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X-6875
DIGEST OF STATE LAWS RELATING 10 MEMBERSHIP 07 STATE
BANKS AND TRUST COMPANIES IN FEDERAL RESERVE SYSTEM
ASP RESERVES REQUIRED OF SUCH EMBERS.
(Final draft)
The following digest was prepared in the o f f i c e of
the General Counsel to the Federal Reserve Board, with the
assistance of the Counsel f o r the various Federal reserve
banks, at the request of the Committee on Bank Reserves of the
Federal Reserve System. The digest shows the provisions of
the State laws permitting banks and trust companies to join
the Federal Reserve System and authorizing member banks and
trust companies to maintain the reserves required by the Federal Reserve Act in l i e u of those required by the State law;
and where the provisions on either of these j o i n t s have been
amended, the digest also shows the original provisions and
the dates of and changes effected by a l l amendments.
X-687
ALABAMA.
A
Banks and t r u s t coi-:oani<9B x W m i t t e d t o become metnbers bf F e d e r a l Reserve
System;
•»,
-
• •»
• - •
•'
•
•
An a c t of t h e L e g i s l a t u r e of Alabama approved on September 17,
1919, p r o v i d e s t h a t any S t a t e bank o r t r u s t company " s h a l l have t h e
power t o s u b s c r i b e to t h e c a p i t a l s t o c k and become a member of a Fede r a l r e s e r v e bank ***". (Laws of 1919, Act approved September 17, 1919,
s e c . 1; C i v i l Code, s e c . 6416; Banking Law Pamphlet, 1928, s e c . 6416,
p. 45.)
Conwliance w i t h F e d e r a l Reserve Act r e s e r v e r e q u i r e m e n t s a c c e n t e d a s
compliance w i t h S t a t e law r e q u i r e m e n t s .
The Act of September 17, 1919, a l s o p r o v i d e s t h a t a member
bank or t r u s t company " s h a l l keep and m a i n t a i n a s a l a w f u l r e s e r v e t h e
same r e s e r v e s a s a r e r e q u i r e d by t h e F e d e r a l Reserve Act and t h e
amendments t h e r e t o of o t h e r banks members of t h e F e d e r a l Reserve System, and a compliance by such bank o r t r u s t company of t h i s S t a t e w i t h
t h e r e s e r v e r e q u i r e m e n t s of t h e F e d e r a l Reserve Act s h a l l b e h e l d to
b e a f u l l compliance w i t h t h e p r o v i s i o n s of t h e laws of t h i s S t a t e
on t h e s u b j e c t of b*nk r e s e r v e s , and such bank o r t r u s t company s h a l l
n o t b e r e q u i r e d to c a r r y r e s e r v e s o t h e r than such a s a r e r e q u i r e d under
t h e terms of t h e F e d e r a l Reserve" Act and i t s amendments." (Laws of
1919, Act approved September 17, 1919, sec. 1; C i v i l Code, s e c . 5418;
Banking Law Pamphlet, 1928, s e c . 5418, p . 4 6 . )
ARIZONA.
Bank o r t r u s t company a u t h o r i z e d to "become member of F e d e r a l Reserve
System.
On March 18, 1919, an a c t of t h e L e g i s l a t u r e of t h i s S t a t e was
approved in which i t was p r o v i d e d "That any bank o r t r u s t company i n c o r p o r a t e d under t h e laws of t h i s S t a t e s h a l l have t h e oower to s u b s c r i b e
to t h e c a p i t a l s t o c k and become a member of a F e d e r a l Reserve Bank."
(Laws of 1919, Act approved March 18, 1919, ch. 99, s e c . 2 . )
In 1922, t h e L e g i s l a t u r e e n a c t e d a new Code of t h e b a n k i n g
laws of t h i s S t a t e and a p r o v i s i o n c o v e r i n g membership i n t h e F e d e r a l
Reserve System s u b s t a n t i a l l y t h e aame a s t h e 1919 p r o v i s i o n i s i n c l u d e d
i n t h e Code. The new Code p r o v i d e s "That any bank o r t r u s t company
i n c o r p o r a t e d u n d e r t h e laws of t h i s S t a t e s h a l l have t h e power t o subs c r i b e to t h e c a p i t a l s t o c k and become a member of t h e F e d e r a l R e s e r v e
System c r e a t e d and o r g a n i z e d under an Act of Congress of t h e U n i t e d
S t a t e s and known a s t h e F e d e r a l Reserve Act." ( S e s s i o n Laws of 1922,
ch. 31, s e c . 72; General Banking Laws, 1922, s e c . 72, p . 4 7 . )
X-6875 4 5 2
— 2 —
Comgliance w i t h F e d e r a l Reserve Act r e s e r v e r e q u i r e m e n t s a c c e p t e d a s
compliance w i t h S t a t e law requirements*
•
The a c t approved March 18, 1919, a l s o provided t h a t a compliance
by a member bank o r t r u s t company "with the r e s e r v e r e q u i r e m e n t s of
t h e F e d e r a l Reserve Act, s h a l l be h e l d to be a f u l l compliance w i t h
those p r o v i s i o n s of t h e laws of t h i s S t a t e which r e q u i r e banks or
t r u s t companies to m a i n t a i n cash b a l a n c e s in t h e i r v a u l t s or with
o t h e r banks, and no such bank or t r u s t company s h a l l be r e q u i r e d to
c a r r y or m a i n t a i n r e s e r v e o t h e r than such a s i s r e q u i r e d under t h e
terms of t h e F e d e r a l Reserve Act." (Laws of 1919, Act approved March
18, 1919, ch. 99, sec. 4 . )
The new 1922 Banking Code a l s o s u b s t a n t i a l l y i n c o r p o r a t es t h e 1919 p r o v i s i o n s p e r m i t t i n g a compliance w i t h t h e r e s e r v - r e quirements of t h e Federal Reserve Act in l i e u of t h e r e q u i r e m e n t s of
S t a t e law. In t h i s connection, the new Code p r o v i d e s t h a t "Any
such bank or t r u s t company s h a l l comply with t h e r e s e r v e reouiram n t s
of t h e F e d e r a l Reserve Act and i t s amendments, and t h e comnli u.ce r f
such bank or t r u s t company t h e r e w i t h s h a l l be in l i e u o f , and ;:,hall
r e l i e v o such bank or t r u s t company from compliance w i t h t h e o r o v i s i o n s
of t h e laws of t h i s S t a t e r e l a t i n g to t h e maintenance of r e s e r v e s . "
(Seaeion Laws of 1922, ch. 31, sec. 74; General Banking l a w s , 1922,
sec. 74, p . 4 7 . )
A r e v i s e d code of t h e laws of Arizona was p u b l i s h e d in 19?8,
and t h e membership and r e s e r v e p r o v i s i o n s s e t f o r t h above have been
i n c o r p o r a t e d i n t o one s e c t i o n of t h i s code. This s e c t i o n p r o v i d e s t h a t :
"Any bank may s u b s c r i b e to t h e c a p i t a l s t o c k and become a member of t h e
f e d e r a l r e s e r v e system c r e a t e d and organized under an a c t of congress of
t h e United S t a t e s and known a s the f e d e r a l r e s e r v e a c t . The compliance
of such bank w i t h the r e s e r v e requirements of s a i d a c t s h a l l be i n l i e u
o f • and s h a l l r e l i e v e such bank from compliance w i t h t h e p r o v i s i o n s of
t h e laws of t h i s s t a t e r e l a t i n g to t h e maintenance of r e s e r v e s . The
s u p e r i n t e n d e n t may * * *. (Sees. 72, 74-5, i . d . cons, a r e v . ) " (Revised Code of Arizona, 1928, sec. 268.)
The r e v i s e d code a l s o p r o v i d e s t h a t " t h e term bank s h a l l i n clude commercial banks, s a v i n g s bank and t r u s t companies * * *. " (Rev i s e d Code of Arizona, 1928, sec. 209.)
arkansas.
Banks and t r u s t companies may own stock in Federal Reserve Bank.
An a c t of March 22, 1919, of the L e g i s l a t u r e of t h i s S t a t e
p r o v i d e s t h a t S t a t e banks and t r u s t companies may "own such amount of
s t o c k i n a F e d e r a l Reserve Bank a s may b e r e q u i r e d by t h e F e d e r a l Res e r v e Act f o r a l l banks, t r u s t companies or savings banks becoming
members t h e r e o f . " (Acts of 1919, Act of March 22, 1919, Act 339, p .
X-6875
- 3 251, s e c , 3; Ci & M» D i g e s t , 1926, sec, 740$ Banking Law Pamphlet,
1929, s e c . 100, p . 75*)
Compliance w i t h F e d e r a l Reserve Act r e q u i r e m e n t s h e l d compliance
w i t h S t a t e law r e q u i r e m e n t s .
The Act of March 22, 1919, a l s o p r o v i d e s t h a t member banks
and t r u s t companies " s h a l l keep and m a i n t a i n a s a l a w f u l r e s e r v e ,
t h e same r e s e r v e s a s a r e r e q u i r e d of o t h e r bank members of t h e Fetter a l Reserve System" and such a compliance by member banks and t r u s t
companies " s h a l l b e h e l d t o be a f u l l compliance w i t h t h e p r o v i s i o n s
of t h e laws of t h i s S t a t e on t h e s u b j e c t of bank r e s e r v e s . " ( A c t s
of 1919, Act of March 22, 1919, Act 339, p . 251, s e c . 1; C. & M,
D i g e s t , 1926, s e c . 738; Banking law Pamphlet, 1929, s e c . 103, p . 7 7 . )
CALIFORNIA.
Banks e x p r e s s l y and t r u s t companies i m p l i e d l y a u t h o r i z e d to become
members of F e d e r a l Reserve System.
In 1913, t h e s o - c a l l e d Bank Act of C a l i f o r n i a was amended so
a s to p r o v i d e i n p a r t t h a t any bank " i s h e r e b y a u t h o r i z e d and emrpowered t o j o i n or a s s o c i a t e i t s e l f w i t h any ' n a t i o n a l r e s e r v e a s s o c i a t i o n of t h e U n i t e d S t a t e s ' o r branch t h e r e o f , o r any p l a n now o r
h e r e a f t e r c r e a t e d o r e s t a b l i s h e d by a c t of c o n g r e s s whether such banki n g o r c u r r e n c y a s s o c i a t i o n o r p l a n be c r e a t e d by c o n g r e s s under t h e
above o r any o t h e r name". ( C a l i f o r n i a Bank Act, a s amended i n 1913*,
s e c . 5 6 . ) The s e c t i o n of t h e laws c o n t a i n i n g t h e above p r o v i s i o n was
amended i n 1915, b u t t h e wording of t h e p r o v i s i o n i n q u e s t i o n was not
changed.
In 1919, t h e bank a c t was f u r t h e r amended so t h a t i t now p r o v i d e s i n p a r t t h a t "Any bank i s h e r e b y a u t h o r i z e d and empowered to b e come a member of a F e d e r a l r e s e r v e bank, n o t h i n g i n t h i s a c t s h a l l p r o h i b i t any such bank from becoming a member of a F e d e r a l r e s e r v e bank, i n
t h e manner p r o v i d e d i n t h e f e d e r a l r e s e r v e a c t , nor from i n v e s t i n g any
p a r t of i t s c a p i t a l o r s u r p l u s o r r e s e r v e f u n d i n t h e c a p i t a l s t o c k
of such f e d e r a l r e s e r v e bank, in accordance w i t h t h e terms and p r o v i s i o n s of such f e d e r a l r e s e r v e a c t ; * *
( C a l i f o r n i a Bank Act, a s
amended i n 1919, s e c . 5 6 . )
In 1919 l e g i s l a t i o n a l s o amended t h e laws c o v e r i n g t r u s t comp a n i e s so a s i m p l i e d l y to a u t h o r i z e such companies to become members of
t h e F e d e r a l Reserve System, t h e p r o v i s i o n i n q u e s t i o n p r o v i d i n g i n p a r t
t h a t "Any t r u s t company upon becoming a member of a f e d e r a l r e s e r v e bank
i s a u t h o r i z e d and empowered * * * " . ( C a l i f o r n i a Bank Act, a s amended
i n 1919, s e c . 9 0 . )
- 4 -
X.6875
The C a l i f o r n i a Bank Aqt p r o v i d e s t h a t t h e Word ''bank?1 a s Used
t h e r e i n s h a l l i n c l u d e any c o r p o r a t i o n 11 t r a n s a c t i n g a t r u s t b u s i n e s s " .
( C a l i f o r n i a Bank Act, s e c . 2 . )
Compliance w i t h r e s e r v e p r o v i s i o n s of F e d e r a l Reserve Act a s r e l i e v i n g
compliance w i t h S t a t e law.
P r i o r t o 1919, member banks and t r u s t companies were n o t p e r m i t t e d t o m a i n t a i n t h e r e s e r v e s p r e s c r i b e d b y t h e F e d e r a l Reserve Act
i n l i e u of t h e r e s e r v e s p r e s c r i b e d by t h e S t a t e law, a s l e g i s l a t i o n
e n a c t e d i n 1915 o n l y p e r m i t t e d such banks and t r u s t companies t o maint a i n a s r e s e r v e s on d e p o s i t w i t h a F e d e r a l r e s e r v e bank s u c h p o r t i o n of
t h e i r t o t a l r e s e r v e s a s was r e q u i r e d by members of t h e F e d e r a l Reserve
System. ( C a l i f o r n i a Bank A c t , a s amended i n 1915, s e c . 2 0 . )
I n t h e Bank Act, a s amended i n 1919, t h e r e were two p r o v i s i o n s
r e l a t i n g to r e s e r v e r e q u i r e m e n t s which r e a d a s f o l l o w s :
" S e c . 20.
Every commercial bank s h a l l m a i n t a i n t o t a l r e s e r v e s * * *
" I f any bank s h a l l have become a member of a f e d e r a l
r e s e r v e bank, i t s h a l l comply w i t h t h e r e s e r v e r e q u i r e m e n t s
of t h e f e d e r a l r e s e r v e a c t and i t s amendments, and i t s comp l i a n c e t h e r e w i t h s h a l l b e i n l i e u o f , and s h a l l r e l i e v e such
bank from compliance w i t h , t h e p r o v i s i o n s of t h i s s o c t i o n .
*
*
*.»
" S e c . 68. Every s a v i n g s b a n k or s a v i n g s department of a bank s h a l l
a t a l l times maintain t o t a l reserves * * *
" I f any bank s h a l l have bccome a member of a f e d e r a l r e s e r v e bank, i t s h a l l a t a l l times m a i n t a i n t h e r e s e r v e s r e q u i r e d
by t h e f e d e r a l r e s e r v e a c t f o r time d e p o s i t s , and i n a d d i t i o n
t h e r e t o s h a l l b e r e q u i r e d to m a i n t a i n a r e s e r v e of a t l e a s t two
p e r centum of i t s a g g r e g a t e d e p o s i t s , e x c l u s i v e of U n i t e d S t a t e s ,
p o s t a l s a v i n g s , s t a t e , county and m u n i c i p a l , and o t h e r p u b l i c
money d e p o s i t s , which a r c secured a s i s r e q u i r e d by l a w , which
two p e r centum s h a l l c o n s i s t of g o l d b u l l i o n , o r any form of
money o r c u r r e n c y a u t h o r i z e d by t h e laws of t h e U n i t e d S t a t e s . "
That p a r t of S e c t i o n 20 above quoted h a s n o t b e e n amended s i n c e
i t s enactment im 1919, b u t t h a t p a r t quoted from S e c t i o n 68 was amended
i n 1921 t o r e a d a s f o l l o w s :
" I f any s a v i n g s b a n k s h a l l have become .a member of a
f e d e r a l r e s e r v e bank, i t s h a l l comply w i t h t h e r e s e r v e require-?
ments of t h e f e d e r a l r e s e r v e a c t and i t s amendments, and i t s
compliance t h e r e w i t h s h a l l be i n l i e u o f , and s h a l l r e l i e v e
such s a v i n g s bank o r s a v i n g s department of a d e p a r t m e n t a l bank
from compliance w i t h t h e p r o v i s i o n s of t h i s s e c t i o n . " ( L . 1921,
ch. 780, s e c . 28, p . 1400.)
X-6875^^^
I t w i l l b e n o t e d t h a t in t h e above quoted p r o v i s i o n s of s e c t i o n
SO t h e r e i s no s p e c i f i c r e f e r e n c e to t h e r e s e r v e r e q u i r e m e n t s of t r u s t
companies; and, a l t h o u g h t h e word "•bank?1 i s d e f i n e d by t h e Bank Act a s
i n c l u d i n g any c o r p o r a t i o n " t r a n s a c t i n g a t r u s t b u s i n e s s " ( C a l i f o r n i a
B6nk Act* s e c . 2 ) , i t would seem to b e a q u e s t i o n of c o n s t r u c t i o n a s to
whether o r n o t t r u s t companies c o u l d be i n c l u d e d w i t h i n t h e meaning of
t h e word " b a n k " , a s t h e word i s u s e d i n t h a t p a r t of s e c t i o n 20 r e l a t i n g to banks which have become members of t h e F e d e r a l R e s e r v e System,
inasmuch a s t h e opening s e n t e n c e of t h e s e c t i o n r e f e r s t o commercial
banks.
COLORADO.
Banks and t r u s t companies p e r m i t t e d to become members of F e d e r a l
R e s e r v e System.
Under t h e terms of an a c t approved A p r i l 4 , 1919, a S t a t e
bank o r t r u s t company i s g i v e n "power to s u b s c r i b e t o t h e c a p i t a l
s t o c k and become a member of a F e d e r a l Reserve Bankf. (Laws of 1919,
Act approved A p r i l 4 , 1919, p . 298, s e c . 2; C o u r t r i g h t ' s M i l l s Ann o t a t e d S t a t s . , 1930, s e c . 403 i - 403 j , p . 192 b; Banking Law Pamp h l e t , 1928, s e c . 167, p . 8 0 . )
Compliance w i t h F e d e r a l Reserve Act r e s e r v e s r e l i e v e s compliance w i t h
r e s e r v e r e q u i r e m e n t s pf S t a t e law.
In 1923, t h e l e g i s l a t u r e of t h i s S t a t e e n a c t e d l e g i s l a t i o n
p r e s c r i b i n g when member banks and t r u s t companies may b e r e l i e v e d from
complying w i t h S t a t e r e s e r v e laws, t h e p r o v i s i o n i n t h i s c o n n e c t i o n p r o v i d i n g t h a t " w i t h t h e a p p r o v a l of t h e S t a t e Bank Commissioner, any c o r p o r a t i o n now o r h e r e a f t e r o r g a n i z e d under the laws of t h i s s t a t e a s a
t r u s t company o r b a n k i n g t r u s t company, o r e n j o y i n g and e x e r c i s i n g t h e
r i g h t s , powers and p r i v i l e g e s of a bank and t r u s t company, under t h e
laws of t h e s t a t e , i f a member of a F e d e r a l r e s e r v e bank, may by a comp l i a n c e w i t h t h e r e q u i r e m e n t s of t h e F e d e r a l Reserve Act and t h e regulact i o n s of t h e F e d e r a l Reserve Board a s to t h e maintenance of r e s e r v e s ,
b e r e l i e v e d to t h e r e q u i r e m e n t s of t h e laws of t h i s s t a t e r e l a t i n g t o
such r e s e r v e s . " (Laws of 1923, p . 191, s e c . 1; C o u r t r i g h t ' s M i l l s
Annotated S t a t s . , 1930, s e c . 341a, p . 146a; Banking Law Pamphlet, 1928,
s e c . 149, p . 7 3 . )
C0M3CTICUT.
Banks and t r u s t companies may p u r c h a s e s t o c k i n F e d e r a l R e s e r v e Bank.
P r i o r t o 1931 t h e laws of t h i s S t a t e d i d n o t c o n t a i n any
p r o v i s i o n s e x p r e s s l y a u t h o r i z i n g banks o r t r u s t companies to p u r c h a s e
•i 6 *
X4687456
s t o c k i n and becomc members. of f e d e r a l r e s o r v e banks. Under t h e terms
of an a c t approved June 8> l9<37, however, banks and t r u s t companies
"may p u r c h a s e and h o l d c o r p o r a t e s e c u r i t i e s o f any d e s c r i p t i o n , p r o vided t h e t o t a l amount a t t h e p u r c h a s e p r i c e i n v e s t e d i n c o r p o r a t e
s t o c k s s h a l l a t no time exceed t w e n t y - f i v e p e r centum of i t s combined
c a p i t a l , s u r p l u s and u n d i v i d e d p r o f i t s and p r o v i d e d i t s investment i n
t h e s t o c k of any one c o r p o r a t i o n s h a l l n o t exceed t o n p e r centum of
t h e s t o c k of t h a t c o r p o r a t i o n o r exceed t e n p e r centum of t h e p e r c e n t a g e
p r e s c r i b e d h e r e i n , whichever may be t h e g r e a t e r , * * * 11
( P u b l i c Acts,
1927, Act approved June 8 , 1927, ch. 251.) The Act j u s t r e f e r r e d t o
was i n c l u d e d , w i t h o u t change in t h e language quoted above, i n t h e Gene r a l S t a t u t e s of Connecticut, Revision of 1930, Vol. I I , T i t l e 37, ch.
