commercial zones as hereinbefore provided any national bank may retire
all or any part of its present bond-secured note circulation by
depositing with the United States Treasurer an amount of the present
bond-secured notes or lawful money, or both, which shall be equal to
the amount of its circulation so retired, and may thereupon, with the
approval of the Comptroller of the Currency, take out for issue and
circulation an amount of bank notes, which shall be known as "national
bank notes," that does not exceed in amount its paid-up and unimpaired
capital without depositing United States bonds or any other securities
to secure the payment thereof as now provided by law: _Provided,
however_, That before any national bank shall have the right to retire
its present bond-secured circulation and take out national bank notes
for circulation as in this section prescribed, it shall first, unless
located in its financial centre, make arrangements with a national bank
which is located in its financial centre for the redemption of its bank
notes in gold coin or other lawful money: _And provided further_, That
it shall first deposit in gold coin or gold coin certificates with
the American Reserve Bank an amount of money equal to 7 per centum of
its average deposits during the preceding calendar six months, and in
addition thereto an amount equal to 7 per centum of the national bank
notes it proposes to take out for issue and circulation.
COMMENT:--The amount of notes is limited to the amount of capital as
a matter of convenience only. Some banks will not be able to keep out
25 per cent of their circulation, because their customers use checks;
other banks will need at certain times of the year in some sections
of the United States an amount of circulation largely in excess of
the amount of their capital. The habits of the people will always
determine what the amount of currency in use is, if permitted to
choose between checks and notes; but crop-moving times will greatly
increase the normal demand, as we have seen in the case of Canada.