Full text of Mimeograph Letters and Statements of the Board : Comparative Statement in Regard to Aldrich Monetary Commission Bill and the Federal Reserve Act, Number 351, Volume 2, Page 575

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351

THE

A L D R I C H
THE

M O N E T A R Y
F E D E R A L

C O M M I S S I O N

R E S E R V E

BILL

ACT

COMPARATIVE STATEMENT

MONETARY COMMISSION BILL

FEDERAL RESERVE ACT

SECTION 1.

National Reserve Association of the
United States.

; Not over twelve Federal Reserve Banks.
j

Term of 50 years,

j Term of 20 years.

Capital authorized:
Equal in amount to 20$ of paid in and
unimpaired capital of all banks eli
gible for membership.
Before commencing business:
(a) 200 millions to be subscribed,
(b) 100 millions paid in.

Six psr cent of paid in capital and sur
plus*
nr

i No
1
i
i
i

Sharas $100 each*

Federal reserve bank to commonca business with subscribed capital less than
4 millions; one-sixth payable on call,
etc; one-sixth within 3 months and
one-sixth within 6 months thereafter;
remainder or any part subject to call
of Federal Reserve Board.
S,2:L,29:
p,3,
All capital payments to be in gold,
S,2:L,13:p.2.

Shares $100 ea.ch.

S,5:L,42:p,1 .

Stock to be increc.sed or decreased:
(a) As subscribing banks increase or
reduce their capital,
(
(b) As -additional banks become members
or as subscribing banks leave the Substantially the same, S,5:L*43*.p.7«
!
association bv liauidation.
Head Office:
Washington, D. C»

| In designated Federal Reserve City.
S.2:L.20;p,1::S.4:L.6:p.4.

SECTION 2.
On filing certificate hereinafter re
quired with the Comptroller of the
Currency, -

Same:S.4:L,39:p,4.

Powers:
1, To adopt and use corporate seal,

Same:S,4:L .43:p ,4,

2. Succession for 50 years.

i Twenty years.

3. To make contracts necessary and
proper to carry out purposes of
Act*

i Substantially the same.
1
t

S.4:L,44:p.4.

4, To sue, be sued, complain and de
fend, in any court of law or
: Substantially the same.
equity, as fully as natural per
sons.
5. To elect or appoint directors and
officers in manner hereinafter
provided, and define.-, their
duties.

S*4:L.47:p,4.

S.4:L.48:p.4.

! To appoint officers, fix their duties,
!
require bonds and to dismiss at
|
pleasure,
S,4:L.50:p«4.
1
!

6, Board of Directors to adopt by-laws!
not inconsistent with Act regulat4
ing manner in which its property I Substantially the same, except no refershall be transferred, its genence to property.
S,4:L,l:p,5.
eral business conducted and the i
privileges granted to it by law !
exercised and enjoyed.
j
7. To purchase, acquire, hold, and con-j
vey real estate as hereinafter
! Not mentioned.
provided .
j
8, To exercise by its Board .of Dii
rectors of duly authorized com- !
mittees, officers or agents, sub-i Substantially the same.
ject to lavr, all powers and priv-j All incidental powers granted,
ileges conferred upon the Nation-! S.4:L.7ip,5,
al Reserve Association by this
j
Act.
\
SECTION 3.

Who mav subscribe to stock:
1. All national banks.

! All national banks must under pain of
forfeiture. S.2:L,36:p.2,
1

2. All banks or trust companies char- j
tered by laws of any State or of j These may subscribe.
District of Columbia,
Subscriptions:
Amount equal to 2G$> of paid-in and un
impaired capital of the subscribing
bank and not more nor less.

S.2:L.3:p»2,
S.9:L,45:p.9.

Six per cent of paid-up capital and sur
plus.
S .2:L,12:p,2,

Local Associations:
Each subscribing bank to become mem
ber of a local association as here !No such provision.
in after provided.
Payment of Subscriptions:
50% to be fully paid in.
Remainder
subject to call and payment when
ever necessary to meet obligations
of National Reserve Association
under terms and conditions and in
accordance with regulations pre
scribed by the Directors.

One-sixth payable on call, etc.; onesixth within 3 months, and one-sixth
within 6 months thereafter; remainder
or any part subject to call of Fed
eral Reserve Board.
S.2:L,29:p.3.

State, etc.,Bank and Trust Company Sub- ;
scrintions:
i
Conditions:
(a) If a Bank:
To have paid-in and unimpaired
capital not less than required
for a national bank in same locality.

!
i
|Substantially the same.
i
j

S.9:L.16:p.lO.

(b) If a Trust Company:
1. (a) Unimpaired surplus of not |Same provision for Trust Company as for
a State Bank.
S,9:L.16:p.lO.
less than 20% of its cap
ital .
(b) If located in place havingj
i
population:
i
Not less]
than. !
6.000 people ...........
$ 50,000 j
6 to 50,000 people ......
100,000 ;
50 to 200,000 people ....
200,000 i
200.000 to 300,000 .....
300,000 iNo such provision expressed.
300.000 to 400,000 .... .
400,000 1
i
s
Over 400,000 people .....
500,000 i
2. Reserves
. State banks and trust companies: same
(a) Demand deposits.
amount as national member banks.
Same as required by law
S.9:L.14:p.lO.
for national bank in same
As to character of reserve Quaere,
locality.

Provided:
Deposits with any subscribing
national hank^ State hank or !
trust company in a Reserve or
Substantially the same, but limited to
Central Reserve City to sount
3 years after Secretary of Treasury
as reserve as similar deposits j
has officially announced establishof a national hank with nation-j
ment of its Federal reserve hank,
al hanks in such cities,
j
S„l9:L*3:p. 33,
f
f

3. Other classes of deposits.
Reserves required by this Act.
See infra.
4. To submit to such examinations as
are required by law and to comply
with the requirements and condi
tions imposed by this Act and reg
ulations made in conformity there
with .

j
To submit to the examinations and regula
tions prescribed by Organization Com
mittee or by Federal Reserve Board.
S.9:L.15:p.lO.
Federal Reserve Board may authorize ex
amination by State authorities to be accepted in the case of State banks
and trust companies. S.21:L.3:p.24.

Definitions
Term "Member bank" to mean any national
Words "Subscribing banks" to rebank, State bank, or trust company,
fer to such national banks, and
which has become a member of one of
banks or trust companies charter
the reserve banks created by this Act.
ed by any State of United States
S,l:L.10:p.l.
or of District of Columbia as
shall comply with the requirements Term "Bank" to include State bank, banking
association and trust company, except
for membership herein defined.
j
where national banks or Federal reserve
i
*
banks are specifically referred to.

S,liLi4:pa,
— --------- ------- ------ .
------------- j----- ---------SECT IOr! 4.
j
Organization Commit-cee:
Secrete.ry of the Treasury,
Secretary of Commerce and Labor,
Comptroller of the Currency.

| Organization Committee:
i
Secretary of the Treasury,
!
Secretary of Agriculture,
Comprtoller of the.Currency.
S.2:L.l7:p.l.

Expenses paid out of Treasury on vouchers i May appoint assistants and incur such
expenses in carrying out Act as it
approved by the members of said Com
may
deem necessary.
S.2:L.35tp»3.
mittee.
$100,000 appropriated for its expenses.
S.2:L,40:p.3.
Treasury to be reimbursed by National
Reserve Association.

No provision for reimbursing Treasury.

j
j
With 60 days after passage of Act,,
j After Federal Reserve Districts and Cities
Subscription books to be opened by
j designated every national bank required
Committee,
j
to subscribe within 30 days after .
In such places as Committee maydesign
notice from Organization Committee. If
nate.
! failing it shall cease to act as re
serve agent upon 30 days notice, etc.
S,2:L.10:p.2 : : S,2:L.27:p,2.
Failure within one year - Penalty for
feiture.
S.2:L,21:p.2.

adscriptions:

Resolutions of Board of Directors to bo i
filed with Organization Committee or 1
after organization with National Re- IResolution to be in application blank
serve Association.
authorizing subscription. S.4:L,ll:p.4.
(a) Accepting all provisions and lia- jAlso certificate of Organization to be
bilities of Act.
!
filed rath Comptroller. S,4:L,20:p,4,.
(b) Authorizing President or Cashier M
to Subscribe.

SECTION 5.
See Infra.

iA careful comparison of the division of
!
the Aldrich plan into"15 districts
with a branch in each district, with
j
the division of the Organization Comj
mittee under the Federal Reserve Act,
| discloses that they are substantially
! the same, the points of difference
!
being::1. The Aldrich plan has 15 districts and
j
branches.
1
The Federal Reserve plan has 12 disj
tricts and Federal Reserve Banks,
I2. The Aldrich plan puts each State in a
|
district,
j
The Federal Reserve plan divides up
the following States, putting part
i
in one and part in another district
Hew Jersey
Pennsylvania
West Virginia
Michigan
Wisconsin
Illinois
Indiana
Arizona

Kentucky
Louisians.
Missouri
Mississippi
Tennessee
Oklahoma
New Mexico

- 6 3. The Federal Reserve Organization Com
mittee was criticized!
(a) for dissipating Eastern banking
strength by setting apart New Eng
land as a separate district.
Answer: So does the Aldrich plan,
(b) for not consolidating New York and
Philadelphia.
Answer: Neither does the Aldrich plan,
The Aldrich plan allowed two'
districts and two branches for New
York, New Jersey, Pennsylvania,
and Delaware,
The Federal Reserve Organization
Committee also allowed two dis
tricts and two Federal Reserve
Cities for the same States,
It
merely took out Western Pennsyl vania and added it to the Cleveland
district.
(c) The Aldrich plan allowed 4 dis
tricts and branches for the South
ern and South Western States,
Answer: The Federal Reserve plan allows
only 3 districts and 3 Federal Re
serve Cities; it, however, divided
West Virginia, Tennessee, Mississ
ippi, Louisiana, Oklahoma, New
Mexico, and Arizona, putting part
of these States in other districts,
(1) West Virginia was divided be
tween Richmond and Cleveland.
(2) Tennessee was divided between
Atlanta and St. Louis.
(3) Mississippi was divided be
tween Atlanta and St. Louis,
(4) Louisiana was divided between
Atlanta and Dallas,
(5) Oklahoma was divided between
Kansas City and Dallas,
(6 ) New Mexico was divided bet\?een
Kansas City and Dallas.
(7) Arizona was divided between
Dallas and San Francisco.
(d) The Federal Reserve Act also pro
vides for branches of the
Federal Reserve Banks.
The Federal Reserve Act thus provides especially through it© branch banks better banking facilities for the South
than does the Aldrich plan. e.g. Un
der Aldrich plan there could be in the
South and’
.South West only 4 branches,
while under the Federal Reserve Act

7
there are provided Richmond, Atlanta
and Dallas, and some of the Southern
states are in part placed under St.
Louis, Kansas City, and San Francisco,
In addition, the Federal Reserve plan
authorizes additional branches of the
Federal Reserve hanks.

