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X-45$M)6 (Memorrnnjum J r ^ & r e d by Office of Comptroller of the Cur^n^f)- . April 31, 1926. Memorandum for the Comptroller; I have given a hurried examination of the proposed codifi- cation of the laws with reference to sections relating to National Banks and find the following omissions and errors: OMISSIONS. 1. The provision in the Act of June 3, 1864, incorporated in Section D80 of the Revised Statutes providing that suits and proceedings arising out of laws governing National Basking Associations should, J^a, conducted by district attorneys under the supervision of the Solicitor of the Treasury, 2i The provision in the Act of June 5, 1664, incorporated in Section 736 of the Revised Statutes providing when proceedings to enjoin the Comptroller, must be brought, 3. The provision in the Act of June 3, 1864. incorporated in Section 884 of the Revised Statutes nai.ti.ng sealed certificates of the Comptroller competent evidence. 4. The provision in the Act of June 3, 1864, incorporated in Section 885 of the Revised Statutes? making a certified copy of the Organization Certificate evidence of the existence of a National Banking Association, 5. The provision in the Jedoral Reserve Act incorporated i:i Section 24 as amended Se~:te".bcr 7, 1316, authorising National Banks to make loans on roal estate. While this was passed as an amendment to the Federal Reserve ^.ct, it relates entirely to National Banks and should be incorporated in the chapters relc,tin c : to national Bank Act and not in chapters relating to the Federal Reserve Act. 6. That portion of Section 11-K of the Federal Reserve Act authoriz- ing the Federal Reserve Board to issue permits to National Banks to exercise fiduciary powers. As thi;3 rslates to National Banks it should appear in the chapters relating to National Bank Act and not to those relating to the Federal Reserve Act. 7. Section 25 of the Federal R3se:cva Act authorizes National Bank- ing Associations possessing capital of a million dollars or more with the permission oi' the Federal Reserve Board to establish branches in foreign countries. This relaten entirely to National Banks and should appear in chapters relating to the National Bank Act and not in the Federal Reserve Act. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
Transcript of frsbog_mim_v24_0316.pdf
X-45$M)6 (Memorrnnjum J r ^ & r e d by O f f i c e of Comptroller of t h e C u r ^ n ^ f ) - .
A p r i l 31, 1926.
Memorandum f o r the Comptrol ler ;
I have given a h u r r i e d examination of the proposed c o d i f i -c a t i o n of the laws wi th r e f e r e n c e to s e c t i o n s r e l a t i n g to Na t iona l Banks and f i n d the fo l lowing omissions and e r r o r s :
OMISSIONS.
1 . The p r o v i s i o n in the Act of June 3, 1864, i n c o r p o r a t e d i n Sect ion D80 of the Revised S t a t u t e s p rov id ing t h a t s u i t s and p roceed ings a r i s i n g out of laws governing Nat iona l Basking A s s o c i a t i o n s should, J a, conducted by d i s t r i c t a t t o r n e y s under the supe rv i s ion of t h e S o l i c i t o r of the Treasury ,
2i The p r o v i s i o n in the Act of June 5, 1664, i nco rpo ra t ed i n Sec t ion 736 of t h e Revised S t a t u t e s p rov id ing when proceedings to en jo in the Comptrol ler , must be b rough t ,
3 . The p r o v i s i o n i n the Act of June 3, 1864. i nco rpo ra t ed i n Sect ion 884 of the Revised S t a t u t e s nai.ti.ng sea l ed c e r t i f i c a t e s of the Comptrol ler competent evidence .
