View original document

The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.

L-87

AMENIIMENTS PROPOSED BY GOVERNOR ECCLES*
TO H, R, 7617 AS PASSED BY THE HOOSE OF REPRESENTATIVES.

Submitted to
Senate Committee on Banking and Currency

L-87

Page 45, between line 13 and line 14, insert the following
paragraph:




1
1

(y) (1) No State bank organized after the effective

date shall be an insured bank or continue to have any part
of its deposits insured after July 1, 1937, unless such bank
shall be a member of the Federal Reserve System. No State
bank organized on or before the effective date which during
the calendar year 1936 or any succeeding calendar year shall
have average deposits of $500,000 or more shall be an insured
bank or continue to have any part of its deposits insured after
July 1 of the year following any such calendar year during which
it shall have had such amount of average deposits, unless such
bank shall be a member of the Federal Reserve System: Provided,
Th&t for the purposes of this paragraph the term fState bank1
shall not include (a) a mutual savings bank, or (b) a Morris
Plan Bank, or (c) a bank located in the Territory of Hawaii
or Alaska."
(Note: This amendment is intended only as a compromise
in the event that it is impossible to retain the provisions
of existing law or the provisions of the original bill
(p. 37, line 18), which require nonmember banks to become
members of the Federal Reserve System by July 1, 1937 in
order to retain the benefits of deposit insurance• The
above compromise amendment would exempt from this requirement banks having average deposits of less than $500,000,
thus eliminating the chief ground for opposition to the
compulsory membership requirement. It would exempt 5,644
banks and would only require 2,038 of the present insured
banks to become members of the Federal Reserve System*)

~ 2 ~

L-87

Page 45. line 14, strike out "(1)" and substitute "(2)".
Page 43, line 21, striks out «(£)" and substitute "(3)".
Section 201 (a)
Page 44. lines 9 to 14, inclusive, strike out the sentence
beginning with the word "Each" in line 9 and ending with the words
"Vice Governor11 in line 14 and insert in lieu thereof the following:
"The term of office of each class C director shall be
three years but the Governor shall cease to be a class C
director when he ceases to be Governor of the bank even
though he may not have served his entire term as class C
director and, if the Vice Governor be designated as a class
C director, he shall cease to be a class C director when he
ceasos to be Vice Governor even though he may not have served
his entire term as class C director*"




(note: This is merely a clarifying amendment intended to remove any ambiguity as to the term of office
of a Governor or a Vice Governor appointed to fill a
vacancy. At present the section provides that the
Governorfs term as a class G director "shall expire"
when he ceases to be Governor of the bank. The section also provides that a person appointed to fill a
vacancy in the office of Governor shall hold office
until the expiration of the term of his predecessor•
Since the section provides that the Governorfs term
as a class C director "shall expire" when he ceases to
be Governor, it could be argued that there would be no
unexpired term for his successor to fill. This amendment changes the provision that the Governor's term as
a class C director "shall expire" when he ceases to be
Governor to a provision that he "shall cease to be a
class C director" when he ceases to be Governor. The
some provisions are applicable to the term of the
Vice Governor.)

- 5 Page 44« lines 20 and 21, strike out the words?

L-87
"Effective

ninety days after the enactment of the Banking Act of 1935" and
substitute the words "Effective January 1, 1956"•
Page 46« lines 9 and 10, make the same change.
(Kote: The purpose of these changes is to postpone the effective date of the combination of the offices
of Governor and Chairman so as to allow ample time for
the directors of the banks to select the persons to be
appointed to the combined office and to obtain the
Federal Reserve Board!s approval of such appointments*)
Page 46, line 30', insert after the word "each" and before
the comma the following:
"(excluding &xrj service prior thereto for an unexpired
portion of a term as the result of a vacancy)"
(Note: The purpose of this amendment is to make it
clear that the two consecutive terms of three years each
which a director may serve do not include prior service
during an unexpired portion of a term as the result of a
vacancy. Thus, a director who had served during the last
year of a term as the result of a vacancy would be eligible
to serve thereafter two three year ..terms, or a total
service of seven years.)
Section 205
Page 48, after line 18, insert the following:
"(2) By adding at the end of the first paragraph the
following:

f

Beginning with the date upon which the person who

is first hereafter appointed or reappointed as an appointive
member of the Federal Reserve Board makes and subscribes to the
oath of office, the appointive members of the Federal Reserve
Board shall each receive a salary at the same rate as that of
the heads of Executive Departments who are members of the




