Full text of Nelson W. Aldrich Papers : Monetary Commission : Miscellany, Reel 55, Box 79, Folder 4

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PER CENT.

1MONO.
NB
SEC.
A BILL
To incorporate the National Reserve Association of the
United States, and for other purposes.

CHARTER, CAPITAL, AND LOCATION, v ... ' .
Be it enacted, by the Senate and House oj Representatives
of the United States oj A merica in Congress assembled, That
the National Reserve Association of the United States be,
and it is hereby, created uJUuHT Uffp&nrte and established
for a term of fifty years froth the date of the filing with
the Comptroller of the Currency of the certificate herein­
after provided, with an authorized capital equal in amount
to twenty per centum of the paid-in and' unimpaired
capital of all banks eligible for meriibership in said
National Reserve Association. Before the Said associa­
tion shall be authorized to commence business two hun­
dred million dollars of the capital stock shall be sub­
scribed and one hundred million dollars of the capital
stock shall be paid in cash. The capital stock of said
association shall be divided into shares of one hundred
dollars each. The.capital stock may be increased from
time to time as subscribing banks increase their capital
or as additional banks become subscribers or may be
decreased as subscribing banks reduce their capital or
leave the association by liquidation. The head office of
the National Reserve Association shall b e ' located hi
Washington, in the District of Columbia.
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CORPORATE POWERS OK THE NATIONAL RESERVE
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.ASSOCIATION.
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S ec . 2. Upon duly making and filing with the Comp­
troller of the Currency the certificate hereinafter required
the National1 Reserve Association shall become a body
corporate and as such and by that name shall have power—
First. To adopt and use a corporate seal.
Second. To have succession for a period of fifty years
from the date pf said certificate.
Third. Te make contracted
Fourth. To sue and be sued, complain and defend, in
any court of laWj .sm»4 equity, as fully as natural persons.
Fifth. To elect or appoint directors and officers in the
manner herein]
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penalty tth»raa&
Sixth. To prescribe by its board of directors by-laws
not inconsistent with this act, regulating the manner in
which its property shall be transferred, its general busi­
ness conducted, and the privileges granted to it bv law
exercised and enjoyed. .
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---Seventh. To purchase, acquire,^wRUTiold/real estate as
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Right h. To cxerciae by its board «*f Erectors or duly
authorized^oflicers or agents, subject to law, all powers
and privileges conferred by this act.
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MEMBERSHIP.

S ec . 3. All national banks, and all banks or trust com­
panies chartered by the laws of any State of the United
States or of the District of Columbia, complying with the
requirements for membership in the said National Reserve
Association, hereinafter set forth, may subscribe to its
capital to an amount equal to twenty per centum of the
paid-in and unimpaired capital of the subscribing bank,
and not more nor less; and each of such subscribing banks
shall become a member of a local association as hereinafter
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authorized officers or agents, subject to law, all powers
and privileges conferred bv this act.
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S ec . 3. All national banks, and all banks or trust com­
panies chartered by the laws of any State of the United
States or of the District of Columbia, complying with the
requirements for membership in the said National Reserve
Association, hereinafter set forth, may subscribe to its
capital to an amount equal to twenty per centum of the
paid-in and unimpaired capital of the subscribing bank.,
and not more nor less; and each of such subscribing banks
shall become a member of a local association as hereinafter
provided. Fifty per centum of the subscriptions to the
capital^of the National Reserve Association shall be,fully
paid In; the balawec of the subscriptions*.wiHremain a
liability of the subscribers, subject to call and payment
thereof whenever necessary to meet the obligations of the
National Reserve Association under such terms and in
accordance with such regulations as the board of directors
of the National Reserve Association may prescribe.
^ A bank or trust company incorporated under the laws
of any State^may subscribe to the capital stock of the
National Reserve Association^
First. That (a) if a bank, it shall have a paid-in and
unimpaired capital of not less than that required for a
national bank in the same place; and that (b) if a trust
company, it shall have an unimpaired surplus of not less
than twenty per centum of its capital, and if located in
a place having a population of six thousand inhabitants
or less shall have a paid-in and unimpaired capital of not
less than fifty thousand dollars; if located in a city having
a population of more than six thousand inhabitants and
not more than fifty thousand inhabitants, shall have a
paid-in and unimpaired capital of not less than one hun­
dred thousand dollars; if located in a city having a popu­
lation of more than fiftyjthousand inhabitants and not
more than two hundred and fifty ^thousand inhabitants
shall have a paid-in and unimpaired capital of not less
than two hundred thousand dollars; if located in a city
having a population of more than two hundred and "fifty
thousand inhabitants and not more than £iw^1iundred
thousand inhabitants shall have a paid-in and unimpaired
capital of not less than i aiir^hundred thousand dollars;
if located in a city having a population of more than
-fcS^hundred thousand inhabitantSjfSTiaU hav£ a paid-in
*n d unimpaired capital of not less thanf& x * hundred
thousand dollars
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MONOTYPE SECTION
Second. That it shall have and agree to maintain
against its demand deposits a reserve of like character
and proportion to that required by law of a national bank
in the same laatUiaft: Provided, however, That deposits
which it may have with any subscribing national bank,
State bank, or trust company in a city designated in the
national banking laws as a reserve city or a central reserve
city shall count as reserve in like manner and to the same
extent as similar deposits of a national bank with national
banks in such cities.
Third. That it shall have and agree to maintain against
all other classes of deposits the percentages of reserve
required by this act.
Fourth. That it shall agree to submit to such examina­
tions and to make such reports as are required by law and
to comply with the requirements and conditions imposed
by this act and regulations made in conformity therewith.
The words “ subscribing banks” when used hereafter
in this act shall be understood to refer to such national
banks, and banks or trust companies chartered by the
laws of any State of the United States or of the District of
Columbia, as shall comply with the requirements for
membership hereinfeeiaa»defined.

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ORGANIZATION COMMITTEE.
S e c . 4. The Secretary of the Treasury, the Secretary of
Agriculture, the Secretary of Commerce and Labor, and
the Comptroller of the Currency are hereby designated
a committee to effect the
organization of
the National Reserve Association, and the necessary
expenses of said committee shall be payable out of the
Treasury upon vouchers approved by the members of
said committee, and the Treasury shall be reimbursed
by the National Reserve Association to the full amount
paid ouj: therefor.
Within sixty days after the passage of this act said com­
mittee shall provide for the opening of books for subscrip­
tions to the capital stock of said National Reserve Asso­
ciation in such places as“the said committee may designate.
Before the subscription of any bank to the capital stock of
the National Reserve Association shall be accepted, said
bank shall file with the organization committee or after
organization with the National Reserve Association a
certified copy of a resolution adopted by the board of
directors of said bank accepting all the provisions and
liabilities imposed by this act and authorizing the presi­
dent or cashier of said bank to subscribe for said stock.

LOCATION OF BRANCHES AND DIVISION OF THE COUNTRY
INTO DISTRICTS.

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S e c . 5. When the subscriptions to the capital stock of
the National Reserve Association shall amount to the sum
of two hundred m illion*^* dollars the organization com­
mittee hereinbefore provided shall forthwith proceed to
select fifteen cities in the United States for the location of
the branches of said National Reserve Association : Pro­
vided, That one branch shall be located in the New England
States, including the States of Maine, New Hampshire,
Vermont, Massachusetts, Rhode Island, and Connecticut;
two branches in the Eastern States, including the States of
New York, New Jersey, Pennsylvania, and Delaware; four
branches in the Southern States, including the States of
Maryland, Virginia, West Virginia, North Carolina, South
Carolina, Georgia, Florida, Alabama, Mississippi, Louis­
iana, Texas, Arkansas, Kentucky, Tennessee, and also
the District of Columbia; four branches in the Middle
Western States, including the States of Ohio, Indiana,
Illinois, Michigan, Wisconsin, Minnesota, Iowra, and
Missouri; four branches in the Western and Pacific
States, including the States of North Dakota, South
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two branches in the Eastern States, including the States of
New York, New Jersey, Pennsylvania, and Delaware; four
branches in the Southern States, including the States of
Maryland, Virginia, West Virginia, North Carolina, South
Carolina, Georgia, Florida, Alabama, Mississippi, Louis­
iana, Texas, Arkansas, Kentucky, Tennessee, and also
the District of Columbia; four branches in the Middle
Western States, including the States of Ohio, Indiana,
Illinois, Michigan, Wisconsin, Minnesota, Iowa, and
Missouri; four branches in the Western and Pacific
States, including the States of North Dakota, South
Dakota, Nebraska, Kansas, Montana, Wyoming, Colorado,
New Mexico, Oklahoma, Washington, Oregon, California,
Idaho, Utah, Nevada, and Arizona.
When the cities in which the branches are to be located
have been selected the organization committee shall forth­
with divide the entire country into fifteen districts, with
one branch of the National Reserve Association in each
district; provided that the districts shall be apportioned
with due regard to the convenient and customary course
of business and not necessarily along State lines.
The districts may be readjusted, and new districts and
new branches may from time to time be created by the
directors of the National Reserve Association, 4/rhs*

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ORGANIZATION OF LOCAL ASSOCIATIONS.