4 . The p r o v i s i o n i n the Act of June 3, 1864, i nco rpo ra t ed i n Sect ion 885 of the Revised Statutes? making a c e r t i f i e d copy of the Organiza t ion C e r t i f i c a t e evidence of the ex i s t ence of a Na t iona l Banking Assoc i a t i on ,
5 . The p r o v i s i o n in the J e d o r a l Reserve Act i nco rpo ra t ed i:i Sec t ion 24 as amended Se~:te".bcr 7 , 1316, a u t h o r i s i n g Na t iona l Banks to make loans on r o a l e s t a t e . While t h i s was passed as an amendment to the F e d e r a l Reserve ^.ct, i t r e l a t e s e n t i r e l y to Na t iona l Banks and should be i n c o r p o r a t e d i n the chap te r s re lc , t in c : to n a t i o n a l Bank Act and not i n chap te r s r e l a t i n g to the Federa l Reserve Act .
6 . That p o r t i o n of Sec t ion 11-K of the Federa l Reserve Act a u t h o r i z -ing t h e Federa l Reserve Board to i s s u e p e r m i t s to Na t iona l Banks to e x e r c i s e f i d u c i a r y powers. As thi;3 r s l a t e s to Na t iona l Banks i t should appear in the chap te r s r e l a t i n g to Na t iona l Bank Act and not to those r e l a t i n g to the Fede ra l Reserve Act .
7 . Sec t ion 25 of the Fede ra l R3se:cva Act a u t h o r i z e s Na t iona l Bank-ing A s s o c i a t i o n s p o s s e s s i n g c a p i t a l of a m i l l i o n d o l l a r s o r more wi th the pe rmiss ion oi' the Federa l Reserve Board to e s t a b l i s h branches i n f o r e i g n c o u n t r i e s . This r e l a t e n e n t i r e l y to Na t iona l Banks and should appear in chap te r s r e l a t i n g to the Na t iona l Bank Act and no t i n the Federa l Reserve Act .
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8 . The 16th paragraph of f lect ion 24 of the Act of March 3, 1911, p r o v i d i n g t h a t Na t iona l Banks should "be deemed c i t i z e n s of the s t a t e s i n which l o c a t e d should a l so appear i n the Na t iona l Bank Act .
9 . Sec t i on 18 Act of December 23, 1913, a u t h o r i z i n g Na t iona l Banks to r e t i r e the whole or any p a r t of t h e i r c i r c u l a t i n g n o t e s "by s a l e to Federa l Reserve Banks.
10. Sec t i on 175 Act of March 4 , 1909, p r o v i d i n g p e n a l t y f o r i m i t a t e ing banks c i r c u l a t i o n .
11* Sec t ion 176 Act of March 4 , 1909, p rov id ing a p e n a l t y f o r mu-t i l a t i n g Na t iona l Banking c i r c u l a t i o n .
12. While p r o v i s i o n i s made i n the Act f o r r e s e r v e s and where they s h a l l be h e l d f o r banks l o c a t e d in Alaska and Hawaii, a l l p r o v i s i o n s r e l a t i n g to r e s e r v e s f o r Na t iona l Banks in the c o n t i n e n t a l United S t a t e s t h a t a r e member banks of the Federa l Reserve System, have been omi t t ed f rom t h e Na t iona l Bank Act . As t h i s p r o v i s i o n a l though
* con ta ined i n t h e Federa l Reserve Act r e l a t e s to Na t iona l Banks as we l l a s to S t a t e Banks, a s e c t i o n should be i n s e r t e d i n the Na t iona l Bank Act cover ing t h e ques t ion of r e s e r v e s .
13 . Act of January 26, 1907, f o r b i d d i n g Nat iona l Banks to make con-v t r i b u t i o n s i n connect ion wi th e l e c t i o n to p o l i t i c a l o f f i c e should be i n s e r t e d in the chap te r r e l a t i n g to Na t iona l Banks.
