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FEDERAL RESERVE BOARD
WASHINGTON
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September 8, 1923.
SUBJECT:
Congressiona.l Inquiry on Iverrbership in the
Federal Reserve System ..
Dear Sir:
There is enclosed herewith copy of a letter,
with enclosut'e, received from the Cha.irman of the Congressional Joint Committee of Inquiry.on Membership in
the Federal Reserve System. This letter is referred to
Y<>U with the request tha.t you furnish the Board, a.t the
earliest possible moment, iid th the answers vvh:ich you individually would propose to the questions a.sked by the
Committee, and any information w.hi.ch you think would be
of value to the Board in its appearance before the Com=
mit tee. This rr.a.tter is also being refe:tred to the members
of the Federal Advisory Council ..
Very truly yours,
G o v e r n o r.
TO GOVERNORS OF ALL F. R.. :DANKS
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X-3833a.
( CJPY )
CONGRESS CF THE UNITED STATES
JOINT COMMITTEE OF INQUIRY
oN MENEBERSHIP IN FEDERAL EESEl-NE SYSTEl'vl
WASHINGTON, D. C.
September
6,
1923~
Hon. D. R. Crissinger, Governor,
Federal Reserve Board,
Wa.shington, D. C.
My dear Mr. Crissinger:
In pursuance of the provisions contained in the .Agricultul'a1 Credits .Act of 1923, passed by the Sixty-seventh Congress,
Public Law No. 503, a. copy of which is enclosed herewith, a. joint
committee, consisting of three members of the Eank:i.ng and Cut'rency Committee of the Sena.te and five menbex·s of the :Banking and
Currency Committee of the House of 1\ep;.:esentatives, has been appointed.
It is the purpose of the committee to start forrr.e1 hearings
along the lines of authority conferred upon them by the .Act.
My purpose in corw:unica ting with you a.t this time is tc ·
advise you that the committee will be gla.d to have you, or any ot
all members of the Federal Reserve Board a.ppear before the committee,
on Tuesday, October 2, 1923, at two-thirty o t clock in the a.fternoon,
in the House Banking and Gul'rency Corru"ll:it tee Rooms in the Capitol
I3uilding. The committee would liku, to have you be prepared to give
them the effect of the present limited membership of Sta.te banks and
trust companies in the Federal Ra~.arve System; whether or not it is
advisable to a.ttempt to increa.se the merrbership of the Federal Reserve
Sys tern; also a.dvice upon the present financial conditions in the
Ag:ricultura.l Sections of the United States; Federal Reserve System
rea.sons which actuate eligible Sta.te banks and trust companies in
fa.iling to become members of the Federal Reserve System; and what administration n:easures) if any, ha.ve been taken and a:re being taken
to increase such membership; and whether or not in the opinion of the
Federal Reserve Board any cha.nge should be made in the existing ls.w
or in the rules and regulations of the Federa.l F.eserve Board; or if
you hs.ve any suggestions of change in the method of administration
to brine; about in the .Agricul tu.ral Districts a. la:rger membership of
Sta.te banks and trust companies in the Federal Reserve System.
For the use of the committee in preparing for the investiga.tion, I sha.ll be pleased if you will furnish rr.e with a. complete
set of the rules and regulations of the Federal Reserve Board from
its inception to da.te, also a. copy of the ]'eder-a.l Heserve .Act with
all amendments to date.
The committee of inquiryare endea.vo:ring to give as wide
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X-383}a.
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publicity as possible to these hearings with a view of obtainine?;
information in accordance with the instructions in the Act creating
the corrmittee. In this connection we are asking the cooperation of
the Secretary of the Treasury, Secretary of Agr icultu:re, War Finance
Corpora.tion, Federal Farm Loan Commissioner, An:;erican Bankers .Association, State Bankers Association, Federal Reserve D'J.nks, United
Sta.tes Chamber of Coll'merce, American Fa.:rm Ilu-reau Federation, National
Grange and other simila.r organize.tions, which are in a. position to be
helpful in furnishing accura.te inforJr.a.tion such as is desired by the
committee ..