C 0 M P A R I S C U
ALDRICH PLAN.

FEDERAL RESERVE ACT.
District
Districts
No,

New England States.
Eastern States.
New York
New Jersey
Pennsylvania
Delavra,re

Branch

Branches

.
.
3.

)

Southern States,
District of Columbia)
Maryland
Virginia
West Virginia
North Carolina
South Carolina
Tennessee
Georgia
Florida
Alabama
Mississippi
Louisiana
Texas
Arkansas
Kentucky
Middle West State:
Ohio
Indiana
Illinois
Michigan
Wisconsin
Minnesota
Iowa
Missouri

Branches

5.
5,
5.
5.
5.
5.
6.
6.
6.
6.
6.
6.
11.
8.
4.

4.
7.
7.
7.
7.
9.
7.
8.

Total Distrl
.

Boston

)

New York
New York
Philadelphia : 4.
Cleveland
Philadelphia

)
)
)
)
)

)
)
)
Cleveland
)
)
)
St. Louis
)
)
)
)
St, Louis
)
Dallas
)
)
)
8 . St. Louis'

Richmond
ii
ii

ti
ii

Atlanta
n

it
ii

8.
"
11.
Dallas
St. Louis
Cleveland.
11

Cleveland
)
Chicago 8 . St Louis
)
it
8. "
11
)
»
9, Minneapolis )
..
9.
i«
)
Minneapolis.
)
Chicago
)
St. Louis.10 Kansas City)

♦ __________

- 3 -

Districts
Western and Pacific
North Dakota
South Dakota
Nebraska
Kansas
Montana
Wyoming
Colorado
California
New Mexico
Oklahoma
Washington
Oregon
Idaho
Utah
Arizona,
Nevada

TOTALS

States,
)
)
)
)
)
)

)
)
)
)
)
)
)
)
)

9, Minneapolis
)
ii
)
9•
10. Kansas City
)
ii
ii
10.
) •
9. Minneapolis
)
10. Kansas City
)
10. Kansas City
)
12. San Francisco
)
10. Kansas City 11, Dallas )
10.
"
"
11.
"
)
.San
Francisco
12.
)
ii
12. it
)
N
12. II
)
II
12. 11
)
11. Dallas 12. San Francisco)
12, San Francisco
. )

i
i
i

4 Branches
'

j
:
|
!
!
:
I
1

\7hen branch cities selected,
Organization Committee to divide country
into 15 districts,

Total District;

!Designate 8 to 12 Federal Reserve Cities,
Divide United States into districts.

One branch in each district,

iEach district to contain one Federal Re| serve City,
S,2:L,20:p.l.
----------------j
-------------------------------------Districts to be apportioned withdue re- [
gard to convenienceand customary
|
course of business and not necessarily ISubstantially the same. S.2:L.25:p.l,
along State lines,
i
Districts may be readjusted and new dis
tricts and branches may from time to
time be created by directors whenever,
in their opinion, the business of the
country requires,

r
Districts may be readjusted a.nd new dis
tricts created by Federal Reserve
Board, not to exceed 12 in all,
S.2:L,28:p,l.
—

SECTION 6,
Local Associations .
Subscribing banks in each district,
Grouped by Organization Committee,
Or after organization by Rational Re
serve Association,
Into local associations,
1. Rot less than 10 banks.

Rot provided for by Federal Reserve Act,

i
I

- 9
Aggregate capital and surplus of
at least $5, 000,000.
3. Territory in each association
to be contiguous.
*
4. In apportioning due regard to
be had for' customary course of
business and for convenience of
banks forming the association .

I
f
j
j

5. In apportioning territory to
j
local associations comprising
\
a district, every bank and all
j
the territory within said dis- |
trict shall be located within
j
the boundaries of same local as-j
sociation,
j
6. Every subscribing bank to be
come a member only of local as- j
sociation in which it is situat- .
ed.
I
Bank uniting to form a local association.!
j
To execute certificate, etc.
;
)
Setting forth ■
(a) Hame of Association,
(b) Bankscomprising it,
(c) Principal pla.ce of business,
(d) Territorial limits, .
(e) Purposes for which organized.
Copies to be filed:
1 with Comptroller of Currency,
1 with National Reserve Association,
1 with branch of National Reserve
Association of the district in which
local association is included.
Upon filing certificate:
(a) Local association to become a
body corporate,
(b) By name so designated may sue and
be sued,
(c) May exercise powers of a body cor
porate for purposes mentioned in
Act and not otherwise.
Directors of National Reserve Associa
tions:
(a) May readjust local associations
in each district,
(b)
May
authorize new associations

-.10
SECTION 7.

Local Associations:
To have Board of Directors - number
determined by by-laws of local association.

See infra.
Election of Directors of Federal Reserve
Banks*

Election of Directors:
j
1, 3/5ths elected by ballot.
(a) Cast by representatives of banks
that are members of the local
association,
(b) Each bank to have one represent
ative,
(c) Each representative to have one
vote for each of positions to
be filled, regardless of number
of shares held by the bank in
the National Reserve Associa tion.
2/5ths elected by ballot,
(a) By the same representatives,
(b) Each representative entitled to
as many votes as his bank holds
shares in National Reserve As
sociation.
Proviso:
(a) If 40$ of stock of any subscrib
ing bank is owned directly or
indirectly by any other subscrib
ing bank.
(b) If 40$ of stock in each of two
or more subscribing, banks being
members of the same local as
sociation is owned directly or
indirectly by same person, per
sons, copartnership, voluntary
associations, trustee, or cor
poration.
Then either in (a) or (b),
Neither of such banks shall vote separate
ly, as a unit,
Or upon its stock.

Excent:
Such banks acting together,
As one unit,
Entitled to one vote.
For directors of local associations,
No voting by proxy,
Voting representatives to be President,
Vice President or Cashier,
Duties of Directors:
Oath of office
(a) Diligently and honestly adminis
ter affairs,
(b) Will not knowingly violate any
provision of Act,
(c) Will not willingly permit viola
tion of any provision of Act.
Terms of Office:
(a) Original election.
Unitl 2nd Tuesday in February
immediately following election,
(b) Thereafter all directors elected
annually on that date and to
hold office for term of one year.
By-laws:
May make by-laws not inconsistant with
law,
By-laws subject to approval of Nat
ional Reserve Association,
SECTION

National Reserve Association.
Each branch to have Board of Directors

Not provided for by Federal Reserve Act.
Some analogy between these Branches
and Federal Reserve Banks,

Number to be fixed by by-laws of branch,
Not less than 12 in addition to exofficio members.

Federal Reserve Banks* - 9 directors, A.
B. & C.
S.4:L.35:p.5.

Directors of National Reserve Association Member banks classified into 3 groups of
to be elected:
similar capitalization.
S.4:L.7;p.6
1. Directors of each local association
Each member bank to elect by ballot a
to elect by ballot a voting repredistrict reserve elector. S.4:L.15:p.6
sentative,
2. One-half The electors to be classified into 3
(a) Elected.by representatives,
groups represented by the banks group
(b) Each having one vote for each
ing which elected them. S.4:L.21:p«6..
position.
Each Member bank may nominate one candi
(c) Regardless of number of shares his
date for Class A and ond for Class B»
bank holds in National Reserve
Association.
S .4 1L*.22 •p *6 •
3. One third The candidates nominated for Class A & B
(a) Elected by representatives,
by each group of banks, to be sent to
(b) Each to have number of votee?,
each elector in each group.S.4:L.21:p.6
(c) Equal to number of shares in
National Reserve Association.
Each elector to certify his 1st, 2 d and
(d) Held by all the banks of local
other choices for directors of Class
association he represents.
A and class B in his group.
4. One-sixth (a) Chosen by directors already elected,
(b) To fairly represent the agricultural 1. Candidates having majority of votee in
column of 1 st choice to be declared
commercial, industrial.and other
elected.
interests of the district,
2 * If no candidate has such majority:
(c) Shall not be officers of banks,
Add votes in 2d column to those in
trust companies, insurance com
1 st.
panies or other financial institu
Any candidate having majority of 1st
tions,
and 2 d column to be declared elected.
(d) Nor, while serving, directors of
3.
If
no candidate has such majority;
same.
Third column votes*to be added to
1 st and second.
Candidate having highest number of
votes to be declared elected.
Manager of Branch.
(a) To be ex-officio a member of Board
of directors of the branch.
(b) To be chairman of the Board.

* ________________

- 13

Oath of Directors:
Saco as for local association direc
tors.
Firsc meeting of Board.,
Members except ex-officio members,
Divided into three classes.
Terms of Office:
(a)

One-third until first Tuesday in
March immediately following
election.

(b)

One-third for additional period
of one year after said first
Tuesday.

(c)

Onerthird for an additional
period of two years after said
first Tuesday,

(d)

After first election all di
rectors elected for three years

Substantially the same as to Directors
of Federal Reserve Banks, except first
date is January 1 following date of
meeting.
Directors themselves make the classifi
cation; as to the first terms,
S.4:L,3l:p,7.

All elections to be held on
first Tuesday in March of each
year.
Yacc.ncies:
By-law3 of National Reserve Associa
tion to provide for manner of fil
ling vacancies in Board of Direc
tors of Branches.

Vancancies in Directors to be filled in
manner provided for original selec
tion,
S.4:L,36:p,7.

Branch Boards of Directors may make
by-laws not inconsistant with law.
Subject to approval of National Re
serve Association.

Federal Reserve Banks may, by their
Boards of Directors, prescribe by-laws
not inconsistant with law, etc,
S.4:L,1:p.5.
Organization Committee o:r Federal Reserve
Board to establish by-laws governing
conduct in acting upon applications
of State banks, etc,
S,9:L«10:p.l0,

SECTION

Directors of National Reserve A3sociation.
1. (a) 15 to be elected.

Only analogy is Federal Reserve Board
members.1

(b) One by Board of Directors of
each Branch.
(c) If number of districts be in
creased each additional die- j
trict entitled to elect an a<
3- ;
ditional director of this

clsiss •
2. (a.) 15 additional Directors to be
elected,

(b) One by Board of Directors of
each Branch,
t

)
(c) Who shall fairly represent a.gri-+ Analogous to Class B Directors.
"Who at time of their election shall
cultural, commercial, indus- !
be actively engaged in their district
trial and other interests of j
in commerce, agriculture, or some
the district,
other industrial pursuit."S.4:L,40;p.5.
(d) Shall not be officers of banks, 1
trust companies, insurance
: No director of Class B shall be an of
ficer, director or employe of any
companies or other financial
bank.
S.4:L.l:p.6,
institutions,
(e) Nor Directors of same while
serving.

