In support of this decision we find in the Nationalbank Act itself internal evidence to the same effect. Section 5154, in providing for the conversion of State banks to National banking associations, makes an exception in the matter of the par value of the shares of such State banks, and another ex-' ception with regard to their holding stock in other banks as follows:

And any State bank which is a stockholder in any other bank, by authority of State laws, may continue to hold its stock, although either bank, or both, may be organized under and have accepted the provisions of this Title.

The only reasonable inference to be drawn from this special provision of the law, in favor of State banks converting to the National system, is that it was not intended that National banking associations-originally organized as such-should have the power to purchase and hold such stocks as investments.

And so with regard to the right of a bank to deal in bonds. We quote, as follows, from the decision of a Maryland court (Weckler v. First National Bank, 42 Md., 581):

To the usual attributes of banking, consisting of the right to issue notes for circulation, to discount commercial paper, and to receive deposits, this law adds the special power to

buy and sell exchange, coin, and bullion; but we look in vain for any grant of power to engage in the business charged in this declaration. It is not embraced in the power to discount and negotiate" promissory notes, drafts, bills of exchange, and other evidences of debt. The ordinary meaning of the term "to discount" is to take interest in advance, and in banking it is a mode of loaning money. It is the advance of money not due until some future period, less the interest which would be due thereon when payable. The power to negotiate" a bill or note is the power to indorse and deliver it to another, so that the right of action thereon shall pass to the indorsee or holder. No construction can be given to these terms, as used in this statute, so broad as to comprehend the authority to sell bonds for third parties on commission, or to engage in business of that character. The appropriate place for the grant of such a power would be in the clause conferring authority to "buy and sell;" but we find that limited to specific things, among which bonds are not mentioned, and upon the maxim expressio unius est exclusio alterius, and in view of the rule of interpretation of corporate powers before stated, the carrying on of such a business is prohibited to these associations. Nor can we perceive it is anywise necessary to the purpose of their existence, or in any sense incidental to the business they are empowered to conduct, that they should become bond-brokers, or be allowed to traffic in every species of obligation issued by the innumerable corporations, private or municipal, of the country. The more carefully they confine themselves to the legitimate business of banking, as defined in this law, the more effectually will they subserve the purposes of their creation. By a strict adherence to that they will best accommodate the commercial community, as well as protect their shareholders. Such is our construction of this statute, and it is supported by the

best considered authorities and the decided preponderance of judicial opinion in other States.

From these decisions it would appear that, while it is lawful for a bank to acquire stocks or bonds in good faith for the purpose of securing debts previously contracted, the power to "traffic" in them-that is, to buy them with a view of selling them at a profit— or to hold them as investments, is not among the incidental powers enumerated in section 5136, and is, therefore, a power which it has no legal right to exercise.

From the general tenor of the law, and the restrictions therein imposed, and the construction placed upon the law by numerous court decisions, it would appear that the framers of the law intended to prevent the banks, as far as possible, from getting their assets into any inconvertible form, and for this reason the restrictions as to real estate transactions are imposed.

If the investment of their resources in stocks or bonds, except to save debts previously contracted, would have the same effect of locking up their funds as do investments in real estate, and experience proves that frequently it does, then it would seem that such investments should be avoided by

all bank managers who desire to be on the safe side. of the law.

The accumulation of a large fund of surplus and undivided profits in a bank which it is unable to invest profitably in such loans and discounts as are permitted by law, make it apparently necessary for the bank to purchase stocks, bonds, and other se curities as investments for these "surplus funds" as they are sometimes termed, in order that the stockholders may realize dividends on these funds, and this will account mainly for the large holdings of some banks.

It would seem, however, that the same ends could be attained if these surplus funds or accumulated profits were distributed in dividends to the stockholders and invested by them in the same securities, either as individuals, or by trustees acting for them in groups or as a whole, and such a course would certainly remove any question as to the legality of such investments when made by the bank in its corporate capacity.

Purchasing Commercial Paper.

It is the custom of some banks to purchase commercial or business paper, either from brokers or from the actual owners of such paper without re

course to such brokers or owners, or in other words, without their guarantee or indorsement. Whether or not the power to do this is granted by law to a National bank, has never been decided by the United States Supreme Court, and the decisions rendered by various State courts have been both favorable and adverse to this view. (See "Morse on Banks and Banking," third edition, by Parsons, pars. 72 and 73.)

The whole question appears to hinge upon the proper definition of the word "negotiating" occurring in par. 7, section 5136. On this point, as on some others, the National-bank Act appears to contain some internal evidence as to the intended meaning of this term, for in section 5200 we find that "the discount of commercial or business paper actually owned by the person negotiating the same" is excepted from the limit as to amount which is applied to direct loans, or "money borrowed." As used in this section it is clear beyond question that the word "negotiating" means simply "offering for discount," and, as elsewhere suggested in this work, the evident reason for the exception of such discounted paper from the limit applying to "money borrowed," was that it was