206, s e c . 3885.
S e c t i o n 3885 of t h e General S t a t u t e s was amended by ch. 162
of t h e P u b l i c Acts of 1931, e f f e c t i v e J u l y 1, 1931, and a s so amended
i t e x p r e s s l y r e c o g n i z e s t h e r i g h t of banks and t r u s t companies to h o l d
f e d e r a l r e s e r v e bank s t o c k . As amended i t p r o v i d e s i n p a r t , t h a t a
bank or t r u s t company "may p u r c h a s e and hold c o r p o r a t e s e c u r i t i e s of
any d e s c r i p t i o n , p r o v i d e d t h e t o t a l amount a t t h e p u r c h a s e p r i c e i n v e s t e d i n c o r p o r a t e s t o c k s s h a l l a t no time exceed t e n p e r centum of
i t s combined c a p i t a l , s u r p l u s and u n d i v i d e d p r o f i t s , and p r o v i d e d i t s
investment i n t h e s t o c k of any one c o r p o r a t i o n s h a l l exceed n e i t h e r
f i v e p e r centum of t h e s t o c k of t h a t c o r p o r a t i o n nor t h r e e p e r centum
of such combined c a p i t a l , s u r p l u s and u n d i v i d e d p r o f i t s , except t h a t
such c o r p o r a t e s t o c k s a s were owned on A p r i l 1 , 1931, may b e r e t a i n e d ,
b u t such l i m i t a t i o n s s h a l l n o t apply to t h e s t o c k of any f e d e r a l r e s e r v e bank, * * * . "
S t a t e r e s e r v e laws do not a p p l y to members of Federal Reserve System,
On May 29, 1925, an a c t of t h e General Assembly of t h i s
S t a t e was approved which p r o v i d e s t h a t "The p r o v i s i o n s of t h e gene r a l s t a t u t e s r e l a t i n g to r e s e r v e s and cash b a l a n c e s of s t a t e banks
and t r u s t companies s h a l l n o t apply to any bank or t r u s t company which
i s a s t o c k h o l d e r i n any f e d e r a l r e s e r v e . b a n k ? .
(Connecticut P u b l i c
A c t s , 1925, Act approved May 29, 1925, ch. 135.)
The p r o v i s i o n above
r e f e r r e d to i s now i n c o r p o r a t e d in t h e General S t a t u t e s of C o n n e c t i c u t ,
R e v i s i o n of 1930, Vol. I I , T i t l e 37, ch. 206, s e c . 3898, e x a c t l y a s
quoted w i t h t h e exception of t h e word " g e n e r a l " , which h a s been o m i t t e d .
delaware.
Banks and t r u s t companies a u t h o r i z e d t o become members of F e d e r a l Reserve
System.
In 1915, l e g i s l a t i o n was enacted i n t h i s S t a t e which makes
X-6875
i t l a w f u l f o r S t a t e banks and t r u s t companies t o become members
of t h e F e d e r a l Reserve System* (Act of March 8, 1915, Laws of
Delaware, ch. 10?, p . 322; Banking Law Pamphlet, 1929, s e c . 18*
p. 38,)
Member banks and t r u s t companies o n l y r e q u i r e d to m a i n t a i n r e s e r v e s r e q u i r e d by F e d e r a l Reserve Act.
An a c t e n a c t e d i n 1919, by t h e General Assembly of
t h i s S t a t e , p r o v i d e s i n p a r t t h a t t h e " S t a t e bank commissioner
i n d e t e r m i n i n g , i n t h e c o u r s e of h i s examination, t h e amount
of l a w f u l money r e s e r v e r e q u i r e d under any law of t h i s S t a t e
to b e m a i n t a i n e d , a t a l l t i m e s , by S t a t e Banks and T r u s t Comp a n i e s , s h a l l n o t r e q u i r e such S t a t e Banks and T r u s t Companies
a s may b e members of t h e F e d e r a l Reserve Bank i n t h e F e d e r a l
Reserve D i s t r i c t embracing t h e S t a t e of Delaware t o m a i n t a i n a
g r e a t e r r e s e r v e t h a n t h a t r e q u i r e d b y t h e F e d e r a l Reserve A c t " .
( S e s s i o n Laws of 1919, ch. I l l , p . 255, s e c . 9; Banking Law
Pamphlet, 1929, s e c . 9, p . 1 0 . )
FLORIDA.
Banks and t r u s t companies a u t h o r i z e d t o i n v e s t i n s t o c k of F e d e r a l
Reserve Banks.
The l e g i s l a t u r e of t h i s S t a t e , by an a c t of J u n e 4 , 1917,
p r o v i d e d "That i t s h a l l be u n l a w f u l f o r any bank o r t r u s t company'
X-6875
- 8 -
: 458
" o r g a n i z e d under t h e laws of t h i s S t a t e And doing "business i n t h i s
S t a t e , to d i r e c t l y o r i n d i r e c t l y i n v e s t any of t h e f u n d s of s a i d
bank o r t r u s t company in s t o c k of any i n c o r p o r a t e d connany i n t h i s
S t a t e o r e l s e w h e r e , exceot in t h e s t o c k of t h e F e d e r a l R e s e r v e Bank
of t h i s d i s t r i c t ; * * * »
(Acts of 1917, Act of JUne 4 , 1917, ch.
7629, s e c . 2 . )
The Act of June 4, 1917, was amended i n 1929, b u t t h e
wording above quoted w a s n o t changed. (Acts of 1929, ch. 13576,
s e c . 11; Banking Law Pamphlet, 1930, sec. 4152, p . 1 6 . )
No p r o v i s i o n s ' p e r m i t t i n g compliance w i t h r e s e r v e p r o v i s i o n s of F e d e r a l Reserve Act.
The laws of t h i s S t a t e ' d o n o t appear to c o n t a i n any p r o v i s i o n s s p e c i f i c a l l y a u t h o r i z i n g a member "bank or t r u s t company to
m a i n t a i n r e s e r v e s i n accordance w i t h t h e p r o v i s i o n s of t h e F e d e r a l
Reserve Act i n l i e u of S t a t e law r e q u i r e m e n t s .
GEORGIA.
Banks and t r u s t companies a u t h o r i z e d to become members of F e d e r a l
Reserve System.
~~~~~~
"•
In 1915, l e g i s l a t i o n was e n a c t e d in chis S t a t e which
e x p r e s s l y a u t h o r i z e d S t a t e banks and t r u s t companies " t o s u b s c r i b e
f o r s t o c k and become members of t h e F e d e r a l Reserve Bank of t h e
d i s t r i c t to which t h e y may nro-oerly b e a s s i g n e d by t h e F e d e r a l
Reserve Board * * *; p r o v i d e d t h e same i s approved by r e s o l u t i o n
of t h e Board of d i r e c t o r s of such bank and i n accordance w i t h
t h e r e q u i r e m e n t s of t h e F e d e r a l Reserve Act".
(Acts of 1915,
p. 33.)
On August 16, 1919, an a c t was approved which r e p e a l s
t h e above p r o v i s i o n , but which c o n t a i n s a p r o v i s i o n a u t h o r i z i n g
banks to become members of t h e F e d e r a l Reserve System and which
i s i n many r e s p e c t s s i m i l a r t o t h e r e p e a l e d p r o v i s i o n . The 1919
a c t p r o v i d e s i n p a r t t h a t "Banks a r e a u t h o r i z e d and empowered
t o s u b s c r i b e f o r s t o c k and become members of t h e F e d e r a l Reserve
Bank of t h e d i s t r i c t t o which t h e y p r o p e r l y may be a s s i g n e d b y
t h e F e d e r a l R e s e r v e Board, i n accordance w i t h t h e Acts of Congress
r e g u l a t i n g F e d e r a l Reserve Banks, and any bank becoming such
member s h a l l b e a u t h o r i z e d t o conform to t h e r e q u i r e m e n t s and
r e g u l a t i o n s of such F e d e r a l Reserve Bank, and of t h e F e d e r a l Res e r v e Board". (laws of 1919, Act approved August 16, 1919, A r t .
XIX, s e c . 38; Banking Law Pamphlet, a s amended to and i n c l u d i n g
August 26, 1925, A r t . XIX, s e c . 3 8 . )
X-6875
-§'v
The a c t of A U # # t l 6 t 1919, a l s o d o f f f f t i i s t h e n r o v i s i o n
t h a t "ko batik S h a l l s u b s c r i b e f d £ bi* p u r c h a s e any s t o c k s except
s t o c k i n t h e f e d e r a l Reserve Bank * * *, n e c e s s a r y t o q u a l i f y f o r
membership t h e r e i n , * * * " .
(Laws of 1919, Act approved August
15, 1919, A r t . XIX, s e c . 2 3 . ) ; and; a l t h o u g h t h e s e c t i o n of t h e
laws c o n t a i n i n g t h i s p r o v i s i o n was amended in 1924 and 1930, t h e
e f f e c t of t h e p r o v i s i o n was n o t changed.
I t w i l l be n o t e d t h a t t h e 1915 l e g i s l a t i o n e x p r e s s l y
a u t h o r i z e d b o t h banks and t r u s t companies to become members w h i l e
t h e s e c t i o n s of t h e 1919 p r o v i s i o n s ( s e c . 23, a s amended i n 1924
and 1930, and s e c . 36 ) e x p r e s s l y a u t h o r i z e o n l y banks t o j o i n
t h e F e d e r a l Reserve System. The laws of Georgia, however, d e f i n e t h e word "ban!? 1 , a s u s e d i n t h e b a n k i n g laws, a s i n c l u d i n g
t r u s t companies doing a b a n k i n g b u s i n e s s .
(Laws of 1919, Act
approved August 16, 1919, A r t . 1, s e c . 1; Banking Law Pamphlet,
a s amended t o and i n c l u d i n g August 26, 1925, A r t . 1 , s e c . 1, p .
1.)
Compliance w i t h r e s e r v e p r o v i s i o n s of F e d e r a l Reserve Act deemed
compliance w i t h p r o v i s i o n s of S t a t e law.
By an Act approved August 20, 1918, t h e General Assembly
of t h i s S t a t e p r o v i d e d t h a t any S t a t e bank o r t r u s t company "which
i s or which becomes a member of a F e d e r a l Reserve bank s h a l l keep
and m a i n t a i n a s a l a w f u l r e s e r v e t h e same r e s e r v e s a s a r e r e q u i r e d
of o t h e r banks members of t h e F e d e r a l Reserve System, and a comp l i a n c e by any such bank or t r u s t company in t h i s s t a t e w i t h t h e
r e s e r v e r e q u i r e m e n t s of t h e F e d e r a l Reserve Act s h a l l b e h e l d
to be a f u l l compliance w i t h t h e p r o v i s i o n s of t h e laws of t h i s
S t a t e on t h e s u b j e c t of bank r e s e r v e s , and such bank o r t r u s t company s h a l l n o t be r e q u i r e d to c a r r y r e s e r v e s o t h e r than such a s
a r e r e q u i r e d under t h e therms of t h e F e d e r a l Reserve A c t " .
(Laws
of 1918, Act approved August 20, 1918, s e c . 1 . )
In 1919, t h e above p r o v i s i o n was r e p e a l e d , and w i t h
r e f e r e n c e to r e s e r v e s , t h e new l e g i s l a t i o n p r o v i d e d " t h a t any bank
which i s a member of t h e F e d e r a l Reserve System may in l i e u of t h e
r e s e r v e h e r e i n r e q u i r e d keep and m a i n t a i n such r e s e r v e a s i s r e q u i r e d under t h e Acts of Congress r e l a t i n g to F e d e r a l R e s e r v e
Banks". (Laws of 1919, A r t . XIX, s e c . 2 7 . ) This p r o v i s i o n a p p e a r s t o cover t r u s t companies (Laws of 1919, A r t . 1, s e c . 1 . ) ;
and a l t h o u g h t h e s e c t i o n of t h e laws in which t h e p r o v i s i o n i n
q u e s t i o n was c o n t a i n e d was amended in 1920, t h e wording remained
t h e same. ( M i c h i e ' s Annotated Code, 1926, s e c . 2366 ( 1 7 3 ) ; Banki n g Law Pamphlet, a s amended to and i n c l u d i n g August 26, 1925,
A r t . XIX, s e c . 27, p . 7 7 . )
: 459
-• i e >
9m* -
X-6B7S
:
4 6 0
ml ••• •••
Banks and t r u s t companies a u t h o r i z e d to s u b s c r i b e to F e d e r a l Reserve
Bank s t o c k .
In 1915, t h e l e g i s l a t u r e of t h i s S t a t e e n a c t e d l e g i s l a t i o n
which a u t h o r i z e d a "bank?' to s u b s c r i b e to t h e s t o c k of a Fader ml
Reserve Bank. T h i s l e g i s l a t i o n p r o v i d e d t h a t "Any bank in t h i s
s t a t e i s a u t h o r i z e d to s u b s c r i b e to t h e s t o c k of a F e d e r a l R e s e r v e
Bank, a s p r o v i d e d by t h e laws of t h e U n i t e d S t a t e s . "
(Laws of
1915, ch. 81, s e c . 5, p . 1 9 6 . )
In 1921, t h e above p r o v i s i o n was amended so a s to a u t h o r i z e t r u s t companies a l s o t o become members of t h e F e d e r a l Reserve
System. (Laws of 1931, ch. 231, p . 515.)
In 1925, t h e l e g i s l a t u r e adopted a new code of the banki n g laws f o r t h i s S t a t e , which p r o v i d e s t h a t "Any bank I n c o r p o r a t e d
under t h e laws of t h i s S t a t e s h a l l have t h e power to s u b s c r i b e to
t h e c a p i t a l s t o c k and become a member of a F e d e r a l Reserve Bank."
(Laws of 1925, ch. 132, A r t . 1, s e c . 47; Banking Law Pamphlet,
1925, s e c . 47, p . 2 4 . )
I t w i l l be n o t e d t h a t t h i s p r o v i s i o n o n l y
mentions "any bank?'; b u t inasmuch a s t h e new code i n c l u d e s a " t r u s t
company" v i t h i n i t s d e f i n i t i o n of a l a n k , i t a p p a r e n t l y does n o t
a f f e c t t h e r i g h t of t r u s t companies t o j o i n t h e F e d e r a l R e s e r v e
System. (Laws* of 1925, ch. 13;*, A r t . 1, s e c . 2; Banking Law Pamp h l e t , 1925, sec. 2, p . 2 . )
Compliance w i t h r e s e r v e •'••q ilrementf- of F e d e r a l Reserve Act deemed
compliance w i t h r e s e r v e ~ equip en,euts of S t a t e law.
The 1915 l e g i s l a t i o n a l s o p r o v i d e d t h a t "Any bank'becomi n g a member of a F e d e r a l Reserve Bank i s a u t h o r i z e d to comply w i t h
t h e laws of t h e U n i t e d S t a t e s , and t h e r u l e s and r e g u l a t i o n s of t h e
F e d e r a l Reserve Board and t h e Comptroller of t h e Currency, a n y t h i n g
i n t h i s a c t o r i n t h e laws of t h i s S t a t e to t h e c o n t r a r y n o t w i t h s t a n d i n g " . (Laws of 1915, ch. 81, sec. 5, p . 196.)
In 1921 t h i s
p r o v i s i o n was amended to r e a d "Any bank o r t r u s t comoany becoming
a member of a F e d e r a l Reserve Bank, i s a u t h o r i z e d to comply w i t h
* * * a l l t h e p r o v i s i o n s of t h e F e d e r a l Reserve Act and i t s amendments and t h e r e g u l a t i o n s of t h e F e d e r a l Reserve Board a p p l i c a b l e
to such bank o r t r u s t company and to have a l l t h e powers and assume
a l l t h e l i a b i l i t i e s c o n f e r r e d and imposed by s a i d a c t . " (Laws of
1921, ch. 231, p . 519.) These p r o v i s i o n s p e r h a p s a u t h o r i z e d memb e r s to m a i n t a i n r e s e r v e s i n accordance w i t h t h e p r o v i s i o n s of t h e
F e d e r a l Reserve Act i n l i e u of t h e p r o v i s i o n s of t h e S t a t e law.
- 11 -
X-6875
I n 1925, however, t h e l e g i s l a t u r e adopted a new b a n k i n g
code which s p e c i f i c a l l y p e r m i t s member banks and t r u s t companies
to comply w i t h t h e r e s e r v e p r o v i s i o n s of t h e F e d e r a l R e s e r v e Act
i n l i e u , of t h e S t a t e law r e q u i r e m e n t s , t h e p r o v i s i o n s i n q u e s t i o n
p r o v i d i n g t h a t a compliance by a member bank or t r u s t company
" w i t h t h e r e s e r v e r e q u i r e m e n t s of t h e F e d e r a l Reserve Act s h a l l be
h e l d t o be a f u l l compliance w i t h t h o s e p r o v i s i o n s of t h e l a w s of
t h i s s t a t e which r e q u i r e banks to m a i n t a i n cash b a l a n c e s i n t h e i r
v a u l t s o r w i t h o t h e r b a n k s , and no such bank or t r u s t company
s h a l l be r e q u i r e d t o c a r r y o r m a i n t a i n r e s e r v e o t h e r t h a n such
a s i s r e q u i r e d under t h e terms of t h e F e d e r a l Reserve Act'.'*
(Laws of 1925, ch. 133. A r t . 1 , sec. 47; Banking Law P a m p h l e t ,
1925, sec. 4 7 , p . 2 4 . )
Another p r o v i s i o n of t h e new code a l s o
p r o v i d e s t h a t " Any bank which i s o r becomes a member of t h e Fede r a l Reserve System, s h a l l comply w i t h t h e r e s e r v e r e q u i r e m e n t s
of t h e F e d e r a l Reserve A c t " .
(Laws of 1925, ch. 133, A r t . 1 ,
s e c . 26; Banking Law p a m p h l e t , 1925, s e c . 26, p . 1 6 . )
ILLINOIS.
No p r o v i s i o n s on s u b j e c t .
The laws of t h i s S t a t e do not appear to c o n t a i n any p r o v i s i o n s s p e c i f i c a l l y c o v e r i n g e i t h e r membership of banks o r t r u s t
companies, i n t h e F e d e r a l Reserve System o r t h e r e s e r v e s r e q u i r e d
of such banks o r t r u s t companies.
INDIANA.
Banks and t r u s t companies may become members of F e d e r a l R e s e r v e System.
In 1921, t h e I n d i a n a L e g i s l a t u r e p a s s e d an a c t which
a u t h o r i z e s l o a n , t r u s t and a a f e d e p o s i t companies " t o p u r c h a s e
and h o l d , f o r t h e p u r p o s e of becoming a member of a f e d e r a l r e s e r v e bank, so much of t h e c a p i t a l s t o c k t h e r e o f a s w i l l q u a l i f y
i t f o r membership i n such r e s e r v e bank, * * *; to become a member
of such f e d e r a l r e s e r v e bank, and to have and e x e r c i s e a l l
powers, n o t in c o n f l i c t w i t h t h e laws of t h i s s t a t e , which a r e
c o n f e r r e d upon any such member by t h e f e d e r a l r e s e r v e a c t ; * **•* "
( A c t s of 1921, p . 42; Banking Law Pamphlet, 1929, s e c . 10 ( 9 ) ,
P . 33 ( 3 7 ) . )
I t w i l l be n o t e d t h a t t h e above quoted p r o v i s i o n exp r e s s l y a u t h o r i z e s o n l y " l o a n , t r u s t and s a f e d e p o s i t companies"
X-6875
18
: 463
to p u r c h a s e s t o c k i n az6t become member banks ox a F e d e r a l R e s e r v e
Bank; and t h e laws do n o t appear to c o n t a i n any p r o v i s i o n s s p e c i f i c a l l y g r a n t i n g a s i m i l a r a u t h o r i z a t i o n to s o - c a l l e d ""banks of d i s count and d e p o s i t " . I t a p p e a r s , however, t h a t such b s a k s and s a v i n g s banks a r e now a u t h o r i z e d by t r i p l i c a t i o n t o become members of
t h e F e d e r a l R e s e r v e System i n view of t h e p a r t i c u l a r l a n g u a g e u s e d
i n t h e f o l l o w i n g p r o v i s i o n d e a l i n g with r e s e r v e s of "any bank,
t r u s t company o r s a v i n g s bank * * * which i s o r which becomes a
member of a f e d e r a l r e s e r v e bank?'.
C o m l i a n c e w i t h r e s e r v e p r o v i s i o n s of F e d e r a l Reserve Act h e l d
compliance w i t h p r o v i s i o n s of S t a t e law.
