shares of stock in state and savings banks are not taxable, is an invalid discrimination against national banks. First Nat. Bank v. City Council of Estherville (Iowa, 1911) 129 N. W. 475.

The proviso in this section does not prevent the state from taxing stock in national banks at a greater rate than that imposed on the most favored state banks. Deposit Bank v. Daviess County (1897) 102 Ky. 174, 39 S. W. 1030, 19 Ky. Law Rep. 248, 44 L. R. A. 825.

Under Const. Ky. § 181, as amended, empowering the General Assembly to authorize cities to provide for taxation for municipal purposes on personal property, tangible and intangible, based on income, licenses, or franchises, in lieu of an ad valorem tax thereon, and Act Ky. March 18, 1904 (Laws 1904, c. 33), passed pursuant thereto, giving cities such authority, an ordinance providing for the levying of a tax on state and national banks and trust companies, based on income, licenses, or franchises, is void as to national banks; and if the shares of such banks should be assessed on an ad valorem basis, while the state banks are taxed under the ordinance, the assessment would be void as to national banks as a discrimination in favor of state banks and trust companies, the rate on the ad valorem basis being higher than that paid by the state banks and trust companies under the ordinance. George Schuster & Co. v. City of Louisville (1905) 89 S. W. 689, 28 Ky. Law Rep. 588, 124 Ky. 189.

This section is not violated because two banks which have retained their state organization are taxed a less amount under their charter by special privilege. Lionberger v. Rowse (1868) 43 Mo. 67.

Since under P. S. Vt. 804-820, taxing interest-bearing national bank deposits, owners thereof are required to pay a single tax to the state at a fixed rate less than the average rate of taxes imposed under the general law, such act is not unconstitutional as discriminating against national banks in that all their deposits bearing interest were taxed to the depositors, while only deposits in savings institutions exceeding $2,000 were similarly taxed. State v. Clement Nat. Bank (Vt. 1911) 78 A. 944.

34. Shares owned by nonresidents.The retroactive provision of Act Ky. March 21, 1900, relating solely to national banks, by which such banks are charged with a liability for taxes for past years on their capital stock, whether held within or without the state, and are subjected to a penalty in addition for delinquency, operates as a discrimination against such banks, prohibited by this section, where, until the passage of that act, national banks were not required to return for taxation shares of their capital stock held outside of the state. Covington v.

First Nat. Bank (1905) 25 Sup. Ct. 562, 565, 198 U. S. 100, 49 L. Ed. 963, affirming judgment First Nat. Bank v. Covington (C. C. 1903) 129 Fed. 792.

Under this section a nonresident shareholder, being compelled to pay the tax at such place, is entitled to all deductions from the value of his shares, on account of debts, that are allowed to resident shareholders. Mercantile Nat. Bank v. Shields (C. C. 1894) 59 Fed. 952.

This section makes unlawful the imposing by, or by the authority of, a state, of a tax, on shares owned by an inhabitant thereof in the capital stock of a national banking association organized under that statute, and established in another state. Flint v. Board of Aldermen of City of Boston (1868) 99 Mass. 141, 96 Am. Dec. 713.

The provisions of Act Mass. June 11, 1868 (St. 1868, c. 349), taxing shares in national banks owned by nonresidents of the state, are not unconstitutional, as exceeding the limitation prescribed to the rate of assessment by this section. Providence Inst. for Savings v. City of Boston (1869) 101 Mass. 575, 3 Am. Rep. 407.

The general statute (Sess. Laws Mich. 1875, p. 185) providing for the taxation of bank stock held by nonresidents of the town in which the bank is located, who are residents of another township in the same county, in the township where they reside, the charter of the village of Cassopolis, authorizing the taxation of "all property, real and personal, within the limits of said village," not exempt from taxation for county and township purposes, does not warrant the taxation by the village of the shares of stockholders who reside in another township in the same county. Howell v. Village of Cassopolis (1877) 35 Mich. 471.

Stock in the name of, and owned by, nonresident stockholders, is not taxable to the bank. Mechanics' Bank of Newark v. Thomas (1857) 26 N. J. Law (2 Dutch.) 181.

