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De»©mtJer
15X4,
REGULATION .Nt). t,
THE DUTIES HP THE FEDERAL OBSERVE AGENTS WITH
RELATION TO FEDERAL RESERVE NOTES.
(1) Federal Reserve Agents shall from time to tj.ma no
tify the Federal Reserve Board on a standard form, Form No.\
and as far in advance as practicable, of the sypply o{ Federal
reserve notes they expect to require in order to meet applies- •
tions for issue, stating the amounts of the different denomin
ations desired.
(2 ) The Federal
extent notes shaJl be
will notify them that
supplied from time to
ponse to applications
Reserve Board will determine to what
supplied to Federal Reserve Agents and
they are authorized to issue notes so
time to their respective banks in res
duly approved by said agents.
(3) The Federal Reserve Ager.c shall from time tc time
notify his Federal Reserve Bank of the extent to which he is
authorized to meet its applications for Federal reserve notes.
(4) A Federal Reserve Bank desiring an issue of Federal
reserve notes shall make application therefor to its Federal
Reserve Agent furnishing at the same time to said Agent a
list of the collateral which it proposes to tender as a deposit
against said notes, said application to be made out on Form
B.D, 21-1.
(5) The Federal Reserve Agent shall carefully examine
the collateral and make such investigation as he mAy deem
necessary.
If satisfied that the collateral confirms to
provisions of Section 13 of the Federal Reserve Act and the
Regulations of the Federal Reserve Board made pursuant there
to, he shall so inform the Federal Reserve Bank and shall
notify said bank that Federal reserve notes will be issued
as soon as the collateral is deposited and the requisite gold
redemption fund paid to the Treasurer of tl*e United States,
and the required gold reserves set apart by said bank.
(*)
(6) On receipt of said collateral and a certificate
from the Treasurer of the United States setting forth that
the Federal Reserve Bank has deposited.with him the requisite
gold redemption fund, the Federal Reserve Agent if satisfied
that the bank has the gold reserve in its vault required by
law to be held against its notes, shall issue, to extent
(*)
Note: Under Section 16 of the Federal Reserve Act, this
redemption fund may be increased a]?ove the 5/t legal minimum
at the discretion of the Secretary of the Treasury.
that such issue has been author'Cead by
0
9 pPirtins f'?r .Jfai d
Board, Federal reserve notes to said bank, re Fgderai.
serve
collateral on Form B.D. 21-2, reporting _* J w ‘ by slid bank,
Board each day all notes issue* ta and wi , f ing sald Board
using for that purpose Form F.R.A.5, ana notify
Form B . 2 1 - 3
of the collateral accepted, using for that p P
(7)
If at anytime the federal ^ ^ ^ h a r a c t e ^ o r 8amount'
necessary to require changes in either tn +
hg 8hau notify
of collateral deposited to protect said
"
oall ut>on the
the Federa! Rase?va Board « d at th. J
^ L^oUat.ra!
Federal Reserve Bank for additional ool±
.
. + ue
to be substituted for that which in his opm^.
using
opinion of the Federal Reserve Board is un®a 1S
’•
for that purpose the Forms already referre
0.
(ft} Tf a+ anv time the gold reserve required by lav; to
be held by a Federal Reserve Bank^against Federal^serve^no^es
issued to it falls below 40?, | ^ c^ d^ ry)9^he Federal Reserve
required to be maintained in the treasury/
u
,
Agent shall at once notify the Federal Reserve
(9) The Federal Reserve Board will, upon
provided in Paragraph 8 hereof-, establish a Sr
provided in Section 11 of the Fed-ril
deficiency, which tax shall be. computed an
Federal Reserve Agent and forwarded to the
Board.
Said tax shall be computed as fol ows.
a ° tlC8
'
such
bl tSe
Reserve
When reserves fall below 40% but are
of 32-1/2%, the tax upon the deficienoy shall be at
the rate of 1 % per annum;
When reserves fall bale' 3 2 -l/~> but are i« ex
cess of 30%, the tax on the entire deticienc.
40% shall be at the rate of 2-1 feb per annum,
When reserves fall below 30% but excejJ. 37-l/2%
the tax upon the entire deficiency below 40% shall be
at the rate of 4 % per annum.
and so on, increasing at the rate of
an^fracreduction in reserve amounting to 2 -1 / %
V
tion thereof.
_
..
Gold Reserves
Penalty tax
against Fed'l
on Deficiency
Reserve Notes
in Reserves.
