By-laws.

Directors; qualifications;

also have power to define and regulate by by-laws, not inconsistent with the provisions of this act, the manner in which its stock shall be trans ferred, its directors elected or appointed, its officers appointed, its property transferred, its general business conducted, and all the privileges granted by this act to associations organized under it shall be exercised and enjoyed; and its usual business shall be transacted at an office or banking house located in the place specified in its organization certificate.

SEC. 9. And be it further enacted, That the affairs of every association shall be managed by not less than five directors, one of whom shall one to be pres- be the president. Every director shall, during his whole term of service,

ident.

Oath.

Term of office of directors.

Elections.

'filled.

be a citizen of the United States; and at least three fourths of the directors shall have resided in the state, territory, or district in which such association is located one year next preceding their election as directors, and be residents of the same during their continuance in office. Each director shall own, in his own right, at least ten shares of the capital stock of the association of which he is a director. Each director, when appointed or elected, shall take an oath that he will, so far as the duty devolves on him, diligently and honestly administer the affairs of such association, and will not knowingly violate, or willingly permit to be violated, any of the provisions of this act, and that he is the bona fide owner, in his own right, of the number of shares of stock required by this act, subscribed by him, or standing in his name on the books of the association, and that the same is not hypothecated, or in any way pledged, as security for any loan or debt; which oath, subscribed by himself, and certified by the officer before whom it is taken, shall be immediately transmitted to the comptroller of the currency, and by him filed and preserved in his office.

SEC. 10. And be it further enacted, That the directors of any association first elected or appointed shall hold their places until their successors shall be elected and qualified. All subsequent elections shall be held annually on such day in the month of January as may be specified in the articles of association; and the directors so elected shall hold their places for one year, and until their successors are elected and qualified. But any director ceasing to be the owner of the requisite amount of stock, or having in any other manner become disqualified, shall thereby vacate

Vacancies, how his place. Any vacancy in the board shall be filled by appointment by the remaining directors, and any director so appointed shall hold his place until the next election. If from any cause an election of directors shall not be made at the time appointed, the association shall not for that cause be dissolved, but an election may be held on any subsequent day, thirty days' notice thereof in all cases having been given in a newspaper published in the city, town, or county in which the association is located; and if no newspaper is published in such city, town, or county, such notice shall be published in a newspaper published nearest thereto. If the articles of association do not fix the day on which the election shall be held, or if the election should not be held on the day fixed, the day for the election shall be designated by the board of directors in their by-laws, or otherwise: Provided, That if the directors fail to fix the day, as aforesaid, shareholders representing two thirds of the shares may.

Voting and

proxies.

Capital stock to be divided into shares.

SEC. 11. And be it further enacted, That in all elections of directors, and in deciding all questions at meetings of shareholders, each shareholder shall be entitled to one vote on each share of stock held by him. Shareholders may vote by proxies duly authorized in writing; but no officer, clerk, teller, or book-keeper of such association shall act as proxy; and no shareholder whose liability is past due and unpaid shall be allowed to vote.

SEC. 12. And be it further enacted, That the capital stock of any association formed under this act shall be divided into shares of one hundred dollars each, and be deemed personal property and transferable on the

not to be im

books of the association in such manner as may be prescribed in the bylaws or articles of association; and every person becoming a shareholder by such transfer shall, in proportion to his shares, succeed to all the rights Transfer. and liabilities of the prior holder of such shares, and no change shall Rights of exbe made in the articles of association by which the rights, remedies, or isting creditors security of the existing creditors of the association shall be impaired. paire1. The shareholders of each association formed under the provisions of this act, and of each existing bank or banking association that may accept the provisions of this act, shall be held individually responsible, equally and Individual liaratably, and not one for another, for all contracts, debts, and engagements bility. of such association to the extent of the amount of their stock therein at the par value thereof, in addition to the amount invested in such shares; except that shareholders of any banking association now existing under state laws, having not less than five millions of dollars of capital actually paid in, and a surplus of twenty per centum on hand, both to be determined by the comptroller of the currency, shall be liable only to the amount invested in their shares; and such surplus of twenty per centum shall be kept undiminished, and be in addition to the surplus provided for in this act; and if at any time there shall be a deficiency in said surplus of twenty per centum, the said banking association shall not pay any dividends to its shareholders until such deficiency shall be made good; and in case of such deficiency, the comptroller of the currency may compel said banking association to close its business and wind up its affairs under the provisions of this act. And the comptroller shall have authority to with- When comphold from an association his certificate authorizing the commencement of troller may withbusiness, whenever he shall have reason to suppose that the shareholders thereof have formed the same for any other than the legitimate objects contemplated by this act.