The stock of a national bank located in New Jersey, held by a resident of Pennsylvania, is not liable to taxation in the latter state. Bucks v. Ely (Pa. 1867) 6 Phila. 414.

IV. STATE LEGISLATION 35. Construction, operation, and validity. As to construction and operation of state laws taxing national bank property, see Citizens' Nat. Bank v. Kentucky to Use of Boyle County (1910) 30 Sup. Ct. 532, 217 U. S. 443, 54 L. Ed. 832; Covington City Nat. Bank v. City of Covington (C. C. 1884) 21 Fed. 484; Second Nat. Bank v. Caldwell (D. C. 1882) 13 Fed. 429; People v. Moore (1873) 1 Idaho, 504; Strader v. Manville (1870) 33 Ind. 111; Town of McGregor v. McGregor Branch of State Bank (1861) 12 Iowa, 79; Henkle v. Town of Keota (1886) 68 Iowa, 334, 27 N. W. 250; Dutton v. Citizens'

Nat. Bank (1894) 53 Kan. 440, 36 Pac. 719; Commonwealth V. First Nat. Bank (1815) 67 Ky. (4 Bush) 98, 96 Am. Dec. 285; Commonwealth v. Covington Nat. Bank (1885) 7 Ky. Law Rep. (abstract) 48; Stetson v. City of Bangor (1868) 56 Me. 274; Revere v. City of Boston (1877) 123 Mass. 375; First Nat. Bank v. Peterborough (1875) 56 N. H. 38, 32 Am. Rep. 416; Weston v. City of Manchester (1883) 62 N. H. 574; City of Utica v. Churchill (1865) 33 N. Y. 161; People v. Commissioners of Taxes and Assessments (1876) 67 N. Y. 516; Buie v. Commissioners of Town of Fayetteville (1878) 79 N. C. 267; Moore v. City of Fayetteville (1879) 80 N. C. 154, 30 Am. Rep. 75; Frazer v. Siebern (1866) 16 Ohio St. 614; Niles v. Shaw (1893) 50 Ohio St. 370, 34 N. E. 162; Strong v. O'Donnell (Pa. 1875) 32 Leg. Int. 283; Appeal of Truby (1880) 96 Pa. 52; Gorley v. Bowlby (1889) 8 Pa. Co. Ct. R. 17; Harrison v. Vines (1876) 46 Tex. 15; Waco Nat. Bank v. Rogers (1879) 51 Tex. 606; Rosenburg v. Weekes (1887) 67 Tex. 578, 4 S. W. 899; State v. Clement Nat. Bank (1911) 78 A. 944, 74 Vt. 167, Ann. Cas. 1912D, 22; Ruggles v. City of Fond du Lac (1881) 53 Wis. 436, 10 N. W. 565.

As to validity of such laws, see People's Nat. Bank of Lynchburg v. Marye (C. C. 1901) 107 Fed. 570 (decree modified [1903] 24 S. Ct. 68, 191 U. S. 272, 48 L. Ed. 180); Middletown Nat. Bank v. Town of Middletown (1902) 51 A.

138, 74 Conn. 449; Whitney v. Ragsdale (1870) 33 Ind. 107, 5 Am. Rep. 185; Primghar State Bank v. Rerick (1895) 96 Iowa, 238, 64 N. W. 801; Commonwealth v. Covington Nat. Bank (1885) 7 Ky. Law Rep. 40.

CITED WITHOUT DEFINITE AP.

