NATIONAL BANKING UNDER THE FEDERAL RESERVE SYSTEM 
or cease to be members. Shares of the capital stock of Federal reserve banks owned by 
member banks shall not be transferred or hypothecated. When a member bank in- 
creases its capital stock or surplus, it shall thereupon subscribe for an additional amount 
of capital stock of the Federal reserve bank of its district equal to six per centum of the 
said increase, one-half of said subscription to be paid in the manner hereinbefore pro- 
vided for original subscription, and one-half subject to call of the Federal Reserve 
Board. A bank applying for stock in a Federal reserve bank at any time after the or- 
ganization thereof must subscribe for an amount of the capital stock of the Federal 
reserve bank equal to six per centum of the paid-up capital stock and surplus of said 
applicant bank, paying therefor its par value plus one-half of one per centum a month 
from the period of the last dividend. When the capital stock of any Federal reserve 
bank shall have been increased either on account of the increase of capital stock of 
member banks or on account of the increase in the number of member banks, the 
board of directors shall cause to be executed a certificate to the Comptroller of the Cur- 
rency showing the increase in capital stock, the amount paid in, and by whom paid. 
When a member bank reduces its capital stock it shall surrender a proportionate 
amount of its holdings in the capital of said Federal reserve bank, and when a member 
bank voluntarily liquidates it shall surrender all of its holdings of the capital stock of 
said Federal reserve bank and be released from its stock subscription not previously 
called. In either case the shares surrendered shall be canceled and the member bank 
shall receive in payment therefor, under regulations to be prescribed by the Federal 
Reserve Board, a sum equal to its cash-paid subscriptions on the shares surrendered 
and one-half of one per centum a month from the period of the last dividend, not to 
exceed the book value thereof, less any liability of such member bank to the Federal 
reserve bank. 
Insolvency of Member Bank 
Sec. 6. If any member bank shall be declared insolvent and a receiver appointed 
therefor, the stock held by it in said Federal reserve bank shall be canceled, without 
impairment of its liability, and all cash-paid subscriptions on said stock, with one-half 
of one per centum per month from the period of last dividend, not to exceed the book 
value thereof, shall be first applied to all debts of the insolvent member bank to the 
Federal reserve bank, and the balance, if any, shall be paid to the receiver of the in- 
solvent bank. Whenever the capital stock of a Federal reserve bank is reduced, either 
on account of a reduction in capital stock of any member bank or of the liquidation or 
insolvency of such bank, the board of directors shall cause to be executed a certificate 
to the Comptroller of the Currency showing such reduction of capital stock and the 
amount repaid to such bank. 
Division of Earnings 
As amended by act approved March 3, 1919 (40 Stat., 1314, chap. 101). 
Sec. 7. After all necessary expenses of a Federal reserve bank have been paid or 
provided for, the stockholders shall be entitled to receive an annual dividend of six 
per centum on the paid-in capital stock, which dividend shall be cumulative. After 
the aforesaid dividend claims have been fully met, the net earnings shall be paid to 
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