The hospitality of the house is proverbial, but its chief attraction is
its well-stocked library.
* * * * *
NATIONAL BANKS.
THE SURPLUS FUND AND NET PROFITS.
By George H. Wood.
In the elimination of an unusually large amount of dead assets under the
requirements of the National Bank law, previous to extension of the
corporate existence of a bank, the very interesting question is brought
to notice, of what is the proper construction of the law in regard to
reducing and restoring the surplus fund.
Does the law forbid the payment of a dividend by a National Bank when
the effect of such payment will be to reduce the surplus fund of the
bank below an amount equal to one-tenth of its net profits since its
organization as a National Bank; and if so, upon what ground? It does,
and for the following reasons. The power to declare dividends is granted
by section 5199 of the Revised Statutes of the United States in the
following language: "The Directors of any association (National Bank)
may semi-annually declare a dividend of so much of the _net
profits_ of the association as they shall judge expedient; but each
association shall, before the declaration of a dividend, carry one-tenth
of its net profits of the preceding half year to its surplus fund until
the same shall amount to twenty per cent, of its capital stock.
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