PLICATION

Cummings v. Merchants' Nat. Bank (1879) 101 U. S. 153, 25 L. Ed. 903; Tennessee v. Whitworth (1886) 6 Sup. Ct. 645, 647, 117 U. S. 129, 29 L. Ed. 830; Bell's Gap R. Co. v. Pennsylvania (1890) 10 Sup. Ct. 533, 536, 134 U. S. 232, 33 L. Ed. 892; Cleveland Trust Co. v. Lander (1902) 22 Sup. Ct. 394, 395, 184 U. S. 111, 46 L. Ed. 456; Lander v. Mercantile Nat. Bank of Cleveland, Ohio (1902) 22 Sup. Ct. 908, 913, 186 U. S. 458, 46 L. Ed. 1247; Guthrie v. Harkness (1905) 26 Sup. Ct. 4, 7, 199 U. S. 148, 50 L. Ed. 130, 4 Ann. Cas. 433; Home Savings Bank v. Des Moines (1906) 27 Sup. Ct. 571, 575, 205 U. S. 503, 51 L. Ed. 901; Wynne v. U. S. (1909) 30 Sup. Ct. 447, 448, 217 U. S. 234, 54 L. Ed. 748; Davenport Nat. Bank v. Mittelbuscher (C. C. 1883) 15 Fed. 225, 228; Santa Clara v. Southern Pac. R. Co. (C. C. 1883) 18 Fed. 385, 401 (affirmed [1886] 6 Sup. Ct. 1132, 118 U. S. 394, 30 L. Ed. 118); The Exchange Bank Tax Cases (C. C. 1884) 21 Fed. 99; First Nat. Bank v. Hungate (C. C. 1894) 62 Fed. 548, 549.

Sec.

9785. Short title of act; "bank," "national bank," "national banking association," "member bank," "board," "district," and "reserve bank," defined.

FEDERAL RESERVE DISTRICTS 9786. (1) Federal reserve cities and Federal reserve districts; designation by Reserve Bank Organization Committee; readjustment.

(2) Powers of Reserve Bank Or-
ganization Committee; Fed-
eral reserve banks; super-
vision of organization; titles
of Federal reserve banks.
(3) Acceptance of act by banks;
subscriptions to capital stock
of Federal reserve banks;
when and how payable.

(4) Liability of shareholders of
Federal reserve banks.

(10) Allotment to United States of stock in Federal reserve banks.

(11) Nonvoting stock.

(12) Rules and regulations govern-
ing transfers of capital stock
of Federal reserve banks.
(13) Required capital of Federal
reserve banks; effect of act
on present reserve cities and
central reserve cities; powers
and expenses of organization
committee in carrying out
the provisions of act; ap-
propriation.

BRANCH OFFICES

9787. Federal reserve bank branch offices; directors and managers of branch banks.

FEDERAL RESERVE BANKS 9788. (1) Certificate of establishment of Federal reserve districts; contents; application blanks for subscriptions to capital stock of Federal reserve banks.

(2) Certificate of organization of Federal reserve bank; contents.

(3) Acknowledgment and trans-
mission of certificate of or-
ganization to Comptroller of
Currency; filing.

(4) Corporate capacity and pow-
ers of Federal reserve banks.
(5) Board of directors of Federal
reserve banks; classifica-
tion, qualifications and elec-
tion; compensation and ex-
penses; chairman of Feder-
al reserve bank and "Feder-
al reserve agent"; appoint-
ment, qualifications, compen-
sation, and powers and du-
ties; deputy chairman of
Federal reserve bank and
deputy Federal
agent; meetings of direc-
'tors; term of office of direc-
tors; vacancies in office of
directors.

reserve

STOCK ISSUES; INCREASE AND DECREASE OF CAPITAL 9789. Capital stock of Federal reserve banks; value of shares; increase or decrease; certificate of increase; transfer or hypothecation of shares owned by member banks prohibited; subscriptions to stock of reserve bank on increase of capital by member bank; amount of subscription to stock of reserve bank required of member banks after organization of reserve bank; surrender of shares of stock in reserve bank by member bank on decrease of capital or liquidation.

9790. Cancellation of stock held by member bank on insolvency; certificate of reduction of capital of reserve bank.

DIVISION OF EARNINGS

9791. (1) Dividends on stock of reserve banks; franchise tax on net earnings of reserve banks; surplus fund.

(2) Disposition of net earnings paid to United States as franchise tax; disposition of surplus fund on dissolution or insolvency of reserve bank. (3) Exemption of reserve banks from taxation.

STATE BANKS AS MEMBERS 9792. (1) State banks as members of Federal reserve banks; application, etc., stock, how paid for.

