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61ST CONGRESS }

2d Session

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H 1 T O

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J D O C U M E N T S82

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Part

2

NATIONAL MONETARY COMMISSION

Supplement
to

The Origin of the National
Banking System

BY

ANDREW M A C F A R L A N D

DAVIS

Washington ; Government Printing Office : 1911







Origin of National

Banking

APPENDIX

System

D.

THE MOORHEAD BILL.
On the 20th of January, 1863, Mr. Moorhead of Pennsylvania introduced in the House of Representatives a
bill " To provide a national currency secured by a pledge of
Ujiited States stock, and to provide for the circulation and
redemption thereof." Mr. Moorhead was neither a financier nor a lawyer, hence it may be inferred that the bill was
introduced at the suggestion of some other person, for the
purpose of securing a foothold in the legislative controversy then in progress. Its introduction does not, however, seem to have had the slightest influence upon the
progress of events. The history of the bill is to be found
in full in the entries in the House Journal and the Congressional Globe, which record the action of the House on
that day. The bill was ordered to be printed and was
referred to the Committee on Ways and Means. After
which it was not heard of. No copy of the bill is to be
found in the House document room, but it chances that
one has been preserved in the collection in the document
room of the Senate. From that source we are able to procure a copy of House bill No. 693, Thirty-seventh Congress,
third session, which, even though it was stillborn, is entitled to recognition in an attempt to place on record the
story of the development of the present national banking
act. As it has not heretofore been reprinted it is now
offered as an appendix to Senate Document No. 582,
Sixty-first Congress, second session.
84013°—S. D o c . 582, 61-2, p t 2




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The reference of the Moorhead bill to the committee
proved to be fatal even to the discussion of its merits, for
when the bill known as the Sherman Act was sent down
to the House after its passage in the Senate, its consideration by the House was secured without committee reference, with the result that it was put through the several
parliamentary stages requisite as a preliminary to its
passage and finally passed without suffering delay from
reference, all of which took place while the Moorhead bill
was slumbering in the hands of the committee.
The Hooper bill was already before the House and a
comparison of that bill with the Moorhead bill will show
that the provisions of the first four sections are the same.
The fifth section, however, in the Moorhead bill, is intrusive and discloses the probable purpose of the introduction
of the bill. It provides that any bank having a capital of
not less than $100,000, chartered in any State or Territory
or in the District of Columbia may deposit United States
stock with the United States Treasurer, and receive the
national currency authorized by the act, to the extent of
80 per cent of the market value of the stock deposited.
Provision is made in this section for the reception by the
banks of the currency to be furnished by the Government
and for the forfeiture of the pledged securities of any bank
receiving the currency, which should fail to redeem the
same on presentation.
The provisions of the Hooper bill relative to the reception by associations of the government currency; the
method of establishing a failure to redeem, and the manner in which the forfeiture should be imposed are necessarily voluminous. The person who drafted section 5 of




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the Moorhead bill, in order to save unnecessary repetition,
covered the ground of incorporating these various sections
into section 5 by references to the other sections by number, describing them as sections "of this act. ,, An examination of the sections in the Moorhead bill bearing the
designated numbers shows that they do not treat of the
subjects referred to. If we test the Hooper bill to see if the
references by section might perhaps fit in with that bill, we
meet with the same result; but when we make the same
test with the Sherman Act, we find that the references
are appropriate. It would be natural to conclude that
whoever drafted this section had the Sherman Act before
him and made his references to the numbered sections in
that act which deal with the respective subjects under
consideration. It would not seem, however, as if such
could have been the case. The Moorhead bill was introduced in the House on the 20th and the Sherman Act in
the Senate on the 26th of January. Had the case been
reversed and numerical references in the Sherman Act been
found to correspond with the sections in the Moorhead
bill, the conclusion would have been irresistible that use
had been made of that bill by the person who drafted the
Sherman Act. It is evident that whoever performed that
service discovered the fact that there was likely to be
trouble in these numerical cross references, and skillfully
avoided them throughout the act. On the other hand, an
examination of the Hooper bill shows that the section references in that bill are all wrong. This also is the case
with the Moorhead bill with a single exception.
The sixth and seventh sections of the Moorhead bill
correspond practically with the fifth and sixth in the




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Hooper bill, but the eighth section of the former is made
up of a consolidation of the ninth and tenth sections of
the latter, the seventh and eighth not being reproduced.
Through omissions and changes the consolidated section
differs considerably from the originals, it being made a
prerequisite for an association before it can receive its
certificate to deposit with the Treasurer 50 per cent of
the amount of its capital stock in United States 6 per cent
bonds.
Sections 9, 10, 11, and 12 of the Moorhead bill correspond practically with sections n , 12, 13, and 14 of the
Hooper bill. No increase of stock, however, was to be
valid under the Moorhead bill until the whole amount of
this increase should have been deposited with the Treasurer of the United States in 6 per cent United States stocks.
The fifteenth section of the Hooper bill is dropped entirely from the Moorhead bill, but in place of it the eighth
section of that bill called for a notification to the Comptroller of Currency that at least 50 per cent of the whole
amount of the proposed capital stock of the association
which was seeking to organize under the act had been
deposited with the Treasurer of the United States " in and
of United States stocks, or their equivalent in United States
stocks/' for the purpose and with the views of obtaining
therefor circulating notes.
Sections 13 to 31, inclusive, of the Moorhead bill correspond closely with sections 16 to 34 of the Hooper bill,
with the exception that section 23 is greatly curtailed.
Sections 35 to 55 of the Hooper bill, which relate in a
general way to the management of the associations, prescribe what they may do, impose certain restraints upon