hold certificate.

Increase of capital stock.

SEC. 13. And be it further enacted, That it shall be lawful for any association formed under this act, by its articles of association, to provide for an increase of its capital from time to time, as may be deemed expedient, subject to the limitations of this act: Provided, That the maximum of such Maximum. increase in the articles of association shall be determined by the comptroller of the currency; and no increase of capital shall be valid until the whole amount of such increase shall be paid in, and notice thereof shall have been transmitted to the comptroller of the currency, and his certificate obtained specifying the amount of such increase of capital stock, with his approval thereof, and that it has been duly paid in as part of the capital of such association. And every association shall have power, by the vote of shareholders owning two thirds of its capital stock, to reduce the capital of such association to any sum not below the amount required by this act, in the formation of associations: Provided, That by no such reduction shall its capital be brought below the amount required by this act for its outstanding circulation, nor shall any such reduction be made until the amount of the proposed reduction has been reported to the comptroller of the currency and his approval thereof obtained.

Minimum.

SEC. 14. And be it further enacted, That at least fifty per centum of Amount to be the capital stock of every association shall be paid in before it shall be paid in before commencing authorized to commence business; and the remainder of the capital stock business. of such association shall be paid in instalments of at least ten per centum Remainder, each on the whole amount of the capital as frequently as one instalment when to be paid. at the end of each succeeding month from the time it shall be authorized by the comptroller to commence business; and the payment of each instalment shall be certified to the comptroller, under oath, by the president or cashier of the association.

SEC. 15. And be it further enacted, That if any shareholder, or his as- Proceedings, signee, shall fail to pay any instalment on the stock when the same is re- if shareholder fails to pay inquired by the foregoing section to be paid, the directors of such associa- stalments. tion may sell the stock of such delinquent shareholder at public auction,

Stock of delin- having given three weeks' previous notice thereof in a newspaper pubquent shareholders to be sold.

United States registered bonds

lished and of general circulation in the city or county where the association is located, and if no newspaper is published in said city or county, then in a newspaper published nearest thereto, to any person who will pay the highest price therefor, and not less than the amount then due thereon, with the expenses of advertisement and sale; and the excess, if any, shall be paid to the delinquent shareholder. If no bidder can be found who will pay for such stock the amount due thereon to the association, and the cost of advertisement and sale, the amount previously paid shall be forfeited to the association, and such stock shall be sold as the directors may order, within six months from the time of such forfeiture, and if not sold it shall be cancelled and deducted from the capital stock of the association; and if such cancellation and reduction shall reduce the capital of the association below the minimum of capital required by this act, the capital stock shall, within thirty days from the date of such cancellation, be increased to the requirements of the act; in default of which a receiver may be appointed to close up the business of the association according to the provisions of the fiftieth section of this act.

SEC. 16. And be it further enacted, That every association, after having to be deposited complied with the provisions of this act, preliminary to the commencewith treasurer to ment of banking business under its provisions, and before it shall be an amount equal authorized to commence business, shall transfer and deliver to the treascapital stock.

to one third of the

increased;

urer of the United States any United States registered bonds bearing interest to an amount not less than thirty thousand dollars nor less than one third of the capital stock paid in, which bonds shall be deposited with the treasurer of the United States and by him safely kept in his office until the same shall be otherwise disposed of, in pursuance of the provisions of this act; and the Secretary of the Treasury is hereby authorized to receive 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; and the deposit of bonds shall be, by every association, increased as its capital may be paid up or in

Deposit to be creased, 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: Provided, That nothing in may be dimin- this section shall prevent an association that may desire to reduce its

ished.

capital or to close up its business and dissolve its organization from taking up its bonds upon returning to the comptroller its circulating notes in the proportion hereinafter named in this act, nor from taking up any excess of bonds beyond one third of its capital stock and upon which no circulating notes have been delivered.