' No director of Class C shall be an of
ficer, director, employe or stock
holder of any bank. S,4:L.3:p,6,

(f) If number of districts increased each additional dis
trict entitled to elect an
additional director of thi3
class.

|
j
i

3. (a,) 9 additional directors to be
elected,
(b) By voting representatives
i
chosen by Boards of Directors 1
of the various branches,
j
(c) Each to cast votes equal to
i
shares in National Reserve As-j
sociation held by banks in
j
branch which he represents,
j
(d) Not more than one of directors !
of this class to be chosen
j
from one district.
'

------------------------------ ------ ----- -

Directors of each of above three
classes to be residents of
District from which elected,
4.

j
j
1

7 Ex-officio members ol Board of
Directors:-

(1)
(2)
(3)
(4)
(5)
(5)

Secretary of the Treasury and Comptroller
of the Currency are Ex-officio members
of Federal Reserve Board. S.10:L.7;p,ll

Governor of National Reserve
Association.
Two Deputy Governors,
Secretary of the Treasury,
Secretary of Agriculture,
Secretary of Commerce & Labor
Comptroller of the Currency,
The Governor shall be Chairman
of the Board.

Secretary of the Treasury. S,10:L»51:p,ll.

No member of any National or State legis No Senator or Representative in Congress
shall be a member of the Federal Re
lature to be a Director of National
Reserve Association nor of any of its
serve Board or an officer or a direc
Branches, nor of any local association.
tor of a Federal Reserve Bank,
S.4:L.52:p,3.
No member of the Federal Reserve Board
shall be an officer of director of
any bank, ba-nking institution, trust
company or Federal reserve bank, nor
hold stock in any bank, banking insti
tution or trust company.S,iO*.L,52:p.ll»
Board of Directors at first meeting
to be divided - except the exofficio members - into three class
es:
(a) l/3 to hold office until first
Tuesday in April immediately
following.the election,
(b) l/3 to hold, for additional per
iod of one year from said first
Tuesday in April,
(c) l/3 to hold for additional per
iod of two years from said first
Tuesday.

All oloctiono to bo hold on first
Tuesday of April of each year,
After first election all Directors
to serve for 3 yoars.

See Supra, note to Section 8 for elec
tion of directors of Federal reserve
banks.

_________ ________________

16 -

■ All directors of Local Associations,
Branches and of National Reserve
Association shall serve until
their successors have qualified.
5. Vacancies in Directors of National
Reserve Association to be filled
as provided in by-laws of National,
Reserve Association.
Cath of Directors of National Reserv^
Association same as oath of Direcf
tors of Local Associations and
Branches.
By-laws.
Board of Directors of National Re
serve Association may make by
laws, not inconsistent with law,
as to conducting business of
Association and exercise and en
joyment of privileges granted it
by law.

Federal Reserve Banks, by their Boards of
Directors, may prescribe by-laws not in
consistent with law regulating the man
ned in which its general business may
be conducted, and the privileges grant
ed to it by law may be exercised and
enjoyed.
S.4:L.l:p.5.

SECTION 10.
Executive officers of National Reserve
Association.
. Governor,
2. Two Deputy Governors,
3. Such subordinate officers as may be
provided by by-laws.
1

Governor
Vice Governor
S.10rL.34:p.ll.

1 • Selection of Governor.
By President of United States from
list of not less than 3 submitted
to him by Board of Directors.

Designated by President from among the
5 appointed members.
S.10 jL.33ip.il*

Person so selected to be appointed
by Board as Governor.

Term of Office.
Ten years, subject to removal for
cause by z/z vote of Board.

Presumably at pleasure of President.

Z - Deputy Governors.

Two to be elected by Board.

i
|
Vice Governor designated by President#
S ^XO:L*33 Sp.ll*

Term of Office.
Seven years, subject to removal for
cause by majority vote of Board.

At pleasure of President.

Deputy Governors first elected to serve
for four and seven years respectively.
Vacancies *
Successors to be elected to fill un
expired term.

In absence of Governor or inability to
act, senior Deputy in point of ser
vice shall act as Governor.
3. Board of Directors nay appoint such ;Board of Directors to appoint such of
ficers and employees not otherwise pro
other officers as provided for by
vided for in Act, define their duties,
by-laws.
require bonds, and fix penalty thereof,
i and to dismiss at pleasure such officers
or employees. S.4;L.50;p«4.

Six per centum of paid-in capital and sur
plus. S.2:L«12:p.&.
Stock subscription.
One-sixth payable on call of Organization
Committee or Fed. Res. Board; one-sixth
with 3 months and one-sixth within 6
months thereafter; remainder or any
Certificate to be filed with Secretary
part subject to call by Fed. Res. Board
of State when 100 millions paid in
S .2;L«13:p.2.
showing said payment.
Not to commence business until capital
subscribed of not less than 4 millions.
Certificate to be filed with Comp
troller of Currency showing;
S,2iL.29*p.3
Application blank which shall contain
(a) Title of each bank which has sub
Resolution of Board authorizing subscribed,
scription# S.4:L.10;p.4«
Certificate of organization filed with
Comptroller:Directors to call for 50% on organi
zation.

(.b) Location of sam3 ,
(c) Number of shares subscribed by
each bank,
(d) Amount paid thereon.

(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)

Name.
Territorial extent of district.
City and State .
Amount of capital stock.
Number of shares .
Name and place of doing business.
All banks which have subscribed.
Number of shares held by each.
Fact that certificate is made,etc.
S.4:L.21:p,4*

SECTION 12.
Shares of Capital Stock;
(a) Not transferable,

Same.

S.5:L.48:p»7,

(b) Can not be hypothecated,

Same.

S.5:L.48:p,7.

May be owned by United States and public
if stock not sufficiently subscribed
for,
S.2*.L.3:p.3,
S.2:L.17:p.3,

(d) Only to be owned in proportions
herein provided
Additional Stock:
1. Where subscribing bank increases
its capital must subscribe to ad-'
.ditional amount of capital of
National Reserve Association.
(a) Equal to 20$ of said increase,

Six per cent of increased capital or sur
plus.
S.5:L.42:p.7, i : S.5:L.49:p,'

(b) Paying therefor its then book
value as shown by last publish
ed statement of said associa
tion.
2, A bank applying for membership

after formation of National Re
serve Association
(a) Must subscribe for amount equal
to 2 0 $ of capital of subscrib
ing bank.

Six per cent of its paid-up capital and
surplus.
S.5:L,3:p.8,

(b) Paying tnerefor its then book
value as shown by last pub
lished statement of said as
sociation,

Its par value plus l/2 of 1$ per month
from period of its last dividend.
S,5 :L« 5:p.8 .

*
In both 1 and 2 Directors to file
certificate in office of Comp
troller of Currency, showing:(a) Increase in capital,

Substantially the same.

S,5:L,12:p.8 .

Substantially the same,

S.5:L,14:p,8.

(b) Amount paid in,
(c) By whom paid.
Reduction of Stock:
1

. Where subscribing bank reduces its
capital shall surrender propor
tionate amount of its holdings•
in the capital of said associa
tion.

Substantially the same, but additional
provision that it shall be released
from its stock subscription not pre
viously called.
S,5:L.18:p,8,

2. Voluntary liquidation shall sur
render all its holdings.

In both

and 2,
Same,

(a) Surrendered shares shall be
cancelled

A
(b) Association shall pay sum
equal to their then boot
value as shown by last pub- j
lished statement of said as-j
sociation.
|
3, Insolvency of any member and appointment of receiver.

S,5:L,20:p,8.

siim equal to its cash paid subscription
on shares surrendered and one-half of
1$ per month from period of last div
idend not to exceed book value thereof,
less any liability, etc., to the Fed
eral Reserve Bank.
S.5:L.22:p.8.

j
i

(a) Stock held by it to be cancelled
(b) Balance after paying all debts
due to association to be
paid to receiver.
All debts of member banks to Rat
ional Reserve Association to be
a first lain upon the paid-in
capital stock.

But addition - "without impair
| Same.
ment of its liability."
All cash paid subscriptions with l/2 of
Vfo per month from period of last divi
dend, not to exceed book value thereof,
to be first applied to all debts to
Federal Reserve Bank, and balance to
receiver.
S,6:L.29:p.8.

Board of Directors to file certif Substantially the same.
icate in office of Comptroller
showing in either 1,,.2 or 3:j

S.5*,L.12lp,8,
S.5:L.37:p.8,

(a) The reduction in capital stock,
(b)

1 Amount

repaid to each bank.

SECTION 13.
Taxation..
National Reserve Association and its
branches and the local Association
to be exempt from local and State
taxation, except taxes on real es
tate .

Federal Reserve Banks, including capital
stock, surplus, and income therefrom,
exempt from Federal, State and local
taxation, except taxes upon real es
tate.
S.7:L.9:p.9,

SECTION 14.
Executive Committee
Annually elected by Directors from
their number as the by-laws may pro
vide.
Nine members.
Governor of National Reserve Associa
tion to be ex-officio Chairman.
The two Deputy Governors and the Comp
troller of Currency to be ex-officio
members.
Not more than one of elected members
shall be chosen from any one dis
trict.
Power of Executive Committee:
All authority vested in Board of
Directors, except:
(a) Power of nomination, appoint
ment and removal of the
Governor and Deputy Governors.
(b) Powers specifically delegated
by the Board to other Com
mittees or to the Executive
officers.

Nothing in Federal Reserve Act as to Com
mittees .
Board of Directors given such incidental
powers as shall be necessary to carry
on the business of banking within the
limitations prescribed by the Act*
S.4:L.7:p*5.

(c) Powers specifically reserved
or retained by the Board.
Other^Committees :
Directors may elect from their number
such other Committees as the by
laws of National Reserve Association
may provide.

See Note above.
Directors may prescribe by-laws, not in
consistent with law, regulating the
manner in which its general business
may be conducted, etc. S.4:L.l:p.5»

SECTION 15.
Examinations.
Board of Examination to be elected
annually by Board of Directors
among their number, excluding the
members of the Executive Committee.
Secretary of Treasury to be exofficio Chairman of Board of.
Examination.

Examinations. .
1. Member banks
(a) By Comptroller
Comptroller, with approval of
Secretary of Treasury, to ap
point examiners who shall ex
amine every Member bank, at
least twice in each calendar
year and oftener if necessary.
S.21:L.52:p.23.

