cent. bonds as provided by section 18 of the Federal Reserve Act:

The regulations provided that on and after December 31, 1915, when section 18 becomes effective, any National bank may submit to the Treasurer of the United States application to sell at par and accrued interest any bonds securing circulation which the bank desires to retire. On March 31, 1916, and quarterly thereafter, the Treasurer of the United States will submit to the Federal Reserve Board a list of all applications to retire circulation that have been received at least ten days before such date.

The board will pass upon such applications and will advise the treasurer of any bonds allotted to the federal reserve banks for purchase; thereupon the treasurer will call on the federal reserve banks required to purchase the bonds to deposit lawful money therefor and after receipt of such deposits the treasurer will convert into the Treasury such sums as may be necessary to redeem the bonds to be retired, will remit the balance to the banks selling the bonds and will transfer title of the bonds to the federal reserve bank acquiring them. Applications to retire circulation which are not accepted by the board must be subsequently renewed.

The regulations further provide that federal reserve banks owning two per cent. consols of 1930 or two per cent. Panama Canal bonds against which no circulation is outstanding may apply for the conversion of such bonds into one-year three per cent. notes or thirty-year three per cent. bonds. Such applications may be submitted at any time, but conversions will be made quarterly only on the first day of January, April, July and October, which are the dividend dates for the consols

of 1930.

Not to exceed one-half of the bonds tendered may be converted into notes. The notes will be termed "one-year Treasury notes"; they will be payable one year from date of issue and a bank applying therefor must execute an obligation to purchase at recurring maturities for thirty years similar notes in like amounts. Subsequently banks may exchange such notes for three per cent. bonds.

These notes will be issued in denominations of $1,000, $10,000 and $50,000. The bonds will be termed "three per cent. conversion bonds" and will be payable thirty years from January of the year of issue; they will be issued in denominations of $100, $1,000, $5,000 and $10,000.

Both notes and bonds will be issued in registered and coupon form; they will bear interest at three per cent., payable quarterly on the first day of January, April, July and October; they will be payable principal and interest in gold coin of the present standard of value and will be exempt from all taxation. They will not be acceptable as security for circulation.

THE FEDERAL RESERVE BOARD MAKES INELIGIBLE OFFICE HOLDERS AND MEMBERS OF PARTY COMMITTEES

FOR OFFICERS OR DIRECTORS

December 22, 1915, the Federal Reserve Board adopted resolutions to the effect that public office holders and members of political party committees are ineligible for election as officers or directors of federal reserve banks. The resolution, which was offered by the Secretary of the Treasury, also informs member banks of the reserve system that in the opinion of the board such persons henceforward should not act as officials or directors of reserve banks.

The action of the board was taken without discussion, the resolution being offered during an election of class C directors of reserve banks. It was stated especially that the action was not aimed particularly at any candidate or at any director or officer now serving.

This action by the board will apply to the selection of class directors. The action of the Federal Reserve Board is final and conclusive in the matter, and no appeal from it is provided in the Federal Reserve Act.

No member manifested a disposition to modify the proposition that politicians should not use the banking system of the country as a part of their patronage or as any adjunct of the party machinery. The text of the resolution follows:

Whereas, It is the opinion of the Federal Reserve Board that persons holding political or public office in the service of the United States, or of any State, territory, county, district, political subdivision or municipality thereof, or acting as members of political party committees, cannot consistently with the spirit and underlying principles of the Federal Reserve Act, serve as directors or officers of federal reserve banks.

Resolved, That the Federal Reserve Board hereby expresses to the member banks its opinion that no such persons should henceforward be elected, or act as directors or officers of federal reserve banks, and prescribes as a condition of eligibility that candidates for election shall comply with the terms of this resolution.

Resolved, further, That copies of this resolution be sent to every member bank and federal reserve bank, and all directors of federal reserve banks.

It was stated that the action of the board was made necessary because of the pressure of political influence for candidates for directorships, and that the urgency of politicians became so emphatic that no progress could be made without hazard of offense to leading men who undertook to dictate the choice of directors.

The situation grew out of the banking practice of practically every part of the United States for half a century. National banks in many cases have been a part of the party system to a material degree with senators and representatives using their influence in Washington to obtain or increase Government deposits and to control bank organizations for the value they might have in commanding political support. The board in the year that has elapsed since the organization of the Federal reserve system has realized that the same influences that attended the operation of the National banks would continue to the new system, and as time passed grow stronger until the system would probably be the creature of political domination.

