The bank must pay the charges for transportation and the cost for assorting redeemed notes. At the end of each fiscal year, account having been kept of its expenses by the National Bank Redemption Agency, the several banks are assessed in proportion to the amount of their notes redeemed, and this sum is then charged to their 5 per cent funds respectively. If a bank deposits lawful money for the retirement of its circulation, it is assessed at the time it makes such deposit for the cost of transporting and redeeming the notes then outstanding, the assessment being equal to the average cost of the redemption of national bank notes during the preceding year. The rate charged to the national banks in 1915-1916 for redemption expenses was $.817229 per $1,000 redeemed.
Any bank desiring to withdraw all of its circulation, or any part of it, may do so by depositing with the Treasurer of the United States lawful money to an amount equal to the notes it wishes to retire. The Treasurer will then reassign the bonds to the bank which is withdrawing circulation, and will destroy the redeemed circulation. The retirement of circulation by depositing lawful money is limited to $9,060,00o in any one calendar month.' In certain cases, however, this limitation dOes not apply: (r) when a bank reduces its capital stock to an amount below its outstanding circulation; (2) when a bank retires its circulation by surrendering the notes for cancellation without reissue, as in this case no deposit of lawful money is required; (3) when bonds are called for redemption by the Secretary of the Treasury and circulating notes are withdrawn in consequence thereof. The purpose of limitation on the rate of retirement of national bank notes is to prevent too sudden reduction in the volume of currency, with its train of undesirable consequences.
Effect of Liquidation Within six months from the date of the vote to go into liquida tion, the bank must deposit with the Treasurer of the United States lawful money sufficient to redeem all outstanding notes. This deposit is made directly, or through a correspondent or agent, with the Treasurer at Washington. When the deposit is made and the bank has paid to the Treasurer all amounts due for taxes on circulation and for expenses of redeeming outstanding notes, its bonds on deposit will be surrendered to it. Thereafter the shareholders are discharged from all liability on the outstand ing notes, and these notes are redeemable only at the Treasury. If the bank fails to take up the bonds within 3o days after the expiration of the time specified, the Comptroller has the power to sell them at public auction in New York and, after providing for the redemption of the outstanding notes and the necessary expenses of the sale, to pay over any balance remaining to the bank. It is made the duty of the Treasurer, the federal reserve
banks, and designated depositories of the United States, to assort and return to the Treasury for redemption the notes of such national banks as have failed or gone into voluntary liquida tion, and the Treasurer causes the redeemed notes of such banks to be destroyed and charged to the redemption accounts of the banks.
Effect of Failure to Redeem Upon Demand Whenever a national bank fails to redeem in lawful money any of its circulating notes, upon demand of payment duly made at its place of business during the usual business hours, the holder may cause the notes placed in one package to be protested by a notary public, unless the president or cashier of the bank waives demand and notice of protest and makes, signs, and delivers to the holder making the demand an admission in writing stating the time of the demand, the amount demanded, and the fact of non-payment thereof. The notary public forwards such protest or admission to the Comptroller, who with the concurrence of the Secretary of the Treasury may then appoint a special agent, of whose appointment immediate notice is given to the bank, and who proceeds at once to ascertain and report whether the bank has refused to pay its notes in lawful money when demanded. If, from such protest and the report of this agent, the Comptroller is satisfied that the bank has refused to redeem its notes and is in default, he declares, within 3o days, the deposited bonds forfeited to the United States. After notice has been sent to the defaulting bank it becomes unlawful for the bank to do any business except receive and safely keep money belonging to it and to deliver special deposits.
The holders of the notes of the defaulting bank are also imme diately notified that the notes will be redeemed as presented at the Treasury. The Comptroller may then, at his discretion, either cancel an amount of bonds pledged by the bank equal at current market rates, not exceeding par, to the notes paid, or may cause so much of them as may be necessary to redeem its out standing notes to be sold at public auction in New York City, after giving 3o days' notice of such sales to the bank. If the Comptroller deems it for the best interest of the United States, he may sell any of the bonds at private sale, but not for less than par value or market value thereof at the time of sale. If the proceeds of all the bonds of the bank when thus sold are in sufficient to reimburse itself for the amount expended in redeem ing the notes of the bank, the United States has a paramount lien upon all the bank's assets for the deficiency.