Clearing

house certificates representing specie or lawful money deposited may be counted in its reserve by a bank owning such certificates. The lawful money deposited with the Treasurer of the United States for the redemption of its notes (equal to 5 per cent of its outstanding notes) may be counted in its reserve. [A national bank cannot count in its reserve national bank notes whether they are its own notes or the notes of other national banks]. A city with a population of 50,000 may be made a reserve city by the Comptroller of the Currency on application by three-fourths in number of the national banks in that city. A city with a population of 200,000 may in like manner be made a central reserve city. The interest or discount rate of a national bank must not: exceed the rate allowed by law in the state, territory or district: in which it is located. Where no rate is fixed by law the bank’s rate cannot exceed 7 per cent. A national bank may declare a dividend semi-annually. Before declaring a dividend it must carry one-tenth of its net profits in the preceding half-year to its surplus fund until this fund amounts to 20 per cent of its capital stock. The liability of a person, firm or corporation to a national bank for money borrowed must not exceed one-tenth of the bank’s capital. But the discount of bills of exchange drawn in good faith against actual values and the discount of commercial or busine paper actually owned by the person negotiating it is not considered as money borrowed. A national bank cannot loan money on or purchase shares of its own stock. A national bank must not pay out in dividends an amount in exce of its net earnings. A debt due to a national bank on which interest is past due and unpaid for a period of six months, unle the debt is well secured and is in proce of collection, is, under the law, a bad debt. 379