published, then in the newspaper published nearest thereto, that the association is closing up its affairs, and notifying the holders of its notes and other creditors to present the notes and other claims against the association for payment.

Blanks for certifying the notice to the Comptroller of the Currency are furnished by that office, and can be obtained on application there; also form to be used in making the publication required by the section. The liquidation takes effect on the date of the vote and not on the receipt of the notice by the Comptroller, or it may take effect on some future date fixed in that notice. Thus two-thirds of the stock may vote to liquidate; the vote may be taken on the third of the month; the notice may be sent on the sixth and be received by the Comptroller on the ninth. The books of the Comptroller's office will place the association in liquidation on the third, but if the vote be taken on the third to commence to liquidate the association on the twentieth, then, although the Comptroller as before may receive notice on the ninth, yet the date of liquidation will be the twentieth. Insertion of notice in weekly papers, both in New York and at home, is regarded as fulfilling the requirement of the law. The notice should appear in each issue of the paper within the two months from the date of the first issue in which the notice appears.

Associations in voluntary liquidation retain their corporate existence, and can sue or be sued until their affairs are finally liquidated. The process of liquidation may be conducted by the directors and officers of the bank, or the directors may appoint a committee from their own number for the purpose. In any event it is better to keep up the board of directors by regular annual elections until the liquidation is complete. The usual course is to pay depositors in full, and then, as funds are realized from assets, pay pro rata dividends to stockholders. Usually there is a residue of deposits which are not called for. Before dividends are paid to stockholders funds to meet this residue if called for should be set aside. Doubtless, after due published notice of liquidation, the statute of limitations in the State where the bank is located would begin to run perhaps from the date of the last published notice. This may be a question. In the case of a going bank it runs from the date of demand; but it would seem that where a bank closes its affairs and notifies the public to make demand the statute should begin to run at furthest from the last published notice. Profit on notes not presented for redemption apparently goes to the Government. A bank in voluntary liquidation is still subject to the inspection of the Comptroller of the Currency. He can require reports from it and cause examination to be made of its affairs. If it fails to pay its depositors he may appoint a receiver. (See Section 1, Act of June 30th, 1876, page 101.)

101. Deposit to Redeem Circulation.

SECTION 5222.-Within six months from the date of the vote to go into liquidation, the association shall deposit with the Treasurer of the United States lawful money of the United States sufficient to redeem all its outstanding circulation. The Treasurer shall execute duplicate receipts for money thus deposited, and deliver one to the association and the other to the Comptroller of the Currency, stating the amount received by

him, and the purpose for which it has been received; and the money shall be paid into the Treasury of the United States, and placed to the credit of such association upon redemption

account.

If not otherwise determined, the vote to liquidate takes effect immediately, and the six months run from that date; but if the vote itself is that the liquidation shall take place at a future date, then that future date is the actual date on which the vote takes effect, and the six months run therefrom. Lawful money is United States gold coin, silver dollars, or legal-tender notes. The usual method is to make the deposit either directly or through a correspondent or agent with the Treasurer of the United States at Washington, or an Assistant Treasurer. When the deposit is made with an Assistant Treasurer, he issues certificate of deposit, which is sent to Washington. When the deposit is made, and the bank has paid to the United States Treasurer all amounts due for taxes on circulation and all amounts due for expenses of redeeming notes, its bonds on deposit will be surrendered to it. 102. Consolidating Banks need not Make Deposit. SECTION 5223.-An association which is in good faith winding up its business for the purpose of consolidating with another association shall not be required to deposit lawful money for its outstanding circulation; but its assets and liabilities shall be reported by the association with which it is in process. of consolidation.

Although this section still stands on the statute-book, it has been regarded as obsolete by a ruling of the Comptroller's office. That office has required liquidating banks, no matter for what purpose they are winding up, to deposit lawful money in all cases. The reasoning appears to be that this section was intended to enable banks to retain all their circulation at a time when the law fixed a limit, viz., $354,000,000, on the aggregate circulation, and when such circulation was apportioned according to wealth and population among the States and Territories. As there is now no limit on the circulation which may be issued in any State, there is not the same necessity of banks adopting the plan provided for in this section to retain in the consolidated bank the circulation issued to each of the two banks entering into the consolidation. There are many other considerations why this plan is not a good one, even if legal, at the present time; such as the rights of stockholders, &c.

The best plan, if two banks desire to consolidate, is to increase (see Section 5142) the capital of No. 1 to the extent necessary to equal the stock of both; put No. 2 in liquidation in the regular way, and sell out its assets to No. 1, paying for them in the increased stock to be distributed among stockholders of No. 2. The circulation of No. 2 being provided for by a deposit of lawful money, its bonds can be transferred to account of No. 1, which last will receive circulation thereon. transaction in regard to circulation need not occupy over ten days. money can doubtless be borrowed for the necessary time.

The whole The lawful

103. Reassignment of Bonds, Redemption of Notes, &c. SECTION 5224.-Whenever a sufficient deposit of lawful money to redeem the outstanding circulation of an association proposing to close its business has been made, the bonds deposited by the association to secure payment of its notes shall be reassigned to it, in the manner prescribed by section fiftyone hundred and sixty-two. And thereafter the association and its shareholders shall stand discharged from all liabilities upon the circulating notes, and those notes shall be redeemed at the Treasury of the United States. And if any such bank shall fail to make the deposit and take up its bonds for thirty days after the expiration of the time specified, the Comptroller of the Currency shall have power to sell the bonds pledged for the circulation of said bank, at public auction in New York city, and, after providing for the redemption and cancellation of said circulation, and the necessary expenses of the sale, to pay over any balance remaining to the bank or its legal representative.

