UNITED STATES POSTAL SAVINGS LAW.

The act of Congress, approved June 25, 1910, authorizes the establishment of postal savings depository offices and creates a board of trustees, consisting of the Postmaster-General, the Secretary of the Treasury, and the Attorney-General, severally, acting ex officio, with power to designate such post-offices as it may select to be postal savings depository offices. This board has control, supervision, and administration of all postal savings offices and of the funds deposited therein by virtue of this act, and has authority to make all necessary and proper regulations for the receipt, transmittal, custody, deposit, investment, and repayment of such funds.

Any person, of the age of 10 years or over, may open an account, in his or her own name, in any postal savings depository, but no person can have more than one such account in his or her own right. Deposit accounts may be opened in the following ways: First, by the deposit of $1 or a larger amount in multiples thereof; second, by purchasing for 10 cents a postal savings card and attaching thereto 10-cent postal savings stamps and depositing the card and stamps in the amount of $1, or any multiple thereof.

Additional deposits may be made in cash in amounts of $1 or multiples thereof, or by card and 10-cent stamps in corresponding amounts, but no person is permitted to deposit more than $100 in any one calendar month, and the balance to the credit of any person can never exceed $500.

Interest at the rate of 2 per cent per annum will be allowed on all deposits, and any person may withdraw the whole or any part of his or her deposit, with accrued interest, upon demand and under such regulations as the board of trustees may prescribe.

Of the postal savings bank funds, 5 per cent shall be deposited as a reserve with the Treasurer of the United States, who is the treasurer of the board of trustees. The remaining funds may be deposited in national or state banks at a rate of interest of not less than 2 per cent, and on the security of such public bonds or other securities supported by the taxing power as the board may approve. Not exceeding 30 per cent of the total funds may be used by the board in the purchase of bonds or other securities of the United States, except that by the direction of the President and only when in his judgment the general welfare and the interests of the United States so require the remaining 65 per cent may be withdrawn from the banks for investment in bonds or other securities of the United States.

Postal savings funds shall be deposited in solvent banks, whether organized under national or state laws, and subject to national or state supervision and examination, in operation at the locality of the postal savings depository office, if they are willing to accept the deposit, but the total deposit in any bank shall not exceed its capital and one-half of its surplus. In the absence of any bank in the locality fulfilling the requirements of the act and willing to accept the deposit, the money shall be deposited in the bank most convenient to such locality, and in the event there is no such bank in the State or Territory willing to receive the funds, then they shall be placed in the reserve fund with the treasurer of the board. Any deposit with a bank may be withdrawn at the pleasure of the board.

Provision is made in the act for the conversion, under certain conditions, of deposits in postal savings depositories in the amount of $20 or multiple thereof, into bonds of the United States bearing interest at the rate of 21 per cent, payable semiannually.

The faith of the United States is pledged to the payment of any deposit made in postal savings depository offices.

The trustees are engaged in the formation of plans in detail for the administration and operation of postal savings depositories and it is expected that the designated offices will be ready for the receipt of deposits by the first of the new year.

The following is a list of post-offices, so far designated, as postal savings depositories:

In the annual report of the Comptroller of the Currency for 1908 the salient provisions were published of the act of May 30, 1908, providing for the formation of national currency associations and the issue of additional national-bank currency.

Under this act national currency associations may be formed by any number of national banks, not less than 10, with aggregate capital and surplus of at least $5,000,000, and located in contiguous territory. No national bank, however, may be a member of a currency association unless it has an unimpaired capital and a surplus amounting to at least 20 per cent of its capital. It is further provided that to be entitled to issue additional currency a national bank, a member of a currency association, shall have circulation outstanding, secured by United States bonds, aggregating not less than 40 per cent of the capital stock. Additional circulation provided by this act may only be issued upon the recommendation of the Comptroller and approval of the Secretary of the Treasury. The maximum circulation issuable by a bank on United States bonds, and under authority of the act of May 30, 1908, is measured by the capital and surplus of the bank.

The officers of a currency association, on behalf of one of the bank members, may apply for authority to issue additional circulation to an amount not exceeding 75 per cent of the cash value of the securities or commercial paper deposited with the association, and upon deposit of state, city, town, county, or other municipal bonds of the character prescribed by the act may obtain for issue circulating notes to the extent of 90 per cent of the market value of the bonds deposited. The issue of additional circulation on commercial paper, however, is limited to 30 per cent of the unimpaired capital and surplus.

