Where a national bank makes a loan on the security of farm land, the maker and indorser of the note become liable to the national bank. Such loans can not be treated as bills of exchange drawn in good faith against actually existing values, or as commercial or business paper actually owned by the person negotiating the same. They are, therefore, not excluded from the limitation imposed by section 5200 by the proviso to that section. The question, therefore, arises whether section 24 of the Fed

eral Reserve Act can be construed as an amendment to section 5200.

It will be observed that no reference is made to section 5200 by section 24, and while a specific limitation is contained in this section, this limitation applies merely to the value of the security and the aggregate amount of such loans that may be made by a national bank that is to say, it is specifically provided that no loans shall be made for an amount exceeding 50 per cent of the actual value of the property offered as security. This limitation is in no sense inconsistent with the provision of section 5200 which relates to the amount which may be loaned to any one person, firm, or corporation. It merely provides that the security must be double the amount of the loan.

In the opinion of this office, therefore, section 24 of the Federal Reserve Act can not be construed as repealing any part of section 5200, Revised Statutes, and national banks are pro

M. C. ELLIOTT, Counsel.

Hon. C. S. HAMLIN,

Governor Federal Reserve Board.

Stamp Tax on Certificates of Stock.

The following opinion, rendered by the Attorney Genthat section 7 of the Federal Reserve Act exempts certifieral at the request of the Secretary of the Treasury, holds cates of stock issued to member banks by Federal Reserve Banks from the stamp tax imposed in Schedule A of the act of October 22, 1914 (38 Stat., 759).

DEPARTMENT OF JUSTICE,

Washington, March 10, 1916. SIR: I have the honor to acknowledge receipt of your letter of February 15, 1916, wherein you ask my opinion as to whether certificates of stock to be issued to member banks

by Federal Reserve Banks must be revenue stamped. In my opinion they should not be so stamped, and for these reasons: stamped, and for these reasons:

The Federal Reserve Act of December 23, 1913 (38 Stat., 258), provides that—

stock and surplus therein, and the income deFederal Reserve Banks, including the capital rived therefrom, shall be exempt from Federal, State, and local taxation, except taxes upon real estate.

This act plainly frees such stock certificates of the stamp duty tax unless its force has been modified by subsequent legislation. Whether this is so or not depends on the interpretation of certain language in Schedule A of the act of October 22, 1914 (38 Stat., 759), providing for a stamp tax on

each original issue, whether on organization or reorganization, of certificates of stock by any such association

*

etc.

In my opinion the exemption created by the first-named act is in no wise affected by the last quoted provision. The latter act can, and properly should be, read as imposing a tax on certificates of stock other than the capital stock of a Federal Reserve Bank. The rule controlling the case is announced by the Supreme Court of the United States in Washington v. Miller (235 U. S., 422, 428), as follows:

In these circumstances we think there was

no implied repeal, and for these reasons: First, such repeals are not favored, and usually occur only where there is such an irreconcilable conflict between an earlier and a later statute that effect can not reasonably be given to both (citing cases); second, where there are two statutes upon the same subject, the earlier being special and the later general, the presumption is, in the absence of an express repeal, or an absolute incompatibility, that the special

is intended to remain in force as an exception to the general (citing cases); and, third, there was in this instance no irreconcilable conflict could be given reasonable operation if the or absolute incompatibility, for both statutes presumption just named were recognized.

See also Townsend v. Little (109 U. S., 512, 594); Ex parte Crow Dog (109 U. S. 556, 570); Rodgers v. United States (185 U. S., 83, 87, 89); United States v. Healey (160 U. S., 136, 146); United States v. Greathouse (166 U. S., 601, 605); People v. Hanrahan (42 N. W., 1124); State ex rel. v. Stratton (38 S. W., 83); Wheeler v. Lane (15 Vt., 26). Respectfully,

T. W. GREGORY,
Attorney General.

To the SECRETARY OF THE TREASURY.

leather is an important factor. Some manufacturers report that in spite of an increase in prices retailers are buying freely and raw materials are getting so high that a further advance in prices is expected in the near future. Manufacturers are nearing the end of their spring run and already orders for the fall run are reported to be unusually heavy.

Cotton mills are running as full as the supply of labor will permit, the shortage being principally in the weaving departments. Good buying is reported in all grades of goods, but is especially evident in fine and fancy lines. Mills manufacturing these goods are sold several months ahead and the demand still continues strong. Mills are taking some orders for deliveries starting in August or September and running the usual period of three months beyond that time. Some mills are reported to be declining further advance orders at this time, as the trend of cloth prices is upward and mill treasurers wish to be in a position to take advantage of the higher prices.