Duties.
(a) To carefully examine the condi
tion and business of National
Reserve Association and of its
branches.
(b) To make a public statement of
result of such examination at
least once each year.

Federal Reserve Board, on re
commendation of Comptroller,
to fix salaries of all bank
examiners and report thereof
to Congress. S.21:L.14:p.24
Expense of examinations to be
assessed by Comptroller in
proportion to assets and re
sources held by the banks upon
the dates of examinations.
S.21:L.19:p.24.
(b) By Federal Reserve Board.
Federal Reserve Board may ex
amine, at its discretion, the
accounts, books, and affairs
of each Federal Reserve Bank,
and of each Member bank, and
nay require such statements
and reports as it may deem
necessary. S;.ll:]l,.38:p.l2.

In addition to examinations
made and conducted toy Comptrol
ler, every Federal Reserve Bank
may, with approval of Federal
Reserve Agent, or of Federal
Reserve Board, provide for spe
cial examination of member banks
within its district.
S.21:L,2J:p,24.
Expense of such examinations to
toe borne toy bank examined,
S.21:L.25:p,24.
To toe conducted so as to inform
the Federal Reserve Bank of the
condition of its member banks
and of lines of credit extended
toy them. S.21:]L,26:p.24,
Every Federal Reserve Bank shall
at all times furnish to Federal
Reserve Board such information
as may toe demanded concerning
condition of any member bank
within district of said Federal
Reserve Bank, S.21:L,28:p,24.
(2) Federal Reserve Banks:
Federal Reserve Board to order
an examination of each Federal
Reserve Bank at least once each
year,
S,21:L.38:p,24.
Upon joint application of 10
member banks Federal Reserve
Board shall order a special ex
amination of any Federal Reserve
Bank.
S,21:L,40jp,24,
Federal Reserve Board to pub
lish a statement once each week
showing condition of each Fed
eral Reserve Bank, and a con
solidated statement for all
Federal Resei've Banks.
Such statements to show in de
tail (a)Assets and liabilities of the
Federal Reserve Banks;
(to)Information regarding charac
ter of money held as reserve;

(c)Amount, nature and maturities
of the paper and other invest
ments owned or held by Federal
Reserve Banks. S.ll;L.40:p,12.
(3) State Banks and Trust Companies:
By-laws of Federal Reserve .
Board to require applying banks
not organized under Federal
law to submit to the examina
tions, etc., prescribed by the
Organization Committee or by
the Federal Reserve Board,
S.9:L.15ip,10.
Federal Reserve Board may au
thorize examination by the
State authorities to be ac
cepted in the case of State
banks and trust companies.
S.23,:L.4:p.24.
Federal Reserve Board may, at
any time, direct holding of a
special examination of State
banks or trust companies that
are stockholders in any Federal
Reserve Bank. S.21:L,4;p,24,
Examiner making the investiga
tion to have power to make a
thorough examination of all
the affairs of the bank.
S.21:L.8:p.24.
(4) Foreign Branches:
Federal Reserve Board may or
der special examinations of
foreign branches. S,25:L.22:'
p,26.
SECTION 16.
Branch Bank Officers:

Nearest anology in Federal Reserve Act
is the branches of Federal Reserve
Manager and Deputy Manager appointed j
Banks.
from district by Governor of Nat- ■
Manager to be designated by the direc
ional Reserve Association with ap
tors of the Federal Reserve Bank.
proval of:
S,3:L.54:p.3.
(a) Executive Committee of National
Reserve Association,

i,b; Board of D ir e c t o r s of branch,,

Eour selected by Federal Reserve Bank
and 3 by Federal Reserve Board.

Subject to removal by Governor,

To hold office during the pleasure

With approval of. Executive Committee
of National Reserve Association.'

Directors to possess same qualifications
as directors of Federal Reserve Bank.
S.3:L.44:p,3.

Powers and Duties:
Of Manager, Deputy Manager and the
various Committees of the branches,
To be prescribed by by-laws of Nat
ional Reserve Association,

Branches to be operated by Board of
Directors under rules and regulations
approved by the Federal Reserve Board.

SECTION 17,
Officers of Local Association:

Nothing in Federal Reserve Act as to
this.

President, Vice President and an Ex
ecutive Committee to be annually
elected by the directors.
Powers and Duties:
To be determined by by-laws of local
association,subject to approval of
National Reserve Association,
________
SECTION 18.

List of banks and shareholders
To be kept at head office by National
Reserve Association.

Contained in Organization certificate
filed with Comptroller. S.4:L,21:p.4;
Also in certificate filed with Comptrol-ler showing increase or decrease of
capital stock. S.5:L,12;p»8,
S, 6*.L.37 :p,8 .

Open to inspection of all shareholders No such provision in Federal Reserve Act.
Copy to be transmitted to Comptroller
of Currency on first Monday of
July each year.

CSCTION 19.
Disposition of Earnings:
After payment of:
(a) All expenses

Same

(b) Other taxes not provided for in
this section.

Not specified in Federal Reserve Act.

Shareholders entitled to receive an
annual cumulative dividend of 4$
on paid-in capital.

Annual cumulative dividend of

6 $.

Further annual net earnings to be dis
posed of:
No such provision in Federal Reserve Act.

1 .Contingent

fund to be maintained at
amount equal to 1 $ on paid-in cap
ital

Not to exceed

2 >millions

of dollars,

To be used to meet any possible losses,
To be paid, upon final dissolution of
National Reserve Association to
United States.
Not to be included in book value of
the stock,
Not to be paid to the shareholders,
!
2 .1/2

of additional net earnings to be
paid into the surplus fund of Na
tional Reserve Association until it
amounts to 2 0 $ of paid-in capital.

One-half of the net earnings after ex
penses and dividends paid, to be
paid into a surplus fund until it
?.mounts to 40$ of paid-in capital
of said Federal Reserve Bank,
S.7:L.46:p.8.

1/4 to be paid to United States as
a franchise tax

Remainder of net earnings to be paid to
United States as a franchise tax,
S.7:L.46:p,8.

1/4 to be paid to the shareholders
until their dividend shall amount
to 5$ per annum on paid-in capital.

No such provision in Federal Reserve
Act, but stockholders entitled to
6 $.
S,7:L.43:p,8.

f* o ff.
'a :l;st J

- 26 - ‘
Provided:
No such dividends in any one
clusive of the cumulative
above provided for, shall
time be paid in excess of

year, ex No such provision in Federal Reserve Act.
dividends,
at any
5$/

l/2 of additional earnings to be ad

No such provision in Federal Reserve Act.

ded to surplus fund and l /2 paid
to United States as a franchise
tax,
Ho such provision in Federal Reserve Act.
(a) Whenever and so long as contin
gent fund has been provided for,
(b) And whenever and so long as the
5$ dividend has been paid to
shareholders.
All excess earnings to be paid to
United States as a franchise
tax whenever and so long as,
(a) The surplus fund amounts to 20$
of the paid-in capital

All net earnings over expenses, 5$ cu
mulative dividends and 40$ surplus
fund to go to United States as a
franchise tax.
S,7:L.45:p.8,

(b) And the shareholders shall have
received dividends not ex
ceeding 5$
SECTION 20.
Guaranty of Commercial Paper.'A
Any member of a local association
May apply to such association

No such provision in Federal Reserve Act:
Except that all paper rediscounted
(save only open market transactions)
must be indorsed by a member bank.
S.13:L.40:p,14.

For a guaranty of the commercial
paper,
Which it desires to rediscount
At branch of National Reserve As
sociation.
In its district.
Commissions:
Any such bank receiving a guaranty

No such provision in Federal Reserve Act.

To pay a commission to local asso
ciation.

No such provision in Federal Reserve Act.

To be fixed by its Board of Directors.

Expenses and losses in excess of
commissions,
To be met by assessment of members
of local association
In proportion to ratio which tjieir
capital and surplus bears to ag
gregate capital and surplus
Of the members of the local associa
tion,
Assessment to be made by its Board
of Directors,
The commission received for such
guaranty, after payment of expenses
and losses, to be distributed among
the several banks of the local as
sociation in the same proportion,
Local association to have authority:
(a) To require security from any
bank offering paper for guaranty
(b) To decline to grant the appli
cation
Total amount of guaranties by a local
association to the National Reserve
Association not at any time to ex
ceed aggregate capital and surplus
of the banks forming the Guaranty
Association.
SECTION 21.
Clearing House:
Federc.l Reserve Board may in its dis
cretion exercise the functions of a
clearing house for the Federal Ro
se rve Banks,
S,15:L.53:p.i9,
Such of functions of a clearing house

Any local Association may assume and
exercise

As are not inconsistent with the pur Or it may designate a Federal Reserve
Bank to exercise such functions.
poses of this Act.
S,16:L.54:p,19,
(a) By vote of 3/4 of its members

(b) With approval of National Reserve Association.

National Reserve Association may require any local association

; Or it may require each Federal Reserve
Bank to exercise functions of a
clearing house for its member bank3 .
I
j
S.16:L,l:p.20.
j

Federal Reserve Board shall, by rule,
(a) Fix charges to be collected by
member banks from its patrons
whose checks are cleared through
In facilitating the domestic exchanges
the Federal Reserve Banks.
of the National Reserve Association
\
(b) The charge which may be imposed
for the service of clearing or
As the public interests may require
collection rendered by the Fed
eral Reserve Bank,
To perform such services

SECTION 22.
All privileges and advantages
Of National Reserve Association
To be equitably extended
To every bank, etc.
Which shall subscribe to its propor
tion of stock.

Directors of Federal Reserve Banks, sub
ject to provisions of law and the
orders of Federal Reserve Board, to
extend to each member bank such dis
counts, advancements, and accommoda
tions, as may be safely and reason
ably made with due regard for the
claims and demands of other member
banks. S.4:L.31:p.5.

And conform to requirements of Act.
Suspension:
National Reserve Association may susspend a bank
From privileges of membership
(a) For refusal to comply with re
quirements of Act.
(b) For failure for 30 days to main
tain its reserves
(c) Failure to make reports required
by Act.
(d) Misrepresentation in any report or
examination

Federal Reserve Board, for any violation
of the provisions of this Act, may
suspend the operations of any Fed
eral Reserve Bank, take possession
thereof, administer same during
period of suspension, and, when
deemed advisable, liquidate or re
organize such bank, S.ll:L.32:p,13,

1. As to condition
2* As to character or extent of its
assets or liabilities*
iiCTTON 23iscal Agents.
National Reserve Association to be the
principal fiscal agent o'f the United
States»

Federal Reserve Banks to act as Fiscal
Agents of the United States when re
quired by Secretary of the Treasury.
S .15:L.44:p.16•
Foreign branches of National ban’-.s to act
if required to do so, as fiscal agents
of United States* S»25.L.8:p.26.

