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X-566 Ex -O fficio m em bers W. P. G. HARDING. GOVERNOR PAUL M. WARBURG. VICE GOVERNOR FREDERIC A. DELANO ADOLPH C. MILLER CHARLES S. HAMLIN WILLIAM G. McADOO SECRETARY OF THE TREASURY CHAIRMAN JOHN SKELTON WILLIAMS Co m p t r o l l e r o f th e c u r r e n c y F E D E R A L R E S E R V E B O A R D H. PARKER WILLIS. SECRETARY SHERMAN P. ALLE N . ASST. SECRETARY an d f is c a l WASHINGTON Ag e n t ADDRESS REPLY TO FEDERAL RESERVE BOARD Decomber 13, 1917. Dear Sir: Section H of the Federal Reserve Act provides in part as follows.: "After all .nedessary expenses of a Federal Reserve Bank have been paid or provided for, the stockholders shall be entitled to deceive an annual dividend of six, per dentum on the paid-in capital stock, which dividend shall be cumulative* Aftei* the aforesaid dividend claims have been fully mei> all the net earnings shall be paid to the United States- as a franchise tax, .except that onehalf of such net earning? shall be paid into a surplus fund until, it shall amount to forty per centum of the paid-in capital stock of such bank." • Inasmuch as on December 31, your bank will have remaining out of undivided profits, after charging off all current expenses, and »■ . *i . providing a reserve for depreciation, a sum UUffieieiit to pay all ac cumulated dividends on capital stock, it will become necessary for your bank to make a payment to the United States as a franchise tax, in an amount equal to one-half of the net earnings in excess of the required dividend, the other half of such excess to be paid into a surplus fund. •It is suggested^ therefore, that after the necessary entries have been made upon the.books Of your bank,that the Federal Reserve Board be authorised to transfer from your account in the Gold Settlement Fund, to the Treasurer of the United States, an amount equal to one-half of X-566 - 2 - the net earnings in excess of all accumulated, dividends, the regain ing half of the excess earnings to be carried to a surplus fund in a ledger account to be opened for that purpose. . It is desired that pay ments to the Treasurer be na.de on the sane day, on behalf of all the Federal Reserve Banks which have excess earnings, and that any announce ments made nay be simultaneous. The Board will telegraph your bank when this transfer from the Gold Settlement Fund to the Treasurer of the United States is cade, and you are requested to make no public announcement until you receive the Board's telegraphic advice. Very truly yours, Governor.
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