"undivided profits," in the connection in which they are used, as stated
above.

Furthermore, if losses may be charged to surplus when at the same time
the other earnings are used for dividends to shareholders, a bank may go
on declaring dividends, and never accumulate any surplus fund whatever
if losses be sustained, as they are in the history of nearly every bank.
A construction of the law which would render inoperative the requirement
for the creation of a surplus cannot be sound; and as the only way to
insure that a surplus shall be accumulated and maintained is to charge
losses against other earnings as far as may be before trenching upon the
surplus; it must be that the law intended that the "undivided profits"
which are not in the surplus fund shall first be used to meet losses.

To a full understanding of the subject it is proper to say that after
using all other earnings on hand at the usual time for declaring a
dividend to meet losses the whole or any part of the surplus may be used
if the losses exceed the amount of the earnings other than surplus, and
then at the end of another six months a dividend may be made if the
earnings will admit of it, one-tenth of the earnings being first carried
to surplus and the re-accumulation of the fund thus begun.

This is because the law has been complied with by charging the losses
against the "undivided profits," as far as they will go, and it is
impossible to do more, or require more to be done, for the
re-establishment of the state of things that existed prior to losses
having been sustained than to do what the law requires shall be done to
originally establish that state of things.

* * * * *