In 1927, l e g i s l a t i o n was e n a c t e d i n t h i s S t a t e which p r o v i d e s "That any bank, t r u s t company, o r s a v i n g s bank o r g a n i z e d and
doing b u s i n e s s under t h e laws of t h i s s t a t e , which i s or which b e comes a member of a f e d e r a l r e s e r v e bank, s h a l l keep and m a i n t a i n
a s a l a w f u l r e s e r v e t h e same r e s e r v e s a s a r e r e q u i r e d of o t h e r
bank members of t h e f e d e r a l r e s e r v e system, and a compliance by
any such bank, t r u s t company or s a v i n g s bank w i t h t ie e s e r v e r e quirements of t h e f e d e r a l r e s e r v e a c t s h a l l be h e l d to b e a f u l l comp l i a n c e w i t h t h e p r o v i s i o n s of t h e laws of t h i s s t a t ? on t h e s u b j e c t
of bank r e s e r v e s , and such bank, t r u s t company, o r s a v i n g s b a n k s h a l l
b e r e q u i r e d t o c a r r y o n l y such r e s e r v e s a s a r e r e q u i r e d under t h e terms
of t h e f e d e r a l r e s e r v e a c t . "
(Acts of 1927, ch. 152, p . 461, s e c . 1;
Banking Law Pamphlet, 1929, s e c . 1, p . 8 0 . )
IOWA.
Banks and t r u s t companies a u t h o r i z e d to become members of F e d e r a l Reserve
Bank.
'
In 1915, t h e General Assembly of t h i s S t a t e p a s s e d an a c t
which p r o v i d e s "That any s t a t e bank, savings bank o r t r u i t company
o r g a n i s e d under t h e laws of t h i s s t a t e i s a u t h o r i z e d and empowered,
upon a v o t e of t h e s h a r e h o l d e r s t h e r e o f owning not l e s s than f i f t y one "oer c e n t o f t h e c a p i t a l s t o c k of such s t a t e bank, s a v i n g s bank
o r t r u s t company, to become'|& member of t h e f e d e r a l r e s e r v e bank
and to i n v e s t t h e i r f u n d s i n * t h e s t o c k of t h e f e d e r a l r e s e r v e bank
i n t h e f e d e r a l r e s e r v e d i s t r i c t i n which such banks or t r u s t comp a n i e s a r e l o c a t e d , and to i n c u r l i a b i l i t y t h e r e f o r . " (Laws of
1915, s e c . 1889-0; Code of 1927, s e c . 9269.)
< Compliance w i t h r e s e r v e p r o v i s i o n s of F e d e r a l Reserve Act o n l y r e q u i r e d
of member banks and t r u s t companies.
In 1919, t h e General Assembly of t h i s S t a t e p a s s e d l e g i s l a t i o n
X-6875
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\ 463
r e q u i r i n g member "banks and t r t f s t companies to c a r r y o n l y t h e r e s e r v e s
p r e s c r i b e d by t h e Federal Reserve Act. That l e g i s l a t i o n p r o v i d e s
t h a t "Any s t a t e bank, savings bank, or t r u s t company i n c o r p o r a t e d
under t h e laws of t h i s s t a t e , which i s or h e r e a f t e r may become a
member of t h e f e d e r a l r e s e r v e bank system of the United S t a t e s of
America, s h a l l be r e q u i r e d to c a r r y d u r i n g t h e p e r i o d of such memb e r s h i p only such cash r e s e r v e f u n d s as may be r e q u i r e d from time
to time to be m a i n t a i n e d by n a t i o n a l bank members of s a i d f e d e r a l
r e s e r v e bank system." (laws of 1919, ch. 319, s e e . 1; Code of
1927, s e c . 9270; Banking law Pamphlet, 1929, s e c . 9270, p . 3 5 . )
KANSAS.
Banks expressly permitted to become members of Federal Reserve Bank;
In 1915, t h e l e g i s l a t u r e of t h i s S t a t e amended t h e laws
p r o h i b i t i n g a bank from making c e r t a i n investments of i t s f u n d s so
a s to p r o v i d e t h a t "any bank may become a s t o c k h o l d e r i n , and men>ber o f , t h e F e d e r a l Reserve Bank of t h e F e d e r a l Reserve d i s t r i c t
where such s t a t e bank i s l o c a t e d " . (Laws of 1915, ch. 88, s e c . 1;
Bev. S t a t s , of 1923, s e c . 9 - 1 1 1 . ) The s e c t i o n of t h e laws c o n t a i n ^
i n g t h i s p r o v i s i o n was amended in 1921, and a g a i n i n 1927; b u t
n e i t h e r of t h e s e amendments a l t e r e d t h e e f f e c t of t h e 1915 p r o v i s i o n .
T r u s t companies a p p a r e n t l y p e r m i t t e d to become members of F e d e r a l
Beserve System.
The laws of t h i s S t a t e do not c o n t a i n any p r o v i s i o n s exp r e s s l y p e r m i t t i n g or a u t h o r i z i n g t r u s t companies to become members
of t h e F e d e r a l Beserve System; b u t i t Trould seem t h a t such i n s t i t u t i o n s have t h i s r i g h t under a p r o v i s i o n which empowers them " t o buy
and s e l l a l l k i n d s of government, s t a t e , county, municipal and c o r p o r a t i o n bonds, and a l l k i n d s of n e g o t i a b l e and n o n - n e g o t i a b l e p a p e r ,
s e c u r i t i e s and s t o c k s : P r o v i d e d , That t h e t o t a l investment of any
such t r u s t company i n bank stock s h a l l a t no time excced o n e - f o u r t h
i t s p a i d - u p c a p i t a l * * * * «.
(lav/s of 1901, ch. 407, s e e . 2, a s
amended by
of 1903, ch. 528, soc. 1, a s amended by Lav/s of
1907, ch. 425, s e c . 1, Act of March 21, 1907; Bev. S t a t s , of 1923,
s e c . 17-2002; Banking Law Pamphlet, 1929, sac. 2 ( 8 ) , p . 3 7 . ) . I t
i s u n d e r s t o o d , however, t h a t a t the p r e s e n t time t h e r e a r e no t r u s t
companies in t h i s S t a t e %'hich .are members of t h e F e d e r a l Beserve
System.
http://fraser.stlouisfed.org/
% •
Federal Reserve Bank of St. Louis
X-6875
- 14-
• 484
ftp p r o v i s i o n s p e r m i t t i n g c o ^ l l a n d e w i t h r e s e f V d r e q u i r e m e n t s of F e d e r a l
Reserve Act i n l i e u of S t a t e law r e q u i r e m e n t s .
The laws of t h i s S t a t e do n o t appear to c o n t a i n any p r o v i s i o n s p e r m i t t i n g members of t h e F e d e r a l Reserve System to m a i n t a i n r e s e r v e s i n accordance with F e d e r a l Reserve Act r e q u i r e m e n t s i n s t e a d of
S t a t e law r e q u i r e m e n t s .
KENTUCKY.
Banks and t r u s t companies a u t h o r i z e d to become members of F e d e r a l
Reserve Bank.
I n 1914, t h e l e g i s l a t u r e of t h i s S t a t e p a s s e d an a c t which
p r o v i d e s t h a t "Any bank o r t r u s t company o r g a n i z e d under t h e laws of
t h i s Commonwealth may s u b s c r i b e f o r and own s t o c k of t h e F e d e r a l Res e r v e Bank w i t h i n t h e F e d e r a l r e s e r v e d i s t r i c t where such bank o r t r u s t
company i s l o c a t e d and may t a k e any s t e p s n e c e s s a r y to become a member
of such F e d e r a l r e s e r v e b a n k . " (Laws of 1914, ch. 16, eed. 1 ; C a r r o l l ' s
Kentucky S t a t s . , 1930, s e c . 584a; Banking Lew Pamphlet, i n c l u d i n g 1986
l e g i s l a t i o n , «ea, 584a, p . 25*)
Provisions regarding reserves.
On March 14, 1914, an Act of t h e General Assembly was a p p r o v e d p e r m i t t i n g S t a t e b a n k s and t r u s t companies to p u r c h a s e s t o c k
i n a F e d e r a l r e s e r v e bank and p r o s c r i b i n g new r e s e r v e r e q u i r e m e n t s
f o r S t a t e banks and t r u s t companies. (Acts of 1914, ch. 16, p . 6 1 , ) .
With r e f e r e n c e to r e s e r v e s , t h e a c t p r o v i d e d t h a t " e a c h bank and
t r u s t company, o r g a n i z e d under t h e laws of t h i s Commonwealth and
a u t h o r i z e d by law to r e c e i v e d e p o s i t s s h a l l keep on hand, a t a l l
t i m e s , a t l e a s t twelve p e r c e n t of i t s t o t a l demand d e p o s i t s and
f i v e p e r c e n t of i t s t o t a l time and s a v i n g s d e p o s i t s ; and, i n
c i t i e s which a r e r e s e r v e or c e n t r a l r e s e r v e c i t i e s , urylcr t h e Act
of Congress of December 23, 1913, known a s t h e F e d e r a l Reserve A c t ,
a t l e a s t f i f t e e n p e r cent of i t s t o t a l demand d e p o s i t s and f i v e p e r
c e n t of i t s t o t a l time and s a v i n g s d e p o s i t s ; o n e - t h i r d of which r e s e r v e s h a l l b e i n money and t h e remainder may be i n b a l a n c e s due from
o t h e r banks and s u b j e c t to c a l l . * * * T h i s a c t , however, cont a i n e d no p r o v i s i o n e x p r e s s l y a u t h o r i z i n g member banks and t r u s t
companies t o m a i n t a i n t h e r e s e r v e s r e q u i r e d by t h e F e d e r a l Reserve
Act i n l i e u of t h o s e r e q u i r e d by t h e S t a t e law. The p r o v i s i o n j u s t
quoted became S e c t i o n 584 of "Kentucky S t a t u t e s , C a r r o l l ' s 1915 E d i t i o n " ,
which, t o g e t h e r w i t h t h e Baldwin Law Book Company1 s 1918 Supplement
was a d o p t e d a s t h e law of Kentucky on March 24, 1922 (Acts 1922, ch.
104, p . 2 9 5 . ) .
- is *
X-6875 ,
S e c t i o n . 2 of t h e Adt of March 26, 1918, p r o v i d e d , "That
S e c t i o n 584; Kentucky S t a t u t e s , ( C a r r o l l 1915) b e and same h e r e b y
i s amended and r e e n a c t e d " , so a s to add a new p a r a g r a p h p r o v i d i n g
i n p a r t t h a t "any such (member) bank o r t r u s t company s h a l l comply
w i t h t h e r e s e r v e r e q u i r e m e n t s of t h e F e d e r a l Reserve Act and i t s
amendments and t h e compliance of such bank o r t r u s t company t h e r e w i t h
s h a l l b e i n l i e u o f , and s h a l l r e l i e v e such bank o r t r u s t company
f r o m compliance w i t h t h e p r o v i s i o n s of t h e laws o f t h i s Commonwealth
r e l a t i n g t o t h e maintenance of r e s e r v e s " (Acts of 1918, c h . 34,
s e c . 2 , p . 100); and t h e e n t i r e s e c t i o n was d e s i g n a t e d a s S e c t i o n
584 i n t h e 1922 e d i t i o n of C a r r o l l ' s Kentucky S t a t u t e s .
Chapter 127 of t h e Kentucky Acts of 1922, p . 377 (which
became a law w i t h o u t b e i n g e i t h e r approved o r d i s a p p r o v e d by t h e
Governor) p r o v i d e s , i n p a r t , t h a t : " S e c t i o n 584, Kentucky S t a t u t e s ,
( C a r r o l l ' s 1915 E d i t i o n ) , be and t h e same i s h e r e b y amended b y
e l i m i n a t i n g t h e words twelve p e r c e n t , f i v e p e r c e n t and f i f t e e n
p e r c e n t , wherever same a p p e a r i n s a i d s e c t i o n , and s u b s t i t u t i n g
t h e r e f o r t h e words seven p e r c e n t , t h r e e p e r c e n t and t e n p e r c e n t ,
so t h a t s a i d s e c t i o n , when amended and r e - e n a c t e d , w i l l r e a d a s
follows:"
F o l l o w i n g t h i s , t h e r e I s quoted t h e p r o v i s i o n s of S e c t i o n
584 of t h e Kentucky S t a t u t e s ( C a r r o l l ' s 1915 E d i t i o n ) w i t h t h e
changes i n t h e p e r c e n t a g e s of r e s e r v e s t o b e m a i n t a i n e d ; b u t t h e
new p a r a g r a p h added t o S e c t i o n 584 of t h e Kentucky S t a t u t e s ( C a r r o l l ' s
1915 E d i t i o n ) by S e c t i o n 2 of t h e Act of March 26, 1918, was o m i t t e d .
Under t h e s e c i r c u m s t a n c e s , i t i s d i f f i c u l t t o d e t e r m i n e whether t h e
General Assembly i n t e n d e d to r e p e a l t h o p r o v i s i o n p e r m i t t i n g t h e
maintenance by member banks and t r u s t companies of t h e r e s e r v e s re-**
q u i r e d b y t h e F e d e r a l Reserve Act i n l i e u of t h o s e r e q u i r e d by S t a t e
law, o r whether t h e L e g i s l a t u r e i n t e n d e d o n l y to amend t h e p a r a g r a p h
p e r t a i n i n g t o t h e p e r c e n t a g e s of r e s e r v e s t o b e m a i n t a i n e d by a l l
S t a t e banks and t r u s t companies, member and nonmember. There i s ,
however, p r i n t e d on p a g e s 378 and 379 of t h e Kentucky A c t s of
1922, a p p a r e n t l y a s par% of Chapter 127 t h e r e o f , a r e s o l u t i o n
a d o p t e d on September 8 , 1920, by t h e 2 8 t h annual m e e t i n g , of t h e
Kentucky B a n k e r s ' A s s o c i a t i o n , from which i t i s c l e a r t h a t t h e
p u r p o s e of t h i s law was to r e d u c e t h e r e s e r v e s r e q u i r e d of S t a t e
banks t o t h e amount r e q u i r e d by t h e F e d e r a l Beserve Act of member
banks of t h e F e d e r a l Reserve System, and t h e r e s o l u t i o n c o n t a i n s
no i n d i c a t i o n of any i n t e n t i o n t o d e p r i v e S t a t e members of t h e
F e d e r a l R e s e r v e System of t h e p r i v i l e g e of m a i n t a i n i n g t h e r e s e r v e s r e q u i r e d by t h e F e d e r a l Reserve Act i n l i e u of t h o s e r e q u i r e d by S t a t e law. (The o n l y d i f f e r e n c e i s t h a t , u n d e r t h e
S t a t e law, o n e - t h i r d of t h e r e s e r v e s i s r e q u i r e d t o b e i n money
and t h e remainder i n b a l a n c e s due from o t h e r banks and s u b j e c t t o
c a l l , whereas, under t h e F e d e r a l Reserve Act t h e e n t i r e r e s e r v e
i s r e q u i r e d t o c o n s i s t of an a c t u a l n e t b a l a n c e w i t h t h e F e d e r a l
485
x 6875
"
- 16 R e s e r v e Bankt)
The compiler of t h i s d i g e s t i s informed
t h a t riiemiber banks and t r u s t companies i n t h e S t a t e of
Kentucky c o n t i n u e to m a i n t a i n t h e r e s e r v e s r e q u i r e d by
t h e F e d e r a l Reserve Act in l i e u of t h o s e r e q u i r e d by
S t a t e law; so t h a t , i n p r a c t i c e , Chapter 127 of t h e
Kentucky A c t s of 1922 a p p a r e n t l y h a s been c o n s t r u e d a s
n o t r e p e a l i n g t h e p a r a g r a p h on t h i s s u b j e c t added to
s e c t i o n 584 of t h e Kentucky S t a t u t e s ( C a r r o l l ' s 1915
E d i t i o n ) by t h e Act of March 26, 1918.
LOUISIANA.
Banks and t r u s t companies p e r m i t t e d t o become members of F e d e r a l
R e s e r v e System.
A l l S t a t e b a n k s , s a v i n g s banks and t r u s t comp a n i e s o r g a n i z e d under t h e laws of L o u i s i a n a a r e "author*i z e d a n d empowered to s u b s c r i b e f o r s t o c k and become
members of t h e F e d e r a l Reserve Bank of t h e D i s t r i c t t o
which t h e y may p r o p e r l y b e a s s i g n e d by t h e F e d e r a l R e s e r v e
466
X-6875
Board i n a c c o r d a n c e w i t h t h e Act of Congress adopted December 153,
l913» p r o v i d e d th'e same i s approved by r e s o l u t i o n of t h e Board of
D i r e c t o r 6 of such bank and in accordance w i t h t h e r e q u i r e m e n t s of •
t h e F e d e r a l Heserve A c t . " (Acts of 1914, Act No. 305, s e c . 1;
Banking Law Pamphlet, 1928, s e c . 1 , o. 7 9 . )
No p r o v i s i o n s p e r m i t t i n g compliance w i t h F e d e r a l Reserve Act r e s e r v e
r e q u i r e m e n t s i n l i e u of S t a t e law r e q u i r e m e n t s ; b u t r e s e r v e s i n Fede r a l R e s e r v e Bank c o n s t r u e d a s " c a s h on hand"!
The laws of t h i s S t a t e do n o t c o n t a i n any p r o v i s i o n s p e r m i t t i n g or a u t h o r i z i n g banks and t r u s t companies, which a r e members
of t h e F e d e r a l Reserve System, to comply w i t h t h e r e s e r v e r e q u i r e ments of F e d e r a l Reserve Act i n l i e u of t h e r e q u i r e m e n t s of S t a t e
law; b u t t h e laws were amended i n 1918 so a s to p e r m i t such member
banks and t r u s t companies to c o n s t r u e cash r e s e r v e s d e p o s i t e d i n
F e d e r a l Reserve B a nks " a s c a s h on hand."
(Act 179 of 1902, s e c .
14, a s amended by Act 91 of 1918; Act 45 of 1902, s e c . 5, a s amended by Act 92 of 1918; Banking Law Pamphlet, 1928, sec. 14, p . 10,
and s e c . 5, p . 2 9 . )
MAINE.
T r u s t Companies a u t h o r i z e d to become members of F e d e r a l Reserve Bank.
The laws of t h i s S t a t e do not make any d i s t i n c t i o n between
a s o - c a l l e d commercial bank and a t r u s t company; and by an a c t approved
March 3 1 , 1915, t h e l e g i s l a t u r e p r o v i d e d t h a t "any t r u s t company may
become a s t o c k h o l d e r i n a. F e d e r a l Reserve Bank w i t h i n t h e F e d e r a l Res e r v e D i s t r i c t where s a i d t r u s t company i s s i t u a t e d * * * " . (Laws of
1915, Act approved March 31, 1915, ch. 262, amending s e c . 80, ch. 48
of Revised S t a t u t e s of 1903, a s amended by c h . 15, P u b l i c Laws of
1905.)
On A p r i l 4 , 1923, a n o t h e r a c t was approved r e v i s i n g and cons o l i d a t i n g a l l of t h e b a n k i n g laws; b u t a p r o v i s i o n r e a d i n g p r e c i s e l y t h e same a s t h e p r o v i s i o n above quoted i s i n c o r p o r a t e d t h e r e i n .
(Laws of 1923, Act approved A p r i l 4 , 1923, ch. 144, s e c . 80, p . 199;
Banking Law Pamphlet, 1927, sec, 80, p . 5 3 , )
F e d e r a l Reserve Act r e s e r v e r e q u i r e m e n t s s u b s t i t u t e d f o r S t a t e law
requirements.
The Act of March 31, 1915, a l s o p r o v i d e d t h a t " w h i l e such
t r u s t company c o n t i n u e s a s a member bank * * * ( i t ) s h a l l b e s u b j e c t
to t h e p r o v i s i o n s of s a i d ' F e d e r a l Reserve A c t 1 , and any amendments
t h e r e o f r e l a t i v e to bank r e s e r v e s i n s u b s t i t u t i o n f o r t h e requirements 1 .'
X-6875
... *• i s i
4 6 8
of t h e ^ t a t e law r e l a t i n g t #
(taws of 1915, Act approved
March 31, 1915, ch. 262, amending s e c . 80, ch. 48 of R e v i s e d S t a t u t e s
of 1903, a s amended by eh. 15, P u b l i c Laws of 1905.)
The Act of A p r i l 4 , 1923, r e v i s i n g and c o n s o l i d a t i n g t h e
b a n k i n g l a w s , a l s o u s e s t h e same wording a s t h e above quoted 1915 p r o v i s i o n i n d e a l i n g w i t h r e s e r v e s of t r u s t company members of t h e Fede r a l Reserve System. (Laws of 1923, Act approved A p r i l 4 , 1923, ch.
144, s e c . 80, p . 199; Sanking Law Pamphlet, 1927, s e c . 80, p . 5 3 . )
MARYLAND.