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their actions, and define the responsibilities and liabilities
of their officers, are omitted in the Moorhead bill, with
the exception that section 54 of the Hooper bill, which
authorizes the Secretary to employ associations as depositaries, is to be found in section 32 of the Moorhead bill in
a modified form.
Sections 33 to 37, inclusive, of the Moorhead bill correspond with sections 56 to 60 of the Hooper bill. Section
61 of the Hooper bill is omitted, while section 38 of the
Moorhead bill is a mere reservation of the right to amend
at any time.




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37TH CONGRESS,]
3RD SESSION.

r

J

Commission

H. R. 693.

I N THE HOUSE OF REPRESENTATIVES.
January 20, 1863.

Mr.

MOORHEAD,

on leave, introduced the following bill:

To provide a national currency, secured by a pledge of United States stock,
and to provide for the circulation and redemption thereof.

Be it enacted by the Senate and House of Representatives
of the United States of America in Congress assembled,
That there shall be established in the Treasury Department a separate bureau, which shall be charged with the
execution of this act and all laws that may be passed
by Congress respecting the issue and regulation of a
national currency secured by a pledge of United States
stock. The chief officer of said bureau shall be denominated the Comptroller of the Currency, and shall be
under the general direction of the Secretary of the Treasury. He shall be appointed by the President, by and
with the advice and consent of the Senate, and shall
hold his office for the term of five years unless sooner
removed by the President, by and with the advice and
consent of the Senate; he shall receive an annual salary
of five thousand dollars; he shall appoint a competent
deputy, whose salary shall be two thousand five hundred dollars, and who shall possess the power and perform the duties attached by law to the office of said
Comptroller during a vacancy in such office and during
his absence or inability; he shall employ, from time to




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time, the necessary clerks to discharge such duties as he
shall assign to them, whose salaries shall not exceed
sixteen hundred dollars each. Within fifteen days from
the time of notice of his appointment the said Comptroller
shall take and subscribe the oath of office prescribed
by the Constitution and laws of the United States; and
he shall give to the United States a bond in the penalty
of one hundred thousand dollars, with two responsible
freeholders as sureties, to be approved by the Secretary
of the Treasury, conditioned for the faithful performance
of the duties of his office; and he shall not, either directly
or indirectly, be interested in any association issuing
national currency under the provisions of this act. The
Deputy Comptroller so appointed shall also take the
oath of office prescribed by the Constitution and laws
of the United States, and shall give a bond in the penalty
of fifty thousand dollars.
SEC. 2. And be it further enacted, That the said Comptroller of the Currency, with the approval of the Secretary
of the Treasury, shall devise a seal with suitable inscriptions for his office, a description of which, with a certificate of approval by the Secretary of the Treasury, shall
be filed in the office of the Secretary of State with an
impression thereof, which shall thereupon be and become
the seal of office of the Comptroller of the Currency, and
the same may be renewed whenever necessary. Every
certificate, assignment, and conveyance executed by
the said Comptroller, in pursuance of any authority
conferred on him by law, and sealed with his said seal of
office, shall be received in evidence in all places and
courts whatsoever; and all copies of papers in the office




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of the said Comptroller, certified by him and authenticated by the said seal, shall in all cases be evidence
equally and in like manner as the original. An impression of such seal directly on the paper shall be as valid
as if made on wax or wafer.
SEC. 3. And be it further enacted. That there shall be
assigned to said Comptroller of the Currency by the
Secretary of the Treasury suitable rooms in the Treasury
building for conducting the business of the Currency
Bureau, in which shall be safe and secure fire-proof
vaults, in which it shall be the duty of said Comptroller
#
to deposit and safely keep all the books, papers, plates,
and other valuable things belonging to his department;
and the said Comptroller shall from time to time furnish
the necessary furniture, stationery, fuel, lights, and
other proper conveniences for the transaction of the said
business, the expense of which shall be paid out of any
money in the treasury not otherwise appropriated.
SEC. 4. And be it further enacted, That the term
"United States stock,'' as used in this act, shall be construed to mean all coupon and registered bonds now
issued, or that may hereafter be issued, on the faith of
the United States by the Secretary of the Treasury in
pursuance of law.
SEC. 5. And be it further enacted, That any chartered
bank or banking association in good credit, whose capital
is not less than one hundred thousand dollars, organized
under the law of any State or Territory, or in the District
of Columbia, wishing to avail itself of the advantages of
the national currency authorized to be issued by this act,
shall present to the Comptroller of the Currency an author-




