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"= :ss H. R. 7230
IN THE HOUSE OF REPRESENTATIVES
MAY 25,1937
Mr.

introduced the following bill; which was referred to the Committee on Banking and Currency and ordered to be printed

PATMAN

A BILL
Providing for Government ownership of the twelve Federal
Reserve banks, and for other purposes.
Whereas a large number of Members of the House of Representatives believe that the twelve Federal Reserve banks should
be owned and operated by the United States; and
Whereas an organization known as. the Unofficial Steering Committee for the enactment of a law providing for Government
ownership of said banks, and for other purposes, has been
formed, composed of the following members from the following States:
Alabama—Patrick; Arizona—Murdock; Arkansas—Cravens, Miller, McClcllan, Kitchens; California—McGroarty,
Yoorhis, Kramer, Ford, Colden, Tolan, Scott, Sheppard,
Izac; Colorado—Cummings, Martin;, Connecticut—Kopplemann; Delaware—Allen; Florida—Caldwell, Green, Hendricks, Peterson.




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Idaho—White; Illinois—Long, Sabatli, Boyer, Kelly,
Rigney, McKeough, Tries, Keller; Indiana—Schulte, Ludlow, Gray, Griswold,

Crowe,

Larrabee;

Iowa—Eicher,

Wearin, Harrington, Jacobsen; Kansas—Patterson, Houston;
Louisiana—Brooks, Griffith, Fernandez, Mills; Massachusetts—Connery, Healey, Casey; Michigan—O'Brien, Hook,
Sadowski, Luecke, Dingell, Transue, Lesinski; Minnesota—
Ryan; Mississippi—Ford, Colmer, Rankin, Collins; Missouri—Nelson, Shannon, Wood, Zimmerman: Montana—
O'Connell, O'Connor; Nebraska—Luckey, Binderup; Nevada—Scrugham; New Jersey—Kenney, O'Neill, Wene;
New York—Barry, Beiter, Gavagan, Sirovich; North Carolina—Weaver; Ohio—Aleshire, Dixon, Lamneck, Ashbrook,
Kirwin, Kniffin, Harlan, McSweenej^, Harter, Crosser, Bigelow, Fletcher, Sweeney, Fleger, Hunter, Secrest; Oklahoma—Nichols, Rogers, Disney, Boren, Johnson,

Cart-

wright, Massingale, Hill, Ferguson; Oregon—Pierce, Honeyman; Pennsylvania—Crosby, Bradley, Stack, Allen, Daly,
DeMuth, Gildea, Quinn, Dunn, Flannery, Moser, Dorsey,
Eckert, Drew, Haines, Gray, Eberharter; Rhode Island—
Forand, O'Connell.
South Carolina—Gasque; South Dakota—Hildebrandt;
Tennessee—Chandler,

Atkinson;

Texas—Sanders,

Jones,

Thomas, Mansfield, McFarlane, Maverick, Patman; Utah—
Murdoek,

Robinson;

Virginia—Hamilton;

Washington-

Smith, Leavv, Wallgren, Hill, Coffee, Magnuson; West
Virginia—Randolph, Ramsay ; Wisconsin—O'Malley, Cannon; Wyoming—Greever.
and
Whereas said bill was prepared by the members of this group
and said members are its coframers, coauthors, and cosponsors; and



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Whereas said group instructed one of its members to introduce
the bill: Therefore
1

Be it enacted by the Senate and House of Representa-

2

tives of the United States of America in Congress assembled,

3

That it is hereby declared to be the policy of Congress to

4

provide for Government ownership of the twelve Federal

5

Reserve banks; to prevent injurious expansion and contrac-

6

tion of credit and currency; to stabilize and maintain a dollar

7

of uniform purchasing power for the purpose of. assuring the

8

kind of dollar which a generation hence will have the same

9

purchasing and debt-paying power; to permit all banks, the

10

deposits of which are insured by the Federal Deposit Insur-

11

ance Corporation, to receive all rights and privileges from

12

the Federal Reserve System; and to encourage the sound

13

local bank, recognizing the contribution that the local bank

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makes to the social and financial betterment of the local

15

community.

16

SEC. 2. (A) The Secretary of the Treasury is author-

17

ized and directed to acquire and hold, on behalf of the United

18

States, all shares of capital stock of the Federal Reserve

19

banks held by member banks of the Federal Reserve Sys-

20

tem.

21

such stock to the Secretary, he shall establish a credit for

22

such bank in the Federal Reserve bank in an amount equal

23

to its cash-paid subscription, with interest at the rate of




Upon surrender by any. such member bank of any

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.1 one-half of 1 per centum per month from the date of the
2

last dividend until the enactment of this Act.

If any mem-

3

ber bank fails to surrender its stock prior to the effective

4

date of this Act, it shall not be entitled to exercise any

5

privileges of membership in the Federal Reserve System,

G after a tender to such bank by the Secretary of the Treasury
7

of an amount, equal to the cash-paid subscription for such

8

stock and interest as above provided; but, upon surrender

9

of such stock and acceptance of the tender of refund in

10

respect thereof, such bank shall be restored to the privileges

11

of such membership.