Banks and t r u s t companies may become members of F e d e r a l Reserve System
by i m p l i c a t i o n ; e x p r e s s l y p e r m i t t e d to c a r r y o n l y F e d e r a l Reserve Act
reserves.
The laws of t h i s S t a t e do n o t c o n t a i n any p r o v i s i o n s exp r e s s l y p e r m i t t i n g S t a t e banks and t r u s t companies t o become members
of t h e F e d e r a l Reserve System; b u t i t would seem t h a t t h e y i m p l i e d l y
a r e g i v e n t h i s p e r m i s s i o n by l e g i s l a t i o n e n a c t e d i n 1918 p e r m i t t i n g
banks which a r e members to c a r r y o n l y such r e s e r v e s a s a r e r e q u i r e d
by t h e F e d e r a l Reserve Act. This l e g i s l a t i o n p r o v i d e s t h a t "Notw i t h s t a n d i n g a n y t h i n g i n t h i s A r t i c l e c o n t a i n e d , any b a n k i n g i n s t i t u t i o n which i s a member of t h e F e d e r a l Reserve System, s h a l l n o t be
r e q u i r e d to keep any r e s e r v e o r r e s e r v e s o t h e r than t h o s e r e q u i r e d
and p r e s c r i b e d f o r banking i n s t i t u t i o n s which a r e members of s a i d
F e d e r a l Reserve System." (Laws of 1918, ch. 33, s e c . 62 c; Ann o t a t e d Code of Maryland, 1924, A r t . 11, s e c . 65; Banking Law Pamp h l e t , 1928, s e c . 65, p . 3 2 . )
The laws of Maryland d e f i n e a b a : k i n g i n s t i t u t i o n " t o mean
i n c o r p o r a t e d Banks, Savings I n s t i t u t i o n s and T r u s t Companies, and
n o t to a p p l y t o p r i n c l u d e b u i l d i n g and l o a n a s s o c i a t i o n s . " (Laws
of 1910, ch. 219, s e c . 51; Annotated Code of Maryland, 1924, A r t .
11, s e c . 52; Banking Law p a m p h l e t , 1928, s e c . 52, p . 2 7 . )
MASSACHUSETTS.
T r u s t companies i m p l i e d l y a u t h o r i z e d to become members of F e d e r a l Res e r v e System; b u t e x p r e s s l y p e r m i t t e d to comply w i t h F e d e r a l Reserve
Act r e s e r v e r e q u i r e m e n t s i n l i e u of S t a t e law r e q u i r e m e n t s .
The laws of t h i s S t a t e do not make any d i s t i n c t i o n between
a s o - c a l l e d commercial bank and a t r u s t company; and i n 1914, l e g i s l a t i o n was e n a c t e d which i m p l i e d l y a u t h o r i z e s t r u s t companies t o b e come members of t h e F e d e r a l Reserve System, b u t e x p r e s s l y p e r m i t s
X-6875
- is them to comply With t h e rmsurve r e q u i r e m e n t s of t h e F e d e r a l 3 e s e r v e
Act i n s u b s t i t u t i o n of t h e I'eqiii#1 diluent8 df t h e S t a t e lav;. (Laws of
1914, ch. 537, s e c . 1; General t a w s , ch. 172, s e e s . 48 and. 81; Banki n g Law Pamphlet r e l a t i n g to T r u s t companies, 1929, sec. 48, p . 24,
and s e c . 81, p . 3 2 . )
MICHIGAN.
Banks and t r u s t companies t r a n s a c t i n g b.-nking b u s i n e s s a u t h o r i z e d to
p u r c h a s e s t o c k i n a F e d e r a l Ho s e r v e Bank.
In 1915, t h e l e g i s l a t u r e of t h i s S t a t e p a s s e d an a c t
a u t h o r i z i n g ban.es " t o p u r c h a s e c a p i t a l s t o c k i n a f e d e r a l r e s e r v e
bank, o r do any o t h e r a c t r e q u i r e d to be done by a bank to become
a member bank * * * " ( P . A. 1887, Act 205, soc. 4 ( 7 t h ) , a s
amended b y P . A. 1913, Act 11 and P . A. 1915, Act 25; Comp. Laws
of 1897, s e c . 6093 ( 7 t h ) , a s amended.)
The s e c t i o n of t h e laws c o n t a i n i n g t h e above o r o v i s i o n
was amended i n 1917, 1919, 1925, and 1927; and in 1929, t h e
l e g i s l a t u r e p a s s e d an a c t r e v i s i n g and c o d i f y i n g a l l of t h e laws
r e l a t i n g to b a n k i n g , b u t none of t h e s e amendments changed t h e wording
of t h e p r o v i s i o n in q u e s t i o n . (For 1929, l e g i s l a t i o n s e e P.A.
1929, Act 66, soc. 4 ( 7 t h ) ; Banking Law Pamohlet, 1929, s e c . 4
(7th), p. 9.) ,
I t w i l l be n o t e d t h a t t h e "provisions above r e f e r r e d to
s p e c i f i c a l l y a u t h o r i z e o n l y banks to become members of t h e F e d e r a l
He s e r v e System; and t h e laws do n o t appear to c o n t a i n any p r o v i s i o n s
e x p r e s s l y a u t h o r i z i n g a t r u s t company engaged s o l e l y in t h e t r a n s a c t i o n of a t r u s t b u s i n e s s to become a member. F u r t h e r m o r e , i t i s
u n d e r s t o o d , t h a t t h e r e a r e no i n s t i t u t i o n s of t h i s g e n e r a l c h a r a c t e r
which a r e now, o r which have ever been, members of t h e System.
T r u s t Companies, however, a r e p e r m i t t e d t o do a banking b u s i n e s s ,
and when t h e y do engage i n such a b u s i n e s s i n a d d i t i o n t o t h e i r
t r u s t b u s i n e s s t h e y " s h a l l , a s to such b u s i n e s s , have a l l t h e r i g h t s
and b e n e f i t s and b e s u b j e c t t o a l l t h e a p p l i c a b l e p r o v i s i o n s of t h e
g e n e r a l banking l a w . " (P. A. 1929, Act 67, s e c . 23; Banking Law
Pamphlet, 1929, s e c . 136, p . 6 8 . ) A c c o r d i n g l y , i t would seem t h a t
t r u s t companies t r a n s a c t i n g a banking b u s i n e s s may become members
of t h e F e d e r a l Reserve System.
R e s e r v e s of member f i x e d b^r F e d e r a l Reserve .Act and n o t by S t a t e law.
The 1915 l e g i s l a t i o n a l s o p r o v i d e d "That t h e amount of
r e s e r v e r e q u i r e d to b e k e p t on hand by any such b a n k becoming a
member bank under t h e s a i d F e d e r a l Reserve Act s h a l l be a s f i x e d
by s a i d f e d e r a l r e s e r v e a p t o r any amendment t h e r e t o , and n o t a s
f i x e d by t h e p r o v i s i o n s of t h i s a c t . " ( P . A. 1887, Act S05, s e c .
4 ( 7 t h ) , a s amended by P . A. 1913, Act 11, and P . A. 1915, Act 35;
Comp. Laws of 1897, s e c . 6093 ( 7 t h ) , a s amended.)
469
X"6675
470
The s e c t i o n of t h e laws c o n t a i n i n g t h e above p r o v i s i o n s
was amended i n 1917, 191°, 1935, and 1927; b u t none of t h e s e
amendments changed t h e wording of the p r o v i s i o n s i n q u e s t i o n .
In 1929, t h e l e g i s l a t u r e oassed nn a c t r e v i s i n g and
c o d i f y i n g a l l t h e laws r e l a t i n g to banking, and a l t h o u g h t h e wording
of the above p r o v i s i o n i s changed s l i g h t l y t h e e f f e c t of t h e prov i s i o n remains t h e same. The 1929 l e g i s l a t i o n p r o v i d e s s p e c i f i c a l l y
"That t h e amount of r e s e r v e r e q u i r e d to be kept on hand by any bank
which i s a member of t h e f e d e r a l r e s e r v e system s h a l l be a s f i x e d
by t h e f e d e r a l r e s e r v e a c t or any amendment t h e r e t o , and n o t a s
f i x e d by t h e p r o v i s i o n s of t h i s a c t " . (P. A. 1929, Act 65, s e c .
21; Banking Law Pamphlet, 1929, sec. 30, p . 2 1 . ) As s t a t e d above,
t r u s t companies t r a n s a c t i n g a banking b u s i n e s s a p p a r e n t l y may b e come members of t h e Federal Reserve System; and t h e p r o v i s i o n s
under which t h e y may become such members would a l s o seem to a u t h o r i z e
them to c a r r y r e s e r v e s i n accordance w i t h t h e above quoted r e s e r v e
provision.
MITOBSOTA.
Banks and t r u s t companies p e r m i t t e d to become members of f e d e r a l
Reserve Bank.
On March 6, 1915, an a c t of t h e l e g i s l a t u r e of t h i s S t a t e
was approved which p r o v i d e s t h a t "Any i n c o r p o r a t e d S t a t e bank or
t r u s t company may become a member of t h e Federal Reserve Bank of
t h e Federal Reserve D i s t r i c t in which s a i d bank o r t r u s t company
i s l o c a t e d and may i n v e s t i a and h o l d s t o c k t h e r e i n " . (Laws of
1915, Act approved March 6, 1915, ch. 28, sec. 1; K a s o n ' s Minnesota
S t a t u t e s , 1927, s e c . 7649; Banking Law Pamphlet, 1929, p . 2 3 . )
No p r o v i s i o n s p e r m i t t i n g compliance with F e d e r a l Reserve Act r e s e r v e
r e q u i r e m e n t s in l i e u of S t a t e law r e q u i r e m e n t s .
The laws of t h i s S t a t e do not appear to c o n t a i n any p r o v i s i o n s p e r m i t t i n g S t a t e banks and t r u s t companies which a r e members
of t h e F e d e r a l Reserve System to m a i n t a i n r e s e r v e s r e q u i r e d by t h e
F e d e r a l Reserve Act in l i e u of t h o s e r e q u i r e d by S t a t e law.
X-6875
:
471
Mississippi.
Banks and t r u s t companies p e r m i t t e d to become members of F e d e r a l Res e r v e System,
An a c t of t h e l e g i s l a t u r e of t h i s S t a t e approved on March
9 , 1914, p r o v i d e d t h a t "no p a r t of t h e s t o c k of any bank, e x c e p t
r e g i o n a l r e s e r v e b a n k s , doing b u s i n e s s i n t h i s S t a t e , s h a l l be owned
by any bank u n d e r t h e p r o v i s i o n s of t h i s a c t " . (Laws of 1914, c h ,
124, Act approved March 9 , 1914, s e c . 64; Miss. Code, 1930, s e c . 3821.)
I n 1918, t h e l e g i s l a t u r e of t h i s S t a t e l e g i s l a t e d more
s p e c i f i c a l l y w i t h r e f e r e n c e t o membership i n t h e F e d e r a l R e s e r v e
System. That l e g i s l a t i o n p r o v i d e s t h a t any S t a t e bank o r t r u s t
company " s h a l l have power t o s u b s c r i b e t o t h e c a p i t a l s t o c k and b e come a member of a F e d e r a l Reserve Bank?1 c r e a t e d under t h e F e d e r a l
R e s e r v e A c t . (Laws of 1918, ch. 248; Brown 1 s M i s s i s s i p p i and Fedo r a l S t a t u t e s , 1925, s e c . 87, p . 83; Miss. Code, 1930, s e c . 3842.)
R e s e r v e s r e q u i r e d by F e d e r a l Reserve Act may be m a i n t a i n e d i n l i e u of
r e s e r v e s r e q u i r e d by S t a t e l a w .
The 1918 l e g i s l a t i o n a l s o p r o v i d e s t h a t member banks and
• t r u s t companies " s h a l l comply w i t h t h e r e s e r v e r e q u i r e m e n t s of t h e
F e d e r a l Reserve Act and i t s amendments, and t h e compliance of such
bank o r t r u s t company t h e r e w i t h s h a l l be i n l i e u o f , and s h a l l r e l i e v e such b a n k o r t r u s t company from, compliance w i t h t h e p r o v i s i o n s
of t h e laws of t h i s S t a t e r e l a t i n g to t h e maintenance of r e s e r v e s . "
(Laws of 1918, ch. 248; Brown's M i s s i s s i p p i and F e d e r a l S t a t u t e s ,
1925, s e c . 88, p . 83; Miss. Code, 1930, s e c . 3843.)
MISSOURI.
Banks and T r u s t companies a u t h o r i z e d t o become members of F e d e r a l Reserve
Bank.
In 1915, t h e General Assembly of t h i s S t a t e e n a c t e d l e g i s l a t i o n which a u t h o r i z e d e v e r y bank " t o p u r c h a s e and h o l d , f o r t h e p u r p o s e
of becoming a member of a F e d e r a l r e s e r v e bank, so much of t h e c a p i t a l
s t o c k t h e r e o f a s w i l l q u a l i f y i t f o r membership i n such r e s e r v e bank
* * *. t 0 become a member of such F e d e r a l r e s e r v e bank and t o have and
e x e r c i s e a l l powers, not i n c o n f l i c t w i t h t h e laws of t h i s S t a t e , which
a r e c o n f e r r e d upon any such member bank by t h e ' F e d e r a l r e s e r v e act*
and any amendments t h e r e t o . " (Laws of 1915, p . 132; R e v i s e d S t a t s . ,
1929, s e c . 5 3 5 $ . ) The 1915 l e g i s l a t i o n a l s o c o n t a i n e d s i m i l a r p r o v i s i o n s a u t h o r i z i n g t r u s t companies to j o i n t h e F e d e r a l R e s e r v e System.
36-6875
"***
(Laws of 1915, p . 165; R e v i s e d S t a t e , of 1929, s e c . 5421; Banking
Law p a m p h l e t , 1919, s e c . 11789 (13) p . 9 8 . ) t h e s e c t i o n of t h e laws
c o n t a i n i n g t h e p r o v i s i o n s c o v e r i n g banks was amended b y an a c t a p p r o v e d March 23, 1927, b u t t h e p o r t i o n a u t h o r i z i n g banks t o become
members of t h e F e d e r a l R e s e r v e System i s unchanged. ( R e v i s e d S t a t s . ,
1929, s e c . 5354; Laws of 1927, Act approved March 23, 1927, s e c . 4 .
p. 219.)
Member banks and t r u s t companies o n l y r e q u i r e d t o m a i n t a i n F e d e r a l
R e s e r v e Act r e s e r v e s .
The General Assembly of 1915 a l s o p a s s e d l e g i s l a t i o n t o
t h e e f f e c t t h a t "any bank becoming a member of a f e d e r a l r e s e r v e
bank, and w h i l e i t c o n t i n u e s such member, s h a l l b e r e q u i r e d t o
m a i n t a i n o n l y such r e s e r v e s a s a r e r e q u i r e d by t h e F e d e r a l Reserve
Act and any amendments t h e r e t o " . (Laws of 1915, p . 1 5 5 ) . T h i s
l e g i s l a t i o n a l s o g r a n t e d a s i m i l a r p e r m i s s i o n t o t r u s t companies.
(Laws of 1915, p . 177). The s e c t i o n s of t h e laws c o n t a i n i n g t h e s e
p r o v i s i o n s were amended i n 1927, b u t t h e wording of t h e p r o v i s i o n s
i n q u e s t i o n i s unchanged. (Revised S t a t s . , of 1929, s e e s . a5360 and
a5432; Laas of 1927, Act approved March 23, 1927, s e c . 6, p . 227,
and Act approved A p r i l 5, 1927, s e c . 3, p . 2 4 2 . )
MONTANA.
Banks and t r u s t companies a u t h o r i z e d to become members of F e d e r a l
R e s e r v e Bank.
By an a c t approved March 5, 1915, t h e l e g i s l a t u r e of t h i s
S t a t e p r o v i d e d t h a t "Any bank i s h e r e b y a u t h o r i z e d and empowered t o
j o i n o r a s s o c i a t e i t s e l f w i t h t h e N a t i o n a l Reserve A s s o c i a t i o n of
t h e U n i t e d S t a t e s , o r any b r a n c h t h e r e o f , and n o t h i n g h e r e i n cont a i n e d s h a l l p r e v e n t o r p r o h i b i t any bank from j o i n i n g o r a s s o c i a t i n g i t s e l f w i t h any such a s s o c i a t i o n o r b r a n c h t h e r e o f o r f r o m
i n v e s t i n g any p a r t of i t s c a p i t a l o r s u r p l u s i n t h e s t o c k of such
a s s o c i a t i o n o r b r a n c h t h e r e o f , * * * . " (Laws of 1915, Act a p p r o v e d March 6 , 1915, ch. 89, s e c . 23 ) . T h i s l e g i s l a t i o n d e f i n e d
a "bank? 1 , wherever i t was u s e d t h e r e i n , a s i n c l u d i n g a t r u s t company, so t h a t t r u s t companies a p p a r e n t l y were a l s o a u t h o r i z e d t o
j o i n t h e " N a t i o n a l Reserve A s s o c i a t i o n " by t h e above p r o v i s i o n .
(Laws of 1915, Act approved March 6, 1915, ch. 89, s e c . 2 ) .
The above quoted p r o v i s i o n s were n o t amended u n t i l March
8 , 1927, when a n a c t r e v i s i n g and c o d i f y i n g t h e b a n k i n g l a w s of
t h i s S t a t e was p a s s e d . The new b a n k i n g code, however, does n o t
472
X-6875
23
change t h e e f f e c t of e i t h e r of t h e p r o v i s i o n s , and t h e o n l y change
made in t h e p r o v i s i o n a u t h o r i z i n g t a n k s and t r u s t companies t o j o i n
t h e F e d e r a l Reserve System, i s to s u b s t i t u t e t h e term " F e d e r a l Res e r v e Bank" f o r t h e term " N a t i o n a l Reserve A s s o c i a t i o n of t h e U n i t e d
S t a t e s " and t h e word "Bank?1 f o r t h e word " a s s o c i a t i o n " wherever such
term o r words a p p e a r e d i n t h e 1915 p r o v i s i o n . (Laws of 1927, Act
approved March 8, 1927, c h . 89, se s . 28 and 2 ; Banking Law Pamphlet,
1927, sac. 28, p . 27, and s e c . 2, p . 7 . )
Compliance w i t h r e s e r v e p r o v i s i o n s deemed compliance w i t h p r o v i s i o n s
of S t a t e law.
The a c t of March 6 a l s o p r o v i d e d t h a t any bank o r t r u s t
company "which s h a l l become a member of t h e F e d e r a l Reserve Bank
A s s o c i a t i o n , and s h a l l i n a l l r e s p e c t s comply w i t h t h e r u l e s and
r e g u l a t i o n s of t h a t a s s o c i a t i o n , s h a l l be deemed to have complied
w i t h t h e p r o v i s i o n s of t h i s Act."
(Laws of 1915, Act approved
March 6, 1915, ch. 89, s e e s . 50 and 2 . )
I t would seem t h a t t h i s
p r o v i s i o n a u t h o r i z e d a compliance w i t h t h e r e s e r v e p r o v i s i o n s of
t h e F e d e r a l R e s e r v e Act i n l i e u of t h e p r o v i s i o n s of t h e S t a t e law.
In 1917, tji'e s e c t i o n of t h e Montana laws c o n t a i n i n g t h e
above p r o v i s i o n was amended (Laws of 1917, ch. 135, s e c . l ) , b u t
t h i s p r o v i s i o n remained unchanged; and in 1921, t h e s e c t i o n was
f u r t h e r amended. This time t h e p r o v i s i o n above quoted was changed
so a s s p e c i f i c a l l y to p r o v i d e t h a t " a compliance w i t h t h e f e d e r a l
r e s e r v e b a n k i n g l a w s , r u l e s and r e g u l a t i o n s by member banks (and
t r u s t companies) s h a l l b e h e l d t o be a compliance w i t h t h e r e s e r v e
r e q u i r e m e n t s and c o n d i t i o n s of t h i s a c t , and e n t i t l e such F e d e r a l
r e s e r v e member banks (and t r u s t companies) to t h e r i g h t s and p r i v i l e g e s a c c r u i n g from a compliance w i t h t h i s a c t " . (Laws of 1921, ch.
94, s e c . 1 . )
In 1927, t h i s p r o v i s i o n was a g a i n amended by au a c t a p p r o v e d March 8 , 1927, r e v i s i n g and c o d i f y i n g t h e banking laws of
t h i s S t a t e , b u t t h e e f f e c t of t h e p r o v i s i o n i s t h e same. The
new b a n k i n g code p r o v i d e s in p a r t t h a t " a compliance w i t h t h e Fede r a l r e s e r v e b a n k i n g l a w s , r u l e s and r e g u l a t i o n s by member banks
(and t r u s t companies) s h a l l be h e l d to be a compliance w i t h the
r e s e r v e r e q u i r e m e n t s and c o n d i t i o n s of t h i s Act".