- 4 -

L-87

Presidents Cabinet, together with actual necessary traveling
expenses, in lieu of the salary provided for such appointive
members in the preceding sentence• Each appointive member of
the Federal Reserve Board heretofore appointed may retire
from service upon reaching the age of seventy or at a#y time
thereafter, and all members hereafter appointed shall retire
upon reaching the age of seventy. Each member of the Board
so retired from service who shall have served for as long as
twelve years shall, during the remainder of his life, receive
an annual retirement pay in an amount equal to the annual salary
heretofore paid to appointive members: Provided% That, if he shall
have served for as long as five years, but less throi twelve years,
his annual retirement pay shall be at the rate of one-twelfth
of the annual salary heretofore paid to appointive members
for each year served and for any fraction of an additional year
of such service: Provided further« That any member whose term
expires and who is not reappointed shall receive retirement
pay upon the same basis as if he had been retired under the
provisions of this paragraph, except that, if his term expire
before he reaches the age of sixty-five and he be offered and decline
to accept r©appointment, he shall not receive any retirement pay*
The funds necessary for such retirement pay shall be provided by
the Federal Reserve banks in such manner as the Federal Reserve




- 5 -

L-87

Boarcl shall prescribe. Nothing in this section shall prevent
the President from reappointing any member of the Federal
Reserve Board holding office on the date of enactment of
the Banking Act of 1935.'"
(Note: The first portion of this amendmsnt would
restore the provisions of the original bill which would
have increased the salaries of the members of the Federal
Reserve Board to an amount equal to that paid the members of
the President's Cabinet and would make the amendment
applicable to members heretofore appointed as well as
to members hereafter appointed. The remainder of the
proposed amendment would restore to the bill the
provisions for the retirement of members of the Federal
Reserve Board in the form approved by the Committee
on Banking and Currency of the House of Representatives.
The provision for increasing the salariea of the Board
members was stricken out by the House Committee on
Banking and Currency. The provision for retirement of
Board members was approved by the House Committee on
Banking and Currency, but it was stricken out by an
amendment offered from the floor of the House of
Representatives and adopted by a vote of 92 to 81.)
Page 48, line 19, change the figure 2 in the parentheses to
the figure 5.
(Note: This amendment merely changes the numbering
of the paragraph.)
Page 48. line 24, change the comma following the word
"President" to a period and strike out everything from that point through
the period following the vrord "Governor" on page 49, line 1.




(Note: This is a perfecting amendment designed to
bring this section into conformity with the provision
that the Governor may continue to serve as a member of
•fche Board after the termination of his designation as
Governor. By restoring the applicability of the third
sentence of section 10 of the Federal Reserve Act, the
Governor's term as a member of the Board will remain fixed
at 12 years.)

Pago 49 1 lino 9, change tho figure 3 in the parentheses
to the figure 4*
(Note: This amendment merely changes tho numbering
of tho paragraph.)
Sectipn 308
Pa^o 53, line 11, immediately aft or the words "Soc, 208.w
insert tho words "Effective 90 days after tho enactment of tho Banking
Act of 1935,«.
(Vote; This is intended to allow reasonable time
for the Board to issue regulations regarding tho issuance of Federal Reserve notes and for the Socretary of
the Treasury to proscribe tho form of such notes before
tho omondod provisions of law become offective.)
Section 310
Pago 56^, line 21, strike out tho sontonco beginning with
tho words "No bank shall* and onding with tho word wgreater« in line 1
on pago 57.
Paffe 57, lino 12, insert aftor tho period and before tho
quotation marks the following:

w

0n and aftor tho date on which the

regulations first adoptod tinder this section shall become effective,
no Stato bask or trust company which is a member of the Federal Reserve
System shall maico new real estate loans oxcept to tho same extent and
under the some regulations and limitations as national banking associa~
tions are permitted to do so#tt




(Hote: Those amendments would restore section 210
to tho form recommended by Governor Socles to tho House
Committee on Banking and Currency by striking out tho
limitation on the aggregate amount of real estate loans

Ir-87

which any national bank may have outstanding and by
restoring the provision requiring State member banks to
comply with the same regulations and limitations regarding real estate loans as are applicable to national banks.)
Section 307
Page 61, line 3, strike all of section 307 and substitute
the following:




NSoc. 307. Effective February 1, 1936, section 32 of the
Banking Act of 1933 is amended to read as follows:
"'Sec, 32. No officer, director, or employee of any
corporation or unincorporated association, no partner or
employee of any partnership, and no individual, engaged in the
issue, flotation, underwriting, public sale, or distribution,
at wholesale or retail, or through syndicate participation, of
stocks, bonds, or other similar securities, shall serve at the
same time as an officer, director, or employee of any member bank.
Tho federal Reserve Board is authorized and directed to enforce
compliance with this section, and to prescribe such rules and
regulations as it dooms necessary for that purpose. IW
(Note: This amendment omits the provision that the
Federal Reserve Board may, by general regulations in
linited classes of cases, make exceptions to the prohibition of the section against interlocking directorates
between member banks and dealers in securities, and adds
the provision that the Board is authorized and directed
to enforce compliance with the section. The word "primarily" before the word wongagedn in line 8 is also
omitted by the amendnent.)

L~87

Section 329
Page 82, lino 14f strike all of section 329 and substitute
the following;




"Sec. 329. Effective January 1, 1936, section 25
of the Federal Reserve Act, as amended* is further amended
by striking out the last paragraph of such section; the
paragraph of section 25(a) of the Federal Reserve Act, as
amended, which coonencos with the words •& majority of the
shares of the capital stock of any such corporation1* is amended
by striking out all of said paragraph except the first
sentence thereof; and the Act entitled 'An Act to supplement
existing laws against unlawful rostraints and monopolies, and
for other purposes1 (38 Stat. 730), approved October 15, 1914,
as amended, is further amended (a) by striking out section 8A
thereof and (b) by substituting for the first three paragraphs
of section 8 thereof the following:
«'Section 8. Mo director, officer, or employee of any
nember bank of the Federal Reserve Systen or any branch thereof
shall be at the same tine a private banker or a director, officer,
or employee of any other bank, banking association, savings
bank, or trust company organized under the Rational Bank Act or
organized under the laws of any State or of the District of
Columbia, or any branch thereof, except any one or more of the
following or any branch thereof:

L-87
A bank, "banking association, savings bank, or
trust company, nore than 90 per cent of the stock of which is
owned directly or indirectly "by the United States or "by any
corporation of which the United States diroctly or indirectly
owns noro than 90 per cent of the stock.
W!

(2) A bank, "banking association, savings bank or

trust company which has boon placed formally in liquidation
or which is in the hands of a receiver, conservator or
other official exorcising similar functions •
Wf

(3) A corporation principally engaged in international

or foreign banking or banking in a dopendency or insular
possession of the United States which has entered into an
agreement with tho Federal Reserve Board pursuant to section
25 of the Federal Beserve Act«
W!

(4) A bank, banking association, savings bank, or

trust conpany, nore than 50 por cent of tho stock of which
is owned directly or indirectly by persons who otm diroctly
or indirectly noro than 50 per cent of the stock of such
nenbor bank.
wt

fhe fcdoral Hosorvo Board is authorized and directed to

enforce compliance T7ith this section, and to proscribo such
rules and regulations as it dooms necessary for that purpose•*




-10-

L-87

(Note: This anondnont enumerates tho limited classes
of cases in which there nay "be interlocking directors
between mentor "banks and other banks under section 8 of
the Clayton Act. It elininates the provision that the
Board may allow interlocking directorates "by general
regulations where banks are not in substantial competition,
and provides that the Board is authorized and directed to
enforce compliance with the section and to prescribe
such rules and regulations as it deens necessary for such
purpose. Conflicting provisions of section 25 and section
25(a) relating to foreign or international banking corporations are repealed. *Ehe provision repealing section 8A
of the Clayton Act is not changed by this amendment.)
Additional section




At the end of tho bill add a now section reading as follows*
wSec.

The right to altor, amend, or repeal this

Act is hereby expressly reserved. If any provision of this Act,
or the application thereof to any persdn or circumstance, is
held invalid, the reminder of the Act, and tho application of
such provision to other persons or circumstances, shall not be
affected thereby.*
(Note: This is merely the usual saving clause
attached to bills of this character and is believed to
be desirable in view of the large number of technical
amendments to the existing law contained in this bill.)