See Act of February 18th, 1875, correcting Revised Statutes, page 97.

After deposit of lawful money has been made and bonds withdrawn and reassigned, the notes become a liability of the United States. It will be observed that this section grants thirty days beyond the six months mentioned in Section 5222 before the bonds can be sold by the Comptroller. The bank will probably, as a rule, find it more advantageous to dispose of its own bonds.

104. Destruction of Redeemed Notes.

SECTION 5225.-Whenever the Treasurer has redeemed any of the notes of an association which has commenced to close its affairs under the six [five] preceding sections, he shall cause the notes to be mutilated and charged to the redemption account of the association; and all notes so redeemed by the Treasurer shall, every three months, be certified to and burned in the manner prescribed in section fifty-one hundred and eighty-four.

See Act of June 23d, 1874, page 94.

Although the preceding section (5224) relieves the bank of all liability on account of its circulating notes, yet this section provides that every three months such of its notes as have been redeemed by the Treasurer of the United States shall be certified to and burned in the manner prescribed in Section 5184. Section 5184, as modified by custom, provides that redeemed and mutilated notes shall be destroyed in the presence of four persons, who must sign a certificate to that effect, a duplicate of which must be forwarded to the association.

SECTION 5226.—Whenever any National banking association fails to redeem in the lawful money of the United States any of its circulating notes, upon demand of payment duly made during the usual hours of business, at the office of such association, or at its designated place of redemption, the holder may cause the same to be protested, in one package, by a notary public, unless the president or cashier of the association whose notes are presented for payment, or the president or cashier of the association at the place at which they are redeemable, offers to waive demand and notice of the protest, and, in pursuance of such offer, makes, signs, and delivers to the party making such demand an admission in writing, stating the time of the demand, the amount demanded, and the fact of the nonpayment thereof. The notary public, on making such protest, or upon receiving such admission, shall forthwith forward such admission or notice of protest to the Comptroller of the Currency, retaining a copy thereof. If, however, satisfactory proof is produced to the notary public that the payment of the notes demanded is restrained by order of any court of competent jurisdiction, he shall not protest the same. When the holder of any notes causes more than one note or package to be protested on the same day, he shall not receive pay for more than one protest.

It is, perhaps, open to dispute whether a bank, after it has deposited lawful money to retire a portion of its circulation under the Act of June 20th, 1874, page 87, is obliged to redeem its notes at its own counter until the deposit of lawful money is exhausted by presentation of notes at the Treasury. In other words, it is held by some that while lawful money remains on deposit in the Treasury the bank might refuse to redeem a note presented at its own counter, and refer the presentor to the Treasury. However this may be, while Section 5226 is in force, a bank might place itself in a very disagreeable position, and perhaps injure its credit, by refusing to redeem any of its notes at its own counter, that is, as long as it continues a going bank.

106. Examination by Special Agent.

SECTION 5227.-On receiving notice that any National banking association has failed to redeem any of its circulating notes, as specified in the preceding section, the Comptroller of the Currency, with the concurrence of the Secretary of the Treasury, may appoint a special agent, of whose appointment im

mediate notice shall be given to such association, who shall immediately proceed to ascertain whether it has refused to pay its circulating notes in the lawful money of the United States, when demanded, and shall report to the Comptroller the fact so ascertained. If from such protest, and the report so made, the Comptroller is satisfied that such association has refused to pay its circulating notes and is in default, he shall, within thirty days after he has received notice of such failure, declare the bonds deposited by such association forfeited to the United States, and they shall thereupon be so forfeited.

The first penalty for duly-proved failure to redeem circulating notes is forfeiture of bonds deposited to secure the same. The penalty in this section seems to be aimed particularly at a bank which, while not insolvent in the sense of insufficient assets, had through mismanagement permitted its lawful money to run short. A bank might have many available assets, and even money in the shape of notes of other banks, and yet not have gold, silver dollars, or legal-tender notes to redeem its own notes. This section also had in view the accrediting of legal-tender notes by compelling the banks to keep them on hand.

107. Not to do Business after Protest of Notes.

SECTION 5228.—After a default on the part of an association to pay any of its circulating notes has been ascertained by the Comptroller, and notice thereof has been given by him to the association, it shall not be lawful for the association suffering the same to pay out any of its notes, discount any notes or bills, or otherwise prosecute the business of banking, except to receive and safely keep money belonging to it, and to deliver special deposits.

See Act of February 18th, 1875, correcting Revised Statutes, page 97.

The next penalty is stoppage of all business. The exceptions are the taking in of money in payment of notes and other obligations due the bank, and the delivery of special deposits.

As this section provides for the delivery of special deposits, the United States Supreme Court has decided that National banks have power to receive such deposits. (See National Bank v. Graham, 100 U. S., 699.) Doubtless a National bank has a right to establish a department within itself for the receipt of special deposits, and can thus secure to itself a part of the business of the National safe deposit companies. This is the proper course to pursue, making a charge for the accommodation which will insure proper safeguards, and at the same time separating the special deposit business from its regular business.

108. Redemption of Notes at Treasury.

SECTION 5229.—Immediately upon declaring the bonds of an association forfeited for non-payment of its notes, the Comp