(Laws of 1927,
Act approved March 8, 1927, ch. 89, s e e s . 53 and 2; Banking Law
Pamphlet, 1927, s e c . 53, p . 36, and s e c . 2, p . 7 . )
X-6875
« 2l4 -
1
i
NEBRASKA.
Banks and t r u s t companies a u t h o r i z e d to become members, b u t not now
e x p r e s s l y a u t h o r i z e d to m a i n t a i n r e s e r v e s in accordance w i t h Federal
Reserve Act i n s t e a d of i n accordance w i t h S t a t e law.
By an a c t approved A p r i l 12, 1915, the l e g i s l a t u r e of t h i s
S t a t e p r o v i d e d t h a t "any bank or t r u s t company, i n c o r p o r a t e d under
t h e laws of t h i s s t a t e s h a l l have power to s u b s c r i b e to t h e c a p i t a l
s t o c k , and become a member, of a f e d e r a l r e s e r v e bank * * * and s h a l l
have power to assume such l i a b i l i t i e s and to e x e r c i s e such powers
as a member of such f e d e r a l r e s e r v e bank a s a r e p r e s c r i b e d by t h e
p r o v i s i o n s of s a i d a c t , o r amendments t h e r e t o ; and, so l o n g a s such
bank s h a l l remain a member of t h e f e d e r a l r e s e r v e system * * *,
i t s h a l l be s u b j e c t * * * to a l l pro v i s i o n s of said, f e d e r a l r e s e r v e
a c t and r e g u l a t i o n s made pursuant thereto t>y the f e d e r a l reserve
board which a r e applicable to such banla $» «»inber« of the f e d e r a l
r e s e r v e system; * * »
(laws of 1 9 1 5 * a p p r o v i f t April 12+
1915, ch. 175, sec. l y p* 359*)
fh&t act$ade
of member banks and trust companies maintaining the reserves required
by the federal Reserve Act in l i e u of thorn# r e # i y # & by the State
law.
- •
Under d a t e of March 19, 1919, an a c t of t h e l e g i s l a t u r e
was approved r e p e a l i n g t h e above p r o v i s i o n s ; b u t , except f o r omitt i n g any r e f e r e n c e to a t r u s t company and except f o r i n c l u d i n g a
p r o v i s i o n p r o v i d i n g t h a t a compliance by a bank w i t h t h e r e s e r v e
p r o v i s i o n s of t h e F e d e r a l Reserve Act r e l i e v e d such bank from complyi n g w i t h t h e r e s e r v e p r o v i s i o n s of S t a t e law, t h i s a c t r e a d p r e c i s e l y t h e same as t h e 1915 p r o v i s i o n s above quoted. (Laws of 1919,
Act approved March 19, 1919, ch. 16, p . 7 7 . ) The 1919 a c t , w i t h
r e f e r e n c e to r e s e r v e s , s p e c i f i c a l l y p r o v i d e d t h a t "Any bank complying w i t h t h e r e s e r v e r e q u i r e m e n t s of the f e d e r a l r e s e r v e a c t , and
i t s amendments, s h a l l be r e l i e v e d from compliance w i t h t h e p r o v i s i o n s of t h e laws of t h i s s t a t e r e l a t i n g to t h e maintenance of
reserves".
On A p r i l 19, 1919, another a c t was approved which was
e n t i t l e d t h e " C i v i l A d m i n i s t r a t i v e Code11, and which, a l t h o u g h i t
r e p e a l e d t h e Act of March 19, 1919, c o n t a i n e d a s e c t i o n ( S e c t i o n
64) r e a d i n g t h e same a s t h e r e p e a l e d a c t r e a d . In a d d i t i o n , t h e
Act of A p r i l 19, 1919, c o n t a i n s a s e c t i o n ( s e c t i o n 65) r e s t o r i n g
to t r u s t companies t h e r i g h t to j o i n t h e F e d e r a l Reserve System;
b u t i t does n o t c o n t a i n a p r o v i s i o n s i m i l a r to t h e p r o v i s i o n which
was i n c l u d e d in s e c t i o n 64 r e l i e v i n g banks from complying w i t h
S t a t e law r e s e r v e r e q u i r e m e n t s i f they observed F e d e r a l Reserve
4
3t-6875
- g$-
: 475
Act r e s e r v e r e q u i r e m e n t s . (Laws of 1919, Act approved A p r i l 19,
1919, ch. 190, a r t . XVI, s e e s . 64 and 65, p p . 711 and 7 1 2 . )
On A p r i l 14, 1921, an a c t was approved which r e p e a l s
s e c t i o n 64 of t h e Act of A p r i l 19, 1919. T h i s a c t r e t a i n s t h e
p r o v i s i o n s a u t h o r i z i n g banks t o j o i n t h e F e d e r a l Reserve System,
b u t i t does n o t r e t a i n t h e p r o v i s i o n a u t h o r i z i n g a compliance w i t h
t h e r e s e r v e r e q u i r e m e n t s of t h e F e d e r a l Reserve Act i n l i e u of t h e
r e s e r v e r e q u i r e m e n t s of S t a t e law. (laws of 1921, p . 9 5 3 . )
No o t h e r amendments appear t o have been made to t h e laws
of t h i s S t a t e c o v e r i n g membership i n t h e F e d e r a l Reserve System
and t h e r e s e r v e s r e q u i r e d of such members; and i t a p p e a r s t h a t
a t t h e p r e s e n t time b o t h banks and t r u s t companies a r e a u t h o r i z e d
t o s u b s c r i b e t o s t o c k i n and become members of a F e d e r a l r e s e r v e
bank b u t t h a t t h e y a r e n o t s p e c i f i c a l l y a u t h o r i z e d t o m a i n t a i n r e s e r v e s in a c c o r d a n c e w i t h t h e F e d e r a l Reserve Act i n s t e a d of i n
accordance w i t h S t a t e law. The p r e s e n t law on t h i s s u b j e c t w i l l
a l s o b e found i n t h e 1929 Compiled S t a t u t e s of Nebraska, s e e s .
8-162 and 8 - 1 6 3 , p p . 114 and 115.
NEVADA.
Banks and t r u s t companies a u t h o r i z e d to become members of F e d e r a l Reserve
Bank.
In 1919, t h e l e g i s l a t u r e of t h i s S t a t e e n a c t e d l e g i s l a t i o n which p r o v i d e s i n p a r t t h a t any S t a t e bank or t r u s t company
" s h a l l have t h e power t o s u b s c r i b e to t h e c a p i t a l s t o c k and become
a member of a F e d e r a l Reserve Bank?1. (Acta of 1919, ch. 126, s e c .
2 , p . 241; Banking Law Pamphlet, 1927, s e c . 2, p . 3 4 . )
F e d e r a l R e s e r v e Act r e s e r v e s may be m a i n t a i n e d i n l i e u of r e s e r v e s
r e q u i r e d by S t a t e law.
.
The 1919 a c t a l s o p r o v i d e s t h a t a compliance by a member
bank o r t r u s t company w i t h t h e r e s e r v e r e q u i r e m e n t s of t h e F e d e r a l
Reserve Act " s h a l l b e h e l d to be a f u l l compliance w i t h t h o s e p r o v i s i o n s of t h e laws of t h i s S t a t e which r e q u i r e banks o r t r u s t
companies t o m a i n t a i n cash b a l a n c e s i n t h e i r v a u l t s o r w i t h o t h e r
b a n k s , and no such bank or t r u s t company s h a l l b e r e q u i r e d t o c a r r y
o r m a i n t a i n r e s e r v e o t h e r t h a n such a s i s r e q u i r e d under t h e terms
of t h e f e d e r a l r e s e r v e a c t " .
(Acta of 1919, ch. 126, s e c . 4 , p ,
241; Banking Law Pamphlet, 1927, s e c . 4, p . 3 4 . )
X-6875
* » '
:
476
NW HAMPSHIRE.
T r u s t companies may become members of F e d e r a l Reserve System by i m p l i c a t i o n ; e x p r e s s l y -permitted, to c a r r y o n l y F e d e r a l Reserve Act r e s e r v e s *
The laws of t h i s S t a t e do n o t c o n t a i n any p r o v i s i o n s exp r e s s l y p e r m i t t i n g e i t h e r banks or t r u s t companies to become members
of t h e F e d e r a l Reserve System; b u t t r u s t companies a r e i m p l i e d l y
g i v e n t h i s r i g h t by l e g i s l a t i o n which was enacted i n t h e y e a r 1915,
and which s u b j e c t s them to t h e r e s e r v e r e q u i r e m e n t s of t h e F e d e r a l
Reserve Act i n s t e a d of t h e S t a t e law r e s e r v e r e q u i r e m e n t s . T h i s
l e g i s l a t i o n p r o v i d e s in p a r t t h a t "A t r u s t company which becomes a
s t o c k h o l d e r i n a f e d e r a l r e s e r v e bank w i t h i n t h e ifederal r e s e r v e
d i s t r i c t where such t r u s t company i s s i t u a t e d may have and e x e r c i s e
any and a l l of t h e c o r p o r a t e powers and p r i v i l e g e s i n c i d e n t t h e r e t o ,
which may be e x e r c i s e d by member banks * * *; and w h i l e such t r u s t
company c o n t i n u e s a s a member bank under t h e p r o v i s i o n s of s a i d
f e d e r a l r e s e r v e a c t , o r any a c t s in amendment t h e r e o f , i t s h a l l be
s u b j e c t to t h e p r o v i s i o n s t h e r e o f r e l a t i v e to bank r e s e r v e s " , i n
s u b s t i t u t i o n f o r t h e S t a t e law r e s e r v e r e q u i r e m e n t s . (Laws of
1915, ch. 109, sec. 28; Pub. Laws, ch. 264, s e c . 7; Banking Law
Pamphlet, 1929, s e c . 7, p . 3 2 . )
Banks and t r u s t companies authorized to purchase stock in Federal
Reserve Bank.
/
In an a c t approved A p r i l 14, 1914, t h e l e g i s l a t u r e of t h i s
s t a t e p r o v i d e s t h a t any S t a t e bank or t r u s t company may become a
member of t h e Federal r e s e r v e bank of t h e Federal r e s e r v e d i s t r i c t
i n which such bank o r t r u s t company i s l o c a t e d , and "may s u b s c r i b e
f o r , p u r c h a s e , h o l d and s u r r e n d e r , from time to time, such amounts
of t h e c a p i t a l s t o c k of such f e d e r a l r e s e r v e bank a s such t r u s t
company or s t a t e bank may deem a d v i s a b l e , or a s may be r e q u i r e d
under s a i d ' f e d e r a l r e s e r v e a c t 1 , or any amendment t h e r e o f , i n o r d e r
to o b t a i n and c o n t i n u e such membership, and upon t h e p u r c h a s e of
such s t o c k , to assume t h e l i a b i l i t i e s and become e n t i t l e d to t h e
b e n e f i t s r e c i t e d i n s a i d ' f e d e r a l r e s e r v e a c t f « n (Laws of 1914,
Act approved A p r i l 14, 1914, ch. 159, sec. 1; Banking Law Pamphlet,
1930, p . 1 3 6 . )
Federal Reserve Aqt reserve requirements s u b s t i t u t e d f o r S t a t e law
requirements.
In an act approved March 2 9 , 1917, member banks and t r u s t
Xr68?5
4
t
: 477
e o # a n i e s are made "subject to the p r o v i s i o n s of the federal reserve
a c t and any amendments thereto r e l a t i v e to bank r e s e r v e s , in subs t i t u t i o n f o r the requirements of the laws of t h i s S t a t e concerning
bank r e s e r v e s f o r t r u s t companies or s t a t e banks not members of the
federal r e s e r v e b a n # . (Laws of 1917, Act approved March 29, 1917,
ch. 225, sec. 1; Banking Law Pamphlet, 1930, p. 1 3 7 , )
NBff MEXICO.
.Hanks and t r u s t companies a u t h o r i z e d to p u r c h a s e s t o c k i n F e d e r a l
Reserve Bank.
By an a c t approved March 15, 1915, the l e g i s l a t u r e of t h i s
S t a t e p r o v i d e d t h a t "Any i n c o r p o r a t e d S t a t e bank may apply to t h e Fede r a l Reserve Board f o r t h e r i g h t to s u b s c r i b e to t h e s t o c k of t h e Fede r a l Reserve Bank organized w i t h i n the F e d e r a l Reserve D i s t r i c t where
t h e a p p l i c a n t bank i s l o c a t e d , and may become a s t o c k h o l d e r of such
bank and e x e r c i s e a l l of t h e powers of monitor banks i n accordance
with t h e p r o v i s i o n s of t h e Act of Congress e n t i t l e d ' F e d e r a l Reserve
A c t ' , approved December 23, 1913". (Laws of 1915, Act approved March
15, 1915, ch. 67, s e c . 9 5 . ) The laws of t h i s S t a t e d e s i g n a t e t h e p r o v i s i o n s c o v e r i n g banking a s t h e "Bank Act" and p r o v i d e t h a t wherever t h e
word "Bank" i s used in t h e Act i t i n c l u d e s t r u s t companies. (Laws of
1915, ch. 67, s e c . 2; Hew-Mexico S t a t u t e s , Annotated, 1929, sec. 13-102;
Banking Law Pamphlet, 1929, soc. 2, p . 5 . )
In 1919, t h e l e g i s l a t u r e i n c o r p o r a t e d t h e above quoted
v " p r o v i s i o n i n p r e c i s e l y t h e same language in o t h e r l e g i s l a t i o n i t
enacted c o v e r i n g member banks and t r u s t companies. (Laws of 1919,
ch. 120, s e c . 35; N#w Mexico S t a t u t e s , Annotated, 1929, s e c . 13-701;
Banking Law Pamphlet, 1929, s e c . 96, p . 3 2 . )
Compliance w i t h r e s e r v e r e q u i r e m e n t s of Federal Reserve Act c o n s t i t u t e s
compliance w i t h r e s e r v e r e q u i r e m e n t s of S t a t e law.
In 1919, t h i s S t a t e enacted l e g i s l a t i o n which p r o v i d e s
t h a t a compliance by a member bank or t r u s t company " w i t h t h e r e s e r v e
r e q u i r e m e n t s of the F e d e r a l Reserve Act s h a l l b e h e l d to be a f u l l
compliance w i t h t h e s e p r o v i s i o n s of t h e laws of t h i s S t a t e which
r e q u i r e banks o r t r u p t companies to m a i n t a i n cash b a l a n c e s i n t h e i r
v a u l t s or w i t h o t h e r banks, and no such bank or t r u s t company s h a l l
be r e q u i r e d to c a r r y or m a i n t a i n r e s e r v e o t h e r t h a n such a s i s r e q u i r e d under t h e terms of t h e Federal Reserve Act." (Laws of 1919,
ch. 120, s e c . 35; New Mexico S t a t u t e s , Annotated, 1929, s e c . 13-702;
Banking Law Pamphlet, 1929, s e c . 97, p . 32. )
X-6875
'** *
478
NW YORK.
Banks and t r u s t companies a u t h o r i z e d to p u r c h a s e s t o c k i n F e d e r a l He s e r v e
Bank,
' '
~
.
I n 1914, t h e laws of t h i s S t a t e were amended so a s to
a u t h o r i z e a bank o r t r u s t company "To p u r c h a s e and h o l d , f o r t h e
p u r p o s e of becoming a member of a f e d e r a l r e s e r v e bank, so much
of t h e c a p i t a l s t o c k t h e r e o f a s w i l l q u a l i f y i t f o r membership
i n such r e s e r v e bank * * *; to become a member of such f e d e r a l r e s e r v e bank, and t o have and e x e r c i s e a l l powers, n o t i n c o n f l i c t
w i t h t h e laws of t h i s s t a t e , which a r e c o n f e r r e d upon any such memb e r bank by t h e f e d e r a l r e s e r v e a c t " . (Banking Law, s e c . 106, subd.
4 and s e c . 185, subd. 12; Laws of 1914, ch. 369, s e e s . 106 and 185;
Banking Laws, 1930, s e c . 106, p . 69, and s e c . 185, p . 1 4 7 . ) S e c t i o n
106 of t h e Banking Law was amended i n 1918, 1919, 1921, and 1926, b u t
none of t h e s e amendments changed tho wording of t h e p r o v i s i o n above
quoted.
Compliance w i t h F e d e r a l Reserve Act r e s e r v e s deemed c ompliance w i t h
S t a t e law.
In 1914, t h e r e s e r v e laws c o v e r i n g banks were amended so
a s to p r o v i d e t h a t , " I f any bank s h a l l h a v e become a member of a
f e d e r a l r e s e r v e bank, i t may m a i n t a i n a s r e s e r v e s on d e p o s i t w i t h
such f e d e r a l r e s e r v e bank such p o r t i o n of i t s t o t a l r e s e r v e s a s
s h a l l be r e q u i r e d of members of such f e d e r a l r e s e r v e bank; and i f
such bank h a s an o f f i c e i n a borough h a v i n g a p o p u l a t i o n of two
m i l l i o n s o r o v e r , t h e remainder of i t s t o t a l r e s e r v e s s h a l l be
c a r r i e d a s r e s e r v e s on h a n d . " (Banking Law, s e c . 112, subd. 3;
Laws of 1914, c h . 3 6 9 . )
Subd. 3 of s e c . 112 of ch. 369 of t h e Laws of 1914 was
amended by ch. 579 of t h e Laws of 1917, e f f e c t i v e May 21, 1917,
b u t t h i s amendment d i d n o t change t h e wording of t h e p r o v i s i o n
quoted above.
Subd. 3 of s e c . 112 of ch. 369 of t h e Laws of 1914 a s amended by ch. 579 of t h e Laws of 1917, was a g a i n amended by c h . 92 of t h e
t h e Laws of 191)3, e f f e c t i v e March 27, 1918, to r e a d a s f o l l o w s :
" * * * i f any bank s h a l l have become a member of a
f e d e r a l r e s e r v e bank, i t may m a i n t a i n a s r e s e r v e s
on hand w i t h such f e d e r a l r e s e r v e bank such p o r t i o n
of i t s t o t a l r e s e r v e s a s s h a l l be r e q u i r e d of memb e r s of such f e d e r a l r e s e r v e b a n k . "
The p r o v i s i o n s of t h e s e c t i o n quoted above were f u r t h e r
amended by ch. 35, Laws of 1919, e f f e c t i v e March 6, 1919, to r e a d ;
•* 29 -
X-6875
" * * * b u t , i f any bank s h a l l have become a memb e r of a f e d e r a l r e s e r v e bank, i t s h a l l m a i n t a i n
such r e s e r v e s w i t h such f e d e r a l r e s e r v e bank a s
a r e r e q u i r e d by t h e f e d e r a l r e s e r v e a c t and so
l o n g a s i t complies w i t h t h e r e q u i r e m e n t s of such
f e d e r a l reserve act with r e f e r e n c e to reserves
s h a l l be exempt from t h e p r e c e d i n g p r o v i s i o n s of
this section."
There have been no changes in subd. 3 of s e c . 112 of ch. 369
of t h e Laws of 1914 s i n c e 1919.
In 1914 t h e r e s e r v e laws c o v e r i n g t r u s t companies were a l s o
amended so a s to p r o v i d e t h a t " I f any t r u s t company s h a l l have
become a member of a f e d e r a l r e s e r v e bank, i t may m a i n t a i n a s r e s e r v e s on d e p o s i t w i t h such f e d e r a l r e s e r v e bank such p o r t i o n of i t s
t o t a l r e s e r v e s a s s h a l l b e r e q u i r e d of members of such f e d e r a l r e s e r v e " . (Banking Law, s e c . 197, subd. 3; Laws of 1914, ch. 3 6 9 . )
The p r o v i s i o n s of subd. 3 of s e c . 197 of ch. 369 of t h e Laws
of 1914 were a l s o amended by ch. 579 of t h e Laws of 1917, e f f e c t i v e
May 21, 1917, b u t t h i s amendment d i d n o t change t h e wording of t h e
p r o v i s i o n above quoted.
Subd. 3 of s e c . 197 of ch. 369 of t h e Laws of 1914 a s amended
by ch. 579 of t h e Laws of 1917, was f u r t h e r amended by ch. 92 of t h e
Laws of 1918, e f f e c t i v e March 27, 1918, t o r e a d i n p a r t :
11
* * * i f any t r u s t company s h a l l have become
a member o£ a f e d e r a l r e s e r v e bank, i t may maint a i n a s r e s e r v e s on hand w i t h such f e d e r a l r e s e r v e bank such p o r t i o n of i t s t o t a l r e s e r v e s
a s s h a l l be r e q u i r e d of members of such f e d e r a l
r e s e r v e bank."