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S ec . 6. All subscribing banks within a district shall
be grouped by the organization committee or after organi­
zation, by the National Reserve Association, into local
associations of not less than ten banks, with an aggre*~'
gate capital and surplus of at least five m illionl^f dollars,
for the purposes hereinafter prescribed: Provided, That
the territory comprised in each association shall be con­
tiguous and that in apportioning the territory due regard
shall be had for the customary course of business and for
the convenience of the banks forming the association:
Provided further, That the territory included in the local
associations comprising a district shall be so apportioned
that every b an ket said district shall be located within the
boundaries of some local association: And provided fur­
ther, That every subscribing bank shall become a mem­
ber only of the local association of the territory in which
it is situated.
The banks uniting to form such association shall, by
their presidents or vice presidents, under authority from
the board of directors, execute a certificate in triplicate
setting forth the name of the association, the names of
the banks composing it, its principal place of business,
its territorial limits, and the purposes for which it is
organized. One copy of this certificate shall be filed
with the Comptroller of the Currency, one copy shall be
filed with the National Reserve Association, and one
copy shall be filed with the branch of the National
Reserve Association of the district in which the local
association is included. Upon the filing of such certifiatesThe^wuttiiil i il I11111H therein named shall become a
body corporate and by the name so designated may sue
and be sued and exercise the powers of a body corporate >
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for the purposes mentioned in this act,
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The local associations in each district may be readjusted
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from time to time and new associations may be **«ntrd
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by the direqftprs of the National Reserve Association.
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20 PER CENT.

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MONOTYPE SECTION
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eisction of directors by local associations.

S ec . 7. Each local association shall have a board of
directors, the number to be determined by the by-laws
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Iof al ass°ciation. Three-fifths of that number
shall be elected by ballot cast by the representatives of
the banks that are members of the local association, each
f>ank having one representative and each representative
one vote for each of the positions to be filled without
reference to the number of shares which the bank holds
m the National Reserve Association. Two-fifths of the
whole number of directors of the local association shall be
ejected by these same representatives of the several banks
tra. are members of the association, but in voting for
t rese additional directors each representative shall be
entitled to as many votes as the bank which he represents
holds shares in the National Reserve Association. In
neither case shall voting by proxy be allowed. The
authorized representative/of a bank, as herein provided,
vice president, or cashier

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Each director when ^ WininOri .1 elected shall take an
oaih that he will, so far as the duty devolves upon him
lligently and honestly administer the affairs of such
association and will not knowingly violate or willingly
permit to be violated any of the provisions of this act '
The directors originally elected shall hold office until
the second Tuesday in February immediately following
then election, and thereafter the directors shall be elected
annually on that date and shall hold office for the term of
one year.
The board of directors of the local association shall have
authority to make by-laws, not inconsistent with law
subject to the approval of the directors of the National
Kes^rve Association.

ELECTION OF DIRECTORS BY BRANCH ASSOCIATIONS.
S ec . 8. Each of the branches of the National Reserve
Association shall have a board of directors, the number, not
less than twelve, to be fixed by the by-laws of the branch.
1 hesjjhrectors shall be elected in the following manner:
Tlfe board^of each local association shall elect by ballot
a vot ng representative or proxy holder. One-half of the
directors of the branch shall be elected by the vote of such
representatives, each representative having one vote for
each of the positions to be filled, without reference to the
numoer of shares which the b a n k / c ^ o s f f i F t i ^ ^ c i r
tion which he represents holds ir} the National Reserve
Association. One-third of the directors shall be elected by
the same voting representatives or proxyholders, but each
voting representative at this election shall have a number
of votes equal to the number of shares in the National
Reserve Association held by all the banks composing the
local association which he represents. The remaining onesixth of the directors shall be chosen by tl
already elcctesL art^ g U A id iL r e s e n t tiu/jndustriai:
coimnerriat/^ugrk-nttiiralj^tod other Interests of the dis­
trict and sh a ltw rfc e officers**, while serving, directors of
banks, trust companies, inAirance companies, or other
financial institutions. The manager of the branch shall be
ex-officio a member of the bpard of directors of the branch
and siiall be chairman of the board.
Each director when wppoinluJ ur elected shall take an
oath that he will, so far as the duty devolves upon him,
diligently and honestly administer the affairs of such asso­
ciation and will not knowingly violate or willingly permit
to be violated any of the provisions of this act.

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trict and shaU not fie officers.**, while serving, directors of
banks, trust companies, insurance ccmpanies, or other
financial institutions. The manager of the branch shall be
ex-officio a member of the bpard of directors of the branch
and snail be chairman of the board.
Each director when appointsef1ui elected shall take an
oath that he will, so far as the duty devolves upon him,
diligently and honestly administer the affairs of such asso­
ciation and will not knowingly violate or willingly permit
to be violated any of the provisions of this act.
All the members of the board of directors of the branch
except the ex officio member shall at the first meeting of
the board be divided into three classes. One-third of the
directors shall hold office until the first Tuesday in March
immediately following the election; one-third of the direc­
tors shall hold office for an additional period of one year
after the first Tuesday in March immediately following
the election; the remaining one-third of the directors shall
hold office for an additional period of two years after the
first Tuesday in March immediately following the election.
All elections shall be held on the first Tuesday in March
of each year, and after the first election all directors shall
be elected for a term of three year^.
1 he board of directors of the branch shall have author­
ity to make by-laws, not inconsistent with law, subject to
the approval of the National Reserve Association.

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directors of the national, reserve association.

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S e c . 9. The National Reserve Association shall have a
board of directors, to be chosen in the following manner:
First. Fifteen directors shall be elected, one by the
board of directors of each branch of'tTie“\Tational R ese rve
Association. In case the number of districts shall be
increased hereafter, each additional district shall be enti­
tled to elect an additional director.
Second. Fifteen directors shalT be elected ^ on e bv the
board of directors of each branch of the Natttmal^Reserve
A ssociation whn ^ 11 fairly represent thejrindustrial) comV mercial^ a g ricu ltu ra l^ h d other interests of~the country,
and" who shall not be officers nor, while serving, di­
rectors of banks, trust companies, insurance companies,
or other financial institutions. In case the number of dis­
tricts shall be increased hereafter, each additional district
shall be entitled to elect an additional director of this class.
Third. Nine directors shall be elected by voting repre­
se n ta tiv e s^ the various districts, each of whom shall cast
a number of votes equal to the number of shares in the
National Reserve Association held by the banks in the
district which he represents. Not more than one of these
directors shall be chosen from one district.
Fourth. There shall be seven ex officio members of the
board, namely: The governor of the National Reserve
Association, who shall be chairman of the board, two
deputy governors of the National Reserve Association, the
Secretary of the Treasury, the Secretary of Agriculture,
the Secretary of Commerce and Tabor, and the Comp­
troller of the Currency.

No member^of any national or State legislative body
sha,L be -a- i bJ*®ctor ° f the National Reserve Association,
nor of any oO*he> branches, nor of any local association.

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20 PER CENT.

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MONO. SEC.

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APPOINTMENT OF OFFICERS OF THE NATIONAL RESERVE
ASSOCIATION.

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All the members of the boarth except the ex officio
members, shall at the first meeting of the board be divided
into three classes. One-third of the directors shall hold
office until the first Tuesday in April immediately follow­
ing the election; one-third of the directors shall hold office
for an additional period of one year after the first Tuesday
in April immediately following the election; the remaining
one-third of the directors shall hold office for an additional
period of two years after the first Tuesday in April imme­
diately following the election. All elections shall be held
on the first Tuesday in April of each year, and after the
first election all directors shall be elected for a term of
three yoor^^
tCach director shall take an oath that he will, so far as
the duty devolves upon him, diligently and honestly
administer the affairs of such association and will not
knowingly violate or willingly permit to be violated any
of the provisions of this act.
1 he board of directors of the National Reserve Asso­
ciation shall have authority to make by-laws, not incon­
sistent with law, which shall prescribe the manner in
which the business shall be conducted and the privileges
granted to it by law exercised and enjoyed.

S ec . io . The executive officers of the National Reserve
Association shall consist of a governor, two deputy gov­
ernors, a secretary, and suen subordinate officers as may
be provided by the by-laws. The governor of the National
Reserve Association shall be selected by the President of
the United States from a list of not less than three sub­
mitted to him by the board of directors of said association.
Tiie person so selected shall thereupon be appointed by the
said board as governor of the National Reserve Association
for a term of ten years, subject to removal for cause
by a two-thirds vote of the board. There shall be two
deputy governors, to be elected by the board, for a term
of seven years, subject to removal for cause by a m ajority
vote of the board. The two dfipntjpn first elected shall
serve for terms of four years and seven years, respectively.
In the absence of the governor or his inability to act the
deputy who is senior in point of service shall act as
governor. I he board of directors shall have authority to
appoint such other officers as may be provided for by the

ORGANIZATION PAPERS OF THE NATIONAL RESERVE ASSO­
CIATION.
S ec . i i . When the board of directors of the National
Reserve Association is duly organized it shall call upon
the subscribing banks for a payment of fifty per centum
on the amount of their subscriptions to the capital stock
of j* e association. When one hundred m illio n * * dollars
of such capital have been paid in the board of directors
shall at once proceed to execute and file with the Secre­
tary of State a certificate showing the payment of one
hundred million dollars, and they shall further file with
the Comptroller of the^urreney a certificate showing the
title and location of each bank which has subscribed to the
capital stock of the National Reserve Association, the num­
ber of shares subscribed by each, and the amount paid
thereon.
OWNERSHIP OF STOCK IN THE NATION Al Rf?<%FPVfl> \ c c n n %-

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tary of State a certificate showing the payment of one
hundred million dollars, and they shall further file with
the Comptroller of tne currency a certificate showing the
title and location of each bank which has subscribed to the
capital stock of the National Reserve Association, the num­
ber of shares subscribed bv each, and the amount paid
thereon.