The committee re€!:lizes tha.t in connection with the consideration of the question of limited membership of Ste.te banks and
trust companies in the Federal Reserve System there a1•e several out.:.
standing, widely discussed questions which involve, to a. greater or
less degree, membership in the System; to-wit, branch banking, par
collections, abolishment of the office of the Conptroller of the
CU-rrency, a.dministra.tion practices and policies of the Federal Reserve
System, administration pra.ctices and policies of the office of the
Comptroller of the Currency, interest on da.ily balances of the Federal
Reserve System, conflict and competition now existing retween Nationa.l
end State banking laws.
·The purpose in mentioning these outstanding questions is to
ena.ble you to prepare yourselves, so f a.-r as possible, to present to
the committee your views and conclusions a.s regards the problems presented by each of these questions. It is not, however, the intention
of the committee to limit the discussions to these few enumerations,
but i t is the honest desire of the committee to, as fa.r a.s possible,
arrive a.t definite conclusions, therefore, it is to be hoped that the
Iloaxd will make a. full p:resenta.tion of its vie1.vs to the committee
covering the scope of this inquiry.
Very truly yours·,
(sgd) Lf T. UicFadden,
Cha.irman.
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(COPY)
X-3333b
(Ext:ract from Public Law, No. 503, 67th Congress.)
An Act To provide additional credit fe.cilities for the agricul tura.l a.nd 1 i ve-s tock indus tries of the United States; to a.mend the
Federal Farm Loan Act; to amend the Federal Reserve ACtj and for other
pUl"lJOSe S •
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JOINT CONGRESSIONAL
C~M!UTTEE.
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SEC· 506 (a.) That a. joint committee be appointed, to consist of
three members of the :Ba.nking and Currency Committee of the Sena.te, to
be appointed by the President thereof, and five members of the Banking
and Currency Committee of the House of Representa.tives, to be appointed
by the Speaker thereof. Vacancies occurring in the membership of the
committee shal~ be filled in the same manner as the original a.ppointments ..
{b) The joint committee is authorized to inquire into the effect of
the present limited membership of State banks and trust companies in the
Federal reserve system upon financial conditions in the a.gricul tural
sections of the United Sta.tes; the reasons which actuate eligible State
banks and trust. companies in f'a.iling to become members of the Federal
reserve system; what a.dministra.tive n:easures have been taken a.nd a.re
being taken to increase such merr:bership). and whether or not any change
should be made in existing law, or in r-hles and regulations of the Federal
Reserve Boa.rd, or in methods of a.dministl'ation, to bring a.bout in the
agricultural districts a larger membership of such banks or trust
companies in the Federal reserve system.
(c) The committee is authorized to sit a.t any time dut'ing the ;.~
sessions or recesses of the Congl'ess, to conduct its hea.rings a.t
Washington or at any other pla.ce in the United Sta.tes, to send for
pel'sons, books, and papers, to take testimony, to administer oa.ths,
and to employ e :xperts deemed necessary by such committee, a clerk, and
a stenographer to report such hearings as may be had in connection with
any sub.ject which may be befol'e said committee, such stenographer's
serv'ices to be rendered at a cost not exceeding $1.25 per jJl'inted page.
The expenses of such comrni ttee shall be paid out of the contingent
funds. of the Sena.te a.nd House of Representa.tives in proportion to the
membel'ship of such comnittee from each House.
(d) 'Ihe comrni ttee sha.ll from time to time :report to both the Senate
and the House of RepresentatiVes the results of its dnquiries, together
with its recormr.endations, and may prepare and submit bills or resolutions
embodying such recomrr.endations, and the final report of sa.id comrni ttee
shall be submitted not later than Janua.l'y 31, 1924.
@FedFRASER