The p r o v i s i o n s of t h e s e c t i o n quoted above were f u r t h e r amended by ch. 35 of t h e Laws of 1919, e f f e c t i v e March 6, 1919, t o r e a d i n
part:
ti * * * t u t i f any t r u s t company s h a l l have b e come a member of a ' f e d e r a l r e s e r v e bank, i t
s h a l l m a i n t a i n such r e s e r v e s w i t h such f e d e r a l
r e s e r v e bank a s a r e r e q u i r e d by t h e f e d e r a l r e s e r v e a c t and so l o n g a s i t complies w i t h t h e
r e q u i r e m e n t s of such f e d e r a l r e s e r v e a c t w i t h
r e f e r e n c e t o r e s e r v e s s h a l l b e exempt from t h e
p r e c e d i n g p r o v i s i o n s of t h i s s e c t i o n . "
•
480
X-6875
-
30 -
There have been no changes in subd. 3 of s e c . 197 of ch.
369 of t h e Laws of 1914 s i n c e 1919.
UORTH CAROLINA.
Banks and t r u s t companies r e c e i v i n g d e p o s i t s a u t h o r i z e d t o become
members of F e d e r a l Reserve System.
The l e g i s l a t u r e of t h i s S t a t e d i d n o t e n a c t l e g i s l a t i o n
s p e c i f i c a l l y p e r m i t t i n g banks and t r u s t companies to become
members of t h e F e d e r a l Reserve System u n t i l March 10, 1919, when
an a c t was r a t i f i e d p r o v i d i n g "That any bank o r t r u s t company
i n c o r p o r a t e d under t h e laws of t h i s S t a t e s h a l l have t h e power
t o s u b s c r i b e to t h e c a p i t a l s t o c k and become a member of a
F e d e r a l R e s e r v e Bank".
( P u b l i c Laws of 1919, ch. 252, s e c .
2 , p . 461. )
Qn F e b r u a r y 18, 1921, a n o t h e r a c t was r a t i f i e d which r e p e a l s t h e above quoted p r o v i s i o n and which p r o v i d e s "That any bank
X-6875
* ii *
i n c o r p o r a t e d under t h e laws of t h i s S t a t e s h a l l have t h e power t o
s u b s c r i b e to the c a p i t a l s t o c k and become a member of a F e d e r a l Res e r v e Bank*. ( P u b l i c Laws of 1921. ch. 4 , s e c . 42, p . 91; N o r t h
C a r o l i n a Code, 1927, Ann., s e c . 2 2 0 ( g ) , p . 63; Banking Law Pamphlet,
1927, s e c . 2 2 0 ( g ) , p . 2 5 . )
i
The 1921 a c t f u r t h e r p r o v i d e s t h a t "The words 'member
bank* s h a l l b e h e l d to mean any N a t i o n a l o r S t a t e bank o r bank and
t r u s t company which has become o r which becomes a member of one of
t h e F e d e r a l Reserve Banks c r e a t e d by the F e d e r a l Reserve A c t " .
( p u b l i c Laws of 1921, ch. 4, s e c . 42, p , 91; North C a r o l i n a Code,
1927, Ann., s e c . 220(g); Banking Law Pamphlet, 1927, s e c . 2 2 0 ( g ) ,
p . 2 5 . ) The laws of North C a r o l i n a a l s o p r o v i d e t h a t "The term
' b a n k ' when u s e d i n t h i s a c t s h a l l be c o n s t r u e d t o mean any c o r p o r a t i o n , p a r t n e r s h i p , f i r m , or individual r e c e i v i n g , s o l i c i t i n g ,
o r a c c e p t i n g money o r i t s e g u i v a l e n t on d e p o s i t a s a b u s i n e s s :
P r o v i d e d , however, t h i s d e f i n i t i o n s h a l l n o t b e c o n s t r u e d to i n c l u d e * * * t r u s t companies n o t r e c e i v i n g money on d e p o s i t . "
(North C a r o l i n a Code, 1927, Ann., s e c . 2 1 6 ( a ) ; Banking Law Pamphlet,
1927, s e c . 2 1 6 ( a ) , p . 3 . ) In view of t h e s e d e f i n i t i o n s , i t would
seem t h a t t h e r i g h t of t r u s t companies, a t l e a s t , t r u s t companies
r e c e i v i n g d e p o s i t s , to j o i n t h e F e d e r a l Reserve System i s n o t t ak en
away by t h e above guoted p r o v i s i o n of t h e 1921 a c t , even though
t h a t a c t s p e c i f i c a l l y a u t h o r i z e s o n l y banks to become members and
r e p e a l s t h e o r i g i n a l enactment (1919) which e x p r e s s l y a u t h o r i z e d
b o t h banks and t r u s t companies to ^ o i n t h e System.
Members of F e d e r a l Reserve System o n l y r e q u i r e d to m a i n t a i n F e d e r a l
Reserve Act r e s e r v e s .
In an a c t which was r a t i f i e d on F e b r u a r y 19, 1919, t h e
General Assembly of t h i s S t a t e p r o v i d e d t h a t "Any bank t h a t i s
now o r may h e r e a f t e r become a member of a F e d e r a l Reserve Bank
s h a l l m a i n t a i n t h e same r e s e r v e s w i t h r e s p e c t to d e p o s i t s a s s h a l l
be r e q u i r e d of o t h e r members of such F e d e r a l Reserve Bank." (Publ i c Laws of 1919, Ch. 58, s e c . 1, p . 7 7 . )
An a d d i t i o n a l p r o v i s i o n c o v e r i n g r e s e r v e s of members of
t h e F e d e r a l R e s e r v e System was a l s o i n c l u d e d in an a c t which was
r a t i f i e d on Marc}} 10, 1919. That a c t p r o v i d e d t h a t "A compliance
on t h e p a r t of any such bank o r t r u s t company w i t h t h e r e s e r v e r e q u i r e m e n t s of t h e F e d e r a l Reserve Act s h a l l b e h e l d to be a f u l l
compliance w i t h t h o s e p r o v i s i o n s of t h e laws of t h i s S t a t e which
r e q u i r e banks o r t r u s t companies to m a i n t a i n cash b a l a n c e s i n t h e i r
v a u l t s o r w i t h o t h e r banks, and no such bank o r t r u s t Company s h a l l
be r e q u i r e d to c a r r y o r m a i n t a i n r e s e r v e o t h e r than such a s i s r e q u i r e d under t h e terms of t h e F e d e r a l Reserve Act". ( P u b l i c Laws
of 1919, ch. 252, s e c . 4 . p . 4 6 2 . )
r
481
X-6875
4 32Both of t h e above c u j t e u r e s e r v e p r o v i s i o n s a r e r e p e a l e d
by an a c t which was r a t i f i e d on February 18, 1921 ( P u b l i c Laws of
1921, ch. 4, s e c . 31, p. 83, and sec. 42, p . 92; North C a r o l i n a
Code, 1927, Ann. s e c . 2 2 0 ( f ) , p . SO, and sec. 2 2 0 ( g ) , p . 62; Banking
Law Pamphlet, 1927, sec. 2 2 0 ( f ) , p . 31, and s e c . 2 2 0 ( q ) , p . 2 5 . )
However, t h i s a c t i n c o r p o r a t e s almost word f o r word t h e p r o v i s i o n
of t h e a c t which was r a t i f i e d on February 19, 1919; and, i t subs t a n t i a l l y i n c o r p o r a t e s a l s o t h e language of t h e p r o v i s i o n which
was r a t i f i e d on March 10, 1919, although i t f a i l s to make any exp r e s s mention of a t r u s t company. This f a i l u r e to mention a t r u s t
company, however, does not t a k e away t h e r i g h t of a member t r u s t
company r e c e i v i n g d e p o s i t s to c a r r y r e s e r v e s i n accordance w i t h
t h e r e q u i r e m e n t s of t h e F e d e r a l Reserve Act i n s t e a d of i n , a c c o r d ance w i t h t h e r e q u i r e m e n t s of S t a t e law, because i f the d e f i n i t i o n s
s e t f o r t h above p e r m i t such company to become a member of t h e Fede r a l Reserve System under t h e membership p r o v i s i o n s they o b v i o u s l y
p e r m i t such company a l s o , i f i t i s a member, to c a r r y r e s e r v e s i n
t h e same manner a s a member bank under t h e r e s e r v e p r o v i s i o n s of
t h e 1921 a c t .
NORTH DAKOTA.
Banks e x p r e s s l y p e r m i t t e d to become members of Federal Reserve System.
An a c t approved February 10, 1915 c o n t a i n s p r o v i s i o n s p r o h i b i t i n g a bank fpom u s i n g i t s a s s e t s in c e r t a i n i n v e s t m e n t s , b u t
t h e s e p r o v i s i o n s p r o v i d e t h a t such p r o h i b i t i o n s " s h a l l n o t be cons t r u e d a s in any way p r e v e n t i n g a bank from i n v e s t i n g such p a r t of
i t s f u n d s i n s t o c k of the F e d e r a l r e s e r v e bank of t h i s d i s t r i c t
a s may be n e c e s s a r y to become a member of t h e F e d e r a l Reserve Associat i o n and from c a r r y i n g such s t o c k among i t s a s s e t s . " (Laws of 1915,
Act approved February 10, 1915, ch. 54, sec. 1; Supplement t o t h e
1913 Compiled Laws of North Dakota, (1913-1925), s e c . 5187; Banking
Law Pamphlet, 1929, s e c . 5187 Supp., p . 2 5 . )
No p r o v i s i o n s s p e c i f i c a l l y a u t h o r i z i n g t r u s t companies to p u r c h a s e
s t o c k i n F e d e r a l Reserve Banks.
The laws of t h i s State do not appear to c o n t a i n any p r o v i s i o n s s p e c i f i c a l l y permitting or authorizing t r u s t companies to
become members of the Federal Reserve System, and i t i s u n d e r s t o o d
t h a t a£ t h e p r e s e n t time there are no t r u s t companies i n t h i s S t a t e
which a r e members of the System; nor have such companies been members
a t any time in the paM.
X-6875
No p r o v i s i o n s p e r m i t t i n g compliance with r e s e r v e r e q u i r e m e n t s of Federal
Reserve Act i n l i e u of r e q u i r e m e n t s of S t a t e Law.
There a r e no p r o v i s i o n s i n t h e laws of t h i s S t a t e under
which a S t a t e member bank may c a r r y t h e r e s e r v e s p r e s c r i b e d by t h e
F e d e r a l Reserve Act in l i e u of t h e r e s e r v e s p r e s c r i b e d by S t a t e law.
OHIO.
Banks and t r u s t companies authorized to j o i n Federal Reserve System.
By an Act approved February 17, 1914, the L e g i s l a t u r e of
t h i s S t a t e a u t h o r i z e d every Ohio c o r p o r a t i o n h a v i n g power to r e c e i v e
and r e c e i v i n g money on d e p o s i t , except b u i l d i n g and l o a n a s s o c i a t i o n s ,
to become members of t h e F e d e r a l Reserve System, t h e p r o v i s i o n s in
t h i s connection p r o v i d i n g t h a t any such c o r p o r a t i o n " i n a d d i t i o n to the
powers, r i g h t s and p r i v i l e g e s p o s s e s s e d by i t under t h e laws of Dhi6
s h a l l have t h e r i g h t and power to become a member bank.under t h e Fede r a l Reserve Act upon t h e terms and c o n d i t i o n s s e t f o r t h i n s a i d Fede r a l Reserve Act, or h e r e a f t e r p r o v i d e d by law, i n o r d e r to become a
member bank a s contemplated by s a i d Federal Reserve A c t " . (Laws of
1.914, Act approved February 17, 1914, sec. 2 ) .
On A p r i l 11, 1919, a new banking Code f o r t h i s S t a t e was
approved, and p r o v i s i o n s covering membership s i m i l a r to those r e f e r r e d to above a r e included in t h e Code. The Code s p e c i f i c a l l y
p r o v i d e s in p a r t t h a t "Every bank, in a d d i t i o n to t h e powers, r i g h t s
and p r i v i l e g e s p o s s e s s e d by i t under t h e laws of Ohio s h a l l have
t h e r i g h t and power to become a member bank under t h e f e d e r a l r e s e r v e
a c t upon t h e terms ^ n d c o n d i t i o n s s e t f o r t h in s a i d f e d e r a l r e s e r v e
a c t , or h e r e a f t e r p r o v i d e d by law. Every bank which becomes a member bank s h a l l have t h e r i g h t and power to do e v e r y t h i n g r e q u i r e d of
or g r a n t e d by s a i d f e d e r a l r e s e r v e a c t to member banks which a r e
o r g a n i z e d under s t a t e laws; * * * " . (General Code of Ohio, sec.
710-5; Banking Law Pamphlet, 1928, sec. 710-5, p . 7 . )
The laws a l s o p r o v i d e t h a t "The term 'Bank' s h a l l i n c l u d e
any p e r s o n , f i r m , a s s o c i a t i o n , or c o r p o r a t i o n s o l i c i t i n g , r e c e i v ing or a c c e p t i n g money, o r i t s e q u i v a l e n t , on d e p o s i t a s a b u s i n e s s ,
whether such d e p o s i t i s made s u b j e c t to check or i s evidenced by a
c e r t i f i c a t e of d e p o s i t , a p a s s - b o o k , a n o t e , a r e c e i p t , o r o t h e r
w r i t i n g , and u n l e s s t h e c o n t e x t o t h e r w i s e r e q u i r e s a s u s e d i n t h i s
a c t i n c l u d e s commercial banks, savings banks, t r u s t companies and
u n i n c o r p o r a t e d banks; * * * 11. (General Code of Ohio, s e c . 710-2;
Banking Law Pamphlet, 1928, s e c . 710-2, p . 5 . ) T r u s t companies,
t h e r e f o r e , may become members of t h e F e d e r a l Reserve System, under
X-6875
* 34 —
484
t h e above quoted, p r o v i s i o n s of t h e 1919 banking code.
Members may keep F e d e r a l Reserve Act r e s e r v e s i n l i e u of t h o s e
r e q u i r e d by S t a t e law.
The a c t approved. February 17, 1914, c o n t a i n e d a p r o v i s i o n
to t h e e f f e c t t h a t a coraoliance by member banks and t r u s t companies
w i t h t h e r e s e r v e r e q u i r e m e n t s of t h e F e d e r a l Reserve Act " s h a l l b e
a c c e p t e d in l i e u of t h e r e s e r v e r e q u i r e m e n t s p r o v i d e d by t h e laws
of Ohio". (Laws of 1914, Act approved F e b r u a r y 17, 1914, s e c . 2 . )
The new 1919 Banking Code a l s o i n c o r p o r a t e s word f o r word
t h e 1914 p r o v i s i o n s r e l a t i n g to r e s e r v e r e q u i r e m e n t s . (General Code
of Ohio, sec. 710-5; Banking Law Pamphlet, 1929, s e c . 710-5, p . 7 . )
OKLAHOMA.
\
Banks and t r u s t companies a u t h o r i z e d to become members of F e d e r a l
Reserve Bank.
In 1921, l e g i s l a t i o n was e n a c t e d i n t h i s S t a t e a u t h o r i z i n g S t a t e banks and t r u s t companies to j o i n t h e F e d e r a l Reserve
System. T h i s l e g i s l a t i o n p r o v i d e s i n p a r t t h a t any S t a t e bank o r
t r u s t company " s h a l l have power t o s u b s c r i b e to t h e c a p i t a l s t o c k
and become a member of t h e F e d e r a l Reserve Bank".
(Laws of 1921,
p . 143; Comp, Oklahoma S t a t u t e s . , 1921, sec. 4156; Banking Law
Pamphlet, 1927, s e c . 49, p . 3 4 . )
Compliance w i t h F e d e r a l Reserve Act r e s e r v e r e q u i r e m e n t s deemed comp l i a n c e w i t h S t a t e law r e q u i r e m e n t s .
The 1931 l e g i s l a t i o n a l s o p r o v i d e s t h a t a compliance by a
member bank o r t r u s t company " w i t h t h e r e s e r v e r e q u i r e m e n t s of t h e
F e d e r a l R e s e r v e Act s h a l l b e h e l d to be a f u l l compliance w i t h t h o s e
p r o v i s i o n s of t h e laws of t h i s S t a t e which r e q u i r e banks o r t r u s t
companies to c a r r y o r m a i n t a i n r e s e r v e o t h e r than such a s i s r e q u i r e d
under t h e terms of t h e F e d e r a l Reserve Act". (Laws of 1921, p . 143;
Comp. Oklahoma S t a t u t e s . , 1921, s e c . 4158; Banking Law Pamphlet, 1927,
s e c . 51, p . 3 4 . )
OREGON.
Banks and t r u s t companies a u t h o r i z e d to become members of F e d e r a l Reserve
Bank.
In 1915, t h e laws of t h i s S t a t e c o v e r i n g banks wore amended so
a s to a u t h o r i z e s t a t e banks to p u r c h a s e s t o c k i n and become members of a
X-6875
"
35
*
: 485
P. Hi Bank. That l e g i s l a t l o h p r o v i d e d t h a t such banks s h a l l have t h e
powietf " i d p u r c h a s e tind h o l d f&S* t h e p u r p o s e of becoming a member of a
F . R, Bank so nluch of t h e c a p i t a l s t o c k t h e r e o f a s w i l l q u a l i f y i t f o r
membership i n such F e d e r a l Reserve Baik * *
(laws of 1915, ch. 285,
s e c . 2 . ) I t was a l s o p r o v i d e d t h a t " H e r e a f t e r no S t a t e bank s h a l l i n v e s t any of i t s a s s e t s i n t h e c a p i t a l s t o c k of any o t h e r c o r p o r a t i o n exc e p t i n t h e c a p i t a l s t o c k of a F e d e r a l Reserve Bank, * * * . * (Laws of
1915, ch. 285, s e c . 8 . )
I n 1917, t h e laws c o v e r i n g t r u s t companies were "amended so a s
to g r a n t an a u t h o r i t y to such companies t o become members of t h e F. R.
System s i m i l a r to t h e a u t h o r i t y c o n t a i n e d i n t h e p r o v i s i o n s above quoted
c o v e r i n g b a n k s . (Laws of 1917, ch. 197, s e e s . 10 and 2 2 . )
S e c t i o n s 2 and 8 , c h a p t e r 285, of t h e laws of 1915, c o v e r i n g
banks were amended i n 1917 (Laws of 1917, ch. 122, s e c . 1 . ) and 1919
(Laws of 1919, ch. 250, s e c . 1 . ) , r e s p e c t i v e l y ; b u t n e i t h e r of t h e s e
amendments changed t h e wording of t h e membership p r o v i s i o n s .
In 1925, l e g i s l a t i o n was e n a c t e d which s p e c i f i c a l l y r e p e a l e d
t h e p r o v i s i o n s above r e f e r r e d to b u t which a t t h e same t i m e i n c o r p o r a t ed p r o v i s i o n s s u b s t a n t i a l l y t h e same a s t h e r e p e a l e d p r o v i s i o n s . (Laws
of 1925, c h . 2507, s e e s . 39, 81, 98 (b) and 100; Banking Law Pamphlet,
1925, s e c . 39, p . 14, s e c . 81, p . 28, s e c . 98 ( b ) , p . 35, and s e c .
100, p . 3 6 . ) S e c t i o n 100 of t h e 1925 laws was amended i n 1927 (Laws
of 1927, c h . 417, s e c . 1 ) , and s e c t i o n 39 was amended i n 1929 (Laws
of 1929, ch. 380, s e c . 8 . ) ; b u t n e i t h e r of t h e s e amendments a l t e r t h e
e f f e c t of t h e 1925 membership p r o v i s i o n s .
S t a t e r e s e r v e r e q u i r e m e n t s n o t a p p l i c a b l e t o members of F e d e r a l Reserve
System.
P r i o r to 1919, t h e laws of t h i s S t a t e d i d n o t c o n t a i n any p r o v i s i o n s p e r m i t t i n g member banks and t r u s t companies t o c a r r y t h e r e s e r v e s p r e s c r i b e d by t h e F e d e r a l Reserve Act i n l i e u of t h e r e s e r v e s
r e q u i r e d by t h e S t a t e law; b u t member b a n k s , by l e g i s l a t i o n e n a c t e d i n
1915 (Laws of 1915, ch. 285, s e c . 9 ) and t r u s t companies, by l e g i s l a t i o n e n a c t e d i n 1917 (Laws of 1917, ch. 197, s e c . 2 5 . ) , were p e r m i t t e d
to " m a i n t a i n ! a s r e s e r v e d e p o s i t s w i t h t h e F e d e r a l r e s e r v e bank such p o r t i o n of i t s ( t h e i r ) t o t a l r e s e r v e a s s h a l l b e r e q u i r e d by members of t h e
F e d e r a l R e s e r v e System! 1 . I n 1919, however, l e g i s l a t i o n was e n a c t e d s t r i k i n g o u t t h e p r o v i s i o n s j u s t quoted and p r o v i d i n g t h a t t h e p r o v i s i o n s s e t t i n g o u t t h e amounts of r e s e r v e s which S t a t e banks and t r u s t companies
were r e q u i r e d t o m a i n t a i n " s h a l l n o t a p p l y t o . a S t a t e b a n k ( o r t r u s t company) which i s a member of t h e F e d e r a l Reserve Banking System and duly
complies w i t h a l l of t h e r e s e r v e and o t h e r r e q u i r e m e n t s of t h a t System".
