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SEC. 18

FEDERAL RESERVE ACT

secured by such bonds, which notes shall be canceled and
Dermanently retired when redeemed.
The Federal reserve banks purchasing such bonds shall
be permitted to take out an amount of circulating notes
*qual to the par value of such bonds.
. Upon the deposit with the Treasurer of the United
States of bonds so purchased, or any bonds with the circulating
 privilege acquired under section four of this Act,
any Federal reserve bank making such deposit in the
manner provided by existing law, shall be entitled to
receive from the Comptroller of the Currency circulating
Dotes in blank, registered and countersigned as provided
by law, equal in amount to the par value of the bonds
30 deposited. Such notes shall be the obligations of the
Federal reserve bank procuring the same, and shall be in
form prescribed by the Secretary of the Treasury, and
to the same tenor and effect as national-bank notes now
provided by law. They shall be issued and redeemed
under the same terms and conditions as national-bank
notes except that they shall not be limited to the amount
of the capital stock of the Federal reserve bank issuing
them,
Upon application of any Federal reserve bank, approved
 by the Federal Reserve Board, the Secretary of the
Treasury may issue, in exchange for United States two
per centum gold bonds bearing the circulation privilege,
but against which no circulation is outstanding, oneyear
 gold notes of the United States without the circulation
 privilege, to an amount not to exceed one-half of the
‘wo per centum bonds so tendered for exchange, and
“hirty-year three per centum gold bonds without the
circulation privilege for the remainder of the two per
centum bonds so tendered: Provided, That at the time of
such exchange the Federal reserve bank obtaining such
one-year gold notes shall enter into an obligation with
the Secretary of the Treasury binding itself to purchase
from the United States for gold at the maturity of such
one-year notes, an amount equal to those delivered in exchange
 for such bonds, if so requested by the Secretary,
and at each maturity of one-year notes so purchased by
such Federal reserve bank, to purchase from the United
States such an amount of one-year notes as the Secretary
may tender to such bank, not to exceed the amount issued
to such bank in the first instance, in exchange for the two

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