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ized application therefor, verified by its seal and the
signature of its president and cashier, duly acknowledged
before a judge of some court of record or a notary public,
the acknowledgment thereof to be certified under the
seal of such court or notary; and the said application shall
state the name of the said bank or banking association,
the place where its office of discount, deposit, and issue is
located, designating the State, city, town, or village, the
amount of the capital stock, the number of shares into
which the same is divided, the par value of each share, the
time when its charter will expire; and a declaration that
the said certificate is made to enable such bank or banking
association to avail itself of the advantages of this act, so
far as to receive from the Comptroller of the Currency such
an amount of the national currency authorized to be
issued by this act, in the denominations and according to
the forms prescribed by the eighteenth section of this act,
as shall be equal in amount to eighty per centum of the
market price not over the par value of the United States
stock, bearing interest, which pursuant to the provisions
of this act, the said bank, making the said declaration,
may preliminary to its receiving such notes, transfer and
deliver to, and deposit with, the Treasurer of the United
States; which United States stock so transferred as security for notes issued as aforesaid, shall be held by the Treasurer of the United States, pursuant to the provisions of
the twenty-first section of this act. And further, that if
any such bank or banking association shall, at any time,
fail to redeem, in lawful money of the United States, any
of the circulating notes delivered to it as aforesaid, when
payment thereof shall be lawfully demanded, during the
84013 0 —S. Doc. 582, p t 2




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usual hours of business, at the office of such bank or
banking association, (the fact of such refusal to pay such
notes to be ascertained pursuant to the twenty-fifth
section of this act,) the stock of the United States, so
pledged, shall be forfeited to, and disposed of, by the
United States, according to the provisions of the twentysixth section of this act; and further, that the said chartered bank or banking association shall be entitled to no
advantages, or be subject to any provisions of this act
other than such as are provided for in this section and the
other sections of this act referred to as aforesaid.
SEC. 6. And be it further enacted, That associations for
carrying on the business of banking many be formed by
any number of persons, not less in any case than five.
SEC. 7. And be it further enacted, That persons uniting
to form such an association shall, under their hands and
seals, make a certificate which shall specify—
First. The name assumed by such association.
Second. The place where the operations of discount and
deposit of such association are to be carried on; designating the State, Territory, or District, and also the particular
city, town, or village.
Third. The amount of the capital stock of such association, and the number of shares into which the same shall
be divided; which capital stock shall not be less than fifty
thousand dollars.
Fourth. The names and places of residence of the shareholders, and the number of shares held by each of them.
Fifth. The time when such association shall commence,
and when the same shall terminate.




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Sixth. A declaration that said certificate is made to
enable such persons to avail themselves of the advantages
of this act.
Said certificate shall be acknowledged before a judge of
some court of record or a notary public, and the acknowledgement thereof certified under the seal of such court or
notary, and shall be transmitted, together with a copy of
the articles of association which shall have been adopted,
to the Comptroller of the Currency, who shall record and
carefully preserve the same in his office. Copies of such
certificate, duly certified by the said Comptroller, and
authenticated by his seal of office, shall be legal and sufficient evidence in all courts and places within the United
States, or the jurisdiction of the government thereof, of
the existence of such association, and of every other
matter or thing which could be proved by the production
of the original certificate.
SEC. 8. And be it further enacted, That whenever a certificate shall have been transmitted to the Comptroller of
the Currency, as provided in the seventh section of this
act, and the association transmitting the same shall notify
said Comptroller that at least fifty per centum of the whole
amount of the proposed capital stock of such association
has been deposited with the Treasurer of the United
States, in and of six per centum United States stocks, or
their equivalent in United States stocks, for the purpose
and with the views of obtaining therefor circulating notes,
under and according to the provisions of this act; if, upon
a careful examination of the facts so reported, and of any
other facts which may come to the knowledge of the said




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Comptroller, whether by means of a special commission
appointed by him for the purpose of inquiring into the
condition of such association, or otherwise, it shall appear
that such association is lawfully entitled to commence the
business of banking, the said Comptroller shall give to such
association a certificate under his hand and official seal,
showing 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 such
association to cause said certificate to be published in some
daily newspaper, published in the State where such association is located, for at least sixty days next after the
issuing thereof.
SEC. 9. And be it further enacted, That every association
formed pursuant to the provisions of this act may make and
use a common seal, and shall have succession by the name
designated in its articles of association and for the period
limited therein; by such name may make contracts, sue
and be sued, complain and defend in any court of law or
equity as fully as natural persons, and may make by-laws,
not inconsistent with law or the provisions of this act, for
the election of directors, the management of its property,
the regulation of its affairs, and for the transfer of its
stock; and shall have power to carry on the business of
banking by obtaining and issuing circulating notes in
accordance with the provisions of this act; by discounting
bills, notes, and other evidences of debt; by receiving
deposits; by buying and selling gold and silver bullion,
foreign coins, and bills of exchange; by loaning money on




