1.] [Footnote 2: The law provided that an organization committee should designate not less than eight nor more than twelve cities as Federal reserve cities and should divide the continental United States, excluding Alaska, into districts each containing one such city.

Twelve districts were designated.

Wherever, therefore, the act speaks of "not less than eight nor more than twelve," or of "as many as there are Federal reserve districts," we may, for convenience, speak of twelve.] [Footnote 3: On agreeing to comply with reserve and capital requirements of national banks and to submit to Federal examination.] [Footnote 4: Except that until the surplus of any reserve bank amounts to 40 per cent of its paid-in capital stock, one half of its net earnings shall be paid into a surplus fund.] [Footnote 5: These notes are all secured by the deposit of bonds of the United States, a large share of them bearing interest at the very low rate of 2 per cent.

Two per cent is less than the market rate for government loans, for 3 per cent bonds without this privilege sell above par.

Therefore these 2 per cent bonds were held almost exclusively by banks, and would have lost a good share of their value had the note-deposit privilege been withdrawn.] [Footnote 6: Through the Federal Reserve Board or they may do it voluntarily, sec.