satisfied it will work this way, and having passed the House once and having come from the Banking and Currency Committee after pretty careful study, I imagine that expedition would be along the lines of no change.

Mr. LONGWORTH. Was this the precise phraseology?

Mr. LEFFINGWELL. Exactly.

The CHAIRMAN. Except for the word "general."

Mr. LONGWORTH. I think there was the word "general."

Mr. LEFFINGWELL. That does not make any difference, whether that is in or out.

Mr. SLOAN. A man can go into a bank with $100,000 capital and surplus and borrow $10,000 on any ordinary form of security, and borrow $10,000 by giving Government bonds as collateral in addition, making $20,000. Then he could ask the Comptroller of the Currency to permit him to borrow $80,000 more on Government bonds from that bank?

Mr. LEFFINGWELL. It never was intended that any man could do that, except as permitted by general regulations. It was not intended that this should be anything involving action on the part of the Comptroller of the Currency as to individual cases. I have no doubt that the word "general" was wisely inserted, because the thought is that the comptroller would establish general rules and regulations and not pass on specific cases.

The CHAIRMAN. I notice on line 2, page 9, these words: "the capital stock of such associations actually paid in and unimpaired and one-tenth part of its unimpaired surplus fund." Now, that language is changed down in line 18 by using the words "of the capital and surplus of such associations." You mean "of such capital and surplus," because they are entirely different propositions. Mr. FRANKLIN. I think that point is very well taken. I think it is paid-in capital and unimpaired surplus, exactly like it is in the law. So if you put in "such," that would get it.

The CHAIRMAN. Why would not it be better to make it clear. Take the exception clause and put it in line 17, after the word " exceed" and cut it off by a parenthesis, and get what we all want, "shall not exceed (except subject to such rules, regulations, and limitations as may be established from time to time by the Comptroller of the Currency, with the approval of the Secretary of the Treasury) 10 per cent of the capital," etc.

Mr. FRANKLIN. I think that would remove any doubt, Mr. Chair

man.

The CHAIRMAN. I think the committee understands the bill thoroughly.

Mr. LEFFINGWELL. There is a brief clause which Mr. Franklin has written which is calculated to preserve and make perfectly clear the already existing contractual rights of the three and a half bonds which have not heretofore been converted.

In order that the contractual rights of holders of 33 per cent first liberty loan bonds who desire to avail themselves of the conversion privilege arising on the issue of the fourth liberty loan may be preserved, a clause is suggested granting them this $30,000 exemp tion to which they are entitled.

It is as follows:

The owners of bonds issued under the exercise of any conversion privilege arising as a consequence of the issue of bonds of the fourth liberty loan shall be entitled to a like exemption, as provided for in subdivision 1 of this paragraph, in respect of not to exceed $30,000, per amount of such bonds.

The CHAIRMAN. You mean when they are converted?
Mr. LEFFINGWELL. Yes.

The CHAIRMAN. I thought that was it, and I think it will be all right.

Mr. LEFFINGWELL. It would follow under the contract entered into with these bondholders, but in order to make it clear we drafted this language.

The CHAIRMAN. You expect another liberty loan campaign to begin on the 28th?

Mr. LEFFINGWELL. On the 28th of September.

The CHAIRMAN. And you think it is very important that we should stop right now with the revenue bill and put this bill through at once?

Mr. LEFFINGWELL. I hope you will not have to stop. I imagine, from the reception you have given this bill, that it is going to be supported in the House.

The CHAIRMAN. We will have to stop for probably two hours, because it will probably take about two hours to pass this bill in the House. You think its importance justifies our doing that?

Mr. LEFFINGWELL. If it is necessary to accomplish the purpose. Mr. GARNER. We would have to stop the consideration of the revenue bill, because we can not get that bill through before a week from Saturday.

Mr. LEFFINGWELL. Then it is necessary.

The CHAIRMAN. Suppose we meet at 3 o'clock and go over the bill section by section. In the meantime, I want Mr. Franklin, or either one of you or both, to go over the bill with Mr. Walker and Mr. Beaman. There is one question I want to ask you. Have you made any calculation as to how much taxes we will lose by this exemption? Mr. LEFFINGWELL. They asked that when you were out of the room; but it will be inconsiderable.

The CHAIRMAN. A great many have asked me about that.

Mr. LEFFINGWELL. And I think it may be that we will lose no taxes. Thereupon the committee adjourned."