40%
37i%
(Legal Minimum including Redemption
1
%
Fund^'
Gold Reserves
against Fed'l.
Reserve Notes.
penalty Tax
on IJeficienpy
in Reserves*
354
32i"
30 "
27-^'
25 "
22^”
20 "
17i"
15 "
I2j>"
10 "
7j?"
5 "
2i"
0
v<
■2 0 i " U
' x
\ X
110) The Federal Reserve Agent shall receiv<* Federal re
serve notes unf it for circulation presented by tile preserve
bank 'or any member bank or transmitted to him by ItHe Treasurer
of the United States, and shall forward the same krfmediately
to,the Comptroller of the Currency for cancellation and des
truction using Forms K R kAil-5, The Comptroller will trans
mit new notes in lieu thereof to' the Federal Reserve Agent,
at the same time notifying the Federal Reserve Board of such
action.
(See also Paragraphs 15-17-18)
(11) The Comptroller will cancel and destroy such notes
unfit for circulation ip the manner provided in the National
Bank Act for the cancellation and destruction of National bank
notes unfit for circulation,
(12) The Federal Reserve Board will maintain a record of
the amounts of notes of the several denominations supplied to
each Federal Reserve Agent, of the amounts issued through said
agent to his Reserve Bank, and of the amounts in the possession
of said agent.
(13) On the receipt of notice from the Federal Reserve Board
that a rate of interest has been established to be charged upon
issues of Federal reserve notes, the Federal Reserve Agent shall
notify his bank and shall compute and collect the amount of in
terest due from said bank and forward the same tc the Reserve
Board.
•
-4 -
(14) When Federal reserve notes issued by the Fed^raJ
Reserve Agent "to a Federal Reserve Bank are deposited
said
bank for the purpose of reducing its liability for
land
ing circulation, the Federal Reserve Agent shall return to
said bank a proportionate amount of the collateral deposited
by it against its notes, using for this purpose Form B.D.28-1.
(15) The Federal Reserve Agent shall notify the Federal
Reserve Board of any deposits made with him by a Federal Re
serve Bank of its ovm Federal reserve notes, or of gold, gold
aertificates or lawful money, for the purpose of reducing its
liability against its outstanding notes, using for that pur
pose Form F.R.A.-5.
(16) The Federal Reserve agent.shall hold such notes gold,
gold certificates or lawful money so deposited, subject to the
order of the Federal Reserve Board. Any gold or gold cer
tificates deposited with a Federal Reserve Agent m$y be de
posited in the nearest sub-treasury of the United States,
(with the consent of the Secretary of the Treasury) and he may v
receive in exchange therefor gold certificates made payable to
the order of said Federal Reserve Agent.
(17) On deposit of such notes, gold, gold certificates
6r lawful money, a proportionate amount of the collateral
may be returned to said bapk, the transaction to be reported
at once to the Federal Reserve Board, using for that purpose
Form F.R.A.5.
.(.18) When Federal reserve notes are deposited by a Re
serve Bank with the Federal Reserve Agent, 9aid agent shall
return to said bank the collateral and any gold, gold cer
tificates Or lawful money deposited by it to reduce liability
except so much of said gold as he may have been required by
the Federal Reserve Board to tra.nsmit -fco the Treasury for
redemption purposes, upon request of the Secretary of the
Treasury,
(19)
On receipt of notice from a Federal Reserve Agent*
that certain of its notes have been returned, the Federal
Reserve Board will request the Secretary of the Treasury
to direct the Treasurer of the United States to return to
said bank such portion of its redemption fund as may bo in
excess of the minimum amount required to bo maintained
by said bank in the gold redemption fund against its notes
still outstanding.
(20) When a Federal Reserve Bank shall a3k to withdraw
collateral and substitute therefor -ether collateral against
Federal reserve notes, the Federal Reserve Agent shall ex
amine said substitute collateral and pass upon it in exactly
the same way as if it wore collateral for original issue of
Federal reserve notes. If approving the collateral, he may
make the exchange, reporting the fact at once to the Federal
Reserve Board, using Form B.D. 28-3.
(21) When.Federal reserve notes have been returned by the
Reserve Bank to which issued, and the collateral, and other
security returned to the bank, said notes shall be held by
the Federal Reserve Agent and shall be reissued only on. the
same terms as'an original issue, and with the use of the
same forms.
All notes so returned by Reserve Banks shall
be. reported at once to the Federal Reserve Board.
@FedFRASER