OWNERSHIP OF STOCK IN THE NATIONAL RESERVE ASSOCIA­
TION, INCREASE AND REDUCTION OF CAPITAL.
S e c . 12. Shares of the capital stock of the National
Reserve Association shall not be transferable, and under
no circumstances shall they be hypothecated nor shall
they be owned otherwise than by the subscribing banks,
nor may they be owned by any bank other than in the
proportion herein provided. In case a subscribing bank
increases its capital it shall thereupon subscribe for an
additional amount of the capital of the National Reserve
Association equal to twenty per centum of the bank’s
increase of capital, paying therefor its then book value
as shown by the last published statement of said asso­
ciation. A bank applying for membership in the
National Reserve Association at any time after its for­
mation must subscribe for art amount of the capital
of said association equal to twenty perjcentum of the
capital of said subscribing bank, paying therefor its then
book value as shown by the last published statement of
said association. When the capital of the National
Reserve Association has been increased either on account
of the increase of capital of the banks in said association
or on account of the increase in the membership of said
association, the board of directors shall make and execute
a certificate showing said increase in capital, the amount
paid in and by whom paid. This certificate shall be
filed in the office of the Comptroller of the Currency.
In case a subscribing bank reduces its capital it shall
surrender a proportionate amount of its holdings in the
capital of said association, and if a bank goes into
ii'Vl'-U liquidation it shall surrender all of its holdings of
the capital of said association. /T h e shares surrendered
shall be canceled and the bank shall receive in payment
therefor a sum equal to their then book value as shown
by the last published statement of said association.
If any member of the National Reserve Association
shall become insolvent and a receiver be appointed, the
stock held by it in the association shall be canceled and
the balance, after paying all debts due by such ^insolvent
bank to
association (such debts being hereby declared
to be a first lien upon the paid-in capital stock), shall be
paid to the receiver o^the insolvent bank.
Whenever the capital stock of the National Reserve
Association is reduced, either on account of the reduction
in capital of members of tfee association or the liquidation
or insolvency of any member, the board of directors shall
make and execute a certificate showing such reduction of
capital stock and the amount repaid to each bank. This
certificate shall be filed in the office of the Comptroller of
the Currency.

20 PER CENT.

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N
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MONO. SEC.

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EXEM PTIO N FROM LOCAL AND STATE TAXATION.

SEC. 13. The National Reserve Association and its
branches and the local associations shall be exempt from
local and State taxation except in respect to taxes upon
real estate.
E X E C U T IV E COMMITTEE OF THE NATIONAL R ESER V E.
ASSOCIATION.

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S e c . 14. The directors of the National Reserve Associa­
tion shall annually elect from their number an executive
committee and such other committees as the by-laws of
the National Reserve Association may provide. The exec^J\Utive committee shall consist of nine members, of which
'jfr the governor of the National Reserve Association shall be
* ^*ex officio chairman and the two rinpwiic.i and the Comp^ ^ trc,ller of the Currency ex officio members, but not more
J r than one of the elected members shall be chosen from any
* one district.
The executive committee shall have all the authority
which is vested in the board of directors, except such as
may be specifically delegated by the board to other com­
mittees or to the executive officers, or such as may be
specifically reserved or retained by the board.

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BOARD OF EXAMINATION.

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S ec . 15. there shall be a board of examination elected
annually by the board of directors from among their num­
ber, excluding the members of the executive committee,
of which the Secretary of the Treasury shall be ex officio
chairman. It shall be the duty of this board to care­
fully examine the condition and the business of the
National Reserve Association and of-feWbranehes and to
1 ™ ake a public statement of the result of such examina^|X>tion at least once a year.

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EX EC U T IV E O FFIC ERS OF BRANCHES.

S ec - 16. Each branch shall have a managerjand a dep­
uty manager appointed from the district by the governor
of the National Reserve Association with the approval of
v ^ jU lc e^ecutiye committee and subject to removal at any
time by thej^Bme^BVfont^. The powers and duties of
the manager and deputy manager and of the various com­
mittees of the branches shall be prescribed by the by-laws
of the National Reserve Association.

EXECUTIVE OFFICERS OF LOCAL ASSOCIATIONS.

.

S e c . 17. The directors of each local association shall
annually elect from their number a president, a vice presi­
dent, and an executive committee, whose powers and
duties shall be determined by the by-laws of the local
association, subject, however, to the provisions of this act.

LISTS OF SHAREHOLDERS.
SEC. 18. The National Reserve Association shall cause
to be kept at all times, at the head office of the associa­
tion. a full and correct list of the names of the banks

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c a c it

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annually elect from their number a president, a vice presi­
dent, and an executive committee, whose powers and
duties shall be determined by the by-laws of the local
association, subject, however, to the provisions of this act.
LISTS OF SHAREHOLDERS.

S e c . 18. The National Reserve Association shall cause
to be kept at all times, at the head office of the associa­
tion, a full and correct list of the names of the banks
owning stock in the association and the number of shares
held by each. Such list shall be subject to the inspection
A
of all the shareholders
of the association, and
.a copy thereof on the first Monday of Ju ly of each year,
^verified by the oath of the govern©* or deputy govcrnofy
shall be transmitted to the Comptroller of the Currency.
SEC. 19. The earnings of the National Reserve Asso­
ciation shall be disposed of in the following manner:
’ After the payment of all expenses and taxes the share­
5 holders shall be entitled to receive annually a
dividend of four per centum on the paid-in capital, which
dividend shall be cumulative. Further net earnings shall
be disposed of as follows: First, a contingent fund shall
be created, which shall be maintained at an amount equal
to one per centum on the paid-in capital, and shall not
exceed in any event two million dollars and shall be used
to meet any possible losses. Such fund shall, upon
final dissolution of the National Reserve Association
to the United States and shall not under any circumstances p
’j
be included in the book value of the stock or fje*foTFie ^
shareholders. Second, one-half of additional net Warnings
shall be paid into the surplus fund of the National Reserve
Association until said fund shall amount to twenty per
A
centum of the paid-in capital, one-fourth shall be paid
to the United States as a franchise tax, and one-fourth
shall be paid to the shareholders, until the shareholders’
dividend shall amount to five per centum per annum on
tfie paid-in capital^jtat no dividendsfshall at any time be
paid in excess of five per centum tn any one year^
year^
one-half of the additional earnings shall be added to the
surplus fund, and one-half shall be paid to the United
States as a franchise tax. Afow the surplus fund of the
National Reserve Association amounts to twenty per
centum of the paid-in capital^all excess earnings shall
i* '
to the United States as a franchise tax.
^

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N
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MONOTYPE SECTION
G U A R A N T IES OF LOCAL ASSOCIATION.

S e c . 20. Any member of a local association may apply
to such association for a guaranty of the commercial
paper which it desires to rediscount at the branch of the
National Reserve Association in its district. Any such
bank receiving a guaranty from a local association shall
pay a commission to the local association, to be fixed in >
each case by its board of directors. ■ The guaranty of 'ttffr- v ‘ \
-local association^ in -the event-of .loss-, shall be met by^he
members of the local association in proportion to the ratio
which their capital and surplus bears to the aggregate
capital and surplus of the members of the local associa­
tion, and the commission received for such guaranty,
after the payment of expenses and possible losses, shall
be distributed among the several banks of the local asso­
ciation in the same proportion. A local association shall
have authority to require security from any bank offering
paper for guaranty, or it may decline to grant the appli­
cation. The total amount of guaranties by a local asso­
ciation to the National Reserve Association shall not at
any time exceed the aggregate capital and surplus of the
banks forming the guaranteeing^association.
CLEARIN G HOUSE.

iy '
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}

S ec . 21. Any local association may by a vote of threefourths of its members and with the approval of the
National Reserve Association, assume and exercise such
of the powers and functions of a clearing house as are not
inconsistent with the purposes of this act. The National
Reserve Association may require any local association to
perform such services in facilitating the domestic ex­
changes of the Reserve Association as the public interests
may require. ^
.
__
.

^

*

> t o S f $6NSION 7

O w ^ M .^ h e National Reserve Association may sus­
pend a bank from the privileges of 'membership for a
failure for thirty days to maintain its reserves, or to make
the reports required by this act, or for misrepresentation
in any report or examination as to its condition or as
to the character or extent of its assets or liabilities^.

PRIVILEGES OF SUBSCRIBING BANKS.
v
S ec . j ^ J l AH

of the privileges and advantages of the
National Reserve Association shall be equitably extended
to every bank of any of the classes herein defined which
shall subscribe to its proportion of the capital stock
of the National Reserve Association and shall otherwise
conform to the requirements of this a c y t / ,

GOVERNMENT OF THE UNITED STATES AND B A N K S
STOCK TO BE THE O^NLY DEPOSITORS.

o w n in g

S ec .
The Government of the United States and
banks owning stock in the National Reserve Association
shall be the only depositors in said association. All
domestic transactions of the National Reserve Association
shall be confined to the Government and the subscribing
banks, with the exception of the purchase or sale of Gov­
ernment or State securities or securities of foreign govern .
a

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GOVERNMENT OF THE UNITED STATES ANDEANKS OWNING
STOCK TO BE THE ONLV DEPOSITORS.