14. The p r o v i s i o n i n Sec t ion 5240 a u t h o r i z i n g the Comptroller of t h e Currency, w i th the approval of the Sec re t a ry of t h e Treasury , to appo in t examiners who s h a l l examine every member bank a t l e a s t twice each ca lendar year has been omi t t ed . The words "member banks" in t h i s s e c t i o n r e f e r to Na t iona l Banks only as the Comptrol ler does no t appoin t examiners to examine S t a t e Banks t h a t a r e members of the
** Fede ra l Reserve system.
15. The Act of A p r i l 12, 1900, extending Na t iona l Banking laws to Por to Rica has been omi t t ed , ,
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^ 16, The Act of Apr i l 20,1509,extending Nat iona l Banking laws to Hawaii has been o m i t t e d .
NOTE: I t i s assumed t h a t a l l of t he se s e c t i o n s a r e given i n some o t h e r p a r t of the proposed Revised Code o t h e r than t h a t r e l a t i n g to Na t iona l Banks bu t i t i s b e l i e v e d
^ t he se s e c t i o n s should be i nco rpo ra t ed i n the Chapter r e f e r r i n g to Na t iona l Banks.
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31 ERRORS IN THE PROPOSED REVISION
The Numbers given a r e the numbers of the new s e c t i o n s .
25 . This s e c t i o n i s no t necessa ry a s i t merely r e p e a l s the qrld Extens ion Act and p rov ide s t h a t the p reced ing s e c t i o n s h a l l govern. The o l d Extens ion Act w i l l be r epea led by the genera l r e p e a l i n g c l ause t h a t comes wi th the enactment of the Revised S t a t u t e s and a s p e c i f i c r e p e a l i s no t neces sa ry .
38. I t i s no t unders tood why t h i s s e c t i o n i s i n s e r t e d . The Act as i t a t p r e s e n t s t ands i s i nco rpo ra t ed under the t i t l e "Banks and Bankers" and i s i n many ways d i f f e r e n t from the Act of June 3, 1864.
55. Line 25 n e a r e s t i s m i s s p e l l e d .
57 and 58 Revised S t a t u t e s , Sec t ion 5142, p rov ided f o r an i n -c r e a s e i n the c a p i t a l s t ock of a Na t iona l Bank. When p r o v i s i o n was made t he re fo r , i n t h e A r t i c l e s of Assoc ia t ion i n Act of May 1, 1886, a new method f o r i n c r e a s i n g the c a p i t a l of a Na t iona l Bank was p r o -vided f o r . A p o r t i o n of Sec t ion 5142 i s t h e r e f o r e o b s o l e t e and a new s e c t i o n should be provided cover ing those p o r t i o n s of Sec t ions 57 and 58 t h a t a r e v a l i d a t t h i s t ime. We had one i n s t a n c e r e c e n t l y of a bank d e s i r i n g to i n c r e a s e i t s c a p i t a l s tock under t h e o l d p r o -v i s i o n s of Sec t ion 5142 wi thout the vo te of i t s sha reho lde r s as i s r e q u i r e d i n the Act of May 1, 1886.
S e c t i o n s 63 and 64. Sec t ion 12 of the Act of June 3, 1864, i n -co rpo ra t ed i n Revised S t a t u t e s as Sec t ion 5151 p r o v i d i n g f o r the i n d i v i d u a l l i a b i l i t y of sha reho lde r s , s t a t e d t h a t the sha reho lde r s should be h e l d i n d i v i d u a l l y r e s p o n s i b l e equa l ly and r a t a b l y and not one f o r ano the r , f o r a l l c o n t r a c t s , deb t s and engagements of such a s s o c i a t i o n , e t c . This i s i nco rpo ra t ed as Sec t ion 63 of t h i p com-p i l i n g . Sec t ion 34 of the Act of December 23, 193,3, p rov ided t h a t t h e s t ockho lde r s of every Nat iona l Banking Assoc ia t ion s h a l l be h e l d i n d i v i d u a l l y r e s p o n s i b l e f o r a l l c o n t r a c t deb ts and engagements each to t h e amount of h i s s t o c k t h e r e i n a t the p a r va lue thereof in a d d i t i o n to the amount i n v e s t e d i n such s t o c k . The remainder of th&s s e c t i o n r e l a t e s to the t r a n s f e r of s t o c k in a Na t iona l Banking Assoc i a t i on w i t h i n 60 days b e f p r o the da te of i t s f a i l u r e . These two s e c t i o n s r e f e r r i n g to the game mat t e r should be combined in one and not r e enac t ed as they s tand becaa.su they d i f f e r as to the l i a -b i l i t y of sha reho lde ra . As the l a s t p r o v i s i o n of law enacted governs i t i s now h e l d t h a t tho l i a b i l i t y i s f i x e d by p r o v i s i o n i n Sec t ion 23 of t h e Act of December 23, 1913, and not by Sec t ion 12 of the Act of June 3, 1864. I f , however, both s e c t i o n s should be r eenac t ed as proposed, t h e r e would be a ques t ion as to e x a c t l y what the l i a b i l i t y of a sha reho lde r of a bank would b o .
