liability incurred is a liability within section 5200. (1916 Bulletin, p. 64; 1918 Bulletin, p. 197.)

(d) The power of member banks to accept drafts or bills of exchange should not be confused with the power to discount the acceptances of others. 1916 Bulletin, p. 680. (See IX, 500, 600, 604; XIII-E, 800.)

5200 R. S., 203. An acceptance which has been purchased by the accepting bank and subsequently rediscounted with its Federal reserve bank, is not subject to the limitations of section 5200. 1917 Bulletin, p. 696(1).

5200 R. S., 204. Acceptances.-A national bank which has loaned to a single firm or corporation an amount equal to 10 per cent of its capital and surplus may nevertheless accept drafts drawn by that firm or corporation. 1918 Bulletin, p. 197.

Bills of Exchange Drawn Against Actually Existing Values.

5200 R. S., 300. Cotton loan paper.-A cotton broker gives his note to a bank secured by a warehouse receipt covering cotton stored and sold to a mill. Such loans come within the 10 per cent limitations of section 5200, R. S., and also within the 10 per cent limitations of section 13, Federal reserve act. A different situation would result, however, if the broker had drawn a bill of exchange on the mill secured by the warehouse receipts and the mill had accepted the bill. In this form the transaction would have come neither within section 5200 nor section 13, for the bills of exchange would have been bills "drawn in good faith against actually existing values." (NOTE.— Under the amendment to section 5200 of October 22, 1919, the discount of a note secured by a warehouse receipt covering cotton might not come within the 10 per cent limitations.) 1916 Bulletin, p. 113.

5200 R. S., 301. An obligation in the form of a bill of exchange which exempts the drawer from liability is not a bill of exchange within the exception to the limitations of section 5200, Revised Statutes. Since a bill which holds only the acceptor liable is in substance a promissory note and not a bill of exchange, it can not be considered "a bill of exchange drawn in good faith against actually existing values." 1916 Bulletin, p. 227.

5200 R. S., 302. A national bank may make a direct loan to its customer to the extent of 10 per cent of its capital and surplus and, in addition, may discount for the same customer bills of exchange drawn against actually existing values, or commercial or business paper actually owned by him, such as the customer's bill of exchange drawn by him for the purchase price of commodities sold and accepted by the drawee, or the notes of the purchaser of the goods if actually

owned by him. The national bank, under section 13, Federal reserve act, may rediscount with its Federal reserve bank such accepted bills without limitation, but the notes would be subject to the 10 per cent limitation prescribed by section 13.

Bills or notes which are renewed at maturity can not be treated as bills drawn against actually existing values or as commercial or business paper owned by the person negotiating them, and consequently are subject to the limitations of section 5200. 1917 Bulletin, p. 287. (See also XIII-D, 100, 200-204.)

5200 R. S., 303. Bills of exchange drawn in good faith against actually existing values.-Commodity paper.-Drafts drawn in connection with sales to the United States Government of lumber or other material can not be treated as bills of exchange drawn against actually existing values and are subject to the limitations of section 5200, Revised Statutes, when discounted by national banks. Such drafts do not conform to the requirements of commodity paper as defined by the Federal Reserve Board and should not be discounted at the rate prescribed for such paper. 1918 Bulletin, p. 32. (See 5200 R. S., 302.)

Acceptances as Commercial or Business Paper Actually Owned.

5200 R. S., 400. Where a firm is a bona fide owner for value of the acceptances of a particular institution and such acceptances are sold to or discounted with a member bank, the acceptances may be treated as commercial or business paper actually owned by the party negotiating them and will therefore be excepted from the limitations of section 5200. 1916 Bulletin, p. 678.

5200 R. S., 401. Commercial paper actually owned.-Trade acceptances actually owned by the person offering them are not subject to the 10 per cent limitations of section 5200. If such acceptances, however, are discounted for the drawee and not for the bona fide holder, they are subject to the 10 per cent limitation. Furthermore, a national bank is not permitted to lend on single-name paper, secured or unsecured, to anyone in an amount greater than 10 per cent of its capital and surplus. 1918 Bulletin, p. 863.

Miscellaneous.

5200 R. S., 500. Notes secured by cattle. The mere fact that a note or draft discounted by a national bank may be secured by cattle does not of itself bring it within the exceptions to section 5200, unless it is commercial or business paper or a bill of exchange drawn in good faith against actually existing values. (NOTE.-This ruling is no longer applicable in view of the amendments to sec. 5200 of Oct. 22, 1919.) 1916 Bulletin, p. 329.

5200 R. S., 501. Demand and sight drafts held for more than a reasonable time after acceptance constitute overdue paper and are in substance promissory notes of the acceptor and consequently subject to the limitations of section 5200. 1917 Bulletin, p. 31; 1918 Bulle

tin, p. 1119. (See XIII-C, 803.)

5200 R. S., 502. Sale of note without recourse. If Bank A, which has discounted a note for one of its customers, later sells that note without recourse to Bank B, such note becomes subject to the limitations imposed by section 5200, so far as Bank B is concerned. Bulletin, p. 34.