S ec 75^ The Government of the United States and
banks owning stock in the National Reserve Association
shall be the only depositors in said association. All
domestic transactions of the National Reserve Association
shall be confined to the Government and the subscribing
banks, with the exception of the purchase or sale of Gov­
ernment or State securities or securities of foreign govern­
ments or of gold coin or bullion.

2 *

NATIONAL RESERVE ASSOCIATION FISCAL AGENT OF THE
GOVERNMENT.

Sec.
The National Reserve Association shall be the
principal fiscal agent of the"#United States. The Govern­
ment of the United States shall upon the organization of
the National Reserve Association deposit its general funds
with said association and its] branches,* and thereafter
all receipts of the Government shall be deposited with
said Association and its branches, and all disbursements
by the Government shall be made through said associa­
tion and its branches.
INTEREST ON DEPOSITS.

SEcT«6^The National Reserve Association shall pay no
interest on deposits.

;

REDISCOUNT OF BILLS OF EXCHANGE ARISING OUT OF
COMMERCIAL TRANSACTIONS FOR SUBSCRIBING BANKS.

t

'

SEC^iiJ^The National Reserve Association through its
branches may rediscount for and with the indorsement of
any bank having a deposit with it, notes and bills of ex­
__ ^change arising out of commercial transactions; that is,
'
notes and bills of exchange issued or drawn for
agricultural, industrial, or commercial purposes, and not
including notes or bills issued or drawn for the purpose
of carrying stocks, bonds, or other investment securities.
^
Such notes and bills must have a maturity of not more
4than twenty-eight days, and must have been made at
least thirty days prior to the date of rediscount. The
amount so rediscounted shall in * o asm exceed the capi­
tal of the bank njaply iag
ho rodioootmt. The aggre­
gate of such notes and bills bearing the signature or in­
dorsement of any one person, company, firm, or corpora­
tion, rediscounted for any one bank, shall at no time
exceed ten per centum of the unimpaired capital and
surplus of said bank.

r '

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20 PER CENT.

7 N
B
MONO. SEC.
REDISCOUNTS FOR SUBSCRIBING BANKS OF NOTES AND
BILLS OF EXCHANGE GUARANTEED BY TIIE LOCAL
ASSOCIATION.
Sec.

lie N a tio n a l R e s e r v e A sso c ia tio n th ro u g h its

b ra n c h e s m a y a lso re d isc o u n t, fo r an d w ith th e in d o rse ­
m e n t o f a n y b a n k h a v in g a d e p o sit w ith it, n o tes an d
b ills o f e x c h a n g e a risin g o u t o f c o m m e rc ia l tra n sa c tio n s a s
h e re in b e fo re d efin ed , h a v in g m o re th a n tw e n ty -e ig h t d a y s ,
b u t not e x c e e d in g fo u r m o n th s, to ru n , b u t in su ch c ase s
th e p a p e r m u st b e g u a ra n te e d b v th e lo cal a s so c ia tio n o f
w h ich th e b a n k a sk in g fo r th e re d isco u n t is a m em b er.

DISCOUNT OF DIRECT OBLIGATION OF DEPOSITING BANK
INDORSED BY LOCAL ASSOCIATION.
Sec.

W h e n e v e r, in th e o p in io n o f th e g o v e r n o r o f

th e N a tio n a l R e s e r v e A s s o c ia tio n , th e p u b lic in te r e sts so
re q u ire , su ch o p in io n to b e c o n c u rre d in b y th e e x e c u t iv e
c o m m itte e o f th e N a tio n a l R e s e r v e A sso c ia tio n an d to
h a v e th e d e fin ite a p p r o v a l o f th e S e c r e ta r y o f th e T r e a s ­
u r y , th e N a tio n a l R e s e r v e A sso c ia tio n th ro u g h its b ra n c h e s
r

m a y d isc o u n t th e d ire c t o b lig a tio n o f a d e p o sitin g b a n k ,
in d o rse d b y its lo cal a s so c ia tio n , p ro v id e d th a t th e in ­
d o rse m e n t o f th e lo cal a sso c ia tio n sh all b e fu lly secu red
b y th e p le d g e a n d d e p o sit w ith it o f s a tis fa c t o r y se c u ri­
tie s, w h ich

sh all

b e h eld

by

th e

lo cal

a sso c ia tio n fo r

a c c o u n t o f th e N a tio n a l R e s e r v e A s s o c ia tio n ; b u t in no
su ch c a se sh all th e a m o u n t lo an ed b y th e N a tio n a l R e ­
se rv e A sso c ia tio n e x c e e d th r e e -fo u rth s o f th e a c tu a l v a lu e
o f th e se c u ritie s so p le d g e d .
f l i c p o w e r o f re d isc o u n t a n d d isc o u n t g ra n te d
_______
ftnd ^ to th e N a tio n a l R e s e r v e A sso c ia t io n ^ h a fl in ea ch c a se be e x e r c is e d th ro u g h th e b ra n c h

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in th e d is tric t in w h ich th e b a n k m a k in g th e a p p lic a tio n
is lo ca te d .

RATES OF DISCOUNT.

1

S ec.
he N a tio n a l R e s e r v e A sso c ia tio n sh all h a v e
a u th o r ity to fix t k ^ ra te s o f d isco u n t fro m tim e to tim e,

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w h ich w h en so fix e d sh all be p u b lish e d , a n d sh a ll be u n i­
fo rm th ro u g h o u t th e U n ited S ta te s .

PURCHASE OF ACCEPTANCES BY THE NATIONAL RESERVE
ASSOCIATION.
S e c . 32.

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I he N a tio n a l R e s e rv e A sso c ia tio n m a y , w h en ­

e v e r its ow n co n d itio n a n d th e g e n e ra l fin a n c ia l co n d itio n s
w a rra n t such in v e stm e n t, p u rch a se from

a su b sc rib in g

b a n k a cc e p ta n c e s o f b a n k s o r a cc e p to rs o f u n q u e stio n ed
fin a n c ia l
a rise n

re sp o n sib ility .

S u ch

a c c e p ta n c e s

m u st

ou t o f c o m m e rcia l tra n sa c tio n s, m u st

have

have

not

e x c e e d in g n in e ty d a y s to ru n , a n d m u st be o f a c h a ra c te r
g e n e ra lly k n o w n in th e m a rk e t a s p rim e b ills. S u c h
a c c e p ta n c e s sh all b e a r th e in d o rse m e n t o f th e su b sc rib in g
b a n k sellin g th e sa m e , w h ich in d o rse m e n t m u st b e o th e r
th a n th a t o f th e a cc e p to r.

INVESTMENT IN GOVERNMENT AND STATE BONDS.
-—SEC.
1 be National Reserve Association may invest
in United States* bonchd also in short-termjobligations
laving not more than ohc year to run) of the United
States or its dependencies, or of anv State, or of foreign
povermnpnts

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bank selling the same, which indorsement must be other
than that of the acceptor.

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

INVESTMENT IN GOVERNMENT AND STATE BONDS.
SEC. 33. The National Reserve Association may invest
in United States' bondsl also in short-term jobligations
'■ having not more than one year to run) of the United
/ States or its dependencies, or of any State, or of foreign
^ governments^

POWER TO DEAL IN GOLD COIN OR BULLION.
SEC. 34. The National Reserve Association shall have
power, both at home and abroad, to deal in gold coin or
bullion, to make loans thereon, and to contract for loans
of gold coin or bullion, giving therefor, when necessary,
acceptable security, including the hypothecation of any
of its holdings of United States bonds.

POWER TO deal in FOREIGN EXCHANGE.
S ec . 35. The National Reserve Association shall have
power to purchase from its subscribing banks and to sell,
with or without its indorsement, checks or bills of exchange
payable in such foreign countries as the boarcUoT tl^ N a ____ tional Reserve Association may determine. These bills of
excKange must^w in nriraeii out of commercial transactions,
must have not exceeding ninety days to run, and must
bear the signatures of two or more responsible parties, of
which the last one shall be_that of a subscribing bank.

t*n ^

I d/M tS

POWER TO MAINTAIN BANK ACCOUNTS AND TO ESTABLISH
AGENCIES IN FOREIGN COUNTRIES.
SEC. 36. The National Reserve Association shall have
power to open and maintain banking accounts in foreign

..countries an(1 to establish agencies in foreign countries for

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the purpose o f p u r c h l s i n ^ ^ selling and collecting for­
eign bills of exchange, a n a it shall have authority to buy
and sell, with or Without its indorsement, through such
correspondents or agencies, checks orjprime foreign bills
of exchange'whioU havr SfiNH fouUof eommereiaTtransactions, which have not exceeding ninety days to run,
and which bear the signatures of two or more responsible
parties.
1

DOMESTIC EXCHANGES.
S e c . 37. It shall be the duty of the National Reserve
Association or any of its branches, upon request, to trans­
fer any part of the deposit balance of any bank having an
account with it to the credit of any other bank having an
account with the National Reserve Association. If a de­
posit balance is transfeircd from the books of one branch
to the books of another branch, it may be done, under
regulations to be prescribed by the National Reserve As­
sociation, by mail, telegraph, or otherwise, at rates to be
fixed at the time by the .^MMt. n^STtlie brancTlrt'whi'ch
the transaction originates, n* r“ r~rrin li i ii uJlliluittL^
, lihrtrpofr-

4

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20 PER CENT.