GOVERNMENT TWO PER CENT. BONDS MAY BE REFUNDED

December 23, 1915, and within twenty years thereafter, the Federal Reserve Board may, at the request of any member bank, direct federal reserve banks to purchase at par, not to exceed $25,000,000 in any one year, Government two per cent. bonds used to secure circulation, and circulation thereby secured shall be retired, and federal reserve banks so purchasing may issue circulation in accordance with chapter second of the National Bank Act, sections 5157-5189, Title LXII., U. S. R. S.1

A federal reserve bank may exchange Government two per cent. bonds for one-year three per cent. Government gold notes in amount equal to one-half of amount of bonds exchanged, and thirty-year Government three per cent. bonds without circulation privilege equal to remainder, pro

1Paine's National Banking Laws (7th Ed.), pp. 55-67.

vided such bank agrees to purchase for gold if so requested at the end of each year for thirty years, an amount of notes equal to the notes so received. Such notes subject to the approval of the Federal Reserve Board may be exchanged for Government three per cent. thirty-year bonds.

THE AMERICAN INTERNATIONAL CORPORATION December 23, 1915, the American International Corporation, with a capital of $50,000,000 and a charter which permits it to engage in almost any enterprise, was incorporated at Albany, N. Y. A corporation organization tax of $25,000 was paid. There have been no promotion fees and there will be no underwriting profits.

The company will begin operations with a capital of $50,000,000, of which $49,000,000 will be in common stock and the remaining $1,000,000 in managers' shares. The par value will be $100. Twenty-five million of the new stock will be offered to stockholders of the National City Bank at par. The remaining $24,000,000 common stock will be offered to those institutions and individuals who have agreed to contribute toward furthering the ends of the new company. The managers' shares will be offered to those men connected with the company in an executive capacity. The managers' shares will share alike in the profits of the American International Corporation until in excess of seven per cent. has been paid in dividends on the common stock. Then the managers' shares will receive twenty per cent. of all disbursements made and the common stock the remaining eighty per cent.

The corporation has a charter that can hardly prove restrictive, no matter what the nature of the activities undertaken. It is primarily the object of the company to coöperate with capitalists in foreign fields for the construction and operation of public utilities and after proper investigation to acquire securities for resale in the United States. But as many of these securities, either because of small

issues or the remoteness of the issuing companies, could not well be placed direct with investors, it is planned to deposit them with a trustee and issue collateral debentures against them. These may either be secured directly by a particular issue of stock or bonds, or they may constitute a lien on the assets of the corporation.

The text of the company's charter is as follows:

We, the undersigned, desiring to form a corporation under the laws of the State of New York, pursuant to the present business corporation law of the said State, all of us being of full age and citizens of the United States, and at least one of us being a resident of the State of New York, do hereby certify, as follows:

First--The name of the corporation is the American International Corporation.

are:

Second-The purposes for which the corporation is to be formed

[Here follow the purposes under eleven sub-divisions.]

In furtherance and not in limitation of the general powers conferred by the laws of the State of New York, it is hereby expressly provided that the corporation shall have also the following powers:

To purchase or otherwise acquire real and personal property of every kind and description and wheresoever situated, including the stocks, bonds, and other evidences of indebtedness of any corporation, domestic or foreign, and to issue in payment or exchange therefor its stock, debentures, notes, bonds, or other obligations.

To manage, improve, develop, lease, mortgage, pledge, hypothecate, deal in, sell, and dispose of all or any of the property, real or personal, at any time owned or controlled by the corporation.

To apply for, obtain, register, purchase, lease or otherwise acquire, hold, own, use, operate, introduce, sell, assign or otherwise dispose of, any and all copyrights, trade marks, and patents, and any and all inventions used in connection with, or secured under, letters patent of the United States of America or elsewhere, or otherwise, and to use, exercise, develop or grant licenses in respect of, or otherwise turn to account, any such copyright, trade marks, patents, inventions, improvements, apparatus, appliances, processes and the like, or any property or information so acquired.

To make and enter into contracts of all kinds with and to act as agent (other than fiscal) or representative for any individual, firm, association, private, public, quasi-public or municipal corporation, State, Government, or governmental authority; and to aid any lawful enterprise.

To borrow money for its corporate purposes; to make, accept, indorse, execute, issue, and deliver bonds, debentures, notes, bills of ex