cured by bonds, and the remainder, $47,252,852, was
covered by lawful money in the government treasury, deposited for the
redemption and retirement of the notes as they might be received.

An important extension of the national system resulted from the authority
given by the act of 1900 to incorporate national banks with a capital as
low as $25,000, in places having a population not in excess of 3000. The
previous minimum limit had been $50,000. Under this provision there were
incorporated to the 31st of October 1907 2389 national banks with capitals
of less than $50,000, with aggregate capital of $62,312,500, of which 272
banks were conversions of state and private institutions, 752 were
reorganizations and 1365 were new institutions.

The national banks possess most of the powers of commercial banks, but are
not permitted to hold real estate other than their banking houses, unless
taken for debt. Five reports are required each year to the comptroller of
the currency at dates selected by him without notice, and each bank is
subject to the visitation of bank examiners acting under the comptroller.
No reserves against notes are required by existing law except 5%, which is
[v.03 p.0348] kept in Washington for current redemption purposes. The
redemption system is defective in that redemptions are not authorized at
other places, and the notes reach the treasury on an average only about
once in two years. For many years the banks were prohibited from retiring
more than $3,000,000 of notes monthly, but the limit was raised by an act
of 4th March 1907 to $9,000,000 per month.

Reserves are required against deposits to the amount of 25% in so-called
"reserve cities," and 15% in what are called the "country banks" outside of
reserve cities. Not all these amounts, however, are required to be kept in
cash. The three central reserve cities, where cash is required, with only
trifling deductions, are New York, Chicago and St Louis. In other reserve
cities, which in 1908 numbered forty, the banks are permitted to deposit
half their cash in national banks in central reserve cities, while country
banks may deposit three-fifths of their cash in any reserve city. The
shareholders of national banks are subject in case of liquidation to double
liability upon their shares, and this is now the rule in most of the
conservative state banking systems. National bank-notes are not legal
tender, but are receivable by the government for all obligati