1918

5200 R. S., 503. A note or bill rediscounted in good faith by a member bank and no longer owned or held by the bank need not be included as a liability of the maker to the bank, within the meaning of section 5200. Notes or bills rediscounted under an agreement to repurchase, or which are merely credited to the account of the bank offering them for rediscount, are subject to the limitations of section 5200. 1918 Bulletin, p. 867. (See IX, 601.)

SECTION 5202, R. S.

Limitations on Aggregate Liabilities of National Banks.

5202 R. S., 100. Loans on bills payable.-A national bank may not borrow as bills payable an amount in excess of its capital stock under section 5202. It can, however, have rediscounted actual items of paper to any amount that the Federal reserve bank of its district is willing to accept. 1916 Bulletin, p. 112. (See 5200 R. S., 202.)

5202 R. S., 101. Liability under letter of credit not included.-A commercial letter of credit is an agreement to make acceptances, a power granted by section 13 of the Federal reserve act, and since outstanding acceptances are not within the limitations of section 5202, as being liabilities incurred under the provisions of the Federal reserve act, an agreement to make such acceptances is similarly a liability incurred under the provisions of the Federal reserve act and is not subject to the limitations of section 5202. 1921 Bulletin, p. 816. (See XIII-E, 505; 5200 R. S., 202.)

SECTION 5207, R. S.

Withholding National-Bank Notes from Circulation.

5207 R. S., 100. National banks are prohibited by section 5207, R. S., from offering or receiving national-bank notes as security for any loan of money or from agreeing for a consideration to withhold the same from circulation. 1916 Bulletin, p. 332.

SECTIONS 5220, 5221, R. s.

Liquidation of a National Bank.

5220, 5221 R. S., 100. Where two-thirds of the stockholders of a national bank ratify a sale of its assets to another corporation, such a vote is not a vote to go into liquidation in accordance with the methods prescribed in section 5220 and section 5221 of the Revised Statutes, and a Federal reserve bank can not, under such facts, cancel the shares of stock held by such member bank, nor can it refund to the member bank the amount of its cash paid subscription, since the bank legally still exists as a corporation and as a member bank. 1916 Bulletin, p. 119. (See XVIII, 300. See also sec. 5, Federal reserve act.)

NATIONAL BANK ACT-MISCELLANEOUS PROVISIONS.

Consolidation of Two or More National Banks-Right to Operate Branches.

N. B. A., 100. A national bank may purchase the assets of other liquidating national banks, but it can not, through such consolidation, operate the liquidating banks as branches, for a national bank has no power under the law to establish a branch in the United States. (See, however, 5190 R. S. 101.) 1916 Bulletin, p. 74.

Pennsylvania Escheat Law.

N. B. A., 101. The act of June 7, 1915, of the Pennsylvania State Legislature, providing for the escheat to the State of all deposits which have not been increased or decreased for a period of 14 years, does not, on account of its phraseology, apply to such deposits in national banks. As the act was not intended to apply to national banks, the question whether Pennsylvania could constitutionally make it applicable to national banks is not involved. 1916 Bulletin, p. 115.

Holding Political Office.

N. B. A., 102. Officers of a national bank which is a member of the Federal reserve system may hold political office provided they are not directors of a Federal reserve bank. Officers and directors of a Federal reserve bank can not hold active political offices. Bulletin, p. 168.

Usurious Charges by National Bank.

1916

N. B. A., 103. Where a national bank, in addition to charging interest at the highest legal rate, requires a borrower to give the bank an additional note, accept a certificate of deposit for the amount thereof, and put up such certificate as additional collateral to his entire loan, the transaction appears to be usurious. 1917 Bulletin, p. 292.

Duty of National Banks to Assist in Financing the Government-National Banks as Fiscal Agents.

N. B. A., 104. National banks were created to assist the Government in the conduct of its fiscal affairs, and in performing the various services incident to the marketing of Liberty bonds, warsavings stamps, thrift stamps, and any other obligations of the Government, they are carrying out one of the fundamental purposes for which they were created. 1918 Bulletin, p. 313.

REVENUE ACT, 1917.

Revenue Stamps on Drafts Drawn to Finance Sales of Goods to Allied Purchasing Commission.

1917 R. A., 100. Drafts drawn for the purpose of financing the shipment of goods, sold to the Allied Purchasing Commission, from the interior point to the seaboard, where the goods are taken on board ship for export, are not subject to the stamp tax, since the draft may be said to constitute an inherent and integral part of an export transaction. It is immaterial whether the draft will mature before or after the sea voyage begins, that is, the life of the draft is immaterial so far as its exemption is concerned. 1918 Bulletin, p. 972; ruling of Commissioner of Internal Revenue; 1918 Bulletin, p. 1218.

REVENUE ACT, 1918.

Drafts Drawn Against Shipments from the United States to Foreign Countries.

1918 R. A., 100. Such drafts are not subject to stamp tax, even though accepted or delivered or both accepted and delivered within the United States. 1919 Bulletin, p. 467. (For a fuller discussion of this question, see 1921 Bulletin, p. 310.)