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real and personal security in the manner specified in their
articles of association for the purposes authorized by this
act, and by exercising such incidental powers as shall
be necessary to carry on such business; to choose one
of their number as president of such association, and to
appoint a cashier and such other officers and agents as
their business may require; and to remove such president,
cashier, officers, and agents at pleasure, and appoint
others in their place; and all associations issuing notes to
circulate as money under the provisions of this act shall
be banks of discount and deposit as well as of circulation,
and their usual business shall be transacted in banking
offices located at the places specified respectively in their
certificates of associations, and not elsewhere.
SEC. IO. And be it further enacted, That the shares of
associations formed under this act shall be deemed personal
property, and shall be transferable on the books of the
association in such manner as may be prescribed in the
articles of association; and every person becoming a shareholder by such transfer shall, in proportion to his shares,
succeed to all the rights and liabilities of the prior holder
of such shares; and no change shall be made in the articles
of association by which the rights, remedies, or security of
the existing creditors of the association shall be impaired.
SEC. I I . 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; but no such
increase shall be valid until the whole amount of such
increase shall have been deposited with the Treasurer of
the United States in six per centum United States stocks,




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or their equivalent in United States stocks, for the purpose and with the views of obtaining circulating notes
therefor, under and according to the provisions of this act,
and notice of such increase and deposit shall have been
duly transmitted to the Comptroller of the Currency and
verified and certified by him.
SEC. 12. And be it further enacted, That it shall be lawful
for any such association to purchase, hold, and convey
real estate as follows:
First. Such as shall be necessary for its immediate
accommodation in the transaction of its business.
Second. Such as shall be mortgaged to it in good faith
by way of security for loans made by such association, or
for moneys due thereto.
Third. Such as shall be conveyed to it in satisfaction of
debts previously contracted in the course of its dealings.
Fourth. Such as it shall purchase at sales under judgments, decrees, or mortgages held by such association.
Such association shall not purchase or hold real estate
in any other case or for any other purpose than as specified
in this section.
SEC. 13. And be it further enacted, That upon the making
of any such transfer and delivery of United States stock
as heretofore provided, and otherwise complying with the
other preliminary requirements of this act, 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 the current
market value of the United States stock so transferred and
delivered, but not exceeding the par value thereof, if




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bearing interest at the rate of six per centum, and the
equivalent of stock bearing interest at the rate of six per
centum if in stock bearing a less rate of interest; and at
no time shall the total amount of such notes, issued to anysuch association exceed the amount at such time actually
paid in of its capital stock.
SEC. 14. And be it further enacted, That, in order to furnish suitable notes for circulation, the Comptroller of the
Currency is hereby authorized and required, under the
direction of the Secretary of the Treasury, to cause plates
to be engraved, in the best manner to guard against counterfeiting and fraudulent alterations, and to be printed
therefrom and numbered, such quantity of circulating
notes, in blank, of the denominations of 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 banks and associations entitled to receive the same; which notes shall express upon their face that they are secured by United
States stock, deposited with the Treasurer of the United
States and issued under the provisions of this act, which
statement shall be attested by the written or engraved
signatures of the Treasurer and Register, and by the imprint of the seal of the treasury; and shall also bear upon
their face the usual promise of the bank or association
receiving the same, to pay on demand attested by the
signatures of the president 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.




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SEC. 15. And be it further enacted, That the plates and
special dies to be procured by the Comptroller of the
Currency for the printing of such circulating notes shall
remain under his control and direction, and the expenses
necessarily incurred by him, in executing the provisions
of this act respecting the procuring of such notes, shall be
audited and paid as contingent expenses of the Treasury
Department; and for the purpose of reimbursing the same,
and all other expenses incurred under this act, and in lieu
of all taxes upon the circulation authorized by this act, or
upon the bonds deposited for security of the same, the
Treasurer of the United States is hereby authorized to
reserve and retain one-fourth of one per centum on the
amount of said bonds so deposited, at each semi-annual
payment of interest thereon; and all sums so reserved and
retained shall be paid into the treasury under the direction
of the Secretary, and every bank, banking association, or
corporation issuing notes calculated or intended to circulate as money, otherwise than as in this act provided r
shall, within six months after the passage of this act, and
regularly once in every succeeding six months, make and
deliver to the Comptroller of the Currency a true and
accurate return of the amount of notes issued by it,
whether in circulation, in its vaults, or on deposit elsewhere, specifying the amount of the several denominations;
and shall pay to the Comptroller of the Currency, semiannually and at the time of making each return, in lawful
money of the United States, one per centum upon the gross
amount of notes issued, according to such return, during
the first year after the passage of this act, and two per
centum semi-annually thereafter thereon; and in default




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of any such return, the bank, banking association, or corporation so failing to make return shall pay to the United
States a penalty of three per centum upon its entire capital
stock, to be recovered, for the use of the United States, in
any court of competent jurisdiction.
SEC. I6. And be it further enacted, That after any suck
association shall have caused such notes to be filled up and
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; and no 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 act.
SKC. 17. And be it further enacted, That all transfers
of United States stock which shall be made by any bank or
banking association as security for circulating notes under
the provisions of this act shall be made to the Treasurer
of the United States, with a memorandum written or
printed on the certificate of such stock, and signed by the
cashier or some other officer of the association making the
deposit, 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 the circulating notes deliv-




