Many States have passed enabling acts, both to enable State banks to become National banks and to enable National banks to become State banks. State banks intending to convert into National banks should be guided as to the closing of the affairs under the State charter by the State statute

From the special privilege granted to converted State banks to continue to hold the stock in other banks they held when State banks, it may be inferred that the power of holding stock in other banks was not intended to be granted to all National associations.

37. State Banks having Branches.

SECTION 5155.-It shall be lawful for any bank or banking association, organized under State laws, and having branches, the capital being joint and assigned to and used by the motherbank and branches in definite proportions, to become a National banking association, in conformity with existing laws, and to retain and keep in operation its branches, or such one or more of them as it may elect to retain, the amount of the circulation redeemable at the mother-bank, and each branch, to be regulated by the amount of capital assigned to and used by each.

As was remarked in reference to the last section in regard to holding bank stock, so it may be said that the granting of the special privilege of having branches under certain circumstances to converted State banks, implies that it was not intended that National banks generally should have branches.

38. Rights of Associations Organized under Act of 1863. SECTION 5156.-Nothing in this Title shall affect any appointments made, acts done, or proceedings had or commenced prior to the third day of June, eighteen hundred and sixtyfour, in or toward the organization of any National banking association under the Act of February twenty-five, eighteen hundred and sixty-three; but all associations which, on the third day of June, eighteen hundred and sixty-four, were organized, or commenced to be organized, under that Act shall enjoy all the rights and privileges granted, and be subject to all the duties, liabilities, and restrictions imposed by this Title, notwithstanding all the steps prescribed by this Title for the organization of associations were not pursued, if such associations were duly organized under that Act.

The banks organized under the original National Banking Act of February 25th, 1863, have all these vested rights under the earlier Act secured to them by this section.

CHAPTER III.

OBTAINING AND ISSUING CIRCULATING NOTES.

39. Applies to all National Banks.

SECTION 5157.-The provisions of Chapters two, three, and four* of this Title, which are expressed without restrictive words, as applying to "National banking associations," or to "associations," apply to all associations organized to carry on the business of banking under any Act of Congress.

This section gives the same rights to all National banking associations at whatever date organized.

40. United States Bonds Defined.

SECTION 5158.-The term "United States bonds," as used throughout this chapter, shall be construed to mean registered bonds of the United States.

41. United States Bonds to be Deposited.

SECTION 5159.-Every association, after having complied with the provisions of this Title, preliminary to the commencement of the banking business, and before it shall be authorized to commence banking business under this Title, shall transfer and deliver to the Treasurer of the United States any United States registered bonds, bearing interest, to an amount not less than thirty thousand dollars and not less than onethird of the capital stock paid in. Such bonds shall be received by the Treasurer upon deposit, and shall be by him safely kept in his office, until they shall be otherwise disposed of,in pursuance of the provisions of this Title.

Under the Act of June 20th, 1874, Section 4, page 87, the maximum amount which any National bank is required to deposit, whatever its capital, is $50,000. By the Act of July 12th, 1882, Section 8, page 107, any bank having a capital of $150,000 or less can be organized on a deposit of bonds equal to one quarter of such capital. Therefore banks with a capital over $150,000 must deposit $50,000 in bonds; those with $150,000 or less, one quarter of such capital.

42. Increase and Decrease of Capital and Bonds. SECTION 5160.-The deposits of bonds made by each associ*Chapters III, IV, and V of this work.

ation shall be increased as its capital may be paid up or increased, so that every association shall at all times have on deposit with the Treasurer registered United States bonds to the amount of at least one-third of its capital stock actually paid in. And any association that may desire to reduce its capital or close up its business and dissolve its organization, may take up its bonds upon returning to the Comptroller its circulating notes in the proportion hereinafter required, or may take up any excess of bonds beyond one-third of its capital stock, and upon which no circulating notes have been delivered.

As stated under the preceding section, later laws have changed the limit of bonds, and the limits prescribed in these later laws must be observed in increasing or reducing capital stock. Banks may still, however, return circulation under this section, and take up excess of bonds above legal limit on which no circulating notes have been delivered.

43. Exchange of Coupon Bonds.

SECTION 5161.-To facilitate a compliance with the two preceding sections, the Secretary of the Treasury is authorized to receive from any association, and cancel, any United States coupon bonds, and to issue in lieu thereof registered bonds of like amount, bearing a like rate of interest and having the same time to run.