82. In t h e f i f t h paragraph of t h i s s e c t i o n a r e the words "of the Federal Reserve Act i n s t e a d of Chapter 3 " . In the s i x t h paragraph a re
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the words "of the War Finance i n s t e a d of Chapter 10 of t i t l e 15 Commerce and Trade" . The e igh th paragraph i s e n t i r e l y a d d i t i o n a l and cannot be v e r i f i e d from anything submit ted ,
84. On the f i f t e e n t h l i n e under t h i s number a f t e r 346 t h e r e should a l s o be i n s e r t e d "372 and 373". There o r i g i n a l l y appeared the number and words " 1 3 of the Fede ra l Reserve Act" . As i t s tands today " S e c t i o n " ' 3 4 6 a lone appears ,
92. Last l i n e f i l i n g omi t ted between in h i s ,
94, F i r s t l i n e f i r s t word S u i t s omi t ted ,
107, Line one e igh th word procured not produced.
143, The words " r e s e r v e of" omi t ted b e f o r e the words " l a w f u l money" i n $he 18th l i n e of t h i s s e c t i o n .
145. The Treasury n o t e s r e f e r r e d to i n t h i s s e c t i o n a r e those i s s u e d under t h e Sherman Act which has been r e p e a l e d ,
162, In l i n e 7 v e r i f i c a t i o n i s m i s s p e l l e d ,
178, The second paragraph of t h i s s e c t i o n r e l a t e s e n t i r e l y to c i r -c u l a t i o n i s sued under a u t h o r i t y of the s o - c a l l e d A ld r i ch Act passed
H a y 30, 1908, This Act expi red by l i m i t a t i o n and t h e r e i s no longer any a u t h o r i t y f o r the i s suance of c i r c u l a t i n g no te s td Na t iona l Banks on any s e c u r i t i e s o the r than bonds of the United S t a t e s , •
191, This s e c t i o n r e l a t e s to Rece ive r sh ip r e f e r r e d to as Sect ion 94. This should be 93,
548 (d) Second l i n e a f t e r 6 th word i n s e r t a t , 570 The l a s t c l ause does no t r e f e r to Na t iona l Banks a t a l l , 591. This i s Revised S t a t u t e s Sec t ion 208 which has been e n t i r e l y
r e w r i t t e n and the g r e a t e r p a r t of the s e c t i o n has been omi t t ed . The e a r l y p a r t of Sec t ion 5208 de f ined the crime f o r f a l s i f y i n g c e r t i f i e d checks . The l a t t e r p a r t p rovided a p e n a l t y t h e r e f o r . The former p a r t of t h i s s e c t i o n has been e n t i r e l y emitted i n 591 t h e p e n a l t y a lone remaining i t be ing exp re s s ly s ta ted t h a t i t i s a p e n a l t y f o r the v i o l a t i o n s of the p r o v i s i o n s of this^ s e c t i o n . This r e f e r s to the omi t t ed p a r t of the s e c t i o n .
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