Upon organization, Government to deposit
its general funds with said associa
tion and its branches
Thereafter,

dll receipts of Government

Exclusive of trust funds
Shall be deposited with such associa
tion and its Branches

Secretary of the Treasury may deposit in
FedSral reserve banks the moneys held
in the general fund of the Treasury)
Except
(a) The 5% National bank redemption
fund
(b) Federal reserve note.redemption
fund S.15:L.39:p.l6.

All disbursements by the Government

The revenues of the Government or any par
thereof may be deposited in such banks

To be made through said Association and
its branches.

Disbursements may be made by checks drawn
against such deposits.S.15:L.45:p. 16.Nothing in Act to be construed to deny
right of Secretary of Treasury to use
Member banks as depositories.
S .15:L.53:p .16.

ACTION 24.
■positors.
(a) Government of U. S.
(b) Stockholding banks.

Federal Reserve Bank Deposits.
1 . May be received:
(a) From U, S. and Member banks.
Current funds in lawful money,
National bank notes, Federal re~
serve notes, choci:s or arafts
upon solvent timber banks payable
upon presentation.
S*13;L.32tp.l4.

3n _
(b) From other Federal Reserve Banks
Solely for exchange purposes.
Current funds in lawful money,
national bank notes, or checks
and drafts upon solvent member
or other Federal Reserve Banks,
payable upon presentation,
S.13:L,36:p,14.
2

. Shall be received on deposit at par.
(a;) From member banks or Federal
Reserve Banks,
Checks and drafts drawn upon
any of its depositors.
(b) From Federal Reserve Banks.
Checks and drafts drawn by any
depositor in any other Federal
Reserve Bank or member bank
upon funds to credit of said
depositor in said reserve hank
or member bank, S.16:L.37:p,19.

Depositors:
(a) Government of United States.
S.12:L.32:p,14.
(b) Member banks. S,12:L.32:p.l4.
(c) Other Federal Reserve Banks,
for exchange purposes only.
S.13:L,36:p,14.
Limitation of Domestic Transactions;

Limitations of Domestic Transactions:

(a) To the United States Government

(a) United States Government.
Fiscal Agent. S,15:L.44:p.l6.
Government deposits.
S.15:L.46jp,16.
Government disbursments,
S.15:L.47:p,16,

(b) To the subscribing banks,

(b) Notes, etc., indorsed by member
banks,
Discounts of notes, bills,
etc,, indorsed by member banks.,
S.13:L,42:p.l4.

Except:
1

. Purchase or sale of Government or ;
State securities,
i

Exclusive of notes, bills,
etc., issued or drawn for pur
pose of carrying or trading
in stocks, bonds, or other

* ---------------- ------------------

Securities of Foreign Governments.

investment securities except
bonds and notes of Government
of United States *
(c) Onen Market Powers. S.14:L.5Q:
p.15. (Nothing as to securi
ties of a foreign government)
1. Deposits for exchange purposes.
S.13:L.36:p.l4.
2. Rediscounts for other Reserve
Banks. S.11:L.49:p.J2.

3. Gold coin or bullion.

SECTION 25.
National Reserve Association to pay
no interest on deposits.

No such provision in Federal Reserve Act.

SECTION 26.
Rediscounts.

National Reserve Association through
a Branch may rediscount for and
with the indorsement of any bank
having a deposit with it.

Indorsement of a Member bank.
Waiver of demand, notice, and protest by
such bank.

Notes and Bills arising out of com
mercial transactions.

Actual commercial transactions*

That is, notes and bills issued or
drawn for agricultural, industrial,
or commercial purposes.

Same, but in addition "or the proceeds
of which have been or are to be used
for such purposes".

Not including notes or bills
Issued or drawn
For purpose of carrying
Stocks, Bonds or other investment
securities.

Covering merely investments or issued or
drawn for purpose of carrying or
trading in stocks, bonds, or other
investment securities.
Except bonds and notes of Government of
United States.
Federal Reserve Board to define Com
mercial paper. S.13:L.40:p.l4.

Maturity.
Not more than 28 days.
Must have been made at least 30 days
prior to date of rediscount.

At time of discount, not more than 90
days, except agricultural paper, not more than 6 months.
S.13:L.7:p.l5.
.S .13:L.9:p,15.

m
-

,32

Amount rediscounted
Limited to capital of
Banks for v/hich rediscounts are
mads
Aggregate of such notes and bills

No such limitation except as to dis
count of Acceptances - limited to
50$ of paid-up capital stock and
surplus of bank for which made, or
to 100$ if authorized by Federal
Reserve Board,
S.13:L.16:p,15.
S.13:L.l:p.32.
Liabilities incurred under provisions
of Federal Reserve Act excepted from
Revised Statutes.
See 5202.

Bearing signature or endorsement
Of any one person, company, firm or
corporation.

Same provision.

Rediscounted for any one bank

But

At no time to exceed 10$
Of unimpaired capital and surplus
of said bank.

Federal Reserve Act adds: This restric
tion not to apply to discount of
Bills of Exchange drawn in good
faith against actually existing
values.
S .13:L .22:p.15.

SECTION 27.
Commercial paper as above defined.
Having nore that 28 days to run
But not exceeding 4 months
May be rediscounted
Through a branch
Paper must be guaranteed
By Local Association
Of which bank asking rediscount
Is a member

No such provision in Federal Reserve
Act.

Rediscount of direct obligation of
depositing ba.nk.
Conditions:

No such provision in Federal Reserve Act,
j
|

. Opinion of Governor that the
public interests so require..

2. Concurrence of Executive Committee of National Reserve As
sociation.

i
j

3. Definite approval of Secretary
of the Treasury,
4. Indorsement by its local institu-i
tion.
|
j

, 5. Such indorsement to be fully se
cured by pledge and deposit with
it of satisfactory securities to
be heid by local association for
account of National Reserve As
sociation.
6.

Amount so loaned not to exceed
3/4 -,i actual value of securi
ties so pledged.

SECTION 39.
Power of rediscount and discount:
Granted by sections 26, 27 and 28 of
Act.

Except as to open market powers limited
to member banks in Federal Reserve
Distiict in which Federal Reserve Bank
lies, S.13:L.40:p.l4.

To be exercised in each case
Through branch in district in which
bank making application is located.
SECTION 30.
Discount rates:
To be fixed from time to time
By National Reserve Association

Established by Federal Reserve Bank,
subject to review and determination
of Federal Reserve Board. S.14:L,24:
p,16.

t'ki
f {
vw .v L-J

When so fixed to "be published

No such provision.

To be uniform through United States.

No such provision.

SECTION 31.
Acceptances:
National banks

Any member bank.

May accept drafts yg bills drawn upon
them

Growing out of transactions involving
importation or exportation of goods.

(a) Having not more than 4 months to
run.

Not more than

(b) Properly secured

No such provision

months’ sight to run.

(d) Amount outstanding
Not to exceed l/2 the capital and
surplus

Same, but amended by Act of March 3,
1915, so that Federal Reserve Board
can extend limit not to exceed cap
ital stock and surplus. S.13:L.l:p,32«

Of the accepting bank
To be subject to the restrictions of
United States - Revised Statutes,
Section 5200.

SECTION 32.
Open market powers:
National Reserve Association
Whenever its own condition
And general financial condition

No such provision in Federal Reserve Act.
Counsel has advised that this section
Revised Statutes does not apply to ac
ceptances under Sections 13 and 14, but
that if drawer does not furnish funds
to acceptor then the transaction takes
on the nature of a loan to drawer and
is subject to Section 5200 Revised
Statutes.

Warrant such investments
May purchase from a subscribing bank
Acceptances of banks
Or of acceptors of unquestioned
financial responsibility arising
out of commercial transactions
As hereinbefore defined.

Purchase and sell in open market, at
home or abroad, from or to domestic
or foreign banks, firms, corporations
or individuals, with or without in
dorsement of a member bank,
Cable transfers and bankers acceptances
and bills of exchange of the kinds
and maturities by this Act made eli
gible for rediscount,S.14;L,50:p,15,

Such acceptances;
(a) Not exceeding 90 days to run

Of the kinds and maturities by this
Act made eligible for rediscount,
S.14:L.2:p.l6,

(b) Prime bills.

No such provision.

No such provision in Section 14, (Open
market powers). Discounts of ac
ceptances under Section 13 must have
indorsement of at least one member
bank. S.13:L,16:p,15.

(d) Which indorsement must be other
than that of the acceptor.

No such provision.

SECTION 33.
Open market powers.
National Reserve Association may in
vest;
(a) In United States bonds

At home or abroad, bonds and notes of
United States. S.14:L.12:p.16.

(b) In obligations having not more
than 1 year to run
1, Of United States or its depend
encies
2. Of any State
3. Of Foreign Governments.

Bills, notes, revenue bonds and war
rants issued by any State, County,
District, Political subdivision, or
municipality,
In continental United States
Including irregation, drainage and
reclamation districts,
With maturity from date of purchase
;
of not exceeding 6 months.

Issued,
(a) In anticipation of collection of
taxes, or,
(b) In anticipation of receipt of
assured revenues,
In accordance with rules and regulations
of Federal Reserve Board.
S.14:L.13.p,16.
SECTION 34.
C?en ma rke t powe rs:
National Reserve Association to havo
power at home or abroad
(a) To deal in gold coin or bullion

Same.

S.14:L.6:p.l6.

(b) To make loans thereon

Same.

S.14:L,7:p.l6.

(c) To contract for loans of gold
coin or bullion, giving there
for when necessary, accepted
security, including hypotheca
tion of its holdings of United
States bonds.

Same.

Additional clause: - "Or other
securities which Federal Re
serve Banks are authorized to
hold." S.14:L.9:p,16,

National Reserve Association to have
power

Same,

S.14;L.21:p.16*

To purchase from subscribing banks

Member banks.

And to sell, with or without its in
dorsement,

Same.

Checks or bills

Same, except no mention of checks.
S,14:L.21:p,16.

Arising out of commercial transac
tions,

Same.

S,14: L .2 1 :p .16,

As hereinbefore defined.

Same.

S.14:L,21*.p.l6,

Payable in such foreign countries.

No suchi limitation in Federal Reserve
Act.

SECTION 35.
Open market powers:

S.l4:L,21,p.l6.

S.14:L.21:p.l6.

As Board of Directors may determine
These bills of exchange
(a) Must have not exceeding 90 days
to run
(b) Must bear signature of 2 or more
responsible parties
0
(c) Of -which last one to that of a
subscribing bank.

