasing bills of 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 lawful money of the United States shall be restored:

Provided, That three-fifths of said fifteen per centum may consist of balances due to an association available for the redemption of its circulating notes from associations approved by the Comptroller of the Currency, organized under this act, in the cities of Saint Louis, Louisville, Chicago, Detroit, Milwaukee, New Orleans, Cincinnati, Cleveland, Pittsburg, Baltimore, Philadelphia, Boston, New York, Albany, Leavenworth, * San Francisco, and Washington city:

Provided, also, That clearing-house certificates, representing specie or lawful money specially deposited for the purpose of any clearing-house association, shall be deemed to be lawful money in the possession of any association belonging to such clearing-house holding and owning such certificate, and shall be considered to be a part of the lawful money which such association is required to have under the foregoing provisions of this section:

Provided, That the cities of Charleston and Richmond may be added to the list of cities in the national associations of which other associations may keep three-fifths of their lawful money, whenever, in the opinion of the Comptroller of the Currency, the condition of the southern States will warrant it.

And it shall be competent for the Comptroller of the In default of sufCurrency to notify any association whose lawful money after notice, bank reserve as aforesaid shall be below the amount to be kept may be wound up. on hand as aforesaid, to make good such reserve; and if such association shall fail for thirty days thereafter so to make good its reserve of lawful money of the United States, the Comptroller may, with the concurrence of the Secretary of the Treasury, appoint a receiver11 to wind up the business of such association, as provided in this act.

* Leavenworth is stricken out by act of March 1, 1872. 11. Ser section 50, and notes thereto, pr. 133, 134.

REDEMPTION AGENCIES.

reserves may bo kept.

other cities.

Redemption Sec. 32. And be it further enacted, That each association agencies at Now

organized in any of the cities named in the foregoing secYork to be se locted

tion shall select, subject to the approval of the Comptroller of the Currency, an association in the city of New York at

which it will redeem its circulating notes at par.12 And -where part of each of such associations may keep one-half of its lawful

money reserve in cash deposits in the city of New York. Like agencies in And each association not organized within the cities

named in the preceding section shall select, subject to the
approval of the Comptroller of the Currency, an association
in either of the cities named in the preceding section at
which it will redeem its circulating notes at par, and the
Comptroller shall give public notice of the names of the as-
sociations so 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.
If
any

association shall fail either to make the selection or to redeem its notes as aforesaid, the Comptroller of the Currency may, upon receiving satisfactory evidence thereof,

appoint a receiver, in the manner provided for in this act, Banks to redeem to wind up its affairs: Provided, That nothing in this sec

tion shall relieve any association from its liability to redeem its circulating notes at its own counter, at par, in lawful

money, on demand: And provided further, That every asthe notes of any sociation formed or existing under the provisions of this act bank in payment shall take and receive at par, 12 for any debt or liability to of debts, &c.

said association, any and all notes or bills issued by any association existing under and by virtue of this act.

their own notes

at par,

and to receive

DIVIDENDS.

Sec. 33. And be it further enacted, That the directors of any association may, semi-annually, each year, declare a

Dividends, when and how declared.

12. The act of July 12, 1870, chapter 252, section 5, exempts gold banks in San Francisco from any obligation to redeem their gold notes at par in the city of New York, and also exempts all gold banks from the provision requiring national banks to receive in payment of debts the currency notes of every other bank at par.

dividend of so much of the net profits of the association
as they shall judge expedient; but each association shall, Restriction.
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. 1

Sec. 34. [Relating to reports, superseded by act of March 3, 1869, chapter 130.]

1 3

PURCHASING AND LOANING ON SHARES.

hold their own

Sec. 35. And be it further enacted, That no association Banks not to loan shall make any loan or discount on the security of the shares on, purchase, or of its own capital stock, 14 nor be the purchaser or holder shares, except in of any such shares, unless such security or purchase shall certain cases. be necessary to prevent loss upon a debt previously contracted in good faith; and stock so purchased or acquired shall, within six months from the time of its purchase, be sold or disposed of at public or private sale, in default of which a receiver may be appointed to close up the business of the association, according to the provisions of this act.

LIMITATIONS AND RESTRICTIONS.

exceptions.

Sec. 36. And be it further enacted, That no association Limitation of inshall at any time be indebted, or in any way liable, to an debtedness at d amount exceeding the amount of its capital stock at such time actually paid in and remaining undiminished by losses or otherwise, except on the following accounts, that is to say

First. On account of its notes of circulation.

Second. On account of moneys deposited with, or collected by, such association.

Third. On account of bills of exchange or drafts drawn against money actually on deposit to the credit of such association or due thereto.

13. There are further restrictions in section 38, on making dividends, that none shall be made to a greater amount than the net profits on band, and none whatever if the losses equal or exceed the profits.

14. The deposit of funds of a bank with bankers is a loan within the meaning of this section, and cannot be secured by a pledge of the shares of the bank. (Bank v. Lanier, 11 Wallace, 369.)

tal.

Withdrawal of

or any

Fourth. On account of liabilities to its stockholders for

dividends and reserved profits. Notes not to be Sec. 37. And be it further enacted, That no association pledged nor used shall, either directly or indirectly, 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 thereof, in any manner or form, to create or increase its capital stock.

Sec. 38. And be it further enacted, That no association, capital forbidden.

member thereof, shall, during the time it shall continue its banking operations, withdraw, or permit to be withdrawn, either in form of dividends or otherwise, any

portion of its capital. Dividends lim- And if losses shall at any time have been sustained by ited when losses occur by bad

any such association equal to or exceeding its undivided debts.

profits then on hand, no dividend shall be made; and no dividend shall ever be made by any association, while it shall continue its banking operations, to an amount greater than its net profits then on hand, deducting therefrom its

losses and bad debts. What are bad And all debts due to any association, on which interest debts.

is past due and unpaid for a period of six months, unless the same shall be well secured, and shall be in process of collection, shall be considered bad debts within the meaning of this act: Provided, That nothing in this section shall prevent the reduction of the capital stock of the asso

ciation under the thirteenth section of this act. Notes not to be Sec. 39. And be it further enacted, That no association paid out, except shall at any time pay out on loans or discounts, or in purbanks, redeem- chasing drafts or bills of exchange, or in payment of de

posits, or in any other mode pay or put in circulation the notes of any bank or banking association which shall not, at any such time, be receivable, at par, on deposit and in payment of debts by the association so paying out or circulating such notes; nor shall it 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

able at par.

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