Woolen and worsted mills are running at full capacity with orders booked far in advance. The report of the National Association of Woolen Manufacturers as of March 1 shows the greatest activity since these reports were inaugurated some two years ago, the percentage of idle woolen spinning spindles and worsted spinning spindles being only 9.3 per cent and 7.9 per cent, respectively. It is also reported that the per centage of domestic business is very much larger than is popularly supposed, foreign business being a very small factor.

In the paper trade the lack of some raw materials and the high price of others has brought about a condition that is unprecedented. The demand both at home and abroad for paper is abnormal. This has caused many jobbers and consumers to anticipate their needs far in advance, thus making a serious situation worse. In this industry the freight embargo has also caused serious inconvenience and in some cases considerable loss.

The principal feature in the bond market is the buying of securities exempt from taxes in Massachusetts due to the approach of April 1, which is tax day. An extremely heavy demand for this class of security is reported. DISTRICT NO. 2-NEW YORK.

Trade throughout the district continues on a broad scale, with no apparent signs of a slackening in industrial activity at a time when some contraction is usually experienced. The month has witnessed a steady growth in the volume of business with production considerably below consumption. In spite of the advancing prices, which wouid ordinarily check the inquiry for merchandise, current demand is very large, especially for immediate deliveries of leather, footwear, dry goods, and steel products. Manufacturers in these and other lines are rejecting urgent demands for goods which they are unable to supply either because their plants are booked to capacity or because of inability to obtain raw materials.

Paper making, which is one of the most important industries in this district, furnishes a striking instance of the prosperity which has been apparent in so many lines of business during the past few months. Paper mills are working full time and are unable to fill the great volume of orders, being sold out several months in advance. Prices have advanced sharply, the upward movement during the past year ranging from $3 to $30 per ton. Collections are unusually good, owing to the fact that buyers are very anxious to maintain an exceptional credit standing in order to secure precedence in the filling of orders. Large shipments of paper are being made to South American countries. The demand from European countries is also heavy but difficult to supply on account of the shortage of vessels.

In all retail lines activity is well sustained in spite of the fact that retailers are between seasons. Department stores are kept busy

Manufacturers are overwhelmed with orders, but are hampered by a scarcity of raw materials, especially dyestuffs, and by a scant supply of labor. The absence of supplies is further aggravated by a serious car shortage, which is uncommon at this period of the year and has caused the railroads to declare additional embargoes. Recent storms have imposed further burdens on the carriers.

The New York Clearing House banks on March 11, 1916, reported aggregate loans of $3,343,715,000, deposits $3,552,286,000, and excess reserves $136,226,880. As compared with January 29, 1916, loans have increased $70,680,000, deposits have advanced $29,101,000, while excess reserves have decreased $41,574,860. Exchanges through the New York Clearing House for the month of February totaled $11,106,737,277, an increase of $4,624,910,730 over the same month ast year. On the New York Stock Exchange transactions during the month of February in both stocks and bonds aggregated less than in January, but showed a considerable gain over the corresponding month last year. Prices of shares were generally lower than in January. The par value of bonds sold during February, 1916, was $80,390,000-an increase of $36,666,500 over February, 1915while the number of shares of stock traded in on the exchange aggregated 12,080,136 against 4,347,866 in February last year. New incorporations in Eastern States, embracing concerns with a capital of $1,000,000 or over, totaled $365,995,300 during February, an increase of $312,045,300 over February, 1915. Monthly reports at hand show 298 failures in this district during February, with liabilities

The pig-iron output in February totaled 3,087,212 tons against 1,674,771 in February last year, the former figure representing a new maximum average production of 106,456 tons per day.

Railroad earnings continue to show striking advances over last year's totals, gross earnings for January aggregating $267,043,635, which is an increase of $46,840,040 over the corresponding month in 1915. Total net earnings for the first month of this year were $78,899,810 as compared with $51,552,397 in January, 1915.

Call money was loaned throughout February from 1 per cent to 2 per cent with renewal rates 1 per cent. Time loans on collateral ranged from 2 per cent to 3 per cent for 60 days and 3 per cent to 4 per cent for long-time money. Time money was slightly firmer than in the preceding month. Bankers' acceptances remained unchanged at 2 per cent to 2 per cent. Commercial paper ranged from 3 per cent to 3 per cent, the main volume of business being transacted at 3 per cent. Toward the end of February it became more difficult to place short notes under 3 per cent.

Quotations at closing rates were fairly steady during February on London and Paris sight bills. Sterling rates were, high 4.761, low 4.75, and on February 29 4.768. Francs, high 5.86, low 5.93, and on February 29 5.87. German exchange early in February was 74 and later strengthened to 77, but weakened to 731 by the end of the month. Holland exchange continued at a premium throughout the month, and was quoted at 42.43 at the end of February. Russian bills moved from 29 to 31. The low rate on Italian bills was 6.77, high 6.681.