Same.

S.14:L.36:p,16.

Same.

S,14:L.36:|J.16.

No such provision.

SECTION 36.
Open market powers.
National Reserve Association to have
power:
(a) To open and maintain banking ac
counts in foreign countries.

Sarnie.

(b) To establish agencies in foreign
countries for purpose of pur
chasing, selling and collecting
foreign bills of exchange.

Appoint correspondents and establish
agencies, etc.
S.14:L.31:p.l6.

Same.

S.14:L.33:p,16.

With or without its indorsement

Same.

S.14:L.33:p.l6.

Through such correspondents or
Agencies.

Same.

S.14:L.33:p.16 .

Checks or prime foreign bills

Bills of exchange.

Arising out of commercial trans
actions
(a) Having not exceeding 90 days
to run
(b) Bearing signature of 2 or
more responsible parties.

"Actual" commercial transactions.
S.14:L,35:p.l6.
Same.
S.14:L.36:p.l6.

S.14:L,30:p,16.

Word "Foreign" not in Federal Reserve
Act.

Same.

S.14:L.34:p,16.

S,14:Lt36:p,16.

Federal Reserve Banks also given power
under rules and regulations of Federal
Reserve Board, to purchase or sell,
at home or abroad, from or to, do
mestic or foreign banks, firms, cor
porations or individuals: Cable transfers, Bankers'acceptances

and bills of exchange,
Of kinds and maturities by this Act
made eligible for rediscount,
With or without indorsement of a
member bank.
S.14:L.50:p.l5.
Furthe r p owe rs;To exchange Federal reserve notes for
gold, gold coin or gold certifi
cates
To establish accounts with other
Federal Reserve Banks for exchange
purposes.
S.14:L,28:p.l6,
SECTION 37.
Transfer of deposits:
Duty of National Reserve Association
or any of. its branches upon re
quest
To transfer any part of deposit bal
ance of any bank

No such provision in Federal Reserve Act,

To the credit of any other Bank hav
ing an account with National Re
serve Association.

Only analogy is the G-old Settlement Fund
Regulation L, Series, 1915,

Transfer of deposit balance from
books of one branch
Under regulations of National Re
serve Association
May be made by mail, telegraph or
otherwise,
At rates to be fixed from time to
time

Rates for rediscounts between Federal
Reserve Banks to be fixed by Federal
Reserve Board. S.ll:L.49:p.l2.

By manager of branch
At which transaction originates.
SECTION 38.
Power to hold real estate:
National Reserve Association

Nothing in Federal Reserve Act as to this.

May purchase, acquire, hold and
convey real estate:
1. For immediate accommodation in
transaction of business at head
office or any branch.
2. Mortgages in good faith as se
curity for debts previously
contracted,
3. Conveyances in satisfaction of
debts previously contracted in
course of its dealings.

4. Purchases at sales under judge
ments, decrees or mortgages
held by said Association

Federal Reserve Banks given power to
exercise by Board of Directors or
duly authorized officers or agents,
all pov/ers specifically granted by
the provisions of this Act, and such
incidental po\vers as shall be neces
sary to carry on the business of
banking within the limitations pre
scribed by this Act. S.4:L.5:p.5,
May make loans on improved and unen
cumbered farm lands, if bank is not
situated in a central reserve city.
Such loans limited to 5 years and to
50$ of actual value of the property.
Also limited to 25$ of capital and sur
plus, or to l/3 of time deposits.
S.24:L.37:p.25.

5. Purchases to secure debts due to
it.
Limitation:
Shall not hold possession of any
real estate.
(a) Under mortgage

No such provision.

(b) Or title and possession of any
real estate purchased to se
cure debts due to it
For longer period than 5 years.
SECTION 39.
Reserves:
(a) Deposit balance of any subscrib
ing bank in National Reserve
Association
(b) Any notes held of National Re
serve Association
May count as whole or any part

(a) Balance in Federal Reserve Banks
due to member banks may be
counted as reserves to extent
herein provided. S.l9:L,28.p.23,
Ultimately, there must be deposited
in Federal Reserve Banks out of
the reserves of member banks, -

«r

- 40
- country banks 5/12; Reserve
City banks, 6/15; Central Re
serve City banks,, 7/J8 ;
S.19:L,1 1 :p,2 2 . : : S.19:L.30
p.22. : : S.19L.49:p,22.
Of its required reserves.

(b) Federal Reserve notes and Federal
reserve bank notes can not be
held as reserve by National mem
ber banks: semble, can be so held
by State member banks if per
mitted by State law;
National member banks must keep
same kind of money in their ret?
serves as National banks under
National Bank Act.
S,20:L.28:p.33.
*

The 5$ National bank redemption
fund no longer to count as part
of lawful reserve, S.20:L,38;p.23,
By-laws of Federal Reserve Board
to require applying banks not
organized under Federal law to
comply with reserve requirements
prescribed by Organization Com
mittee or by Federal Reserve
Board. S.9:L.14:p,10.

1. Demand deposits.
National banks in different lo
calities.
To maintain same percentage of
reserve
As now required by law.
Same percentage of reserve

Defined: All deposits payable with
in 30 days. S.19:L.50:p,21.
Reserve requirements lowered: 1. Country banks from 15$ to 12$,
2. Reserve City banks from 25$
to 15$
3, Central Reserve City banks from
25$ to 18$. S.19:L.6:p,23,
S.19:L,25:p,22. : S.19:L.45:p.22,

Required of all other subscrib
ing banks in same locality.

Applies to all subscribing member
banks.
S.19:L,3:p,22.

Time deposits:

Defined: -

(a) All time deposits
(b) Moneys held in trust payable
or maturing within 30 days
from date.

To comprise
(a) All deposits payable after
30 days.
(b) All savings accounts and cer
tificates of deposit.

To be subject to same reserve re
quirements
As demand deposits in same locality
If maturing more than 30 days from
date

Subject to not lees than 30 days
notice before payment. S.19:L.51:p,21
Time deposits to require reserve of 5$
S,19:L.7:p.22. : : S.19:L.26:p,22.
S,19:L.46:p,22.

To be subject to same reserve re
quirements as demand deposits
For the 30 days preceding their
maturity.
Except for this period no reserve
required
Time deposits and trust moneys
Payable only at a stated time
Not less than 30 days from date
of deposit
(a) Must be represented by certifi No such requirement.
tion E, 1915.
cate or instruments in writing
(b) Must not be allowed to be with
drawn before time specified
without 30 days notice.

But see Regula

No such requirement. But see Regula
tion E, 1915. Not less than 30 days.

SECTION 40.
Real estate loans.
National banks may loan upon im
proved and unimoumbered real
estate.
(a) Not more than 30$ of their
Time Deposits.

Same, except "Farm land".

(b) Not to exceed 50$ of actual
value of the property.

Same also: "Nor for a longer time than
5 years,"

Situated within its Federal Reserve
District, S.24rL.37:p.25,

25$ of its capital and surplus or l/3
of its time deposits.

Provided:
Privilege not to bo extended to
banks acting as reoorvo agont.

Not allowed to banks in Central reserve
cities, nor in other cities when so
determined by Federal Reserve Board.

- 42 For banks or trust companies.

National banks may continue to re
ceive time deposits and pay interest
on same,
S.24;L,37:p,25,

SECTION 41.
Reserves.. National Reserve Association Federal Reserve Banks,
All demand liabilities
Including deposits and circulating
notes.
Of National Reserve Association to
be covered by reserve of 50$
(a) In gold (including foreign gold
coin and gold bullion)

(b) Or in other money of United
States which National banks
may now hold as part Of their
legal reserve,'
Tax on deficient reserve.:
Whenever and so long as
Reserve falls and remains below 50$

Against deposits: Not less than $5$
in gold or jawful money,'

Against Federal Reserve notes in ac
tual circulation. - not offset by
gold or lawful money in hands of
Federal Reserve Agent, - not less
than 40^ in gold. S.l6:L,25:p.l7,
S.16:L.27:p,17,
No such provision except reserves
against deposits may be in gold or
lawful money*
S,16:L.26:p*17.

Metobeh bank may check against and
withdraw its reserve deposits with
a Federal reserve bank; subject to
regulations and penalties of Federal
Reserve Board, fdr purpose of meeting
existing liabilities but shall not
make new loans or pay dividend^ un
less and until total reserve re
quired by law is fully restored.
S.19:L,18:p,23,
Federal Reserve Board to establish
graduated tax upon amounts by which
reserve' requirements of Act may be
permitted to fall below level here
inafter specified, S,ll!L.2:p,13,

National Reserve Association to
pay special tax upon the defi
ciency at a rate increasing in
proportion to such deficiency as
follows: -

When gold reserve against Federal re
serve notes falls below 40$,
Federal Reserve Board to establish a
graduated tax cf not more than one
per centum, upon deficiency until
reserves fall to 32-1/2$.
S.ll;L.6:p,13,

For each 2-1/2$ or fraction

When gold reserve falls below 32-1/2$,
Upon each 2-l/2$ or fraction that re
serve falls below.

- 43

That reserve falls below 50$

32-1/2$

Tax to be levied
At rate of 1-1/2$ per annum

Not less than 1-1/2 per centum,etc.
S.ll:L,7:p,13.

Provided:
No additional circulating notes to
be issued

No such provision.
Only limitation is upon new loans or
dividends when bank checks against or
withdraws its reserve deposits.
See Supra.
S.19;L,18:p.23.

Whenever and so long as
Amount of such reserve
Falls below 33-1/3$ of its out
standing notes.
SECTION 42.
Computation of demand liabilities:
From amount of demand liabilities
There shall be deducted
Sum equal to 1/2 of amount of
United States bonds

No such provision.
In estimating amounts due to other banks
for reserve purposes, the net balance
of amounts due to and from other banks
shall be taken as the basis.
.'S.19:L,25:p,23.

Held by National Reserve Associa
tion.
(a) Which have been purchased from
National banks, and,
(b) Which had previously been de
posited by such National
banks to secure their circu
lating notes.
SECTION 43.
Reports of National Reserve Association.
1. To Comptroller of Currency.
Once each week

Federal Reserve Board to publish once
each week a statement
(a) Condition of each Federal reserve
bank.
(b) Consolidated statement for all
Federal Reserve banks,

Showing principal items of its bal
ance sheet

Such statements to show in detail:
1, Assets and liabilities, single
and combined.

To be made public
2. Character of money held as
reserve.
3. Amount, nature, and maturities
of paper and other investments
owned or held by Federal Reserve
banks.
S.ll:L.38:p.l2.
No provision for reports by Federal Re
serve Board, to Comptroller.
2. Full reports to the Comptroller
of the Currency coincident with
the five reports called for
each year from National banks

No such provision.

