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in District, and under certain conditions by U. S. Treasury, and by general public, holdings by latter not to exceed $25,000 each. Only stock owned by Member Banks can be voted; such stock not to be transferred nor hypothecated.

Six per cent. cumulative dividends shall be paid from earnings after expenses are met. Net earnings remaining, (including those for year ending December 31, 1918) shall be paid into surplus up to 100% of subscribed capital stock and thereafter 10% shall be paid into surplus, the remainder being paid to the U. S. as a franchise tax to be applied to gold reserve or to retiring outstanding U. S. bonds.

Must maintain reserves in gold or lawful money of at least 35% of its deposits, in addition to reserves against notes.

Duties and Powers Shall receive for deposit at par checks and drafts drawn on any of its depositors; and checks and drafts from other Federal Reserve Banks drawn on any bank in the system.

Shall accept deposits from United States and Member Banks of District, and also, for collection, maturing notes and bills.

May receive, solely for exchange or collection, from other Federal Reserve Banks, deposits of current funds in lawful money; National bank notes, or checks upon other Federal Reserve Banks; and checks, drafts, and maturing notes and bills payable within its district.

May receive deposits of net earnings of the War Finance Corporation and act as depositaries forand fiscal agents of the Corporation. (War Finance Corporation Act, of April 5, 1918.)

May receive, solely for exchange or collection, deposits of current funds in lawful money, National bank notes, Federal Reserve notes, checks and drafts, and maturing notes and bills, from any non-member bank or trust company which maintains with Federal Reserve Bank of its district a balance sufficient to offset the items in transit held for its account by Federal Reserve Bank.

May discount commercial notes, drafts and bills of exchange endorsed by Member Banks, such endorsement being deemed a waiver of protest exclusively as to the Member Bank making the endorsement, not including those drawn or issued to carry stocks or securities, except U. S. bonds; such paper not to run for more than 90 days,

of grace.

exclusive of days of grace, except agricultural and cattle paper in amount fixed by Federal Reserve Board, having à maturity not to exceed six months, exclusive of days

May discount acceptances bearing endorsement of one Member Bank based on exportation or importation of goods or domestic shipments accompanied by title documents or warehouse receipts, maturing in not more than three months' sight, exclusive of days of grace.

May discount, for Member State Banks, notes, drafts, or bills of exchange of any borrower who is liable to such bank in an amount not greater than 10% of its capital and surplus. Discount of bills of exchange drawn against actually existing value or of commercial or business

paper actually owned by the person negotiating the same is not considered as borrowed money.

May, on affirmative vote of five Federal Reserve Board members, discount for Member Banks until December 31, 1920, notes, drafts, or bills of exchange of any one borrower in excess of 10% of its capital and surplus but not in excess of 20% of Member Bank's capital and surplus. Discounts for any Member Bank in excess of the 10% provision shall be secured by not less than a like amount of U. S. bonds or notes, issued since April 24, 1917, or U. S. certificates of indebtedness.

May issue circulating notes under conditions provided in National Bank Act, except that issue is not limited to amount of capital.

Under regulations of Federal Reserve Board, may buy and sell, with or without endorsement of a Member Bank, cable transfers, bankers' acceptances and bills of exchange of kind named above.

May deal in gold coin and bullion.

May buy and sell U. S. bonds and notes; also State, county, district, or municipal notes, revenue bonds or warrants having not more than six months to run.

May buy from Member Banks and sell bills of exchange arising out of commercial transactions.

Shall establish branches in District under regulations approved by Federal Reserve Board.

May establish from time to time rates of discount, which, if approved by the Board, may be graduated or progressed on the basis of the amount of the advances discount accommodations extended to the borrowing bank.

May, with consent or by direction of Federal Reserve Board, open accounts and establish agencies in foreign countries to deal in two-name bills of exchange, having not more than 90 days to run, exclusive of days of grace, and may also open bank accounts for such foreign agents.

May open accounts with other Federal Reserve Banks for exchange purposes.

May, subject to review of Federal Reserve Board, discount for Member Banks their promissory notes for a period not exceeding 15 days secured by V. Š. bonds or notes, drafts, bills of exchange or bankers' acceptances eligible for rediscount or purchase by Federal Reserve Banks.