Coupon bonds, as well as registered bonds properly transferred, are usually sent to the office of the Comptroller of the Currency by registered mail or express, and the bond clerk in that office takes the necessary steps to convert the coupon bonds into registered, and to turn over the bonds in due course to the custody of the Treasurer of the United States.

44. Transfer of Bonds to and by Treasurer.

SECTION 5162.-All transfers of United States bonds made by any association under the provisions of this Title shall be made to the Treasurer of the United States in trust for the association, with a memorandum written or printed on each bond, and signed by the cashier or some other officer of the association making the deposit. A receipt shall be given to the association by the Comptroller of the Currency, or by a clerk appointed by him for that purpose, stating that the bond is held in trust for the association on whose behalf the transfer is made, and as security for the redemption and payment of any circulating notes that have been or may be delivered to such association. No assignment or transfer of any such bond

by the Treasurer shall be deemed valid unless countersigned by the Comptroller of the Currency.

The bonds when sent to the Comptroller should bear the memorandum, written or printed, mentioned, signed by the cashier, that they are transferred to the Treasurer in trust for the association. A receipt is given by the Comptroller of the Currency, and when the bonds are placed in the custody of the Treasurer, a receipt is given in duplicate by that officer-one is sent to the bank and the other to the Comptroller of the Currency. The Comptroller and Treasurer will not permit the withdrawal and transfer of bonds from the Treasurer except upon authority given by the board of directors to transfer the same to the designated transferee. When bonds are so to be withdrawn, the Treasurer's duplicate receipt held by the bank must be sent to the Comptroller with the directors' resolution.

45. Registry of Bond Transfers.

SECTION 5163.—The Comptroller of the Currency shall keep in his office a book, in which he shall cause to be entered, immediately upon countersigning it, every transfer or assignment by the Treasurer of any bonds belonging to a National banking association presented for his signature. He shall state in such entry the name of the association from whose account the transfer is made, the name of the party to whom it is made, and the par value of the bonds transferred.

Bonds received in the Comptroller's office are first receipted for to the express company or post office, and are then entered in the books of the office. The subsequent history of each bond can thus be accurately traced.

46. Association to be Advised of Transfers.

SECTION 5164.-The Comptroller of the Currency shall, immediately upon countersigning and entering any transfer or assignment by the Treasurer of any bonds belonging to a National banking association, advise by mail the association from whose accounts the transfer is made of the kind and numerical designation of the bonds and the amount thereof so transferred.

Advice to the bank is required as an additional precaution against erroneous or fraudulent transfers from its account in trust.

47. Comptroller and Treasurer to have Access to Books. SECTION 5165.-The Comptroller of the Currency shall have at all times, during office hours, access to the books of the Treasurer of the United States for the purpose of ascertaining the correctness of any transfer or assignment of the bonds deposited by an association, presented to the Comptroller to

countersign; and the Treasurer shall have the like access to the book mentioned in section fifty-one hundred and sixtythree, during office hours, to ascertain the correctness of the entries in the same; and the Comptroller shall also at all times have access to the bonds on deposit with the Treasurer to ascertain their amount and condition.

This section prescribes further checks on mistakes or frauds.

48. Annual Examination of Bonds.

SECTION 5166.-Every association having bonds deposited in the office of the Treasurer of the United States shall, once or oftener in each fiscal year, examine and compare the bonds pledged by the association with the books of the Comptroller of the Currency and with the accounts of the association, and, if they are found correct, to execute to the Treasurer a certificate setting forth the different kinds and the amounts thereof, and that the same are in the possession and custody of the Treasurer at the date of the certificate. Such examination shall be made at such time or times during the ordinary business hours as the Treasurer and the Comptroller, respectively, may select, and may be made by an officer or agent of such association duly appointed in writing for that purpose; and his certificate before mentioned shall be of like force and validity as if executed by the president or cashier. A duplicate of such certificate, signed by the Treasurer, shall be retained by the association.

This section throws upon the association the direct responsibility of ascertaining the safety and actual presence on deposit of the bonds held in trust for it by the Treasurer. The examination is usually made by the bank's accredited agent.

49. Bonds Held as Security for Circulation, &c. SECTION 5167.-The bonds transferred to and deposited with the Treasurer of the United States by any association, for the security of its circulating notes, shall be held exclusively for that purpose until such notes are redeemed, except as provided in this Title. The Comptroller of the Currency shall give to any such association powers of attorney to receive and appropriate to its own use the interest on the bonds which it has so transferred to the Treasurer; but such power shall become inoperative whenever such association fails to redeem its circulating notes. Whenever the market or cash value of any bonds thus deposited with the Treasurer is reduced below the