(Laws of 1919, ch. 8 , s e c . 1 , and ch. 411, s e c . 1 . ) The s e c t i o n s of t h e
laws c o n t a i n i n g t h e s e p r o v i s i o n s were amended i n 1921, b u t t h e wording
of t h e p r o v i s i o n s was n o t changed. (Laws of 1921, ch. 187, and 1 8 8 . )
- 36 -
X-68?5 4 8 6
l a 1925, l e g i s l a t i o n VW p a s s e d which r e p e a l s t h e 1919 p r o v i s i o n s ,
a s amended i n 1921, and p r o v i d e s t h a t " a compliance on t h e p a r t of any
such (member) bank o r t r u s t company w i t h t h e r e s e r v e r e q u i r e m e n t s of t h e
F e d e r a l R e s e r v e Act s h a l l be h e l d to b e a f u l l compliance w i t h t h o s e
p r o v i s i o n s of t h e laws of t h i s s t a t e which r e q u i r e banks o r t r u s t comp a n i e s t o m a i n t a i n cash b a l a n c e s i n t h e i r v a u l t s o r w i t h o t h e r banks,
and no such bank o r t r u s t company s h a l l b e r e q u i r e d to c a r r y o r m a i n t a i n
r e s e r v e o t h e r t h a n such a s i s r e q u i r e d under t h e terms of t h e F e d e r a l Res e r v e A c t " . (Laws of 1925, ch. 207, s e c . 9 8 ( d ) ; Banking Law Pamphlet,
1925, s e c . 9 8 ( d ) , p . 3 6 . ) . With r e f e r e n c e to s a v i n g s b a n k s or departments,
t h i s l e g i s l a t i o n a l s o p r o v i d e s t h a t " I f any s a v i n g s b a n k , or t h e s a v i n g s
department of any bank o r t r u s t company, s h a l l have become a member of
t h e f e d e r a l r e s e r v e system, i t s h a l l comply w i t h t h e r e s e r v e r e q u i r e m e n t s
of t h e f e d e r a l r e s e r v e a c t and i t s amendments, and i t s compliance t h e r e w i t h s h a l l be i n l i e u of and s h a l l r e l i e v e such bank or s a v i n g s d e p a r t ment of any bank or t r u s t company from compliance w i t h t h e p r o v i s i o n s of
t h i s a c t a s to such r e s e r v e s " . (Laws of 1925, ch. 207, s e c . 134; Banking
Law Pamphlet, 1925, s e c . 134, p . 5 1 . )
The 1925 l e g i s l a t i o n a l s o c o n t a i n e d an a d d i t i o n a l p r o v i s i o n
which r e a d s u b s t a n t i a l l y t h e same a s t h e above quoted p o r t i o n of s e c t i o n
98(d) (Laws of 1925, ch. 207, s e c . 92; Banking Law Pamphlet, 1925, s e c .
92, p . 3 3 . ) ; and a l t h o u g h t h e s e c t i o n which c o n t a i n e d t h i s a d d i t i o n a l
p r o v i s i o n was amended by an a c t approved March 9 , 1929, t h e wording of
t h e 1925 p r o v i s i o n i s unchanged. (Laws of 1929, c h . 478, s e c . 1, Act
approved March 9, 1929.)
PMffSYLVANlA.
Banks and t r u s t companies a u t h o r i z e d tq become members of F e d e r a l Reserve
Bank.
In an a c t of J u l y 17, 1917, a u t h o r i t y i s given t o a S t a t e bank
o r t r u s t company " t o s u b s c r i b e t o t h e c a p i t a l s t o c k and become a member
of a F e d e r a l Reserve Bank * * * " . (Act of- J u l y 17, 1917, P . L . 1021,
s e c . 1; P u r d o n ' s Penna, S t a t u t e s , Annotated, T i t l e 7, c h . 12, s e c . 371,
p . 114; Banking Laws, 1930, a r t . 11, s e c . 464, p . 2 5 3 . )
Members s h a l l m a i n t a i n r e s e r v e s r e q u i r e d by F e d e r a l Reserve A c t .
I t i s a l s o p r o v i d e d i n t h e a c t of J u l y 17, 1917, t h a t a
member bank or t r u s t company " s h a l l 'comply w i t h t h e r e s e r v e r e quirements of t h e F e d e r a l Reserve Act and i t s amendments, and t h e
compliance of such bank o r t r u s t company t h e r e w i t h s h a l l be i n l i e u
o f , and s h a l l r e l i e v e such bank or t r u s t , company from, compliance
w i t h t h e p r o v i s i o n s of t h e laws of t h i s Commonwealth r e l a t i n g to
t h e maintenance df r e s e r v e s " . (Act of J u l y 17, 1917, P . L. 1021,
s e c . S i r P u r d o n ' s Penna. S t a t u t e s , Annotated, T i t l e 7, ch. 12, s e c .
373; p . 114; Banking Laws, 1930, a r t . 11, s e c . 466, p . 2 5 3 . )
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RHODE ISLAFD.
Banks and t r u s t companies a u t h o r i z e d to "become members of F e d e r a l Reserve
Bank.
On A p r i l 19, 1917, an a c t of t h e l e g i s l a t u r e of t h i s S t a t e
was approved which p r o v i d e s t h a t "A bank or t r u s t company may subs c r i b e to t h e c a p i t a l s t o c k and become a member of a F e d e r a l r e s e r v e
bank w i t h i n t h e F e d e r a l r e s e r v e d i s t r i c t where such bank o r t r u s t
company i s s i t u a t e d * * *. Such member bank o r t r u s t company s h a l l
be s u b j e c t to t h e p r o v i s i o n s of s a i d ' F e d e r a l Reserve Act' r e l a t i v e
to member b a n k s , and to t h e r e g u l a t i o n s of t h e 1 F e d e r a l R e s e r v e B o a r d ' .
Every such member bank o r t r u s t company may have and e x e r c i s e any
and a l l of the powers and p r i v i l e g e s which may b e e x e r c i s e d by
member banks under t h e p r o v i s i o n s of s a i d ' F e d e r a l Reserve A c t ' " .
(Acts of 1917, Act approved A p r i l 19, 1917, ch. 1514, s e c . 1;
Banking Law Pamphlet, 1929, s e c . 9, p . 2 0 . )
No p r o v i s i o n s s p e c i f i c a l l y a u t h o r i z i n g compliance w i t h r e s e r v e s p r e s c r i b e d
by F e d e r a l Reserve Act i n l i e u of t h o s e p r e s c r i b e d by S t a t e law.
The laws of t h i s S t a t e do n o t c o n t a i n any p r o v i s i o n s
s p e c i f i c a l l y a u t h o r i z i n g banks and t r u s t companies which a r e members
of t h e F e d e r a l Reserve System to m a i n t a i n t h e r e s e r v e s p r e s c r i b e d
by t h e F e d e r a l Reserve Act i n l i e u of t h o s e p r e s c r i b e d by t h e S t a t e
law.
SOUTH CAROLINA.
Banks and t r u s t companies a u t h o r i z e d to become members of " N a t i o n a l
Reserve A s s o c i a t i o n of t h e U n i t e d S t a t e s " .
On F e b r u a r y 18, 1914, t h e l e g i s l a t u r e of t h i s S t a t e p a s s e d
an a c t a u t h o r i z i n g S t a t e banks and t r u s t companies to become members
of t h e F e d e r a l Reserve System. This a c t p r o v i d e s t h a t any S t a t e bank
o r t r u s t company "may a s s o c i a t e i t s e l f w i t h any n a t i o n a l r e s e r v e
a s s o c i a t i o n of t h e U n i t e d S t a t e s , or any b r a n c h t h e r e o f under any
law now e x i s t i n g , o r h e r e a f t e r e n a c t e d by t h e Congress of t h e U n i t e d
S t a t e s ; and may i n v e s t such p a r t of i t s c a p i t a l or s u r p l u s t h e r e i n
a s may be n e c e s s a r y to a c q u i r e and p r e s e r v e i t s membership i n such
a s s o c i a t i o n . ( L a w s of 1914, Act of February 18, 1914, s e c . 1;
Code of South C a r o l i n a , 1922, s e c . 4002; Banking Law P a m p h l e t ,
1928, s e c . 75, p . 3 6 . )
Ho p r o v i s i o n s e x p r e s s l y a i i t h o r i z f n g compliance w i t h r e s e r v e s p r e s c r i b e d
by F e d e r a l R e s e r v e Act i n l i e u of r e s e r v e s p r e s c r i b e d b y S t a t e law.
The laws of t h i s S t a t e do n o t c o n t a i n any p r o v i s i o n s
e x p r e s s l y a u t h o r i z i n g S t a t e banks and t r u s t companies which a r e
members of t h e F e d e r a l Reserve System t o c a r r y t h e r e s e r v e s p r e s c r i b e d by t h e F e d e r a l Reserve Act i n l i e u of t h o s e p r e s c r i b e d
by t h e S t a t e law; b u t t h e r e s e r v e r e q u i r e d of banks i s 3 p e r c e n t
of t i m e d e p o s i t s and 7 p e r c e n t of demand d e p o s i t s , which may
c o n s i s t of c a s h on hand or i n banks. (Laws of 1923, ch. 112, p .
1 5 9 . ) A compliance w i t h t h e r e s e r v e r e q u i r e m e n t s of t h e F e d e r a l
R e s e r v e A c t , t h e r e f o r e , i s i n e f f e c t a compliance w i t h t h e S t a t e
law.
SOUTH DAKOTA.
Banks and t r u s t companies doing b a n k i n g b u s i n e s s a u t h o r i z e d to become
members of F e d e r a l Reserve Bank.
By l e g i s l a t i o n e n a c t e d i n 1915, any S t a t e bank was
a u t h o r i z e d t o "become a member of a f e d e r a l r e s e r v e bank, ptu>»
s u a n t t o t h e p r o v i s i o n s of t h e f e d e r a l r e s e r v e a c t , and any a c t
of c o n g r e s s supplemental t h e r e o f , and a f t e r becoming such member
and s h a r e h o l d e r i t may comply w i t h and s h a l l be s u b j e c t to s a i d
f e d e r a l r e s e r v e a c t and such o t h e r b e t s of c o n g r e s s , a n y t h i n g
i n t h e laws of t h i s s t a t e to t h e c o n t r a r y n o t w i t h s t a n d i n g " .
(Laws of 1915, ch. 102, a r t . 2 ) .
In 1919, t h i s p r o v i s i o n was amended so t h a t i t now p r o v i d e s t h a t any S t a t e bank "may become a member of a f e d e r a l r e s e r v e bank, p u r s u a n t to t h e p r o v i s i o n s of t h e f e d e r a l r e s e r v e
a c t , and any a c t of c o n g r e s s supplemental t h e r e t o o r amendatory
t h e r e o f , and a f t e r becoming such member and s h a r e h o l d e r i t may
comply w i t h such f e d e r a l r e s e r v e a c t and such o t h e r a c t s of
c o n g r e s s , p r o v i d e d t h a t such s t a t e b a n k s h a l l n e v e r t h e l e s s be
s u b j e c t t o and comply w i t h a l l t h e laws of t h i s s t a t e r e l a t i n g
t o b a n k s " . (Laws of 1919, ch. 125, p . 110; Comp. Laws, South
Dakota, 19291 s e c . 8983; Banking Law Pamphlet, 1927, s e c . 8983,
p. 27.)
The laws of t h i s S t a t e p r o v i d e t h a t no t r u s t company
may " i n v e s t any of i t s f u n d s i n t h e s t o c k of any o t h e r t r u s t
company o r c o r p o r a t i o n " . (Laws of 1911, ch.255, s e c . 21; Comp.
Laws, South Dakota, 1929, s e c . 9050; Banking Law Pamphlet, 1927,
s e c . 9050, p . 68 ) ; and i t w i l l be n o t e d t h a t t h e laws s p e c i f i c a l l y a u t h o r i z e o n l y banks to become members of t h e F e d e r a l Res e r v e System. I n view of t h e f a c t , however, t h a t t h e laws
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p e r m i t t r u s t companies td t r a f t s a c t a banking "business ( l a w s of
1911» ch. 255, s e c . 2; Camp. Laws, South Dakota, 1929, s e c .
9033; Banking Law Pamphlet, 1927, s e c . 9033, p . 62 ) , and. p r o v i d e t h a t "For t h e p u r p o s e of t h i s c h a p t e r every c o r p o r a t i o n ,
a s s o c i a t i o n , f i r m o r i n d i v i d u a l i n t h i s S t a t e whose b u s i n e s s ,
i n whole o r i n p a r t , c o n s i s t s i n t h e t a k i n g of d e p o s i t s o r
b u y i n g o r s e l l i n g exchange s h a l l be h e l d to b e a bank?'.
(Laws of 1915, ch. 102, s e c . 1; Comp. Laws, South Dakota,
1929, s e c . 8948; Banking Law Pamphlet, 1927, s e c . 8948, p . 1 5 ) ,
i t would seem t h a t t r u s t companies which r e c e i v e d e p o s i t s o r
buy o r s e l l exchange a r e a u t h o r i z e d t o become members of t h e
F e d e r a l Beserve System.
Ho p r o v i s i o n s a u t h o r i z i n g compliance w i t h r e s e r v e p r o v i s i o n s of F e d e r a l
Beserve Act i n l i e u of p r o v i s i o n s of S t a t e law.
The laws of t h i s S t a t e do n o t c o n t a i n any p r o v i s i o n s
a u t h o r i z i n g member banks and t r u s t companies to o b s e r v e t h e
r e s e r v e r e q u i r e m e n t s of t h e F e d e r a l Reserve Act i n s t e a d of t h e
r e q u i r e m e n t s of t h e S t a t e l a w .
TENNESSEE.
Banks and t r u s t companies a u t h o r i z e d to become members of F e d e r a l
B e s e r v e Bank.
I n 1919, t h e General Assembly of Tennessee e n a c t e d
l e g i s l a t i o n which p r o v i d e s t h a t "Any bank o r t r u s t company,
i n c o r p o r a t e d u n d e r th@ laws of t h i s s t a t e i s a u t h o r i z e d and
s h a l l have power t o s u b s c r i b e , t a k e and p a y f o r , a s a p a r t
of i t s i n v e s t m e n t s , s h a r e s of t h e c a p i t a l s t o c k of a f e d e r a l
r e s e r v e bank and to become a member of such f e d e r a l r e s e r v e
bank c r e a t e d and o r g a n i z e d under t h e Act of Congress of t h e
U n i t e d S t a t e s , approved t h e 23d day of December, A. D. 1913,
and known a s t h e F e d e r a l Beserve Act, and i t s amendments".
( B a l d w i n ' s Cumulative Code Supplement, s e c . 3 2 3 5 a - l ; P u b l i c
A c t s , 1919, ch. 26, ^ec. 1 . ) This l e g i s l a t i o n a l s o p r o v i d e s t h a t "any investment h e r e t o f o r e made by any bank o r
t r u s t company i n c o r p o r a t e d under t h e laws of t h i s s t a t e i n
t h e c a p i t a l s t o c k of any f e d e r a l r e s e r v e bank of t h e c h a r a c t e r
mentioned i n s e c t i o n 3 2 3 5 a - l , i s h e r e b y a u t h o r i z e d and
validated".
( B a l d w i n ' s Cumulative Code Supplement, s e c .
3235a-2; P u b l i c A c t s , 1919, ch. 26, sec. 2 . )
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A d d i t i o n a l l e g i s l a t i o n was e n a c t e d i n 1919 which
p r o v i d e s i n p a r t t h a t "Any bank or t r u s t company, i n c o r p o r a t e d under t h e laws of t h i s S t a t e , s h a l l have t h e power
to s u b s c r i b e t o t h e c a p i t a l s t o c k and become a member of a
F e d e r a l Reserve Bani*. ( P u b l i c A c t s , 1919, ch. 69, s e c . 2;
B a l d w i n 1 s Cumulative Code Supplement, s e c . 3 2 3 5 a - 4 . )
Members to keep F e d e r a l Reserve Act r e s e r v e s i n l i e u of r e s e r v e s
r e q u i r e d b y S t a t e law.
The 1919 l e g i s l a t i o n a l s o p r o v i d e s t h a t a compliance
by a member bank o r t r u s t company " w i t h t h e r e s e r v e r e q u i r e ments of t h e F e d e r a l Reserve Act s h a l l b e h e l d to be a f u l l
compliance w i t h t h o s e p r o v i s i o n s of t h e laws of t h i s S t a t e
which r e q u i r e banks or t r u s t companies t o m a i n t a i n c a s h b a l ances i n t h e i r v a u l t s o r w i t h o t h e r b a n k s , and no such bank
o r t r u s t company s h a l l b e r e q u i r e d t o c a r r y or m a i n t a i n r e s e r v e o t h e r t h a n such a s i s r e q u i r e d under t h e terms of t h e
F e d e r a l Reserve A c t " . ( P u b l i c Acts, 1919, ch. 69, s e c . 4;
B a l d w i n ' s Cumulative Code Supplement, s e c . 3 2 3 5 - 6 . )
TEXAS.
Banks and t r u s t companies a u t h o r i z e d to become members of F e d e r a l
R e s e r v e Bank.
An a c t p a s s e d i ^ 1914, by t h e T h i r d C a l l e d Sess i o n of t h e T h i r t y - t h i r d L e g i s l a t u r e of t h i s S t a t e ,
p r o v i d e s t h a t a l l S t a t e banks
4.89^u
X-6875
- 4i -
•
48
and t r u s t companies " j h a l l have a u t h o r i t y to become members of Fede r a l Reserve Banks under t h e terms and l i m i t a t i o n s a s may be p r e s c r i b e d by t h e laws of t h e U n i t e d S t a t e s and such r u l e s and r e g u l a t i o n s r e l a t i v e t h e r e t o a s may be "promulgated by l a w f u l a u t h o r i t y " .
(Acts 1914, T h i r d Called S e s s i o n , s e c . 1; B a l d w i n ' s Texas S t a t u t e s ,
A r t . 519; Banking Law Pamphlet, 1929, a r t . 519, p . 4 6 . )
No p r o v i s i o n s a u t h o r i z i n g compliance v i t h r e s e r v e p r o v i s i o n s of F e d e r a l
Reserve Act in l i e u of p r o v i s i o n s of S t a t e law.
The laws of t h i s S t a t e do not a p p e a r to c o n t a i n any p r o v i s i o n s a u t h o r i z i n g b,onks and t r u s t companies which a r e members of
t h e F e d e r a l Reserve System t o m a i n t a i n r e s e r v e s in accordance w i t h
t h e p r o v i s i o n s of t h e F e d e r a l Reserve Act i n s t e a d of the p r o v i s i o n s
of t h e S t a t e law.
UTAH.
Banks and t r u s t companies a u t h o r i z e d to become members of F e d e r a l Reserve
System.
In 1915, t h e l e g i s l a t u r e of t h i s S t a t e p a s s e d l e g i s l a t i o n
which, w h i l e n o t e x p r e s s l y mentioning a F e d e r a l r e s e r v e b a n k , a u t h o r i z e d a S t a t e bank o r t r u s t company t o p u r c h a s e , own nnd h o l d s h a r e s
of t h e c a p i t a l s t o c k of any o t h e r bank, t r u s t company o r o t h e r c o r p o r a t i o n . ( S e s s i o n Laws of 1915, ch. 47, s e c . 1 . )
In 1919, t h e l e g i s l a t u r e oassed a n o t h e r a c t c o v e r i n g memb e r s h i p of banks and t r u s t companies in t h e F e d e r a l Deserve System.
This a c t e x p r e s s l y a u t h o r i z e ^ a bank or t r u s t company to become a
member of t h e F e d e r a l Reserve System, by p r o v i d i n g t h a t " a n y bank
o r t r u s t company i n c o r p o r a t e d under t h e laws of t h i s S t a t e s h a l l
have t h e power to s u b s c r i b e t o t h e c a p i t a l s t o c k and become a member
of a F e d e r a l Reserve System c r e a t e d and o r g a n i z e d under an Act of
Congress of t h e U n i t e d S t a t e s and known a s t h e F e d e r a l R e s e r v e A c t " .
(Laws of 1919, ch. 19, s e c . 1; Banking Law Pamphlet, 1927, s e c . 1,
p. 21.)
Compliance w i t h r e s e r v e r e q u i r e m e n t s of F e d e r a l Reserve Act r e l i e v e s
compliance w i t h S t a t e law.
The 1919 a c t a l s o p r o v i d e s t h a t "Any such bank o r t r u s t
company s h a l l comply w i t h t h e r e s e r v e r e q u i r e m e n t s of t h e F e d e r a l
Reserve Act and i t s amendments, and t h e compliance of such bank o r
t r u s t company t h e r e w i t h s h a l l be in l i e u o f , and s h a l l r e l i e v e such
bank o r t r u s t company from compliance with t h e p r o v i s i o n s of t h e laws of
t h i s S t a t e r e l a t i n g t o the maintenance of r e s e r v e s " . (Laws of 1919, ch.