12

(b) The assets, property, and records of the Federal

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Reserve banks shall be the property of the United States,

14

but the transfer of shares of capital stock of the Federal

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Reserve banks to the Secretary shall not deprive any mem-

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ber bank of its rights and privileges under the Federal

17

Reserve Act, as amended.

18

(c) After all necessary expenses have been paid or pro-

19

vided for, the net earnings of the Federal Reserve banks shall

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be covered into the Treasury as miscellaneous receipts.

21

SEC. 3. (a) The provisions of the Federal Reserve Act,

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as amended, relating to the subscription for stock of the

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Federal Reserve banks, shall not apply in respect of admis-

24

sion to and continuance of membership in the Federal

25

Reserve System.




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1

(b) Any State bank, the deposits of which are insured

2

by the Federal Deposit Insurance Corporation, shall, under

3

such reasonable rules and regulations as the Board of Gov-

4

ernors of the Federal Reserve System shall prescribe, be

5

entitled to all the rights and privileges under the Federal

6

Reserve Act, as amended, if such bank carries its reserves

7

with a Federal Reserve bank.

8

permitted to withdraw at will from such affiliation upon

9

written notice to the Board of Governors of the Federal

Any such bank shall be

10 Reserve System.
11

SEC. 4. Notwithstanding any other provision of law, the

12

Board of Governors of the Federal Reserve System, upon

13

the affirmative vote of not less than ten of its members, in

14

order to prevent injurious credit expansion or contraction

15

and to carry out its duty under subsection

( a ) , may by

16 regulation change the requirement as to reserves to be main17

tained against demand or time deposits, or both, by member

18

or affiliated banks.

19

SEC. 5. The Board of Governors of the Federal Reserve

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System shall consist of fifteen members, including the Secre-

21

tary of the Treasury, the Comptroller of the Currency, and

22

the Chairman of the Board of Directors of the Federal

23

Deposit Insurance Corporation, who shall have voting privi-

24

leges and all other privileges of any member of said board,

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and twelve members appointed by the President of the




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1

United States, by and with the advice and consent of the

2

Senate.

3

selected from any one Federal -Reserve' district.

4

additional appointive members provided for by this section

5

shall be appointed with terms as follows: One to expire

6

January 31, 1941; one to expire January 31, 1943; one

7

to expire January 31, 1945; one to expire January 31,

8

1947; and one to expire January 31, 1949.

9

office of the member who was appointed for a term .expiring

10

January |31, 1938, is hereby extended until January 31,

11

1939. The term of office, of each successor to any appointive

Not more than one appointive member shall be
The five

The term of

12 , member in office on the date of enactment of this Act, oils

appointed as the first incumbent of a membership created by

14

this Act, shall be twelve years from the expiration of the

15

term of his predecessor.

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concurrence of four or more of the members of the Board of

17

Governors of the Federal Reserve System is required, such

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requirement of law shall be held to be Complied with by tlie

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concurrence of eight members.

Whenever under existing law the

20

SEC. 6. Classes A , B, and C directors of each bank

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shall be appointed by the President, by and with the advice

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and consent of the Seriate.

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be an officer, director, employee, or stockholder of any bank.

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Each director of any Federal Reserve bank shall be a resi-

25

dent of the Federal Reserve district: in which such bank is




No director of any class shall

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1

located.

Bacli director shall he appointed for a term of

2

nine years after the first appointment.

3

shall be so arranged that the regular term of one director-

4

at each bank shall expire each year.

5

for any director of a Federal Eeserve bank or an official of

6

the Board of Governors of the Federal Eeserve banks to be

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employed by any bank within three years from the time of

8

service as a director or official.

The appointments

It shall be unlawful

9

SEC. 7. The Federal Advisory Council, created by sec-

10

tion 12 of the Federal Reserve Act, as amended, is hereby

11

abolished.

12

SEC. 8. The Board of Governors of the Federal Reserve

13

Board shall hereafter constitute the Federal Open Market

14

Committee.

15

SEC. 9. All positions, except those of directors and offi-

16

cers, in the Federal Reserve banks are hereby included in

17

the classified civil service. The incumbents of such positions

18

shall acquire the same status under the classified civil service

19

as though certified after examination by the Civil Service

20

Commission if, at the expiration of the probationary period

21

of six months, their services are certified to the Commission

22

as being satisfactory.

23

any Federal Reserve bank or Federal Reserve Board shall

24

receive an annual salary in excess of .$25,000.




No officer, director, or employee of

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1

SEC. 10. Examinations of member and affiliated banks

2

of the Federal Reserve System by any Federal agency shall

3

be made without charge or assessment for costs thereof

4

against such banks.

5

SEC. 11. The Board of Governors of the Federal Reserve

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System is authorized to -prescribe such rules and regulations

7

as may be necessary to carry out the policies and provisions

8

of this Act.

9

SEC. 12. This Act shall take effect on January 1, 1938.

10

SEC. 13. All laws or parts of laws in conflict herewith

11

are hereby repealed.

12

SEC. 14. There is hereby authorized to be appropriated

13

such sums as may be necessary to carry out the provisions

14

of this Act.