8 NB

MONO. SEC
R E A L EST A TE.

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SEC. 38. The National Reserve Association may pur"chase^ hold, and convey real estate for the following purposes and for no others:
First. Such as shall be necessary for the immediate
accommodation in the transaction of the business either
of the head office or of the branches.
Second. Such as shall be mortgaged to it in good faith
by way of security for debts previously contracted.
Third. Such as shall be conveyed to it in satisfaction of
debts previously contracted in the course of its dealings.
Fourth. Such as it shall purchase at sales underjudg-^
ments, decrees, or mortgages held by ^^association, or
shall purchase to secure debts due to it
But the National Reserve Association shall not hold
the possession of any real estate under mortgage or the
title and possession of any real estate purchased to secure
any debts due to it for a longer period than five years.
R E SE R V E S OF SU BSCRIBIN G BAN KS.

SEC. 39. All subscribing banks must conform to the
following requirements as to reserves to be held against
deposits of various classes, but the deposit balance of any
subscribing bank in the National Reserve Association and
any notes of the National Reserve Association which it
holds may be counted as the whole or any part of its re­
quired reserve:
First. On demand deposits: National banks in differ­
ent localities shall maintain the same percentages of
reserve against demand deposits as is now required by
law, and the same percentages of reserve against demand
deposits shall be required of all other subscribing banks
in the same localities.
Second. On time deposits: All time deposits and
moneys held in trust payable or maturing within thirty
days shall be subject to the same reserve requirements
as demand deposits in the same locality. All time
deposits and moneys held in trust payable or maturing
more than thirty days from date shall be subject to the
same reserve requirements as demand deposits for the
thirty days preceding their maturity, but no reserves
shall be required therefor except for this period. Such
time deposits and moneys held in trust must be repre­
sented by certificates or instruments in writing and be
payable only at a stated time not less than thirty days
from date of deposit, and must not be allowed to be with­
drawn before the time specified without thirty days
notice.
'
‘ ' ~ " __ ~ Thirdr Om sw in gs deposits ! Savings deposits, as dei» trUi* act, shall be subject to notice of withdrawal
not less than thirty days and shall be covered by a
reserve amounting to forty per centum of that required
gainst demand deposits in the same locality.
reserve of the national reserve association .

S ec T ^ All demand liabilities, including deposits and
•

*

-*

•

*

t’*

_ —a

a

notice.

f

Third. On savings deposits: Savings deposits, as defiaed i«--4kis~aet, shall be subject to notice of withdrawal
eP* not less than thirty days and shall be covered by a
reserve amounting to forty per centum of that required
gainst demand deposits in the same locality.

4

reserve of the national reserve association.

S e c . 4 ^ All demand liabilities, including deposits and
circulating notes, of the National Reserve Association
shall be covered to the extent of fifty per centum by a
reserve of gold (including foreign gold coin and gold bul­
lion) or other money of the United States which the
national banks are now authorized to hold as a part of
their legal reserve: Provided, That whenever and so long
as such reserve shall fall and remain below fifty per
centum the National Reserve Association shall pay a
special tax upon the deficiency of reserve at a rate increas­
ing in proportion to such deficiency as follows: For each
two and one-half per centum or fraction thereof that the
reserve falls below fifty per centum a tax shall be levied
at the rate of one and one-half per centum per annum:
Provided further, That no additional circulating notes
shall be issued whenever and so long as the amount of
such reserve falls below thirty-three and one-third per
centum of the outstanding notes.
e £.
All note issues of the National Reserve Asso­
ciation must be covered by the legal reserves required by
section 40 of this act and by bankable commercial paper
as herein defined or obligations of the United States.
Sec.
In computing the demand liabilities of th e ^
Association a sum equal to one-half of the amount of the '
United States bonds held by the association which have
been purchased from the national banks, and which had
previously been deposited by those banks to secure their
circulating notes, shall be deducted.

•




o

h*

REPORTS OF CONDITION OF THE NATIONAL RESERVE
ASSOCIATION.

MM

Sec.
The National Reserve Association shall make
a report, showing the principal items of its balance sheet,
to the Comptroller of the Currency once a week. These
reports shall be made public. In addition, full reports.
shall be made to the Comptroller of the Currenc)^coincident with the five reports called for each year from the
national banks.
;

1

........

J y

.

20 PER CENT.
n

MONO. SEC.

U,'.

• *>t

REPORTS OF SUBSCRIBING BANKS TO THE NATIONAL
RESERVE ASSOCIATION. ,
Spc.
All subscribing banks shall, under, regulations
to be prescribed by the National Reserve Association,
make a report monthly, or oftener if required, to said
association showing the principal items of their balance
sheets.

EXAMINATIONS.
The National Reserve Association may for all
subscribing banks accept copies of the reports of the
national-bank examiners for national banks and copies
of the reports of State-bank examiners for State banks
and trust companies, where the furnishing of such infor­
mation is not contrary to law: Provided, however, That
the standard of such examinations, both National and
State, meets the requirements. ^jj<fhe National Reserve
Association. The National Reserve Association shall have
the right at any time to examine or cause to be examined
by its own representatives any subscribing bank. The
National Reserve Association may make such payments
to • national and State examiners for any services re­
quired of them as the directors may consider just and
equitable.

FURTHER NOTE ISSUES BY NATIONAL BANKS PROHIBITED.
SEC. jpi^There shall be no further issue of circulating
notes by any national bank beyond the amount now out­
standing. National banks may^^ii they
/ maintain
their present note issue, but whenever a bank retires the
whole or any part of its existing issue ttTriigti permanently
its right to reissue the notes so retired.
A

va

4

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i
^

- -

9

Ck

PURCHASE OF TWO PER CENTUM BONDS BY NATIONAL
.
RESERVE ASSOCIATION.
S ec.
The National Reserve Association/*nu*T, for a
period of one year, offer to purchase at a price not less
than par and accrued interest the two per centum bonds
held by subscribing national banks and deposited to secure
their circulating notes. The National Reserve Association
shall take over the** bonds and assume responsibility for
the redemption upon presentation of outstanding notes
secured thereby. The National Reserve Association shall
issue, on the terms herein provided, its own notes a s 4esfcthe outstanding notes secured by such bonds so held
shall be presented for redemption and may issue further
notes from time to time to meet business requirements.

PROVISIONS REQUIRING DEPOSIT OF BONDS BY NATIONAL
BANKS REPEALED.
S e c . 'fiw. All provisions of law requiring national banks
to hold or to transfer and deliver to the Treasurer of the
United States Mnitrri
bondspother than those re­
quired to secure outstanding circulating notes and Gov­
ernment deposits are hereby repealed.

MT*.: fW

ON NOTES OF NATIONAL RESERVE ASSOCIATION.

*
**
S ec . 4*^ Any notes of the National Reserve Associa­
tion in circulation at any time in excess of nine hundred
million dollars which are not covered by an equal amount
of lawful mone^fcheld by said association shall pay a spe­
cial tax at the rate of one and one-half per centum per
annum, and any notes in excess of ’one biilion two
hundred million dollars not so covered shall pay a spe­
cial tax at the rate of five per centum per annum.
4

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quired to secure outstanding circulating notes and Gov­
ernment deposits are hereby repealed.
i
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X ON NOTES OF NATIONAL RESERVE ASSOCIATION.

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Sec.
Any notes of the National Reserve Associa­
tion in circulation at any time in excess of nine hundred
j nillion dollars which are not covered by an equal amount
of lawful mone^held by said association shall pay a spe­
cial tax at the rate of one and one-half per centum per
annum, and any notes in excess of rone billion two
hundred million dollars not so covered shall pay a spe­
cial tax at the rate of five per centum per annum.

CIRCULATING NOTES FIRST LIEN ON ASSETS.
5*

&

S e c . ^ The circulating notes of the National Re­
serve Association shall constitute a first lien upon all its
assets and shall be redeemable in lawful money on pres­
entation at the head office of said association or any
of its branches. It shall be the duty of the National
Reserve Association to maintain at all times a parity of
value, of its circulating notes with the standard estab­
lished by the first section of the act of March fourteenth,
nineteen hundred, entitled “ An act to define and fix the
standard of value, to maintain the parity of all forms of
money issued or coined by the United States, to refund the
public debt, and for other purposes.”

F.OR WHAT CIRCULATING NOTES OF NATIONAL RESERVE
__
ASSOCIATION ARE RECEIVABLE.
§EC. ipJ^The circulating notes of the National Reserve
Association shall be received at par in payment of all,
taxes, excises, and other dues ,to the United States, and
fo r ,all salaries and other debts and demands owing by
the United States to individuals, firms, corporations, or
associations, except obligations of the Government which
are by their terms specifically payable in gold, and for all
debts due from or by one bank to another, and for all
obligations due to a bank.

CIRCULATING NOTES FORWARDED ON APPLICATION.
S ec .
The National Reserve Association and its
branches shall at once, upon application and without
charge rfor transportation, forward its circulating notes
to ahy depositing bank against its credit balance.

EXCHANGE OF 2 PER CENT FOR 3 PER CENT BONDS*
S ec.
Upon application of the National Reserve As­
sociation the Secretary of the Treasury shall exchange
the two per centum bonds bearing the circulation priv­
ilege purchased from the banks for three per centum bonds
without the circulation privilege, payable after fifty years
from the date of issue.

s i

FRANCHISE TAX.
.j*
S K < T *^ T h e
ional Reserve Association shall pay to
the Government a special franchise tax of one and one-half
per centum annually during the period of its charter upofi
an amount equal to the par value of such bonds transferred
to it by the subscribing banks,
1

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NB
10
MONO.
SA LE OR REDEMPTION OF PONDS.

