-penaitics in curred.

Exchange may be charged.

ing a rate of interest greater than aforesaid shall be held and adjudged 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 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.

But the purchase, discount, or sale of a bona fide bill of 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.

Banks to hold

LEGAL RESERVES REQUIRED.

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

In case of deficiency

And whenever the lawful money of any association in any 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

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. (See pp. 27, 28.)

posits, such association shall not increase its liabilities by certain restric making 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.

ficient reserve,

And it shall be competent for the Comptroller of the In default of sut Currency 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. See section 50, and notes thereto, pp. 133, 134.

Redemption

agencies at New York to be selected

-where part of reserves may be kept.

Like agencies in other cities.

their own notes

at par,

REDEMPTION AGENCIES.

SEC. 32. And be it further enacted, That each association organized in any of the cities named in the foregoing section 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 each of such associations may keep one-half of its lawful money reserve in cash deposits in the city of New York.

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 associations 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 association 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 section 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 association formed or existing under the provisions of this act shall take and receive at par, 12 for any debt or liability to said association, any and all notes or bills issued by any association existing under and by virtue of this act.

and to receive

the notes of any

other national

bank in payment

of debts, &c.

Dividends, when

and how de

clared.

DIVIDENDS.

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

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

13

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 [Relating to reports, superseded by act of March 3, 1869, chapter 130.]

PURCHASING AND LOANING ON SHARES.

SEC. 35. And be it further enacted, That no association shall make any loan or discount on the security of the shares of its own capital stock,14 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 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.

Banks not to loan on, purchase, or

hold their own

shares, except in certain cases.

debtedness at d

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 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 hand, 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.)

Notes not to be

pledged nor used

tal.

Fourth. On account of liabilities to its stockholders for dividends and reserved profits.

SEC. 37. And be it further enacted, That no association to increase capi- 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.

Withdrawal of capital forbidden.

Dividends lim

ited when losses occur by bad debts.

What are bad debts.

Notes not to be

paid out, except

those of solvent

banks, redeem

able at par.

SEC. 38. And be it further enacted, That no association, or any 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.

And if losses shall at any time have been sustained by any such association equal to or exceeding its undivided 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.

And all debts due to any association, on which interest 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 association under the thirteenth section of this act.

SEC. 39. And be it further enacted, That 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 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