The Federal Reserve Act requires every federal reserve bank to maintain reserves, in gold or lawful money, of not less than 35 per cent against its deposits. It does not state, except by implication, where these reserves should be actually carried. With the approval of its counsel the Federal Reserve Board has permitted or required the reserve banks to keep portions of their reserves in various places. In 1915, when the gold settlement fund was established, the board required each reserve bank to contribute gold or gold certificates to this fund, and the fund is counted as reserve. A portion of the bank's reserves is also lodged with the federal reserve agents and with foreign banks. The reserve against deposits may be gold or lawful money, whereas the reserve against federal reserve notes must be gold. For deficiency of reserves against deposits the act provides no penalty, and the federal reserve banks have taken advantage of this fact to evade the tax on deficiency of reserves against federal reserve notes.