^7

The National Reserve Association shall agree
to hold the three per centum bonds so issued during the
period of its corporate existence: Provided, That after
five year^Jhe Secretary of the Treasury pnay at his option
permit the National Reserve Association to sell not more
than fifty million^)of such bonds annually: And provided
further, That the United Statcs'reserves the right at any
time to pay any of such bonds before maturity, or to pur­
chase any of them at par for the trustees of the postal
savings, or otherwise.
vSEC.

V

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FOREIGN BA N KS.

S ec.
That banking corporations for carrying on the
business of banking^and in aid of the commerce of the
Art*
United States or its eitizonywitli foreign countries and to__^
a5 jas>fiiitiiiei«i agents of the United States^may be formed
by any number of persons, not less in any case than five,
shall enter into articles of association which shall
specify in general terms the object for which the banking
corporation is formed and may contain any other provi­
sions not inconsistent with the provisions of this fwtKwmch
the banking corporation may see fit to adopt for the reg­
ulation and conduct of its business and affairs, which said
regulations shall be signed, in duplicate, by the persons
uniting to form the banking corporation and one copy
thereof shall be forwarded to the Comptroller of the Cur­
rency and the other to the Secretary of State, to be filed
and preserved in their offices.
That the persons uniting to form such banking
corporation shall under their hands make an organization
certificate which shall specify, first, the name assumed by
such banking corporation, which name shall be subject to
approval by the comptroller; second, the foreign country
or countries or the dependencies or colonies of foreign
countries oft of the United States where its^bperations^fc
are to be carried on; third, the place
in the United States where its home office shall be located;
fourth, the amount of its capital stock and the number of
shares into which the same shall be divided; fifth, the
names and places of residence of the^shareholders and the
number of shares held by each of them; and, sixth, a
' ^ ^ e e laration that said certificate is made to enable such
/ lit
persons to avail themselves of the advantages of this.
That no banking corporation shall be organ­
ized under
wjth ^ less capital than two pillion f
dollars, M
-fid h y / k a d U A i / j f i l s
_______v , ThajL.every Jbtaa^hig Corporation formed pur- /
suant to the provisions of thisj^et shallTrom the date of
the execution of its organization certificate be a body
corporate, but shall not be authorized to receive deposits
in the United States nor compete with banks in the
United States organized cither under national, or. State1; i
r
laws for domestic business not necessarily related to the■
i
business being done in foreign countries or in the depend­
encies of the United States.
banking eorpoiatiuns
slinp i-.ru. have i «wiTrr"rfjtn inni r
an y rtf ±lM»~peovisioTis or -the laws refitting to national
bank
Imwwwbw within the United Stateii Such
banking, corporation! shall have full poworvTo make
acceptances of riiaf a s^bills of exchange,*or other com*
r
mercial paper)
maturing *mbr.LH}ucut-Xa-thc date of
■f o-erv-such banking corpora t i o n - f i n v e
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la w s fo r d o m e stic b u sin e ss n o t n e c e s s a rily r e la te d to th e
business b e in g d o n e in fo re ig n c o u n trie s o r in th e d e p e n d ­

banking ■eorpoidLiUTre—
'fchalt-not have ,—w»pmvorito issu e o r ctT^utalU lTotcs undei—
anyth e -fH xrv isio n s o r -the la w s relating t o n a tio n a l
■ baaks doing- business w ith in the United S t a t e s S u c h
b a n k in g c o rp o r a tio n ^ sh a ll h a v e 4 M powor/ t o m a k e
e n c ie s o f th e U n ite d S t a t e s .

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a c c e p ta n c e s o f diuii**,^ b ills o f e x c h a n g e ,* o r o th e r c o m ­

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m id maturing subsequent to-th o date--of
aaecptuavg? -Every such banking corporation-ahah.have
-pewer^ to fmrehase o r sell s e c u r itie s of th e U n ite d S t a t e s
j s r of any State m-the- Uirion or of foreign governments or
swbdivisions-or tnunieipaliiies of foreign--countries. E a c h ,
m e r c ia l p a p e ^

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p o w e r to e s ta b lis h a n d m a in ta in fo r th e tr a n s a c tio n

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it s b u s in e s s a b r a n c h o r b ra n c h e s in fo re ig n c o u n trie s,
t h e ir d e p e n d e n c ie s, o r th e

d e p e n d e n c ie s o f th e U n ite d

vStates a t su c h p la c e s a n d u n d e r su ch r e g u la t io n s as/C he—
b o a rd o f d ire c to rs m a y -d e t e r m in e to b ^ x p e d ie n tT —

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~SNl m a jo r it y o f th e m e m b e rs o f th e b o a rd o f d ire c to rs o f

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su c h b a n k in g e o r p o r a t io i^ s h a ll b e c itiz e n s o f th e U n ite d

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o n e h u n d re d s h a r e s o f th e c a p it a l sto c k o f th e b a n k in g
c o r p o r a tio n o f w h ic h he is a d ire c to r.
o r p o r a tio n s h a ll b e h e ld a t it s h o m e o ffice in th e U n ite d

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S t a t e s , a n d e v e r y su c h b a n k in g c o r p o ra tio n sh a ll k e e p a t
it s h o m e o ffice b o o k s c o n ta in in g th e n a m e s o f a ll

stock­

h o ld e rs o f su c h b a n k in g c o r p o ra tio n a n d m e m b e rs o f its
b o a r d o f d ire c to rs , to g e th e r w ith c o p ie s o f th e re p o r ts f u r ­
n is h e d b y it to th e C o m p tr o lle r o f th e C u r r e n c y e x h ib itin g

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(WXI




lia b ilitie s o f th e b a n k in g c o r p o ra tio n .

, 4s

E v e r y su ch b a n k ­

in g c o r p o ra tio n s h a ll m a k e r e p o r ts to th e C o m p tro lle r o

r?L> Jiuliunal banks make
-IheilLIgpQiti? u lld siL E X istin g s t a t u t e s , a n d shall b e subject
-to-examination, when deemed nccessary^ y tfre-Comptrol
lor of thjy€ugr<*iwwfr throughduank ucamincrc appointed by
tlit Cunimr ollcr.----- — Gut. 0T . A n y b a n k d o in g b u sin e ss in th e U n ite d S t a t e s
t h e C u r r e n c y a t tfTic TIuuC' TfnTf

a n d b e in g th e o w n e r o f sto c k in th e N a tio n a l R e s e r v e A s ­
s o c ia tio n m a y su b sc rib e to th e sto c k o f a n y b a n k in g c o r­
p o ra tio n organ ized - u n d e r th e p ro v isio n s o f this^iefe, b u t
th e a g g r e g a te o f su c h sto c k h eld b y a n y one b a n k s h a ll
n o t e x c e e d te n p e r c e n tn m o f th e c a p it a l sto c k o f th e
s u b s c r ib in g b a n k .
__
$ £ £ .* & * ,. - T h a t - t h e

p ro v is io n s rif~ aT T "taw s " r e la t in g

a sso c ia tio n s

to

so fa r

TT^rincbnsi^nt •Wfth the prcrvrsioxK'of
nd control banking corporations-^' '
-urganiral Lu-ryunU/a

Sec. 59.
the

Congress reserves the right to alter or amend

p r o v is io n s 'o f

r

.

Sec.1 60.

#

this act at the end of decennial periods.

9t
All acts or parts of acts i n c o n s i s t e n t

the provisions of this act are hereby repealed.

;

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1

Be it enacted by the Senate and House oj Representatives
oj the l rnited States oj A merica in Congress assembled, That
the National Reserve Association of the United States be.
and it is hereby, created a body corporate and established
for a term of fifty years from the date of the filing with
the Comptroller of the Currency of the certificate herein­
after provided, with an authorized capital equal in amount
to twenty per centum of the paid-in and unimpaired
capital of all banks; eligible for membership in said
National Reserve Association. Before the said associa­
tion shall be authorized to commence business two hun­
dred million dollars of the capital stock shall be sub­
scribed and one hundred million dollars of the capital
stock shall be paid in cash. The capital stock of said
association shall be divided into shares of one hundred
dollars each. Ihxycapital stock may be increased from
time to time as subscribing banks increase their capital
or as additional banks become subscribers or may be
decreased as subscribing banks reduce their capital,or
leave the association by liquidation. The head office of
the National Reserve Association shall be located in
Washington, in the District of Columbia.

CORPORATE POWERS OF THE NATIONAL RESERVE
ASSOCIATION.
S ec . 2. Upon duly making and filing with the Comp­
troller of the Currency the certificate hereinafter required
the National Reserve Association shall become a body
corporate and as such and by that name shall have power—
First, fo adopt and use a corporate seal.
Second. To have succession for a period of fifty years
from the date of said certificate.
Third. To make contracts.
Fourth. To sue and be sued, complain and defend, in
anv court, of law
equity, as fully as natural persons.
Fifth. To elect or appoint directors and officers in the
manner hereinb ^ gi'ti provided, define their duties, re­
quire bonds of them, and fi> the f entity thereof.
Sixth. To prescribe by its t>oard of directors by-laws
not inconsistent with this act, regulating the manner in
which its property sfipll be transferred; iU general busi­
ness conducted, and the p riv ile g e granted to it by law
exercised and enjoyed.
Seventh. To purchase, acquire,
hold real estate as
hereinafter provided.
r
Right h. t o exercise by its board of directors or duly
authorized officers or agents, subject to law, all powers
and privileges conferred by this act.

