Sec. 18. After 2 years from the passage of this Act, and at any time during a period of 20 years thereafter, any member bank desiring to retire the whole or any part of its circulating notes, may file with the Treas. of the U. S. an application to sell for its account, at par and accrued Int., U. S. bonds securing circulation to be retired.

The Treas. Shall, at the end of each quarterly period, furnish the Fed. Res. Board with a list of such applications, and the Fed. Res. Board may, in its discretion, require the Fed. Res. banks to purchase such bonds from the banks whose applications have been filed with the Treas. at least 10 days before the end of any quarterly period at which the Fed. Res. Board may direct the purchase to be made: Provided, That Fed. Res. banks shall not be permitted to purchase an amount to exceed $25,000,000 of such bonds in any one year, and which amount shall include bonds acquired under Sec. 4 of this Act by the Fed. Res. bank.

Provided further, That the Fed. Res. Board shall allot to each Fed. Res. bank such proportion of such bonds as the capital and surplus of such bank shall bear to the aggregate capital and surplus of all the Fed. Res. banks.

Upon notice from the Treas. of the amount of bonds so sold for its account, each member bank shall duly assign and transfer, in writing, such bonds to the Fed. Res. bank purchasing the same, and such Fed. Res. bank shall, thereupon, deposit lawful money with the Treas. of the U. S. for the purchase price of such bonds, and the Treas. shall pay to the member bank selling such bonds any balance due after deducting a sufficient sum to redeem its outstanding notes secured by such bonds, which notes shall be canceled and permanently retired when redeemed.

The Fed. Res. banks purchasing such bonds shall be permitted to take out an amount of circulating notes equal to the par value of such bonds.

Upon the deposit with the Treas. of the U. S. of bonds so purchased, or any bonds with the circulating privilege acquired under Sec. 4 of this Act, any Fed. Res. bank making such deposit in the manner provided by existing law, shall be entitled to receive from the Comptroller of the Currency circulating notes in blank, registered and countersigned as provided by law, equal in amount to the par value of the bonds so deposited. Such notes shall be the obligations of the Fed. Res. bank procuring the same, and shall be in form prescribed by the Secy. of the Treas., and to the same tenor and effect as Nat.-bank notes now provided by law. They shall be issued and redeemed under the same terms and conditions as Nat.-bank notes except that they shall not be limited to the amount of the capital stock of the Fed. Res. bank issuing them.

Upon Application Of Any Fed. Res. bank, approved by the Fed. Res. Board, the Secy. of the Treas. may issue, in exchange for U. S. 2% gold bonds bearing the circulation privilege, but against which no circulation is outstanding, one-year gold notes of the U. S. without the circulation privilege, to an amount not to exceed \ of the 2% bonds so tendered for exchange, and 30-year 3% gold bonds without the circulation privilege for the remainder of the 2% bonds so tendered: Provided, That at the time of such exchange the Fed. Res. bank obtaining such one-year gold notes shall enter into an obligation with the Secy. of the Treas. binding itself to purchase from the U. S. 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 Secy., and at each maturity of one-year notes so purchased by such Fed. Res. bank, to purchase from the U. S. such an amount of one-year notes as the Secy. may tender to such bank, not to exceed the amount issued to such bank in the first instance, in exchange for the 2% U. S. gold bonds; said obligation to purchase at maturity such notes shall continue in force for a period not to exceed 30 years.

For the purpose of making the exchange herein provided for, the Secy.

Federal Reserve Act of the Treas. is authorized to issue at par Treas. notes in coupon or registered form as he may prescribe in denominations of $100, or any multiple thereof, bearing Int. at the rate of 3% per annum, payable quarterly, such Treas. notes to be payable not more than one year from the date of their issue in gold coin of the present standard value, and to be exempt as to principal and Int. from the payment of all taxes and duties of the U. S. except as provided by this Act, as well as from taxes in any form by or under State, municipal, or local authorities. And for the same purpose, the Secy. is authorized and empowered to issue U. S. gold bonds at par, bearing 3% Int. payable 30 years from date of issue, such bonds to be of the same general tenor and effect and to be issued under the same general terms and conditions as the U. S. 3% bonds without the circulation privilege now issued and outstanding.

Upon Application Of Any Fed. Res. bank, approved by the Fed. Res. Board, the Secy. may issue at par such 3% bonds in exchange for the one-year gold notes herein provided for.