Comptroller to SEC. 17. And be it further enacted, That whenever a certificate shall examine and determine if associ- have been transmitted to the comptroller of the currency, as provided in

ation can com

mence business.

this act, and the association transmitting the same shall notify the comptroller that at least fifty per centum of its capital stock has been paid in as aforesaid, and that such association has complied with all the provisions of this act as required to be complied with before such association shall be authorized to commence the business of banking, the comptroller shall examine into the condition of such association, ascertain especially the amount of money paid in on account of its capital, the name and place of residence of each of the directors of such association, and the amount of the capital stock of which each is the bona fide owner, and generally whether such association has complied with all the requirements of this act to entitle it to engage in the business of banking; and shall cause to be made and attested by the oaths of a majority of the directors and by the president or cashier of such association, a statement of all the facts necessary to enable the comptroller to determine whether such association is lawfully entitled to commence the business of banking under this act.

SEC. 18. And be it further enacted, That if, upon a careful examination

tion is found en

of the facts so reported, and of any other facts which may come to the When associaknowledge of the comptroller, whether by means of a special commission titled to comappointed by him for the purpose of inquiring into the condition of such mence business, association, or otherwise, it shall appear that such association is lawfully comptroller to give certificate. entitled to commence the business of banking, the comptroller shall give to such association a certificate, under his hand and official seal, that such association has complied with all the provisions of this act required to be complied with before being entitled to commence the business of banking under it, and that such association is authorized to commence said business accordingly; and it shall be the duty of the association to cause said certificate to be published in some newspaper published in the city or county where the association is located for at least sixty days next after be published. the issuing thereof: Provided, That if no newspaper is published in such city or county the certificate shall be published in a newspaper published nearest thereto.

Certificate to

How executed.

SEC. 19. And be it further enacted, That all transfers of United States Transfers of bonds which shall be made by any association under the provisions of bonds by association, to be made this act shall be made to the treasurer of the United States in trust for to the treasurer the association, with a memorandum written or printed on each bond, and in trust. signed by the cashier or some other officer of the association making the deposit, a receipt therefor to be given to said association, or by the comptroller of the currency, or by a clerk appointed by him for that purpose, stating that it is held in trust for the association on whose behalf such 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 bonds by the treasurer shall be deemed valid or of binding force and effect unless countersigned by the comptroller of the currency. It shall be the duty of the comptroller of the currency to keep in his office a book in which shall be entered the name of every association from whose accounts such transfer of bonds is keep transfer book, &. made by the treasurer, and the name of the party to whom such transfer is made; and the par value of the bonds so transferred shall be entered therein; and it shall be the duty of the comptroller, immediately upon countersigning and entering the same, to advise by mail the association from whose account such transfer was made of the kind and numerical designation of the bonds and the amount thereof so transferred.

Comptroller to

entered.

SEC. 20. And be it further enacted, That it shall be the duty of the Transfers to be comptroller of the currency to countersign and enter in the book, in the countersigned manner aforesaid, every transfer or assignment of any bonds held by the treasurer presented for his signature; and the comptroller shall have at all times during office hours access to the books of the treasurer, for the Books to be purpose of ascertaining the correctness of the transfer or assignment pre- accessible. sented to him to countersign; and the treasurer shall have the like access to the book above mentioned, kept by the comptroller, 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.

after transfer, may receive circulating notes.