;

membership.
«. i<'■ N
(z* . _< . k> *;. ’ > , , .
S ec . , i All national hanks, and all'bank's dr tnlst coinnnn»«»<< n h q r t p r p r l

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authorized officers or agents, subject to law, all powers
and privileges conferred by this act.

MEMBERSHIP.

7 j..l<
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■ ■
S e c . 3. .All national banks, and alf bank’s or tftist com­
panies chartered by the laws of any State of the United
States or of the District of Columbia, complying with the
requirements for membership in the said National Reserve
Association, hereinafter set forth, may subscribe to its
capital to an amount equal to twenty per centum- of. the
paid-in and unimpaired capital of the subscribing bank,
and not more nor less; and each of such subscribing banks
shall become a member of a local association as hereinafter
provided. Fifty per centum of the subscriptions to the
capital, of the National Reserve Association shall be fully
paid in; the balance of the subscriptions will remain a
liability of the subscribers, subject to call and payment
thereof whenever necessary to meet the obligations of the
National Reserve Association under such terms and in
accordance with such regulations as the board of directors
of the National Reserve Association may prescribe.
A bank or trust company incorporated under the laws
of any State^inay subscribe to the capital stock of the
National Reserve Association; provided:
First. I hat (a) if a bank, it shall have a paid-in and
unimpaired capital of not less than that required for a
national bank in the same place; and that (b) if a trust
company, it shall have an unimpaired surplus of not less
than twenty per centum of its capital, and if located in
a place having a population of six thousand inhabitants
or less shall have a paid-in and unimpaired capital of not
less than fifty thousand dollars; if located in a city having
a population of more than six thousand inhabitants and
not more than fifty thousand inhabitants, shall have a
paid-in and unimpaired capital of not less than one hun­
dred thousand dollars; if located in a city having a popu­
lation of more than fifty thousand inhabitants and not
more than two hundred and fifty thousand inhabitants
shall have a paid-in and unimpaired capital of not less
than two hundred thousand dollars; if located in a city
having a population of more than two hundred and fifty
4 thousand inhabitants and not more than four hundred
thousand inhabitants shall have a paid-in and unimpaired
capital of not less than four hundred thousand dollars;
if located in a city having a population of more than
four hundred thousand inhabitants shall have a paid-in
and unimpaired capital of not less than five hundred
thousand dollars.

/

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J




2
N
B
MONOTYPE SECTION
Second. That it shall have and agree to maintain
against its demand deposits a reserve of like character
and proportion to that required by law of a national bank
in the same (Tocationr Provided, however, That deposits
which it may have with any subscribing national bank,
State bank, or trust company in a city designated in the
national banking laws as a reserve city or a central reserve
city shall count as reserve in lfke/'manner and to the same
extent as similar deposits of a national bank with national
banks in such cities.
’
Third. That it shall have and agree to maintain against
all other classes of deposits the percentages of reserve
required by this act.
Fourth. That it shall agree to submit to such examina­
tions and to make such reports as are required by law and
to comply with the requirements and conditions imposed
by this act and regulations made in conformity therewith.
The words “ subscribing banks” when used hereafter
in this act shall be understood to refer to such national
banks, and banks or trust companies chartered by the
1iws'of any State of the United States or of the District of
Columbia, as shall comply with the requirements jfor
membership hereinbefore defined.
\ ,
.
• * ». *■

ORGANIZATION COMMITTEE!

*

l
S ec . 4 The Secretary of the Treasury, the Secretary ot £
Agriculture, the Secretary of Commerce and Labor, and '{
the Comptroller of the Currency ^are hereby designated
.
a committee to effect the preliminary organization of
the National Reserve Association, and the necessary
expenses of said committee shall be payable out of the
.
Treasury upon vouchers approved by the members of
said committee, and the Treasury shall be reimbursed
by the National Reserve Association to the full amount
paid out therefor.
Within sixty days after the passage of this act said committee shall provide for the opening of books for subscriptidns to the capital stock of said National Reserve Asso­
ciation in such places us the swid&mmjttcc ma,y. designate.
Before the subscription of any bank to the capital stock of
the National Reserve Association shall be accep t^ , said
bank shall file with the organization committee*'orSaftei;,
organization with the National Reserve Association 'a
,
certified copy Joi a resolution adopted by the fioaVd of
1
^
directors of said bank accepting all the provisions and
liabilities imposed by this act and authorizing the presi- ?
}
dent or cashier of said bank to subscribe for said stock,. , ,
■ V-' .

LOCATION OF BRANCHES AND DIVISION OF THE COUNTRY
INTO DISTRICTS.
,
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A
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*

S ec . 5. When the subscriptions to the capital stock of
the National Reservg Association shall amount to the sum
of two hundred million^ J f dollars the organization com­
mittee hereinbefore provided shall forthwith proceed to
select fifteen cities in the United States for the location-of
the branches of said National Reserve Association: P ro­
vided, That one branch shall be located in the New England
States, including the States of Maine, New Hampshire,
Vermont, Massachusetts, Rhode Island, and Connecticut;
two branches in the Eastern States, including the States of
New York, New Jersey, Pennsylvania, and Delaware; four
branches in the Southern States, including the States of
Maryland, Virginia, West Virginia, North Carolina, South
Carolina, Georgia, Florida, Alabama, Mississippi, Louis­
iana, Texas, Arkansas, Kentucky, Tennessee, and also
the District of Columbia; four branches in the Middle
Western States, including the States of Ohio, Indiana,
,

S*

>
-




Vermont, Massachusetts, Rhode Island, and Connecticut;
two branches in the Eastern States, including the States of
New York, New Jersey, Pennsylvania, and Delaware; four
branches in the Southern States, including the States of
Maryland, Virginia, West Virginia, North Carolina, South
Carolina, Georgia, Florida, Alabama, Mississippi, Louis­
iana, Texas, Arkansas, Kentucky, Tennessee, and also
the District of Columbia; four branches in the Middle
Western States, including the States of Ohio, Indiana,
Illinois, Michigan, Wisconsin, Minnesota, Iowa, and
Missouri; four branches in the Western and Pacific
States, including the States of North Dakota, South
Dakota, Nebraska, Kansas, Montana, Wyoming, Colorado,
New Mexico, Oklahoma, Washington, Oregon, California,
Idaho, Utah, Nevada, and Arizona.
When the cities in which the branches are to be located
have bee# selected the organization committee shall forth­
with divide the entire country into fifteen districts, with
one branch of the National Reserve Association in each
district; provided that the districts shall be apportioned
with due regard to the convenient and customary course
of business and not necessarily along State lines.
The districts may be readjusted, and new districts and
new branches may from time to time be created by the
directors of the National Reserve Association.

ORGANIZATION OF LOCAL ASSOCIATIONS.
S e c . 6. All subscribing banks within a district shall
be grouped by the organization committee or after organi­
zation, by the National Reserve Association, into local
associations of not less than ten banks, with an aggre­
gate capital and surplus of at least five m illio n * * dollars,
for the purposes hereinafter prescribed: Provided, That
the territory comprised in each association shall be con­
tiguous and that in apportioning the territory due regard
shall be had Ja r the customary course of business and for
the convenience of the banks forming the association:
Provided further, That the territory included in the local
associations comprising a district shall be so apportioned
that every bank in said district shall be located within the
boundaries of some local association: And provided fur­
ther, That every subscribing bank shall become a mem­
ber only of the local association of the territory in which
it is situated.
The banks uniting to form such association shall, by
their presidents or vice presidents, under authority from
the board of directors, execute a certificate in triplicate
setting forth the name of the association, the names o f
the banks composing it, its principal place of business,
its territorial limits, and the purposes for which it is
organized. One copy of this certificate shall be filed
with the Comptroller of the Currency, one copy shall be
filed with the National Reserve Association, and one
copy shall be filed with the branch of the National
Reserve Association of the district in which the local
association is included. Upon the filing of such certifi­
cates the associated banks therein named shall become a
body corporate and by the name so designated may sue
and be sued and exercise the powers of a body corporate
for the purposes mentioned in this act.
The local associations in each district may 1>c readjusted
<2comAime to time and new associations may be created V
by the directorsof the National Reserve Association.

2C PER CENT.

3
N
B
MONOTYPE SECTION

V

ELECTION OK DIRECTORS BY LOCAL, ASSOCIATIONS.