Federal Reserve Board to make annual
report to Speaker of House.
S.10:L,24:p.12,
Also to fix salaries of all bank ex
aminers, on recommendation of Comp
troller, -and make report thereof to
Congress,
S.21:L,16:p.24,
SECTION 44.
Reports of subscribing banks:
Monthly report or oftener if re
quired «
Showing principal items of their
balance sheets
To National Reserve Association
Under regulations to be prescribed
by said Association .

No change in National Bank Act as to ;
five reports of condition by national
banks.

State banks and trust companies becoming
member banks, to make reports of con
dition and payment of dividends to
Comptroller as provided in United
States Revised Statutes, Section 5211
and 5212, and to be subject to pen
alties prescribed in Section 5213
for failure to make such report.
S.9:L.35:p.lO:

SECTION 45.
All reports of national bank ex
aminers
In regard to condition of banks.

No such provision.

- 45 -

Hereafter to be made in duplicate

! Plainly implied, however, that all
i
reports of National bank examiners
i
One copy to be filed with National !
shall be open to the Federal Reserve
Reserve Association
j
and through said Board to the Fed
I
eral Reserve Agents and Governors.
For confidential use of its execu- j
tive officers and branch managers As to examinations under Federal Re
serve Act, See Supra, notes to Sec
tion 15 of Aldrich Act.

SECTION 46,
National Reserve Association
1. May accept
(a) Copies of reports of national
bank examiners for subscrib
ing national banks

No such provision, but clearly implied
by provision that in addition to ex
aminations by Comptroller anjt 'Federal
reserve bank may make special exami
nations of member banks within its
district.
S.21‘
.L.21:p,24,
See also, note, Supra, to Section 15,
Aldrich Act.

(b) Copies of reports of State
bank examiners for subscrib
ing State banks and trust
companies in States where
furnishing such information
is not contrary to law.

Same provision substantially,
S.21:L.2:p.24.
These words not in Federal Reserve
Act.

Provided:
Standard of such examinations
Both national and State
Meet presceibed requirements of
National Reserve Association,
2,

May examine at any time or
cause to be examined by its
own representative any sub
scribing bank.

No such provision, but plainly implied
in power given to Federal Reserve
Board to authorize examination of
State authorities to be accepted.
S.21:L,3:p,24.

Federal Reserve Board may examine,
at its discretion,the accounts, books,
and affairs of each Federal Reserve
Bank, and of each member bank, etc,
S.ll:L.38:p,12.
See also, note to Section 15, Aldrich
Act.
Special examinations by Federal Reserve
banks of member banks provided for,
S.21:L,21:p,24,

46 -

3,. May make such payments
To national and State examiners
For such services required of
them
As directors may consider just
and equitable

Expense of such special examinations
to be borne by bank examined.
S.21:L.25:p,24.
Expense of examinations by regular ex
aminers to be assessed by Comptroller
in proportion to assets or resources,
otc*
S.21iL.16:p,24
The expense for examinations of Federal
Reserve banks and member banks made
by Federal Reserve Board would seem
to fall within power granted to Board
to levy a semi-annual assessment upon
the Federal Reserve banks "sufficient
to pay its estimated expanses," etc.
S.10:L.42:p.ll.

SECTION 47.
All provisions of law repealed
Requiring national banks ...
To transfer and deliver to Treasurer
of United States
Bonds of United States other than
those required to secure out
standing

(a) Similar provision repealing re
quirements of Section 5159 United
States Revised Statutes; Section 4,
Act of June 20; Section 8 , Act of
July 12, 1882. S.17;L,3:p.20.

(b) No such provision.

(a) Circulating notes
(b) Government deposits
SECTION 48.
■ No further issue of circulating
notes by any national bank be
yond amount now outstanding

National banks may maintain pres
ent note issue
But whenever a bank retires
Whole or any part of its existing
issue
Its right to reissue the notes so
retired.

No such provision, but national bank
notes secured by United States bonds
purchased by Federal Reserve banks
must be cancelled and permanately
retired.
S,18tL»42.p,2Q.
Federal Reserve bank notes, however,
.are not subject to limitation to
capital stock of issuing Federal
reserve bank, as are national banks.
S.4:L.17:p,5.

Shall thereupon cease.
SECTION 49.
Purchase of Government bonds.
National Reserve Association.
For period of one year
From date of its organization
To offer to purchase

At price not less than
Par and accrued interest
The

Government bonds

After two years from passage of Act
and at any time during period of
2 0 years thereafter,
Any member bank desiring to retire
whole or any part of its circulating
notes, may file with United States
Treasurer an application to sell for
its account at par and accrued inter
est United States bonds securing
-circulation to be retired.
S.18:L,13:p,30.
Trd'aouxer to furnish to Federal Reserve
Board a list of such applications at
end of each quarterly period.

National Reserve Association

Federal Reserve Board may in its dis
cretion require the Federal Reserve
banks .to purchase such bonds from
the banks whose applications have
been filed at least 1 0 days before
end of any quarterly period at which
the Federal Reserve Board may direct
the purchase to be made.

To take over bonds so purchased

Limitation:

Held by subscribing national banks
And deposited to secure their cir
culating notes.

And assume redemption upon presen
tation
Of outstanding notes secured thereby

Federal Reserve Banks not permitted
to purchase more than 25 millions
in any one year - including bonds
required under Section 4 by the
Federal Reserve banks.

National Reserve Association
1. To issue its own notes
On terms herein provided
As the outstanding national bank
notes.

Secured by such bonds, so held
Shall be presented for redemption

Method of allotment of such bonds.
Method of purchase by Federal Reserve
banks.
Circulating notes (Federal Reserve Bank
notes) may be taken out equal to par
value of the bonds purchased.
Not limited to capital stock of Federal
Reserve bank issuing them.
S.18;L,13:p,20.

- 48 -

i
2, May issue further notes
From time to time
To meet business requirements
It being the policy of the United
States,

Only similar requirement is issue of
i Federal Reserve notes to Federal Re
serve banks. S,l6sL.2:p,17,
No limit to amount of Federal Reserve
notes which mav be issued .if e:old

rocorvo maintained and also tho
collateral.

To retire as rapidly as possible
Consistent with the public inter
ests
When Federal Reserve banks purchase
2$ United States bonds pledged to
secure national bank notes, the notes
And to substitute therefor
when redeemed must be permanately
cancelled and retired. S,18:L.41:p.20,
National Reserve Association notes

Bond secured circulation

Of. a character and secured and
rediscounted
In manner provided for in this
Act.

The Federal Reserve banks may, however,
take out Federal Reserve bank notes
to par value of bonds so purchased or
bonds having circulating privilege
but not so pledged, such notes not to
be limited to capital stock of Federal
Reserve bank issuing them.
S.4:L.9:p.5. : : S.18:L.46:p.20.

SECTION 50.
Note reserves:
To be covered by legal reserves
As required by Section 41 of Act
(i.e. 50$ reserve in gold)

Federal Reserve notes to be secured by
gold reserve of not less than 40$
against notes in actual circulation,
S.16:L.37:p.l7.

Including foreign gold coin and
gold bullion
Or, 50$ reserve in
Other money of United States
Authorized as legal reserves
Of national banks.)
Also by:
Notes or bills

Also by notes and bills accepted for
rediscount under Section 13,
S.16:L.17:P .17,

•

- 491
Arising out of commercial transactions
As hereinbefore defined

Also by additional security if called
for by Federal Reserve Agent.
S.16:L.23:p.l7.

Obligations of United States

No such provision.

Or:

SECTION 51,
Special tax on notes:
(a) Any notes in circulation in ex
cess of 900,millions.
Not covered by any equal amount
of
1

. Lawful money

2. Gold bullion
3. Foreign gold coin
Held by Association
To pay special tax
At- rate of 1-1/2$ per annum
(b) Any notes in excess of
$ 1 , 200, 000 , 000 .
Not so covered
To pay special tax
At rate of 5$ per annum
Provided;
In computing said amounts, etc.
The aggregate amount
Of any national bank notes then out
standing
Shall be included

No tax on Federal Reserve notes, but
Federal Reserve Board may fix rate
of interest to be charged upon them,
S.16:L.19:p.l8,

50 -

I
....
SECTION 52.
Circulating notes of National Re
serve Association.

Federal Reserve notes to become a first
and paramount lion on all the assets
of the Federal Reserve bank.
S,16:L,25:p,18.

To constitute first lion

Same provision as to Federal Reserve
Bank notes.
S.16:L,25:p,18,

Upon all its assets
Redemption:
In lawful money

Federal Reserve notes redeemable in gold
or lawful money at any Federal Reserve
bank.
S.l6:L.10:p.l7.

On presentation at head office

Redeemable in gold at Treasury in Washington, D, C«
S.16:Lt9:p*17.

Or at any branch
Parity clause:

No such provision.

Duty of National Reserve Association
To maintain at all times

Duty of maintaining parity remains upon
Secretary of Treasury, under Act of
March 14, 1900, and he may issue gold
bonds for this purpose. S,26:L.38:p,26

A parity of value
Of its circulating notes
With the standard established by
Act of March 14, 1900, Section

SECTION 53.
Circulating notes of National Re'
serve Association.
To be roceivod at par
In payment of

(a) Taxes, excises and other duos to
the United States.
(b) Salaries and other debts and
demands
Owing by United States
To individuals, firms, corpora
tions, or associations,

: Federal Reserve Notes.
Shall be obligations of the Unites
States.
Shall be rocoivable
(a) By all national and member banks
and Federal Reserve banks.
And,

(b) For all taxes, customs, and other
public dues. S,16sL*6:p.l7.

Except:
1,

Government obligations specifi
cally payable in gold

tllearly implied but not specifically
mentioned.

All debts due from or by one
bank or trust company to anothe r

See (a) above.

3. All obligations due to any bank
or trust company

See (a) above.

SECT IOH 54.'
National Reserve Association
And its branches

Federal Reserve notes are delivered by
Federal Reserve Agent at Federal Re
serve bank.

Shall at once, upon application
Without charge for transportation
Forward its circulating notes
To any depositing bank
Against its credit balance

The expenses necessarily incurred in
executing the laws relating to the
procuring of such notes, and all other
expenses incidental to their issue and
retirement, shall be paid by the Fed
eral Reserve banks, and the Federal
Reserve Board shall include in its
estimate of expenses levied against
the Federal Reserve banks,a sufficient
amount to cover the expenses herein
provided. S,16:L.10:p,19.