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ered to such bank or association; and no transfer of any
such stock by the Treasurer shall be deemed valid or of
binding force and effect, unless sanctioned by the order
or request of the Comptroller of the Currency upon said
Treasurer. 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 bank or banking association,
from whose account such transfer of stock is made by the
said Treasurer, and the name of the party to whom such
transfer is made, unless such transfer is made in blank,
in which case the fact shall be stated in said book, and in
either case the par value of the stock so transferred shall
be entered therein; and it shall be the duty of the said
Comptroller, immediately upon countersigning and entering the same, to advise by mail the bank or association
from whose account such transfer was made, the kind of
stock, and the amount thereof so transferred.
SEC. 18. And be it further enacted, That it shall be the
duty of the Comptroller of the Currency to countersign
and enter in the book, in the manner aforesaid, every transfer or assignment of any stock held by the said Treasurer
presented for his signature; and the said Comptroller shall
have at all times during office hours access to the books
of the Treasurer, for the purpose of ascertaining the correctness of the transfer or assignment presented to him
to countersign; and the Treasurer shall have the like
access to the book above mentioned, kept by the said
Comptroller, during office hours to ascertain the correctness of the entries in the same.
SEC. 19. And be it further enacted, That it shall be the
duty of either the president or cashier of every bank and




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banking association having stocks deposited in the office
of the Treasurer of the United States, once or'more in each
fiscal year, and at such time or times during the ordinary
business hours as said officer or officers may select, to
examine and compare the stock so pledged with the books
of said department, and if found correct, to execute to the
said Treasurer a certificate setting forth the different
kinds and the amounts thereof, and that the same are in
the possession and custody of the said Treasurer at the
date of such certificate. Such examination may be made
by an agent of such bank or association, duly appointed
in writing for that purpose, whose certificate before mentioned shall be of like force and validity as if executed by
such president or cashier.
SEC. 20. And be it further enacted, That every association issuing circulating notes under the provisions of this
act shall make a quarterly report to the Comptroller of the
Currency, commencing in August next, and to be continued in November, February, May and August in each
year thereafter, which report shall be verified by the
president and cashier, and each of such reports shall
contain a correct statement of the amount of the capital
stock, of the average amount of the loans and discounts,
of the specie and specie funds, of the legal tender notes
of the United States, of the deposits, and of the circulation
outstanding during the three months immediately preceding of each of said several and respective banks and
banking associations, and all wilful false swearing in
respect to such report shall be perjury, and subject to the
punishment prescribed by law for such offence.




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SEC. 21. And be it further enacted, That if any such association shall at any time fail to redeem, in the lawful
money of the United States, any of its circulating notes>
when payment thereof shall be lawfully demanded, during
the usual hours of business, at the office of such association, the holder may cause the same to be protested in one
package, by a notary public, unless the president, cashier,,
or teller of the association shall offer to waive demand and
notice of the protest, and shall, in pursuance of such offer,
make, sign, and deliver to the party making such demand
an admission in writing, stating the time of the demand,
the amount demanded, and the fact of the non-payment
thereof; and such notary public, on making such protest,
or upon receiving such admission, shall forthwith forward
such admission or notice of protest to the Comptroller of
the Currency; and after such default it shall not be lawful
for the association suffering the same to pay out any of
its notes, discount any notes or bills, or otherwise prosecute the business of banking, except to receive and safely
keep money belonging to it, and to deliver special deposits:
Provided, however, That if satisfactory proof be produced
to such notary public that the payment of any such notes
is restrained by order of any court of competent jurisdiction, such notary public shall not protest the same; and
when the holder of such notes shall cause more than one
note or package to be protested on the same day, he shall
not receive pay for more than one protest.
SEC 22. And be it further enacted, That on receiving
notice that any such association has failed to redeem any
of its circulating notes, as specified in the next preceding
section, the Comptroller of the Currency, with the con-




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currence of the Secretary of the Treasury, shall appoint a
special agent, (of whose appointment immediate notice
shall be given to such association,) who shall immediately
proceed to ascertain whether such association has refused
to pay its circulating notes, in the lawful money of the
United States, when demanded as aforesaid, and report
to the said Comptroller of the Currency the facts so ascertained; and if, from the reports so made, the said Comptroller shall be satisfied that such association has refused
to pay its circulating notes as aforesaid, and that it has
been in default ten days, he shall, within thirty days after
he shall have received notice of such failure, declare the
United States stock and securities pledged by such association forfeited to the United States, and the same shall
thereupon be forfeited accordingly; and thereupon said
Comptroller shall immediately give notice in such manner
as the Secretary of the Treasury shall, by general rules or
otherwise, direct, to the holders of the circulating notes of
such association to present them for payment at the treasury of the United States; and the same shall be paid as
presented, whereupon said Comptroller may, in his discretion, cancel an equal amount of the stock pledged by
such association; and it shall be lawful for the Secretary of
the Treasury, from time to time, to make such regulations
respecting the disposition to be made of such circulating
notes after presentation thereof for payment as aforesaid,
and respecting the perpetuation of the evidence of the
payment thereof, as may seem to him proper; but all such
notes, on being paid, shall be cancelled; and for any deficiency in the proceeds of the stocks and securities pledged
by such association, when disposed of as hereinafter speci-




