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73D CONGRESS
2D SESSION

S. 3700

IN THE SENATE OE THE UNITED STATES
MAY 28 (calendar day, MAY 30), 1934
Mr. FLETCHER introduced the following bill; which was read twice and referred
to the Committee on Banking and Currency

A BILL
To amend section 19 of the Eederal Reserve Act, as amended,
and for other purposes.
1

Be it enacted by the Senate and House of Representa-

2

tives of the United States of America in Congress assembled,

3

That the last two paragraphs of section 19 of the Eederal

4

Reserve Act (U.S.O., title 12, sees. 371a-371b), are

5

amended to read as follows :

6

" No member bank shall, directly or indirectly by any

7

device whatsoever, pay any interest on any deposit which is

8

payable on demand: Provided, That nothing herein contained

9

shall be construed as prohibiting the payment of interest

10

in accordance with the terms of any certificate of deposit or




1

other contract entered into in good faith which is in force on

2

the date on which the bank becomes subject to the provisions

3

of this paragraph; but no such certificate of deposit or other

4

contract shall be renewed or extended unlesB it shall be modi-

5 fied to conform to this ]ia#agraph, and every member bank
6

shall take such action as may be necessary to conform to this

7

paragraph as soon as possible consistently with its con-

,8

tractual obligations: Provided, however, That this paragraph

9

shall not apply to any deposit of such bank which is payable

10

only at an office thereof located outside of the States of the

11

United States and the District of Columbia, or to any de-

12

posit made by a mutual savings bank, and shall not apply to

13

any deposit of public funds made by or on behalf of any

14

State, county, school district, or other subdivision or mu-

15 nicipality, or to any deposit, of trust funds, if the payment
16

of interest with respect to such deposit of public funds or of

17

trust funds is required by State law.

18

" The Federal Reserve Board shall from time to time

19 limit by regulation the rate of interest which may be paid
20

by member banks on time and savings deposits, and for

21

such purpose may classify time and savings deposits accord-

22

ing to maturities, conditions respecting receipt, withdrawal,

23

or repayment, locations of banks or otherwise as it may

24

deem necessary in the public interest, and prescribe different

25

rates for deposits of different classes. Notwithstanding the




3
1

provisions of the first paragraph of this section, the Federal

2

Reserve Board is authorized to define the terms ' time

3

deposits \ ' savings deposits \ ' deposits payable on demand ',

4

and ' trust funds ' for the purposes of this paragraph and

5

the paragraph immediately preceding, to determine what

6

shall be deemed to be a payment of interest for the purposes

7

of such paragraphs, and to prescribe such rules and regula-

8

tions as it may deem necessary to effectuate the provisions

9

of such paragraphs in accordance with their purposes and

10

to prevent evasions of such provisions. No member bank

11

shall pay any time deposit before its maturity except upon

12

such conditions and in accordance with such rules and

13

regulations as may be prescribed by the Federal Eeserve

14

Board, or waive any requirement of notice before payment

15

of any savings deposit except as to all savings deposits

16

having the same requirements: Provided, however, *That

17

the provisions of this paragraph shall not apply to any

18

deposit which is payable only at an office oft a member

19

bank located outside of the States of the United States

20

and the District of Columbia. Every bank whose deposits

21

are insured under the provisions of section 12B of this Act

22

shall comply with the provisions of this paragraph and

23

the paragraph immediately preceding and with the rules

24

and regulations prescribed by the Federal Eeserve Board

25

pursuant thereto, Any director or officer of any bank who




4
1

shall have continued to violate the provisions of this or

2

the preceding paragraph or the rules or regulations issued

3

pursuant thereto after having been warned to desist there-

4

from may be removed from office in accordance with the

5

provisions of section 30 of the Banking Act of 1933: Pro-

6

vided, That, in the case of a director or officer of a non-

7

member bank, the warning and certification provided for

8

therein shall be given by the Federal Deposit Insurance

9

Corporation,"







73DCONGRE8S\

s

Q

Q 7 A A

) 5. 3700

A BILL
To amend section 19 of the Federal Reserve
Act, as amended, and for other purposes.
By Mr. FLETCHER
MAY 30, 1934
Read twice and referred to the Committee on
Banking and Currency