waukee, New Orleans, New York, Philadelphia, Pittsburgh, St. Louis, San Francisco and Washington, shall at all times have on hand, in lawful money of the United States, an amount equal to at least twenty-five per centum (25%) of the aggregate amount of its deposits.

Every national banking association other than those in the cities mentioned must at all times have on hand, in lawful money of the United States, an amount equal to at least fifteen per centum (15%) of the aggregate amount of its deposits.

53. Formerly national banks were required to keep reserve against circulating notes of the bank outstanding, but this requirement was abolished by an amendment of the law in 1874. Each national bank is required to keep on deposit with the Treasurer of the United States a fund equal to 5% of circulating notes of the bank, and the amount so deposited with the Treasurer, can be counted, not exceeding 5% of circulation, as part of the 25% or 15%, respectively, which the banks must carry as reserve.

54. Section 14 of the Act of Congress of May 30, 1908, enacts that no reserve need be carried as against “deposits of public moneys by the United States in designated depositories." The banks must furnish security for the moneys of the United States thus received and as the money is deposited by the Treasury Department to place it in circulation where required to meet demands of business, to compel keeping part of it on hand in cash would defeat the object for which the money was placed in the banks.

55. Reserve Cities-It is convenient for all banks to have correspondents in the larger cities, to facilitate the transfer of funds and for other beneficial reasons. All national banks, therefore, keep part of their funds in

national banks in the cities heretofore mentioned. These cities are known as "Reserve Cities." See Sec. 52. Of the 15% which every national banking association is required to keep in lawful money reserve, three-fifths (9% of its deposits) may consist of balances due the bank from national banks in Reserve Cities. New York, Chicago and St. Louis are "Central Reserve Cities." Of the 25% reserve required to be kept by national banks in Reserve Cities; i. e., Albany, Baltimore, Boston, Cincinnati, Cleveland, Detroit, Louisville, Milwaukee, New Orleans, Philadelphia, Pittsburg, San Francisco and Washington, one-half may be kept in cash deposits in national banks in "Central Reserve Cities," New York, Chicago and St. Louis.

56. Reserve Agents-Each bank must select the bank or banks in the reserve city wherein it desires to keep its reserve and this reserve city bank, called a "Reserve Agent," must be approved by the Comptroller of the Currency. Form of making application for appointment of, or change in, a reserve agent will be furnished by the Comptroller of the Currency. All national banks in "Central Reserve Cities" must keep on hand in lawful money the full amount of 25% required to be kept by them.

57. What May be Counted as Reserve "Clearing House Certificates, representing specie or lawful money specially deposited for the purpose (i. e. for the purpose of receiving the clearing house certificate), of any clearing house association, shall also be deemed to be lawful money in the possession of any association belonging to such clearing house, holding and owning such certificate." Sec. 5192 Revised Statutes U. S.

It has been noted that part of the "Lawful Money Reserve" may consist of balances due from reserve

agents; that clearing house certificates issued for money deposited can be counted as reserve, as can the five per cent. redemption fund with the Treasurer of the United States. Otherwise the "Lawful money reserve" must be in gold coin, gold certificates, gold certificates payable to order, legal tender notes, silver dollars, silver certificates and fractional silver coin. Nickels and cents cannot be counted, nor can national bank notes.

CHAPTER IV.

PAYMENT OF DEPOSITS.

58. Contract Existing Between Bank and Depositor.As has been seen, the relation of the bank to the depositor is that of debtor to creditor, and that there exists between the bank and the depositor a contract.

Unless there has been some other agreement or understanding, the contract existing between the bank and a general depositor is that the bank, having received deposits, will honor the checks or orders of the depositor on presentation, if there is a balance to his credit large enough to meet each order as presented, provided the bank has no right of lien or set-off against the amount.

Sometimes the pass book given the depositor contains the by-laws of the bank relating to the receipt of deposits and their payment, and so far as these rules or by-laws are reasonable and not contrary to law the depositor is bound by them. No secret arrangement between the depositor and the bank can be shown to establish a right to preference by one depositor over others, in case of failure of the bank. Of course, there must be an agreement, express or implied, before the relationship of bank and depositor can arise, and unless one who owns the money consents to its being deposited the relation does not exist.

59. Before there can be a binding contract of any kind. there must be an agreement between two or more parties. The agreement may be presumed from the actions of the parties or it may be expressed by spoken words or by written instruments. A depositor may make an

express agreement with the bank, in which case that agreement will control the relationship. By his action in simply opening an account in bank, or depositing money to the credit of an account, we saw in the first chapter of this work, that the contract of depositor and depositee is established. It is an implied contract. The law makes the contract which the conduct of the parties shows they intend shall subsist between them. But to make an agreement, either express or implied, a binding contract the parties who make the agreement must be competent, in law, to contract. In most States now a married woman can contract the same as if she were unmarried. An infant is not competent to bind himself by a contract except for necessaries, but the disability is for the benefit of the infant and the other party, if an adult, is bound, while the infant can avoid if he chooses. Where the infant is not taken advantage of, and he has received all that is due him under a transaction which has been for his benefit, the other party cannot be further held. In most of the States the law provides that deposits, when made by an infant in savings banks, can be repaid to the infant and the receipt of such infant will discharge the bank. In some States savings accounts in savings or State banks can be thus treated. Under general laws where an infant owns property he has no right to transfer or deal with that property, but a guardian must be appointed to manage his estate until he arrives at the age of 21. It is believed that where the State law provides that an infant may control his savings deposited in a savings bank, the state or national banks in such State would be safe in paying out to an infant money deposited by himself as small savings, as the banks cannot deny the right of the infant to it where the money was taken from him; but where the money has been deposited by another for the infant, or the amount