The act contemplates that no additional circulation shall be permitted to be issued unless, in the judgment of the Secretary of the Treasury, conditions in the country at large, or in a special locality, warrant such action, and under section 8 of the act it is made the duty of the Secretary of the Treasury to obtain information with reference to the value and character of securities authorized to be accepted, and from time to time to furnish information to nationalbanking associations as to such securities as would be acceptable under the provisions of the act.

The act further provides for an issue of circulating notes and the incorporation of the statement upon their face that "they are secured by United States bonds or other securities," certified by the written. or engraved signatures of the Treasurer and Register and by the imprint of the seal of the Treasury. They shall also express upon their face the promise of the association receiving the same to pay on demand, attested by the signature of the president or vice-president and cashier. Under this requirement, circulation has been prepared for every national banking association, and there is stored in the reserve vault of the bureau a stock of incomplete currency amounting to $500,000,000. So far, no circulating notes, other than those secured by United States bonds, have been issued, but all incomplete currency shipped to a bank bears the legend quoted.

On June 30, 1910, the number of national banks reporting was 7,145, with paid-in capital of $989,567,114 and surplus of $644,857,482.82. Of these banks, 5,699 had circulation secured by United States bonds equal to or exceeding 40 per cent of the capital, and 1,415 circulation less than that proportion.

In less than thirty days after the passage of the emergency-currency act a national currency association was formed in the District of Columbia, of which all of the 11 banks in the District were members. The aggregate capital and surplus of the banks at that time were $5,202,000 and $3,942,000, respectively. The president of the association is Mr. William J. Flather of the Riggs National Bank of Washington, and the secretary, Mr. H. H. McKee, of the National Capital Bank of Washington.

On September 1, 1910, there were 12 national banks in the District of Columbia, having capital of $6,052,000 and surplus of $4,450,645. While the formation of other currency associations was undertaken, none was perfected in a manner acceptable to the Secretary of the Treasury until the midsummer of 1910, by reason of what were regarded as insurmountable obstacles on the part of banks interested. These obstacles, however, were in a large measure overcome by a revised construction of the law.

Under date of September 16, 1910, the following rulings of the Treasury Department in regard to certain sections and phrases concerning the issue of additional circulation were approved:

I. WITHDRAWAL OF A BANK FROM A CURRENCY ASSOCIATION.

Any member of an association may withdraw therefrom providing—

1. That at the time of such withdrawal there shall be no unredeemed additional circulating notes issued to the association;

2. That the unanimous consent of the executive committee of the board of managers of the association shall be obtained; and

3. That the Secretary of the Treasury of the United States shall approve.

II. REDEMPTION FUND FOR ADDITIONAL CIRCULATION.

Section 3 of the act of June 20, 1874, provides that a national bank must keep on deposit in the Treasury of the United States a sum equal to 5 per centum of such circulation as is provided for in that act. Section 6 of the act of May 30, 1908, provides that the banks shall keep on deposit in the Treasury of the United States an additional sum equal to 5 per centum of such additional circulation at any time outstanding. The department is of the opinion that the redemption fund to be deposited in the Treasury on account of additional circulation authorized by the act is not required to exceed 5 per centum of such additional circulation, and that Congress intended only to extend to the additional currency the original provisions for a 5 per cent redemption fund hitherto provided for the ordinary bond-secured circulation.

III. EXTENT OF TERRITORY TO BE COMPREHENDED BY A CURRENCY ASSOCIATION.

In regard to the extent of territory to be comprehended by a currency association, attention is called to the following provisions of the act of May 30, 1908:

1. That there shall not be more than one such association formed in any city. 2. That the member banks "shall be taken, as nearly as conveniently may be, from a territory composed of a State or part of a State, or contiguous parts of one or more States."