SECTION 55.
Refundine:
Upon application of National Re
serve Association
The Secretary of the Treasury
Shall exchange the 2fo United States
bonds
Bearing the circulating privilege
Purchased from subscribing bank
For 3$ United States bonds.
Without the circulating privilege

Federal Resdrve Act provides that after
two years from passage of Act and at
any time during 20 years thereafter
member banks may file with the "■
Treasurer of the United States an ap
plication to sell for its account
United States bonds securing circula
tion which they wish to retire.
S.i8:l,13:p.20.
The Federal Reserve Board may require the
Federal Reserve banks to purchase such
bonds at par and accrued interost,
S,18:L.22:p,20,

52 -

Payable after 50 years from date
issue,
National Reserve Association
To hold the 3% bonds so issued
During period of its corporate ex
istence .
Provided
After 5 years from date of its organ
ization
The Secretary of the Treasury

25 millions in any one year, includ
ing bonds bought under Section 4 of
Act.
S.18:L*27:p.20.
Method of allotment prescribed.
S.18:L.30:p.20.
Method of payment prescribed.
S.18:L.37:p.20.
Banks to be paid by U. S. Treasurer
balance due after deducting suffi
cient sum to redeem outstanding
National bank notes, which notes
shall be cancelled and permanently
retired. S.18:L.39:p.20.

May at his option
Permit the National Reserve Asso
ciation
To sell annually
Not more than 50 millions of such
bonds

The Federal reserve banks purchasing the
bonds may take out Federal reserve
bank notes up to par value under
same terms and conditions as National
bank notes except not limited to
amount of capital stock of the Fed
eral reserve bank issuing them.
S.18:L.46:p.20.

Provided further
U. S. reserves right at any time
(a) To pay before maturity
Any of such bonds

Secretary of Treasury, upon application
approved by Federal Reserve Board,
may exchange U. S. 2% gold bonds
bearing circulation privilege but
against -which no circulation is
outstanding for

(b) To purchase any of them at par
For the trustees of the postal
savings

(a) One year gold notes of U. S.
without circulation privilege
To amount not exceeding 1/2
of the 2f» bonds tendered

Or otherwise.

And.
(b) 30 year 3% gold bonds without
circulation privilege for the
remainder so tendered.
S . 18:L.8:p.21.
Federal Reserve Bank obtaining such
one year gold notes

53 1, To contract to purchase from U. S,
at their maturity an amount e.qual
to those delivered in exchange
for such bonds, if so requested
by Secretary of Treasury,
S *IS•b 4IS *p •21.
2, At each maturity of one year notes
so purchased to purchase from
U.S. such an amount of one year
notes as Secretary may tender,not to exceed amount issued to
such bank in first instance in
exchange for said bonds.
S.18:L.22:p.21.
3, This obligation to continue in force
for a period not to exceed 30
years. S.18:L.28:»p.21Secretary authorized to issue such one
year notes exempt from all taxes and
duties of the U. Q*. save as provided
in this Act; also to issue 3> gold
bonds
S.18:L.30:p.21.
Such
bonds may be issued at par by
Secretary in exchange for said one
year gold notes upon application of
any Federal reserve bank approved by
Federal Reserve Board. S,18:L.46:p.21.
SECTION .56.
Special Tax
National Reserve Association
To pay to the Government
A special franchise tax
Of l-l/2fo annually
During period of its charter
Upon an amount
Equal to the par value of
U. S. bonds transferred to it
By the subscribing banks.

No such provision in Federal Reserve Act.

f 6

»
- 54 -

SECTION 57,
Banking corporations
For carrying on business of banking
in foreign countries.

Federal Reserve Act provided for branches
of National banks in foreign countries.

And to act when required

Limited to banks having capital and
surplus of one million dollars or
more,
S,25:L.2;p,26.

As fiscal agents of United States in
such countries

Federal Reserve banks also authorized,
with consent of Federal Reserve Board.

May be formed by any number of per
sons

(a) To open and maintain banking ac
counts in foreign countries,

Not less than 5

(b) To appoint correspondents and
establish agencies in such
countries.

To enter into articles of associa
tion
Which shall specify in general terms
Object for which formed

For purpose of securing authority to
establish branches in foreign coun
tries or dependencies of the United
States

May contain any other provisions
Not inconsistent with provisions of
this section
Which the banking corporation
May see fit to adopt
For regulation and conduct
Of its business and affairs
Which regulations
To be signed in duplicate
By the persons uniting to form the
banking corporation
One copy to be forwarded to Comp
troller of the Currency
One to Secretary of State
To be filed and preserved in their
offices

For the furtherance of the foreign
commerce of the United States.
S,25:L,2:p.25.

The persons uniting to form such
banking corporation
To make out an organization certifi
cate
Which shall specify:

Application to specify:

1. The name, to be subject to ap
proval of Comptrller

Name of bank filing application,
S,25:L.10:p,26.

2. The foreign country or depen
dencies or colonies
Or, the dependencies of the
United States
Where its banking operations are
to be carried on

Substancially the same. S.25:L.10;p,26,

3, Place of home office in United
States,
4, Amount of capital stock and num
ber of shares.

Capital of bank filing application.
S.25:L.lO:p,26.

5. Names and places of residence of
shareholders and number of
shares heJLd by each
6,

Declaration that such certificate
is made to enable such per
sons to avail themselves of
the advantages of this section
Limit of capital, 2 million dol
lars .

Amount of capital set aside for conduc
of its foreign business,
S.25:L.12:p,26.

Fully paid in before commencing
business
Fact of payment to be certified
by Comptroller

No such provision

Copy of his certificate to be
filed with Secretary of State

No such provision

Provided:
Capital may be increased
By vote of 2/3 of shareholders

With approval of Comptroller
The capital stock of any tank
Which exceeds

million dollars

May be reduced to sum of 2 millions
By vote of shareholders owning 2/3
of its capital
Such banking corporations
To be body corporate
For 20 years from date of execution
of its organization certificate
Shall not be authorized
(a) To receive deposits in United
States
(b) To transact any domestic busi
ness

No such provision

Not necessarily related
To business being done
In foreign countries
Or in dependencies of United
States
Powers granted:
(a) To make acceptances
(b) Buy and sell bills

Relating to foreign business

No such provision.
Only analogy is
power given to Federal reserve banks
in open market:
To purchase from member banks and to
sell, with or without its indorse
ment, bills of exchange arising out
of commercial transactions as here
inbefore defined. S,14:L.21:p.l6.
For purpose of purchasing, selling
and collecting bills of exchange.
To buy and sell, with or without its
Indorsement, through such correspond
ents or agencies.

Bills of exchange arising out of ac
tual commercial transactions which
have not more than 90 days to run
and which have the signaturescof
two or more responsible parties.
S.14:L.32:p.l6.
(d) To purchase and sell securi
ties

To buy and sell, under rules and regu
lations of Federal Reserve Board, at
home or abroad,

Including
1
Securities of the United States

Or of any State

(a) Bonds and notes of the United
States,
(b) Bonds, notes, revenue bonds, and
warrants with maturity not ex
ceeding 6 months.
Issued in anticipation of collec
tion of taxes.
Or of receipt of assured revenues
By any State, county, district,
political subdivision, or munici
pality in Continental United
States
Including irrigation, drainage
and reclamation districts

(e) To establish, etc., a branch
or branches
For transaction of its busi
ness
In foreign countries and their
dependencies
Or the dependencies of the
United States
At such places
Under such regulations
As its Board of Directors may
deem expedient

No such provision similar to (e) in
Federal Reserve Act.
The power to national banks to estab
lish foreign branches is limited to
"Foreign countries or dependencies
of the United States", S,25:L,6:p,26.

Majority of shares to be' held
and owned
(a) By citizens of United
States
(b) Or by corporations of
United States or any State
Majority of Board of Directors
To be citizens of United
States
Each director to own in own
right
At least 100 shares of the
banking corporation
Of which he is a director.
Insolvency:
Whenever Comptroller satisfied of
insolvency
May appoint receiver
Who shall close up the corporation
As he would a national bank

Wo provision in Federal Reserve Act
as to this; it would be covered,
however, by provisions of Act as to
insolvent national banks.
S.6:L.26:p.8.
S.6:L,31:p.8,
S.6:L,33:p.8.
S.6:L,36:p.8,

Disposition of assets of branches
To be subject to any special pro
visions
Of laws of country under whose
jurisdiction
Such assets are located
Annual meeting:
To be held in home office in
United States
Books to be kept at home.office
containing

Wational banks to conduct accounts of
each foreign branch independently of
the accounts of other foreign branches

- 59 1.

Names of all stockholders

2. Directors
3. Copies of reports to Comptroller

established by it, and of its home
office and shall at end of each
fiscal period transfer to its gen
eral ledger the,profit or loss ac
cruing at each branch as a separate
item,
S,25:L.23:p.26,

Exhibiting in detail under ap
propriate heads.
Its resources and liabilities
Reports to Comptroller
At such times as he may require
Subject to examination by Comp
troller
Uhen deemed necessary
Through examiners appointed by
him
Compensation of such examiners
To be fixed by Comptroller
Liquidation;
May go into liquidation and be
closed
By vote of shareholders
Owning 2/3 of its stock
!7ho.,may be stockholders:
Any bank doing business in United
States
Owning stock in National Reserve
Association
May subscribe to stock
Aggregate of stock held by any
one bank,
Not to exceed 10$ of capital stock
of the subscribing bank

Information as to condition of such
foreign branches to be furnished to
Comptroller at all times on demand
S.25:L.20:p,26,
The Federal Reserve Board may order
special examinations of the said for
eign branches at such time or times
as it may deem best, S.25:L.18Jp,26.

,•1

"‘.hi

60 SECTION 58.
Right reserved to alter or amend
provisions of this Act

The right to amend, alter, or repeal
this Act is hereby expressly re
served.
S,30:L,36:p.27,

Said right to take effect
At end of any decennial period
From and after the organization
Of the National Reserve Associa
tion
SECTION 59.
All Acts or parts of Acts incon
sistent with the provisions of
this Act are hereby repealed

If any clause, sentence, paragraph, or
part of this Act shall for any reason
be adjudged by any court of competent
jurisdiction to be invalid, such
judgment shall not affect, impair, or
invalidate the remainder of this Act,
but shall be confined in its operation
to the clause, sentence, paragraph,
or part thereof directly involved in
the controversy in which such judg
ment shall have been rendered.
S.29:L.29:p,27.

Full text of Mimeograph Letters and Statements of the Board : Comparative Statement in Regard to Aldrich Monetary Commission Bill and the Federal Reserve Act, Number 351, Volume 2, Page 575

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