CONSOLIDATION 
the value of the capital stock, it is necessary to furnish to the Comp- 
troller’s office a sworn certificate, executed by the president or cashier 
of the consolidated bank, showing that such increase has been paid 
in cash. 
Bonds (on deposit to secure circulation) held by either bank in 
excess of the capital of the consolidated bank, must be withdrawn 
before the consolidation is approved by the Comptroller’s office. 
These bonds will be released upon the deposit of lawful money to 
retire outstanding surplus circulation, providing the usual technicali- 
ties are complied with. If bonds are to be transferred to the consoli- 
dated bank, it will be necessary only to furnish the Treasurer’s 
receipts to the Comptroller. 
Under the Federal Reserve Act, shares of the capital stock of 
Federal Reserve Banks owned by member banks cannot be trans- 
ferred or hypothecated. This provision prevents a transfer of 
Federal Reserve stock by purchase, but does not prevent a transfer 
by operation of law. Thus, when two or more national banks con- 
solidate, the consolidated bank continues the corporate identity of 
one of the consolidating banks, and the consolidated bank becomes 
owner of the Federal Reserve stock of the other consolidating banks 
as soon as the consolidation takes effect. In the event that the con- 
solidation results in a change of title, the certificates of stock issued 
in the names of the consolidating banks should be surrendered and 
cancelled, and a new certificate will be issued. 
2. Consolidation with one bank liquidating—Where the capital of 
the absorbing bank is not to be increased by consolidation, the di- 
rectors of that bank may enter into a contract with the directors 
or agents of the liquidating bank to purchase its assets, assume its 
liabilities, and to pay the value of assets purchased in excess of 
liabilities to depositors and other creditors, minus any expense inci- 
dent to liquidation. 
If the capital stock of the absorbing bank is to be increased by 
an amount equal to the stock of the liquidating bank, the additional 
shares may be sold to the stockholders of the liquidating bank, with 
the consent of the shareholders of the absorbing bank. Providing 
thus for the shareholders of the liquidating bank, the directors of the 
continuing bank contract to take over the assets and liabilities of 
the liquidating bank. 
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