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fied, to reimburse to the United States the amount so
expended in paying the circulating notes of such association, the United States shall have a first and paramount
lien upon all the assets of such association, and such
deficiency shall be made good out of such assets in preference to any and all other claims whatsoever, except the
necessary costs and expenses of administering the same.
SEC. 23. And be it further enacted, That whenever said
Comptroller shall become satisfied, as in the last preceding
section specified, that any such association has refused to
pay its circulating notes as therein mentioned he may,
instead of cancelling the United States stock and securities
pledged by such association, as provided in the next preceding section, cause so much of them as may be necessary
to redeem the outstanding circulating notes of such association to be sold at public auction in the city of New York,
after giving notice of such sale to such association, and also
advertising the time and place of sale, with a pertinent
description of the stock to be offered for sale, in two or more
newspapers published in the city of New York, for not less
than ten days next preceding the day of sale.
SEC. 24. And be it further enacted, That the Comptroller
of the Currency, may if he shall be of opinion that the
interests of the United States will be best promoted thereby, sell at private sale any of the stock so transferred to
him by such association to any other association, or to any
individual person or firms, and receive therefor either
money or the circulating notes of such failing association:
Provided, That no such stock shall be sold by private sale
for less than the par value thereof at the time of sale, nor
shall any such stock be sold on credit: And provided fur-




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ther, That no sales of any such stock, either public or private, shall be complete until the transfer thereof shall have
been made with the formalities prescribed in section
twenty-one of this act.
SEC. 25. And be it further enacted, That on becoming satisfied, as specified in section twenty-six of this act, that any
such association has refused to pay its circulating notes as
therein mentioned, and has been in default for ten days,
the Comptroller of the Currency may forthwith appoint a
receiver, and require of him such bond and security as he
shall deem proper, who shall proceed, under the direction
of said Comptroller, to take possession of the books, records,
and assets of every description of such association, collect
all debts, dues, and claims belonging to such association,
and, upon the order of a court of record of competent jurisdiction, may sell or compound all bad or doubtful debts,
and, on a like order, sell all the real and personal property
of such association, on such terms as the court shall direct,
and pay over all moneys so made to the Treasurer of the
United States, and also make report to the Comptroller
of the Currency of all his acts and proceedings. Such
Comptroller shall cause notice to be given, by advertisement in one or more newspapers published in the city in
which such association is located, if the same be in a city,
and if not, then in one or more newspapers published in
the county where the same is located for three consecutive months, calling on all persons who may have claims
against such association to present the same, and to make
legal proof thereof; and after the end of one year from the
first publication of such notice, the said Comptroller, after
full provision shall have been first made for refunding to




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the United States any such deficiency as is mentioned in
the twenty-sixth section of this act, shall make a ratable
dividend of the moneys so paid over to him by such receiver on all such claims as may have been so proved or
adjudicated in a court of competent jurisdiction, and from
time to time, as the proceeds of the assets of such association shall be paid over to him, he shall make further dividends, as aforesaid, on all claims previously proved or
adjudicated; and the remainder of such proceeds, if anything, shall be paid over to the shareholders of such association, or their legal representatives, in proportion to the
stock by them respectively held: Provided, however, That
if any such association, against which proceedings have
been so instituted on account of any alleged refusal to
redeem its circulating notes as aforesaid, shall deny having
failed to do so, such association may, at any time within
ten days after such association shall have been notified of
the appointment of an agent, as provided in the twentysixth section of this act, apply to the circuit court of the
United States, or other court of competent jurisdiction,
to enjoin further proceeding in the premises; and such
court, after citing the Comptroller of the Currency to show
cause why further proceedings should not be enjoined, and
after the decision of the court or finding of a jury that such
association has not refused to redeem its circulating notes,
when legally presented, in the lawful money of the United
States, shall make an order enjoining the Comptroller, and
any receiver acting under his direction, from all further
proceedings on account of such alleged refusal.
SEC. 26. And be it further enacted, That the stock transferred to the Treasurer of the United States, as hereinbe-




