$196,747 Banking capital.

10,000 Bills payable.

20,000 Notes and bills rediscounted.

Liabilities payable on demand.

CHAPTER IV.

GENERAL BANKING POWERS CONFERRED BY SECTION 5136, PAR. 7.

To exercise by its board of directors, or duly authorized officers or agents, subject to law, all such incidental powers as shall be necessary to carry on the business of banking; 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, issuing, and circulating notes according to the provisions of this Title.

Court Decisions Construing These.

As it is very important to know what powers are granted to a National bank under its charter, the following extracts from two decisions are quoted, as throwing some light on this subject, and as showing what a bank may safely and prudently do without exceeding the powers clearly granted by its

charter.

From the decision of the Supreme Court of Pennsylvania, in Fowler vs. Scully, in 1873 (Thompson's National Bank Cases, p. 856), we quote, as follows, on this point:

In view of the rule of interpretation of such charters given to us by the Federal courts, and the maxim expressio unius est exclusio alterius, the argument might close with the terms of the power to loan money on personal security; for agreeably to this rule and maxim no other security than personal can be taken for money lent. This is the law of the bank's capacity and of its control. It accords also with the nature of banking as a business, which is precisely described in the language of the law itself; the discounting and negotiating of promissory notes, drafts, bills, and other evidences of debt (meaning, of course, debts ejusdem generis, such as checks, certificates of deposit, etc.); the buying and selling of bills of exchange, bullion, and lending of money on personal security. The reasons are manifest. The business of a bank is commercial, not that of dealing in real estate, brokerage, etc. It, therefore, does not buy and sell real estate, groundrents, mortgages, stocks, produce, etc.

And, further, from United States Supreme Court decision (First National Bank of Charlotte vs. National Exchange Bank of Baltimore, Thompson's National Bank Cases, p. 128), as follows:

Authority is thus given to transact such a banking business as is specified, and all incidental powers necessary to carry it on are granted. These powers are such as are required to meet all the legitimate demands of the authorized business, and to enable a bank to conduct its affairs within the general scope of its charter safely and prudently. This necessarily implies the right of a bank to incur liabilities in the regular course of its business, as well as to become the creditor of others. Its own obligations must be met, and

debts due to it collected or secured. The power to adopt reasonable and appropriate measures for these purposes is an incident to the power to incur the liability or become the creditor. Obligations may be assumed that result unfortunately. Loans or discounts may be made that can not be met at maturity. Compromises to avoid or reduce losses are oftentimes the necessary results of this condition of things. These compromises come within the general scope of the powers committed to the board of directors and the officers and agents of the bank, and are submitted to their judgment and discretion, except to the extent that they are restrained by the charter or by-laws. Banks may do, in this behalf, whatever natural persons could do under like circumstances.

To some extent it has been thought expedient in the National banking act to limit this power. Thus, as to real estate, it is provided (Revised Statutes, sec. 5137; 13 Stat., 107, sec. 28) that it may be accepted in good faith as security for, or in payment of, debts previously contracted; but, if accepted in payment, it must not be retained more than five years. So, while a bank is expressly prohibited (sec. 5201; 13 Stat., 110, sec. 35) from loaning money upon or purchasing its own stock, special authority is given for the acceptance of its shares as security for, and in payment of, debts previously contracted in good faith; but all shares purchased under this power must be again sold or disposed of at private or public sale within six months from the time they are acquired.

Quotations from this decision will also be found in paragraph on dealing in stocks and bonds (p. 50).

Power to Borrow Money; Power to issue Time Certificates of Deposit.

As the question whether a National bank has the power to borrow money involves the question as to its right to issue time certificates of deposit, the following extracts from third edition of "Morse on Banks and Banking," by Parsons, to which we are indebted for quotations made on other topics in this work, are given as a summary of judicial decisions bearing on this subject.

Business Powers. Par. 51, sec. 5. As involved in the power to receive deposits, a bank may issue certificates of deposit, which in Massachusetts and Pennsylvania are not regarded as negotiable paper; but in other States they are considered promissory notes (which seems clear upon any defini ion of a note to be found in the authorities), negotiable under the same limitations as notes.

They are used to save carrying money; but as they do not. pass by delivery, but only by indorsement, they are not intended to circulate as money in the sense of a banking law, such as the National or New York law; and, therefore, the prohibition in those acts of issuing notes to circulate as money, other than those provided for or named in said acts, does not interfere with the power of a bank to issue certificates of deposit.

They may be payable on demand or on time, if the circumstances. justify the bank in borrowing on time (see par. 63), unless there is a restriction in the organic law or by statute. If a bank can not issue its negotiable promissory note on time, neither can it issue a negotiable certificate of deposit of