19, s e c . 3; Banking Law Pamphlet, 1927, s e c . 3, p . 2 1 . )
- 42 ^
48
VERMONT.
Banks and. t r u s t companies a u t h o r i z e d to become members of F e d e r a l Reserve
Bank.
In an a c t approved February 21, 1919, t h e General Assembly
of t h i s S t a t e p r o v i d e s t h a t " a bank o r t m s t connany i n c o r p o r a t e d
u n d e r t h e laws of t h i s S t a t e s h a l l have t h e power t o s u b s c r i b e t o t h e
c a p i t a l s t o c k and become a member of a F e d e r a l r e s e r v e bank?'. (Laws
of 1919, Act Mo. 143, approved February 21, 1919, s e c . 2 . )
F e d e r a l Reserve Act R e s e r v e s may be m a i n t a i n e d i n l i e u of r e s e r v e s
r e q u i r e d by S t a t e law.
In 1919 l e g i s l a t i o n a l s o p r o v i d e s t h a t a compliance by a
member bank or t r u s t company " w i t h t h e r e s e r v e r e q u i r e m e n t s o f ' t h e
F e d e r a l Reserve Act s h a l l b e h e l d t o be- a f u l l compliance w i t h t h o s e
p r o v i s i o n s of t h e laws of t h i s S t a t e which r e q u i r e banks o r t r u s t
companies t o m a i n t a i n cash b a l a n c e s i n t h e i r v a u l t s o r w i t h o t h e r
b a n k s , and no such bank o r t r u s t company s h a l l be r e q u i r e d to c a r r y
o r m a i n t a i n r e s e r v e o t h e r than such a s i s r e q u i r e d under t h e terms
of t h e F e d e r a l Reserve A c t " .
(Laws of 1919, Act No. 143, approved
F e b r u a r y 21, 1919, s e c . 4 . )
VIRGINIA.
Banks and t r u s t companies a u t h o r i z e d to become members of F e d e r a l Reserve
System.
On March 2 , 1914, an a c t of t h e l e g i s l a t u r e of t h i s S t a t e
was approved i n which ba&ks were "empowered t o become member banks
of t h e f e d e r a l r e s e r v e banks of t h e U n i t e d S t a t e s , * *
(Acts
of 1914, Act approved March 2, 1914; Ch. 27, s e c . 1, p . 4 2 . )
A p p a r e n t l y t h e 1914 p r o v i s i o n c o n t i n u e d i n e f f e c t u n t i l
March 27, 1928, when a n o t h e r a c t was approved " t o r e v i s e , c o l l a t e
and c o d i f y i n t o one a c t t h e g e n e r a l s t a t u t e s of the Commonwealth
r e l a t i n g to banks and banking, which a c t s h a l l c o n s t i t u t e and be
d e s i g n a t e d and c i t e d a s the V i r g i n i a banking a c t , and to r e p e a l
a l l Code s e c t i o n s and a l l a c t s and p a r t s of a c t s i n c o n s i s t e n t
t h e r e w i t h , and to p r o v i d e p e n a l t i e s f o r t h e v i o l a t i o n s t h e r e o f " .
The 1928 a c t , however, does n o t a f f e c t t h e r i g h t of banks to become
members of t h e F e d e r a l Reserve System, b u t merely c o n t a i n s a more
e l a b o r a t e p r o v i s i o n on t h e s u b j e c t , t h e p r o v i s i o n in t h i s c o n n e c t i o n
s t a t i n g t h a t "Any bank h e r e t o f o r e o r h e r e a f t e r i n c o r p o r a t e d under
X^6875
m 4S
489
" t h e laws of t h i s S t a t e , may i f i t so e l e c t , become a member bank
of t h e F e d e r a l Reserve l a n k System of the United S t a t e s , s u b j e c t
to t h e p r o v i s i o n s of t h e a c t of Cotigress of t h e United S t a t e s , a p proved December t w e n t y - t h i r d , n i n e t e e n hundred and t h i r t e e n , and
of any amendments t h e r e o f p e r m i t t i n g i t to do so, and s h a l l be v e s t ed with a l l powers c o n f e r r e d upon S t a t e member banks of t h e s a i d
System by terms of t h e s a i d a c t or a c t s , which s h a l l be e x e r c i s e d
s u b j e c t to a l l r e s t r i c t i o n s and l i m i t a t i o n s imposed by t h e s a i d
Federal Reserve Act or Acts, or by r e g u l a t i o n s of t h e F e d e r a l r e s e r v e board made p u r s u a n t t h e r e t o * * * " .
(Acts of 1928, Act
approved March 27, 1928, Ch. 507, T i t l e 1, s e c . 7, p . 1310;
M i c h i e ' s Va. Code of 1930, ch. 164A, T i t l e 1, sec. 4149(7), p .
1046.)
I t w i l l be noted that the laws only s p e c i f i c a l l y permit
banks to become members of the Federal Reserve System; but i n view
of the f a c t t h a t the word "bankf, as defined in the laws, includes
t r u s t companies, they a l s o are apparently authorized to become
members under the above quoted p r o v i s i o n s . (Michie's Va. Code
of 1930, ch. 164A, T i t l e 1, s e e s . 4149 (1) and 4149 ( 2 ) , p. 1044.)
Compliance w i t h r e s e r v e r e q u i r e m e n t s of F e d e r a l Reserve Act a u t h o r i z e d .
The laws of V i r g i n i a p r o v i d e " t h a t '"hen any bank has become
a member of t h e F e d e r a l r e s e r v e bank system, i t s h a l l be r e q u i r e d to
comply with t h e r e s e r v e r e q u i r e m e n t s of t h e Federal r e s e r v e a c t " . (Act
of 1928, s e c . 3 4 . )
WASHINGTON.
Banks and t r u s t companies a u t h o r i z e d to become members of F e d e r a l Reserve
Bank.
— — — —
In 1915 the l e g i s l a t u r e of t h i s State passed an act in
which i t was provided that "No bank s h a l l subscribe f o r or purchase
the stock of any other banking corporation, except a Federal r e serve bank of i h i c h such bank s h a l l become a member, and then only
to the extent required by such Federal reserve bank*. (Laws of
1915, ch. 35, s e c . 5, p. 1 2 8 . )
In 1917, additional l e g i s l a t i o n having r e f e r e n c e to membership i n the Federal> Re serve System was enacted. This l e g i s l a t i o n provided "That any bank or t r u s t company may p a r t i c i p a t e in membership i n
the f e d e r a l r e s e r v e banking system of the United S t a t e s * * * ".
(Laws of 1917, ch. 8 0 . )
489
X-6875>
- 44The 1915 p r o v i s i o n above r e f e r r e d , to was a l s o amended in
1917 so a s t o p r o v i d e t h a t a bank o r t r u s t company s h a l l n o t " s u b s c r i b e f o r o r p u r c h a s e t h e s t o c k of any o t h e r b a n k i n g house o r t r u s t
company, except a f e d e r a l r e s e r v e bank, of which such c o r p o r a t i o n
s h a l l become a member, and then o n l y to t h e e x t e n t r e q u i r e d b y such
f e d e r a l r e s e r v e b a n # . (Laws of 1917, ch. 8 0 . )
The s e c t i o n of t h e laws c o n t a i n i n g t h e 1917 p r o v i s i o n
f i r s t above r e f e r r e d to was a g a i n amended i n 1919, b u t t h e wording
of t h e 1917 p r o v i s i o n i s n o t changed. (Laws of 1919, s e c . 7 , p .
730; Banking Law Panrohlet, 1929, s e c . 25, p . 1 2 . )
In 1929, t h e
1917 p r o v i s i o n l a s t above r e f e r r e d to was a l s o amended, and a l t h o u g h
t h i s l e g i s l a t i o n i n s e r t e d some few a d d i t i o n a l words, t h e r i g h t of
banks and t r u s t companies t o p u r c h a s e s t o c k i n a F e d e r a l r e s e r v e
bank i s n o t a f f e c t e d . (Laws of 1929, s e c . 5 , p . 101; Banking Law
Pamphlet, 1929, s e c . 46, p . 25 ) . The 1929 p r o v i s i o n s p e c i f i c a l l y
p r o v i d e s t h a t a bank o r t r u s t company s h a l l n o t " s u b s c r i b e f o r o r
p u r c h a s e t h e s t o c k of any o t h e r banking house o r t r u s t company, o r
of any domestic o r f o r e i g n c o r p o r a t i o n of any c h a r a c t e r , except a
f e d e r a l r e s e r v e bank, of which such c o r p o r a t i o n s h a l l become a
member, and then o n l y to t h e e x t e n t r e q u i r e d by such f e d e r a l r e s e r v e
bank".
S t a t e r e s e r v e r e q u i r e m e n t s n o t a p p l i c a b l e t o members.
By l e g i s l a t i o n e n a c t e d in 1917, t h e l e g i s l a t u r e of t h i s
S t a t e p r o v i d e s t h a t |she S t a t e r e s e r v e r e q u i r e m e n t s " s h a l l n o t a p p l y to a c o r p o r a t i o n which i s a member of t h e f e d e r a l r e s e r v e baa k i n g
system and d u l y complies w i t h a l l of t h e r e s e r v e and q t h e r r e q u i r e ments of t h a t system". (Laws of 1917, c h . 80, s e c . 46; Banking
Law Pamphlet, 1929, s e c . 61, p . 2 9 . )
WEST VIRGINIA.
Banks and t r u s t companies a u t h o r i z e d to become members of F e d e r a l Reserve
Bank.
In 1919 t h e l e g i s l a t u r e of t h i s S t a t e p a s s e d l e g i s l a t i o n
p r o v i d i n g t h a t "any bank o r t r u s t company i n c o r p o r a t e d under t h e
l a w s of t h i s s t a t e s h a l l have t h e power to s u b s c r i b e t o t h e c a p i t a l
s t o c k and become & member of & f e d e r a l r e s e r v e bank?. ( A c t s of
1919, c h . 6 0 . )
In 1929, l e g i s l a t i o n was e n a c t e d which r e p e a l s t h e 1919
p r o v i s i o n s ; b u t i n c l u d e d i n t h e 1929 l e g i s l a t i o n a r e membership p r o v i s i o n s of e x a c t l y t h e same e f f e c t a s t h e r e p e a l e d p r o v i s i o n s . The
X-6875
- 45 -
4 8 9 /
(
1929 a c t S p e c i f i c a l l y provides in part that "Any banking i n s t i t u t i o n incorporated under the laws of t h i s S t a t e s h a l l have the power
to subscribe to the c a p i t a l s t o c k and become a mepi^er.of a f e d e r a l - r e s e r v e banld'» (Acts of 1929, 6h% 23. sec# <0; Code of 1931, ch. 31,
Act 8 , s a c . 1 7 . )
I t w i l l be n o t e d t h a t t h e 1929 a c t e x p r e s s l y a u t h o r i z e s o n l y
"banking i n s t i t u t i o n s " to become members of t h e F e d e r a l R e s e r v e System; but
t h i s a c t , i n d e f i n i n g t h e term " b a n k i n g i n s t i t u t i o n " , p r o v i d e s t h a t i t shall,
i n c l u d e a t r u s t company. (Acts of 1929, c h . 2 3 , s e c . 1; Code of 1931, ch. 31,
Act 4 , s e c . 1 . ) I t ' would seem, t h e r e f o r e , t h a t a t r u s t company may become
a member of t h e F e d e r a l Reserve System under t h e above quoted p r o v i s i o n of
t h e 1929 a c t .
Reserves maintained in accordance with provisions of Federal Reserve Act
h e l d compliance with p r o v i s i o n s of S t a t e law.
The 1919 l e g i s l a t u r e p a s s e d l e g i s l a t i o n p r o v i d i n g t h a t
a compliance by member banks and t r u s t companies " w i t h t h e r e s e r v e
r e q u i r e m e n t s of t h e F e d e r a l Reserve Act s h a l l be h e l d to be a f u l l
compliance w i t h t h o s e p r o v i s i o n s of t h e laws of t h i s S t a t e which
r e q u i r e banks o r t r u s t companies t o m a i n t a i n cash b a l a n c e s i n t h e i r
v a u l t s o r w i t h o t h e r banks, and no such bank o r t r u s t company s h a l l
b e r e q u i r e d to c a r r y o r m a i n t a i n r e s e r v e o t h e r t h a n such a s i s r e q u i r e d under t h e terms of t h e f e d e r a l r e s e r v e a c t " .
( Acts of 1919,
ch. 60 )
On F e b r u a r y 28, 1929, t h e l e g i s l a t u r e of t h i s s t a t e p a s s e d
an a c t which r e p e a l s t h e 1919 r e s e r v e p r o v i s i o n above quoted. This
a c t , however, i n c l u d e s a p r o v i s i o n e x c e p t i n g member banks and t r u s t
companies from complying w i t h t h e r e s e r v e p r o v i s i o n s of t h e S t a t e
law which i s s u b s t a n t i a l l y t h e same a s t h e p r o v i s i o n which i t r e p e a l e d , t h e p r o v i s i o n i n t h i s connection p r o v i d i n g " t h a t a compliance
on t h e p a r t of any such b a n k i n g i n s t i t u t i o n which i s a member of t h e
f e d e r a l r e s e r v e system w i t h t h e r e s e r v e r e q u i r e m e n t s of t h e f e d e r a l
r e s e r v e a c t , s h a l l be h e l d to be f u l l compliance w i t h t h e p r o v i s i o n s
h e r e o f , which r e q u i r e banking i n s t i t u t i o n s t o m a i n t a i n c a s h b a l a n c e s
i n t h e i r v a u l t s o r w i t h o t h e r banks and no such member bank s h a l l
b e r e q u i r e d t o c a r r y o r m a i n t a i n r e s e r v e o t h e r than such a s i s r e q u i r e d under t h e terms of the f e d e r a l reserve, act". (Acta of 1929,
ch. 23, s e c . 19; 06da of 1931, ch. 31, Ac.t. 8, s e c . 16.<
The 1929 a c t a l s o c o n t a i n s an a d d i t i o n a l r e s e r v e p r o v i s i o n
which provides that "A compliance on the part of any such banking
i n s t i t u t i o n w i t h the r e s e r v e requirements of the f e d e r a l r e s e r v e
act. s h a l l be h e l d to be a f u l l compliance with those p r o v i s i o n s
o f the laws of t h i s s t a t e which require s t a t e banking i n s t i t u t i o n s
to carry or maintain r e s e r v e other than such as i s required under
the terms of the f e d e r a l r e s e r v e act". {Acts of 1929, ch. 23, s e c .
20; Code of 1931, ch. 33., A c t . 8, s e c . 1 6 . )
4894,
46
X-6875 0
WISCONSIN.
Banks and t r u s t companies a u t h o r i z e d to become members of F e d e r a l Reserve
Bank.
In 1915, t h e laws of t h i s S t a t e c o v e r i n g t h e powers of
banks were amended so a s to a u t h o r i z e a bank "To p u r c h a s e and h o l d ,
f o r t h e p u r p o s e of becoming a member of f e d e r a l r e s e r v e bank, so
much of t h e c a p i t a l s t o c x t h e r e o f a s w i l l q u a l i f y i t f o r members h i p i n such r e s e r v e bank * * * ; to become a member of such f e d e r a l
r e s e r v e bank, and t o have and e x e r c i s e a l l powers, not i n c o n f l i c t
w i t h t h e laws of t h i s s t a t e , which a r e c o n f e r r e d upon any such
member bank by t h e ' f e d e r a l r e s e r v e a c t 1 " . (Laws of 1915, ch.
76, p . 6 7 . )
In 1921, t h e above p r o v i s i o n was r e p e a l e d b u t t h e new
l e g i s l a t i o n i n c o r p o r a t e s a p r o v i s i o n r e a d i n g s u b s t a n t i a l l y t h e same
a s t h e former p r o v i s i o n . The new a c t s p e c i f i c a l l y p r o v i d e s i n p a r t
t h a t "Any bank may p u r c h a s e and h o l d , f o r t h e p u r p o s e of becoming
a member of t h e f e d e r a l r e s e r v e bank, so much of t h e c a p i t a l s t o c k
t h e r e o f a s w i l l q u a l i f y i t f o r membership in such r e s e r v e bank * *
* ; may become a member of such f e d e r a l r e s e r v e bank, and may have
and e x e r c i s e a l l powers, not i n c o n f l i c t w i t h t h e laws of t h i s s t a t e ,
which a r e c o n f e r r e d upon any such member bank by t h e ' F e d e r a l Res e r v e A c t ' . Such member bank and i t s d i r e c t o r s , o f f i c e r s , and
s t o c k h o l d e r s s h a l l c o n t i n u e to b e s u b j e c t , however, to a l l l i a b i l i t i e s
and d u t i e s imposed upon them by any law of t h i s s t a t e " . (Laws of
1921, ch. 555, p , 923: Wise. S t a t u t e s , 1929, sec. 221.04 ( 3 ) , p .
1790; Banking Law Pamphlet, 1925, s e c . 221.04 ( 3 ) , p . 2 8 . )
I t w i l l b e n o t e d t h a t a l l of t h e above p r o v i s i o n s e x p r e s s l y p e r m i t o n l y "banks" to become members of t h e F e d e r a l R e s e r v e System; b u t , a s t h e laws a l s o p r o v i d e f o r t h e o r g a n i z a t i o n of " t r u s t
company banks" under t h e same p r o v i s i o n s under which banks may b e
o r g a n i z e d , and, except ig. two i r r e l e v a n t i n s t a n c e s , s u b j e c t such
companies to a l l t h e p r o v i s i o n s , r e q u i r e m e n t s and l i a b i l i t i e s c o v e r i n g b a n k s , i t would seem t h a t such Mtrust company banks" may a l s o
become members of t h e F e d e r a l Reserve System. F u r t h e r m o r e , t h e
following provisions s p e c i f i c a l l y dealing with the reserve r e q u i r e ments of member banks and t r u s t companies r e c o g n i z e t h a t t r u s t
companies may j o i n t h e F e d e r a l Reserve System.
Member banks and t r u s t companies o n l y r e q u i r e d to c a r r y r e s e r v e s p r e s c r i b e d
by F e d e r a l Reserve A c t .
The l e g i s l a t u r e of t h i s S t a t e d i d not p e r m i t member banks
* 4i -
X-6875
and t r u s t companies t o c a r r y tiie r e s e r v e s p r e s c r i b e d , by t h e F e d e r a l
R e s e r v e Act u n t i l t h e y e a r 1925, when i t p a s s e d an a c t which p r o v i d e s t h a t "any bank or t r u s t company, i n c o r p o r a t e d under t h e laws
of t h i s s t a t e which i s o r h e r e a f t e r may become a member of t h e f e d e r a l r e s e r v e bank system of t h e U n i t e d S t a t e s of America s h a l l be
r e q u i r e d to c a r r y d u r i n g t h e p e r i o d of such membership o n l y such
c a s h r e s e r v e f u n d s a s may be r e q u i r e d from time t o time t o be maint a i n e d by n a t i o n a l bank members of s a i d f e d e r a l r e s e r v e b a n k s y s tem". (Laws of 1925, c h . 292, s e c . 2; Wisconsin S t a t u t e s , 1929,
s e c . 2 2 1 . 2 7 ; Banking Law pamphlet, 1825, s e c . 221.27, p . 3 8 . )
WYOMING.
Banks and t r u s t companies a u t h o r i z e d to become members of F e d e r a l
R e s e r v e Bank.
An a c t of t h i s S t a t e approved February 19, 1919, p r o v i d e s
t h a t banks and t r u s t companies may " s u b s c r i b e t o t h e c a p i t a l s t o c k
and become a member of a F e d e r a l Reserve Bank?1. (Laws of 1919, ch.
45, s e c . 2; Wyoming Comp. S t a t s . , 1920, s e c . 5206.)
Members o n l y r e q u i r e d t o m a i n t a i n r e s e r v e s p r e s c r i b e d by F e d e r a l
R e s e r v e Act.
L e g i s l a t i o n e n a c t e d i n 1925 p r o v i d e s t h a t any s t a t e bank t h a t
i s a member of t h e F e d e r a l Beserve System s h a l l b e r e q u i r e d to keep
o n l y such r e s e r v e a s i s r e q u i r e d by t h e F e d e r a l Reserve Act f o r n a t i o n a l b a n k s . (Laws of 1925, ch. 157, s e c . 3 9 . )
In 1927, t h e 1925 l e g i s l a t i o n was amended b u t t h e p r o v i s i o n p e r m i t t i n g members to m a i n t a i n only r e s e r v e s r e q u i r e d b y t h e
F e d e r a l Reserve Act forms a p a r t of t h e amending l e g i s l a t i o n . (Laws
of 1927, ch. 100, s e c . 1 . )
@FedFRASER