1865, ch. 82. Post, p. 498.,

SEC. 21. And be it further enacted, That upon the transfer and de- Associations, livery of bonds to the treasurer, as provided in the foregoing section, the association making the same shall be entitled to receive from the comptroller of the currency circulating notes of different denominations, in blank, registered and countersigned as hereinafter provided, equal in amount to ninety per centum of the current market value of the United States bonds so transferred and delivered, but not exceeding ninety per centum of the amount of said bonds at the par value thereof, if bearing amount. interest at a rate not less than five per centum per annum; and at no time shall the total amount of such notes, issued to any such association, exceed the amount at such time actually paid in of its capital stock.

SEC. 22. And be it further enacted, That the entire amount of notes

Limit of

Entire circula- for circulation to be issued under this act shall not exceed three hundred tion not to exceed millions of dollars. In order to furnish suitable notes for circulation, the $300,000,000.

comptroller of the currency is hereby authorized and required, under the Comptroller to direction of the Secretary of the Treasury, to cause plates and dies to be prepare the notes. engraved, in the best manner to guard against counterfeiting and fraudu

Notes to express what.

lent alterations, and to have printed therefrom, and numbered, such quanDenominations. tity of circulating notes, in blank, of the denominations of one dollar, two dollars, three dollars, five dollars, ten dollars, twenty dollars, fifty dollars, one hundred dollars, five hundred dollars, and one thousand dollars, as may be required to supply, under this act, the associations entitled to receive the same; which notes shall express upon their face that they are secured by United States bonds, deposited with the treasurer of the United States by the written or engraved signatures of the treasurer and register, and by the imprint of the seal of the treasury; and shall also express upon their face the promise of the association receiving the same to pay on demand, attested by the signatures of the president or vicepresident and cashier. And the said notes shall bear such devices and such other statements, and shall be in such form, as the Secretary of the Treasury shall, by regulation, direct: Provided, That not more than one sixth part of the notes furnished to an association shall be of a less denomination than five dollars, and that after specie payments shall be resumed no association shall be furnished with notes of a less denomination than five dollars.

$5.

Devices.

Notes under

When notes may be circulated as money;

to be received for all dues, except, &c.

SEC. 23. And be it further enacted, That after any such association shall have caused its promise to pay such notes on demand to be signed by the president or vice-president and cashier thereof, in such manner as to make them obligatory promissory notes, payable on demand, at its place of business, such association is hereby authorized to issue and circulate the same as money; and the same shall be received at par in all parts of the United States in payment of taxes, excises, public lands, and all other dues to the United States, except for duties on imports; and also for all salaries and other debts and demands owing by the United States to individuals, corporations, and associations within the United States, except interest on the public debt, and in redemption of the national currency. And no

Post notes, &c., such association shall issue post notes or any other notes to circulate as money than such as are authorized by the foregoing provisions of this

not to be issued.

Worn-out and

act.

SEC. 24. And be it further enacted, That it shall be the duty of the mutilated notes. comptroller of the currency to receive worn-out or mutilated circulating notes issued by any such banking association, and also, on due proof of the destruction of any such circulating notes, to deliver in place thereof to such association other blank circulating notes to an equal amount. And such worn-out or mutilated notes, after a memorandum shall have been entered in the proper books, in accordance with such regulations as may be established by the comptroller, as well as all circulating notes which shall have been paid or surrendered to be cancelled, shall be burned to ashes in presence of four persons, one to be appointed by the Secretary of the Treasury, one by the comptroller of the currency, one by the treasurer of the United States, and one by the association, under such regulations as the Secretary of the Treasury may prescribe. And a certificate of such burning, signed by the parties so appointed, shall be made in the books of the comptroller, and a duplicate thereof forwarded to the association whose notes are thus cancelled.

Associations to

SEC. 25. And be it further enacted, That it shall be the duty of every examine annual- banking association having bonds deposited in the office of the treasurer ly its bonds deposited, and of the United States, once or oftener in each fiscal year, and at such time make certificate. or times during the ordinary business hours as said officer or officers may

select, to examine and compare the bonds so pledged with the books of the comptroller and the accounts of the association, and, if found correct,