transactions should be entered in the 5 per cent. fund account on the books of the bank, and not in the circulation account, which should show a fixed balance, representing the circulation issued to the bank on its bonds, and should not be altered at any time, except to be increased by the amount of circulation issued to it on deposit of additional bonds, or to be decreased by the deposit of lawful money with the United States Treasurer for the purpose of reducing circulation and withdrawing bonds.

To illustrate how entries should be made in the 5 per cent. fund account, let us assume that the Treasurer has on deposit for the bank a fund of $2,250, and that he redeems for the bank $1,000 of its notes, of which $500 are "fit" and $500 are "unfit." Upon receipt of the $500 "fit" notes the bank should debit "Cash" and credit its 5 per cent. fund account, and make a similar entry when it receives the $500 incomplete currency from the Comptroller's office in replacement of the "unfit " redeemed by the Treasurer and destroyed. These entries would reduce the 5 per cent. fund account to $1,250 debit balance, and it would be restored to its proper amount, $2,250, when the bank remits $1,000 to reimburse its account with the Treasurer,

for then the account would be debited with $1,000, and "Cash" credited with the same amount.

This method of treatment would be very simple; the account would always exhibit the exact balance in hands of the Treasurer, and, in fact, would be practically the counterpart of the account as kept on the books of the Treasurer.

How to Compute Average Reserve.

In each report of condition a bank is required to state its average reserve on deposits for the preceding 30 days. To obtain this, take the percentage of reserve for each business day during the 30 days preceding date of report and add these percentages together. Divide the aggregate so obtained by the number of business days and the result will represent the average ratio desired. (See note, page 14, as to excess with reserve agents in computing reserve.)

Form of Application for Comptroller's Approval of Reserve Agent.

TO THE COMPTROLLER OF THE CURRENCY,

National Bank

WASHINGTON, D. C.

SIR: Application is hereby made for your approval of the as an association with which a portion of the lawful money reserve of this bank may be kept in accordance with law.

Respectfully yours,

(To be signed by Cashier or other officer of bank making application.) NOTE.-National banks in reserve cities may select any National bank or banks in any of the "central" reserve cities only. Those located outside of reserve cities may select any National bank or banks in any reserve city or cities "central" or other. All selections are subject to approval of the Comptroller.

PART TWO.

CHAPTER I.

ORGANIZATION OF NATIONAL BANKS.

The law relating to the organization of National banks is to be found in sections 5133, 5134, 5135, and 5136 United States Revised Statutes, Nationalbank Act.

It has not been deemed necessary to introduce into this little work all the details of information and printed forms pertaining to the organization of a National bank for the reason that a pamphlet containing all such information and forms, entitled "Instructions in regard to the Organization, Extension, and Management of National Banks," compiled in the year 1884, under direction of the Comptroller of the Currency, can be obtained free, upon application to his office, by any person desiring a copy, together with any further information on the subject which may not appear to be em braced in the pamphlet.

Minimum Capital Stock Required.

It may be well to state here that the minimum capital stock required of each National bank (see section 5138) is based upon the population of the place in which it is located, at date of its organization, as follows:

1. $50,000 for a bank organized in a place having 6,000 inhabitants, or less.

2. $100,000 for a bank organized in a city having over 6,000, but not more than 50,000 inhabitants.

3. $200,000 for a bank organized in a city having over 50,000 inhabitants.

Increase and Reduction of Capital Stock.

This pamphlet also contains the information and forms necessary to enable a bank to increase or reduce its capital stock as provided by sections 5142 and 5143, respectively.

Since the pamphlet was prepared, section 5142 has been amended by "Act approved May 1, 1886, (see page 75, National-bank Act, edition of 1888), section 1 of which provides that a National bank may "increase its capital stock in accordance with existing laws, to any sum approved by the said Comptroller, notwithstanding the limit fixed in its original articles of association and determined by said Comptroller."

Prior to the passage of this act, in 1886, the banks had been limited in any proposed increase of capital to the maximum of increase which was named and provided for in their articles of association at time of organization.

Extension of Charter.

The pamphlet also gives the forms and information necessary for procuring an extension of corporate existence beyond the limit fixed in the original charter granted at time of a bank's organization. The law on this subject is to be found in the act of July 12, 1882 (pages 68-73, Nationalbank Act, 1888), entitled "An act to enable National banking associations to extend their corporate existence, and for other purposes."

Minimum Bond Deposit Requirements.

Section 8 of the act just mentioned amended the law with regard to the amount of bonds to be deposited by banks already organized, or to be afterward organized, having a capital of $150,000, or less, to the effect that such banks should not be required to deposit United States bonds to any amount in excess of one-fourth of their capital stock.

The minimum bond deposit required of banks having capital in excess of $150,000 is uniformly $50,000. (See section 4, act of June 20, 1874.)