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fore provided, by any bank or association for the security
of its circulating notes, shall be held exclusively for that
purpose, until such notes shall be redeemed, except as
provided in this act; and if any officer of the United States
shall and do allow or permit any of the said stocks so
deposited or transferred as hereinbefore mentioned and
provided, or contemplated to be so done by virtue of this
act, to be taken, abstracted, or otherwise used, than as
contemplated and provided by this act, every such officer
so offending shall be deemed and held to be guilty of a
high misdemeanor, and on conviction thereof in any court
of the United States, shall be sentenced to be imprisoned
and kept at hard labor for a period of not less than six
years, nor more than twenty years, and to be fined in a
sum not less than ten thousand dollars, nor more than
one hundred thousand dollars; but the Comptroller of
the Currency shall give to any banking association
powers of attorney to receive and appropriate to its own
use the interest on the stock which shall have been so
transferred to him by it; but such powers shall become
inoperative whenever such bank or association shall fail
to redeem its circulating notes as aforesaid; and said
comptroller may return any of said stock to the bank or
association which transferred the same, upon the surrender to him and the cancellation of a proportionate amount
of such circulating notes: Provided, The current market
value of the remaining stock which shall have been transferred by the bank or association offering to surrender
such circulating notes shall be equal to the amount of
all the circulating notes retained by such bank or association: And provided, further, That there shall have




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been no failure by such bank or association to redeem
its circulating notes, and that there shall have been no
other violation by such association of any of the provisions of this act for the security of the creditors of such
association; nor shall said Comptroller be required to surrender such stock in fractional sums of less than one thousand dollars; and if, at anytime after said stock shall be
deposited with the Treasurer of the United States, as
aforesaid, the market or cash value shall be reduced, the
Comptroller of the Treasury is hereby authorized to
demand and receive the amount of such depreciation in
other United States stock at cash value, or in money, from
the association receiving said bills, to be deposited with
the Treasurer of the United States as long as such depreciation continues.
SEC 27. And be it further enacted, That whenever the
price of any of the bonds pledged as aforesaid for the
redemption of the circulating notes of any such bank or
association shall be at the stock exchange in the city of
New York, for four consecutive weeks, at a rate less than
that at which they shall have been estimated when so
pledged, and such depreciation shall not have been made
good by a deposit of other stocks or money, it shall be
the duty of the bank comptroller to notify the Treasurer
of the United States of such fact, and the payment of interest upon such depreciated bonds shall be suspended, and
such interest shall be retained by said Treasurer until the
same, when added to the current market value of the
bonds so pledged, to be ascertained as before provided,
shall be equal to the amount for which such bonds were
pledged: Provided, That it shall be the duty of the bank




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comptroller, a t t h e expiration of every period of three
months, t o cause t h e whole of t h e sums so retained, a n d
then remaining in t h e treasury of t h e United States, t o be
invested in United States stocks, in t h e n a m e of t h e b a n k
comptroller, in t r u s t for t h e respective associations b y
which t h e stocks on which such interest shall have accrued shall have been pledged; and whenever t h e price of
such depreciated stock a t t h e stock exchange in New York
shall rise t o t h e price a t which they were pledged, and so
remain for four consecutive weeks, such investment shall
be assigned to such association, and all accruing interest
on such pledged stock shall thereafter be paid to such
association on demand thereof.
SKC. 28. And be it further enacted, T h a t whenever any
such b a n k or association, being desirous of relinquishing
its banking business, shall have paid at least ninety per
centum of its circulating notes, and shall have delivered
t h e same t o t h e Comptroller of t h e Currency to be cancelled, and shall have provided means and given security
t o t h e satisfaction of t h e said Comptroller, for t h e redemption of its outstanding notes of circulation a t the place
where such b a n k or association is located, and shall have
given notice thereof b y advertisement for six consecutive
months in two newspapers of general circulation, published, one a t t h e capital of t h e S t a t e in which such association shall be located, and one in t h e city, town, village,
or county in which t h e same is located, if there be one
published therein, it shall be lawful for the said Comptroller t o authorize and for t h e Treasurer of t h e United
States t o re-transfer and deliver to such b a n k or association
all t h e stock and securities pledged b y it, and thereupon




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all the corporate powers of such association, except such
as shall be necessary to close up its affairs, shall cease.
SEC. 29. And be it further enacted, That it shall be the
duty of the Comptroller of the Currency to receive wornout or mutilated circulating notes issued by any such bank
or association, and to deliver in place thereof to such bank
or association other blank circulating notes to an equal
amount; and such wornout 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 said Comptroller, as well as all circulating notes
which shall have been paid or surrendered to be cancelled,
shall be burned to ashes by the said Comptroller of the
Currency, in the presence of the Treasurer of the United
States; and in case such notes shall have been delivered
to said Comptroller by an officer or agent of said bank or
association, then in the presence, also, of such officer or
agent; and a certificate of such burning, signed by said
Comptroller and Treasurer, shall be made in the books of
said Comptroller, and a duplicate thereof given to such
officer or agent.
SEC. 30. And be it further enacted, That it shall be unlawful for any officer acting under the provisions of this
act to countersign or deliver to any such bank or association, or to any other company or person, any circulating
notes contemplated by this act, except as hereinbefore provided, and in accordance with the true intent and meaning of this act; and any officer who shall violate the provisions of this section shall be deemed guilty of a high misdemeanor, and on conviction thereof in any court of the
United States, shall be sentenced to be imprisoned and