May, subject to maturity limitations of Federal Reserve Act and to regulations of the Board, discount direct obligations of Member Banks secured by War Finance Corporation bonds and rediscount eligible paper secured by such bonds and endorsed by a Member Bank; and, with the Board's approval, may use obligations or paper so acquired for any purpose for which authorized to use obligations or paper secured by bonds or notes of the United States not bearing the circulation privilege. Whenever Federal Reserve notes are issued against the security of such obligations or paper, the Board may make a special interest charge on such notes, which in its discretion, need not apply to other Federal Re serve notes which may be issued and outstanding. All provisions of the law not inconsistent with the above, in respect to the acquisition by a Federal Reserve Bank of obligations or paper secured by such bonds or notes of the United States, and in respect to Federal Reserve notes issued against the security of such obligations or paper, are extended, in so far as applicable, to the acquisition of obligations or paper secured by War Finance Corporation bonds and to Federal Reserve notes issued against the security of such obligations or paper. (War Finance Corporation Act of April 5, 1918.)

No government funds, public funds of the Philippine Islands, nor postal savings funds shall be deposited in any bank in the continental U. S. not belonging to this system.

Any Federal Reserve Bank or Agent may deposit gold with United States Treasurer or any Assistant Treasurer for credit to its or his account with Federal Reserve Board, subject to order of the Board and payable, on order of the Board, to any Federal Reserve Bank or Agent. Such deposits may be counted as part of reserve against either Federal Reserve notes or deposits.

Penalties imposed by R. Š. Section 5208 and R. S. Section 5209 are extended to Federal Reserve Banks.

Note Issue Federal Reserve notes, obligations of U. S., to be issued to Federal Reserve Banks at discretion of Federal Board; denominations $5, $10, $20, $50, $100, $500, $1,000, $5,000, $10,000; redeemable in gold or lawful money at any Federal Reserve Bank, and in gold at U. S. Treasury; secured by equal amount of paper accepted for rediscount or purchased, by gold or gold certificates, and, by first lien equally with circulating notes secured by V. Š. bonds, on all assets of issuing bank; receivable for all taxes, customs, and other public dues.

Federal Reserve Banks allowed to substitute collateral.

Gold or gold certificates held as collateral for Federal Reserve notes shall be counted as part of reserve required against reserve notes in actual circulation.

All Federal Reserve notes and all gold, gold certificates, and lawful money issued to or deposited with any Federal Reserve Agent shall be held, under regulations of Federal Reserve Board, in joint custody of himself and Federal Reserve Bank to which he is accredited.

Notes must be forwarded to issuing bank for credit or redemption when received at other Federal Reserve Banks, or to United States Treasurer to be retired.

Federal Reserve Banks shall carry 40% gold reserve against outstanding notes, of which not less than 5% of total amount issued, less amount of gold held by Federal Reserve Agent as collateral, shall be with United States Treasury. Gold deposited with United States Treasurer for redemption of notes shall be considered as collateral security held by Federal Reserve Agent.

Federal Reserve Banks may retire Federal Reserve notes by depositing them with the Federal Reserve Agent or the United States Treasury and receive back collateral deposited therefor; and shall not be required to maintain reserve or redemption fund against notes which have been retired. Retired notes shall not be reissued except upon compliance with conditions of an original issue.

When gold reserve held against reserve notes falls below 40%, Board shall establish graduated tax of not more than 1% per annum upon such deficiency until reserves fall to 3272% and when reserve falls below 3242%, a tax at the rate increasingly of not less than 192% per annum upon each 242% or fraction that such reserve falls below 3272% Reserve Banks shall pay the tax but add it to rates of interest and discount fixed by Board.

No Federal Reserve Bank shall pay out notes of another bank under penalty of 10% face of notes.

Federal Reserve Board has right to reject application for notes of any Federal Reserve Bank.

Notes presented for redemption at U. S. Treasury shall be paid and returned to Federal Reserve Bank. If presented otherwise than for redemption may be exchanged for gold and returned to issuing bank, or they may be returned for credit of U. S.

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