(2) By-laws regulating admission
of state banks, etc.; to mem-
bership in Federal reserve
banks; capital stock required
of state banks as condition
precedent to membership in
Federal reserve bank.
(3) Laws, etc., applicable to state
banks on becoming members
of Federal reserve banks.
(4) Cancellation of membership
of state banks in Federal re-
serve banks.

FEDERAL RESERVE BOARD 9793. (1) Federal Reserve Board; number of members; appointment; ex officio members; salaries.

(2) Members of board, Secretary
of the Treasury, Assistant
Secretaries of the Treasury
and Comptroller of Curren-
cy ineligible during terms of
office and for two years
thereafter to hold office, etc.,
in member banks; qualifica-
tions and terms of office of
members of board; governor
and vice governor of board;
office for board; oath of of-
fice of members of board.
(3) Assessments on Federal re-
serve banks to pay expenses
of Federal Reserve Board.
(4) First meeting of Federal Re-
serve Board; Secretary of
the Treasury ex officio chair-
man of Federal Reserve
Board; members not to hold
stock in banks, etc.; vacan-
cies in board, how filled.
(5) Filling vacancies on Federal
Reserve Board.

(6) Powers of Secretary of the
Treasury not impaired.
(7) Reports of Federal Reserve
Board to Congress.

(a) Examination of accounts, etc., of Federal reserve banks and member banks; publication of weekly statements.

(b) Permitting rediscounting of discounted paper.

(c) Suspending reserve requirements; establishing graduated tax on deficiency in gold reserve held against Federal reserve notes.

(d) Supervising and regulating issue and retirement of Federal reserve notes.

(e) Adding to or reclassifying reserve and central reserve cities.

(f) Suspending or removing officers or directors of Federal reserve banks.

(g) Requiring writing off of doubtful or worthless assets of Federal reserve banks.

(h) Suspending operations or liquidating or reorganizing Federal reserve banks.

(i) Requiring bonds of Federal re

serve agents; making regulations for safeguarding collateral, bonds, Federal reserve notes, etc.

(j) Exercising supervision over Federal reserve banks. (k) Granting permits to national

banks to act as trustees, etc. (1) Employing attorneys, experts,

assistants, clerks, etc.; salaries and fees of attorneys, etc.; civil service rules not applicable to appointments. (m) To permit member banks to carry reserve in Federal reserve bank.

OPEN MARKET OPERATIONS 9797. (1) Purchase or sale in open market by Federal reserve banks of bills of exchange, etc. (2) Powers of Federal reserve banks.

GOVERNMENT DEPOSITS 9798. (1) Government deposits in Federal reserve banks and fiscal agencies thereof for United States.

(2) Deposits of funds of United States in banks not belonging to system established by Act prohibited; member banks as depositaries.

NOTE ISSUES

9799. (1) Federal reserve notes; issue authorized; by whom and for what dues receivable; redemption.

(2) Application for Federal re-
serve notes; collateral re-
quired.

(3) Reserves against deposits and
Federal reserve
notes;
amount; lettering and num-
bering on Federal reserve
notes; return for credit or
redemption of Federal re-
serve notes to reserve bank
of issue; ten per cent pen-
alty on issue of Federal re-
serve notes by bank other
than that of issue; redemp-
tion of Federal reserve notes
at Treasury; exchange for
gold of Federal reserve notes
received at Treasury other-
wise than for redemption;
cancellation and destruction
of Federal reserve notes un-
fit for circulation.
(4) Deposits in Treasury for re-
demption of Federal reserve
notes; amount; grant or
rejection of application for
Federal reserve notes; man-
ner of supplying notes; in-
terest on notes; lien of notes
on assets of bank.

(5) Reduction of liability for out

standing Federal reserve notes by deposit of Federal reserve notes, etc., with Federal reserve agent; disposition of gold, etc., so deposited. (6) Withdrawal of collateral deposited for protection of Federal reserve notes and substitution of other collateral. (7) Plates and dies for and denominations, form and tenor of Federal reserve notes. (8) Place of deposit of Federal reserve notes prior to delivery to Federal reserve banks. (9) Control and direction of plates and dies by Comptroller of