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3. "That any national bank in such city or territory, * shall, upon its application to and upon the approval of the Secretary of the Treasury, be admitted to membership in a national currency association for that city or territory,'

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These provisions are construed to mean (1) that the territory to be included in the currency association of a particular city must be at least coextensive with the limits of the city, and (2) that if the territory to be covered by an association has been fixed in the approved by-laws, all banks within that territory must, if properly qualified, be admitted to membership. In other words, if the by-laws stated that the membership in an association shall be composed of banks doing a business within a State, no national bank within the State would be excluded from membership, provided that it was otherwise qualified. On the other hand, if the by-laws limited membership to banks doing a business within a county, then only the national banks in that county would expect to attain membership.

IV. SECURITY FOR ADDITIONAL CIRCULATION.

Section 1 provides that the national currency associations may use as a basis for additional circulation "any securities, including commercial paper, held by a national banking association." The term "commercial paper" is thereafter defined to include "only notes representing actual commercial transactions, which when accepted by the association shall bear the names of at least two responsible parties and have not exceeding four months to run." These requirements will be satisfactorily met by single-name paper arising from actual commercial transactions if indorsed by the bank desiring additional currency.

Section 3 permits the issue of additional notes on the security of bonds of a municipality or district in the United States "whose net funded indebtedness does not exceed 10 per centum of the valuation of its taxable property, to be ascertained by the last preceding valuation of property for the assessment of taxes."

(1) The phrase "net funded indebtedness" is held to mean the entire bonded debt of a municipality, less any bonds not yet sold, or any bonds repurchased and not canceled, as for sinking fund account.

(2) The phrase "valuation of its taxable property" is construed to mean the valuation of taxable property as estimated by the assessor. Where the law prescribes that the assessors shall estimate the value of all property subject to taxation at its actual value, and that the taxes shall be assessed at a fraction of such value, the valuation of taxable property is understood to mean the actual valuation as estimated by the assessors. Where, however, the law makes no distinctions between actual and taxable value of property, the "valuation of taxable property" is construed to mean the taxable value upon which the actual taxes are levied.

A. PIATT ANDREW,

Acting Secretary.

Prior to the announcement of these rulings a national currency association was formed in the city of Philadelphia, with a membership of 28 banks; capital stock $20,825,000 and surplus $33,075,000. The date of the organization of this association was July 29. The president of the association is Mr. Levi L. Rue, of the Philadelphia National Bank, and the secretary, Mr. H. W. Lewis, of the Farmers and Mechanics National Bank.

The number of national banks in Philadelphia on September 1, 1910, was 33, with a capital of $22,405,000 and surplus of $35,515,000.

On the same date of formation of the Philadelphia association 35 of the national banks in the city of New York organized "The National Currency Association of the City of New York," the capital of the banks represented being $115,252,000 and surplus $122,295,000. On September 1 there were 39 national banks in the city of New York, with aggregate capital of $119,900,000 and surplus of $125,055,000. The officers of the New York association are: President, A. B. Hepburn, of the Chase National, and secretary, Edward Townsend, of the Importers and Traders National Bank.

On August 4 the National Currency Association of the State of Louisiana was formed, with a membership of 10 and with capital of $6,100,000 and surplus $3,840,000. All of the national banks in New Orleans are members of the association, together with 5 located elsewhere in the State. The total number of national banks in New Orleans and elsewhere in Louisiana on September 1 was 31, with capital of $8,070,000 and surplus of $4,957,365. The officers of the Louisiana association are: President, Charles Godchaux, of the Whitney Central National Bank of New Orleans, and secretary, A. Breton, of the German American National Bank of New Orleans.

The National Currency Association of the city of Boston was organized August 16, with a membership of 15, representing a capital of $18,450,000 and surplus of $15,650,000. The officers of the association are: President, Thomas P. Beall, of the Second National Bank of Boston, and secretary, A. W. Newell, of the Fourth National Bank. The capital and surplus of the 20 national banks in Boston on September 1 were $22,950,000 and $18,050,000, respectively.

On August 18 the National Currency Association of Georgia was formed. The membership of this association is 21, representing capital of $6,356,000 and surplus of $4,867,000. The officers of the association are: President, Robert J. Lowry, of the Lowry National Bank of Atlanta, and secretary, Joseph A. McCord, of the Third National Bank of Atlanta. The reserve city of Savannah has 1 representative in the association, the remaining members being nonreserve city banks.

On September 1 there were 113 national banks in the State of Georgia, with capital of $13,253,580 and surplus of $7,070,736.