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kept at hard labor for a period not less than six years, nor
more than twenty years, and to be fined in a sum not less
than ten thousand nor more than one hundred thousand
dollars.
SEC. 31. And be it further enacted, That all fees for protesting the notes issued by any such bank or association
shall be paid by the person procuring the protest to be
made, and such bank or association shall be liable therefor;
but no part of the stock pledged by such bank or association, as aforesaid, shall be applied to the payment of such
fees; and all expenses of any preliminary or other examinations into the condition of any association shall be paid
by such association; and all expenses of any receivership
shall be paid out of the assets of such association before
distribution of the proceeds thereof.
SEC. 32. And be it further enacted, That the Secretary of
the Treasury is hereby authorized, whenever, in his judgment, the public interest will be promoted thereby, to
employ any of such associations, doing business under this
act, as depositaries of the public moneys, in any place
except the city of Washington.
SEC 33. And be it further enacted, That every person
who shall mutilate, cut, deface, disfigure, or perforate
with holes, or shall unite or cement together, or do any
other thing to any bank bill, draft, note, or other evidence
of debt issued by any such association, or shall cause or
procure the same to be done, with intent to render such
bank bill, draft, note, or other evidence of debt, unfit to be
reissued by said association, shall upon conviction, forfeit
fifty dollars to the corporation who shall be injured
thereby.




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SEC 34. And be it further enacted, That if any person
shall falsely make, forge, or counterfeit, or cause or
procure to be made, forged, or counterfeited, or willingly
aid or assist in falsely making, forging, or counterfeiting
any note in imitation of, or purporting to be in imitation
of, the circulating notes issued under the provisions of this
act, or shall pass, utter, or publish, or attempt to pass,
utter, or publish, any false, forged, or counterfeited note,
purporting to be issued by any corporation or association
doing a banking business under the provisions of this act,
knowing the same to be falsely made, forged, or counterfeited, or shall falsely alter, or cause or procure to be
falsely altered, or willingly aid or assist in falsely altering
any such circulating notes, issued as aforesaid, or shall
pass, utter, or publish, or attempt to pass, utter, or publish as true, any falsely altered or spurious circulating note
issued, or purporting to have been issued, as aforesaid,
knowing the same to be falsely altered or spurious, every
such person shall be deemed and adjudged guilty of felony,
and being thereof convicted by due course of law, shall be
sentenced to be imprisoned and kept at hard labor for a
period not less than three years nor more than ten years,
and to be fined in a sum not exceeding one thousand
dollars.
SEC. 35. And be it further enacted, That if any person
shall make or engrave, or cause or procure to be made or
engraved, or shall have in his custody and possession any
engraved plate or block after the similitude of any plate
from which any circulating notes issued as aforesaid shall
have been printed, with intent to use such plate or block,
or cause or suffer the same to be used, in forging or counter-




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feiting any of the notes issued as aforesaid, or shall have in
his custody or possession any blank note or notes engraved
and printed after the similitude of any notes issued as
aforesaid, with intent to use such blanks, or cause or suffer
the same to be used, in forging or counterfeiting any of the
notes issued as aforesaid, or shall have in his custody or
possession any paper adapted to the making of such notes,
and similar to the paper upon which any such notes shall
have been issued, with intent to use such paper, or cause
or suffer the same to be used, in forging or counterfeiting
any of the notes issued as aforesaid, every such person,
being thereof convicted by due course of law, shall be
sentenced to be imprisoned and kept at hard labor for a
term not less than three nor more than ten years, and
fined in a sum not exceeding one thousand dollars.
SEC. 36. And be it further enacted, That suits, actions,
and proceedings may be had in courts of record of the
several States and Territories by and against corporations
and associations under the provisions of this act; and such
courts shall have concurrent jurisdiction with the circuit
and district courts of the United States in all such suits,
actions, and proceedings.
SEC. 37. And be it further enacted, That it shall be the
duty of the Comptroller of the Currency to report annually
to Congress, at the commencement of its session—
One. A summary of the state and condition of every
association from whom reports have been received the
preceding year, at the several dates to which such reports
refer, with an abstract of the whole amount of banking
capital returned by them, of the whole amount of their
debts and liabilities, the amount of circulating notes




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outstanding, and the total amount of means and resources,
specifying the amount of specie held by them at the times
of their several returns, and such other information in
relation to said associations as, in his judgment, may be
useful.
Two. A statement of the associations whose business
has been closed during the year, with the amount of their
circulation redeemed, and the amount outstanding.
Three. To suggest any amendment to the laws relative
to banking by which the system may be improved, and
the security of the bill-holders and depositors may be
increased.
Fourth. To report the names and compensation of the
clerks employed by him, and the whole amount of the
expenses of the banking department during the year;
such report shall be made by or before the first day of
December in each year, and the usual number of copies
for the use of the Senate and House, and two hundred and
fifty copies for the use of the department, shall be printed
by the public printer and in readiness for distribution on
the first meeting of Congress.
SEC. 38. And be it further enacted, That the right to
alter, amend, and extend this act and the provisions
thereof is hereby expressly reserved; but not so as to do
injustice to those interested and to be affected thereby.




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Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102