C/

S ec . 7. Each local association shall have a board of
directors, the number to be determined bv the by-laws
of the local association. Three-fifths of that number
shall be elected by ballot cast by the representatives of
the banks that are members of the local association, each
bank having one representative and each representative
one vote for each of the positions tb be filled without
reference to the number of shares whk*h the bank holds
in the National Reserve Association. Two-fifths of tlie
whole number of directors of the local association shall be
elected by these same representatives of the several banks
that are members of jthe association, but in voting for
these additional directors each representative shall be
entitled to as many .votes as the bank which he represents '
holds shares in the -National Reserve Association. In
neither case shall voting by proxy be allowed. The
authorized representatives of a bank, as herein provided,
must be
president, vice president, or cashier-ja$*
44ie feftnlt -he ff p fcocntui
,•
,
Each director.yKhen appointed or elected shalj take an
oath that he will, so far as the duty devolves uponvhim„.
diligently and honestly administer the affairs of such ?
association and will not knowingly violate or w^lm^ly
permit to be violated any of the provisions of: this apt.
The directors originally elected shall hold/office until
the second Tuesday in February immediately following
their election, ^pd thereafter the directors shall be elected
annually on th$t date and shall hold office for the term of
one vear.
,
oy .s
•
S
The board of directors of the local association shall have
authority to make, diy-laws, not inconsistent with law,
subject to the approval of the directors o£;the National
Reserve Association.
{i\ ,
,
1 • 4.
1 • ■ ''' ,*
*

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ELECTION OF blREQTQE^ aY BRANCH ASSOCIATIONS.

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1
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SEC. 8. Each of the branches of the National Reserve
Association shall have a board of directors, the number, not
less than twelve, to be fixed by the by-laws of the branch.
These directors shall be elected in the following manner:
Th 4boards of each local association shall elect by ballot
a vo tn g representative or proxy holder. One-half of the
directors of the branch shall be elected by the vote of such
representatives, each representative having one vote for
each of the positions to be filled, without reference to the
number of shares which the bank^onywsing the associa­
tion which he represents holds iftth e National Reserve.
Association. One-third of the directors shall be elected by
the same voting representatives or proxy holders, but each
voting representative at this election shall have a number
of votes equal to the number of shares in the National
Reserve Association held by all the banks composing the
local association which he represents. The remaining onesixth of the directors shall be chosen by the directors
already elected and shall fairly represent the industrial,
commercial, agricultural, and other interests of the dis­
trict and shall not be officers or, while serving, directors of
banks, trust companies, insurance companies, or other
financial institutions. The manager of the branch shall be
ex-officio a member of the board of directors of the branch
and shall be chairman of the board.
Each director when appointed or elected shall take an
oath that he will, so far as the duty devolves upon him,

11
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V* *

*1 ■




trict and shall not be officers or, while serving, directors of ’
banks, trust companies, insurance companies, or other
financial institutions. The manager of the branch shall be
ex-officio a member of the board of directors of the branch
and shall be chairnun of the board.
Each director when appointed or elected shall take an
oath tha£ he will, so far as the duty devolves upon him,
diligently and honestly administer the affairs of such asso­
ciation and will not knowingly violate or willingly permit
to be violated any of the provisions of this act.
All the members of the board of directors of the branch
,!
except the ex officio member shall at the first meeting of
7
the board be divided into three classes. One-third of the
directors shall hold office until the first Tuesday in Maroh
immediately following the election; one-third of the direc- .*
tors shall hold office for an additional period of Pne y e a r Sl1
after the first Tuesday in March immediately following
the election; the remaining one-third of the directors shall
hold office for an additional period of, twp years after the
first Tuesday in March immediately following the eleci:ioh.s *
All elections shall be held on the first Tuesday in March
of each-year, and after the first election all directors shall
be elected for a term of three years.
.
The board of directors of the branch shall have author­
ity to make by-laws, not inconsistent with law, subject to
the approval of the National Reserve Association.

DIRECTORS OF THE NATIONAL RESERVE ASSOCIATION

t
'
S e c . 9. The National Reserve Association shall have a
board of directors, to be chosen in the following manner: *'
'First. Fifteen directors shall be elected, one by the
board of directors of each branch of the National Reserve
Association. In case the number of districts shall be
increased hereafter, each additional district shall be enti­
tled to elect an additional director.
Second. Fifteen directors shall be elected, one bv the
board of directors of each branch of the National Reserve
Association, who shall fairly represent the industrial, com­
mercial, agricultural, and other interests of the country,
mid v\ ho shall not be officers n c , while serving, di­
rectors of banks, trust companies, insurance companies,
or other financial institutions. In case the number of dis­
tricts shall be increased hereafter, each additional district
shall be entitled to elect an additional director of this class.
Third. Nine directors shall be elected by voting repre­
sentatives of the various districts, each of whom shall cast
a number of votes equal to the number of shares in the
National Reserve Association held by the banks in the *
district which he represents. Not more than one of these
directors shall be chosen from one district.
Fourth. There shall be seven ex officio members of the
board, namely: The governor of the National Reserve
Association, who shall be chairman of the board, two
deputy governors of the National Reserve Association, the
Secretary of the Treasury, the Secretary of Agriculture,
the Secretary of Commerce and Labor* and the Comp­
troller of the Currency.
No member of any national or State legislative body
shall be a director of the National Reserve Association,
nor of any of the branches, nor of any local association.

r




'20 PER CENT.

4
N
B
MONO. SEC.
All the members of the board, except the ex officio
JUembers, shall at the first meeting of the board be divided
into three classes. One-third of the directors shall hold
office until the first Tuesday in April immediately follow­
ing the election; one-third of the directors shall hold office
for an additional period of one year after the first Tuesday
in April immediately following the election; the remaining
one-third of the directors shall hold office for an additional
period of two years after the first Tuesday in April imme­
diately following the election. All elections shall be held
on the first Tuesday in April ,of each year, and after the
first election all directors shall be elected for a term of
jdirce years.
Kadi director shall take an oath that he will, so far as
'jr the duty devolves upon him, diligently and honestly
1 administer the affairs of such association and will not
<■ knowingly violate or willingly permit to be violated any
of the provisions of this act.
. . The board of directors of the National Reserve Asso­
ciation shall have authority to make by-laws, not incon­
sistent with law, which shall prescribe the manner in
which the business shall be conducted and the privileges
granted to it bv law exercised and enjoyed.

APPOINTMENT OF OFFICERS OF THE NATIONAL RESERVE
ASSOCIATION.
i •
Sec. io. The Executive officers of the National Reserve
association shall consist of a governor, two deputy gov­
ernors, a secretary, and such subordinate officers as may
be provided by the by-laws. The governor of the National
Reserye Association shall' be Selected t?\ the President of
the United States from a list of not less than three sub­
mitted to him by,the board of directors of said association.
T.ie person so selected shall thereupon be appointed by the
said board as governor of the National Reserve Asspciat.ipn
for a term of ten years, subject to rekio a> for caiise
by a two-thirds vote of the board. There sh$dl be'tw o
deputy governors, to be elected by the board, for a term
of seven years, subject to removal for cause by a majority
vote of the board. The two deputies first elected shall
serve for terms of four years and seven years, respectively.
In the absence of the governor or hip inability to act the
deputy who is senior irt hpoint of service shall act as
governor. The board of directors shall have authoritv to
appoint such other officers as may be provided for by t-he
■ apticlcn
by-laws.
ORGANIZATION PAPERS OF THE NATIONAL RFSERVU.
CIATION.
S e c . i i . When the board of directors of the National
Reserve Association is duly organized it shall call upon
the subscribififc banks for a payment of fifty per centum
on the amount of their subscriptions to the capital stock
of tfr* association. When one hundred million***? dollars
•
such capital^have been paid in the board of directors
shall at once proceed to execute and file wifh the Secre­
tary of State a certificate showing the payment of one
hundred million dollanL and they shall further file with
the Comptroller of the Currency a certificate showing the
title and location of each bank which has subscribed to the
capital stock of the National Reserve Association, the num•'l*

U.. ___ I.

___ 1 . «

.

•«

A
itr7

p1
&




O

shall at once proceed to execute and file wijth the Secre-.
• tary of State a certificate showing the payment of one
hundred million dollars and they shall further file, with
the Comptroller of theXurrency a certificate showing the
title and location of each bank which has subscribed to the
. capital stock of the National Reserve Association, the num­
ber of shares subscribed by each, and the amount paid
thereon.

OWNERSHIP.STOCK IN THE NATIONAL RESERVE ASSOCIA­
TION, •INCREASESAND REDUCTION OF CAPITAL.
S e c . 12. Shares of the capital stock of the National
Reserve Association shall not be transferable, and under
no circumstances shall they be hypothecated nor shall
they be owned otherwise than by the subscribing banks,
nor may they be owned by any bank other than in the
proportion herein provided. In case a subscribing bank
increases its capital it shall thereupon subscribe for an
additional amount of the capital of the National Reserve
Association equal to twenty per centum of the bank’s
. increase of capital, paying therefor its then book value
• as shown by the last published statement of said asso­
ciation. A bank applying for membership in the
National Reserve Association at any time after its for­
mation must subscribe for an amount of the capital
of said association equal to twenty per centum of the
capital of said subscribing bank, paying therefor its then
book value as shown by the last published statement of
said association. When the capital of the National
Reserve Association has been increased either on account
of the increase of capital of the banks in said association
or on account of the increase in the membership of said
association, the board of directors shall make and execute
a certificate showing said increase in capital, the amount
paid in and by whom paid. This certificate shall be
filed in the office of the Comptroller o ff the Currency.
In ease a subscribing bank reduces its capital it shall
surrender a proportionate amount of its holdings in the
capital of said association, and if a bank goes into vol­
untary liquidation it shall surrender all of its holdings of
the capital of said association. The shares surrendered
shall be canceled and the bank shall receive in payment
therefor a sum equal to their then book value as shown
by tjie last published statement of said association.
If any member of the National Reserve Association
shall become insolvent and a receiver be appointed, the
stock held by it in ffce association shall be canceled and
the balance, after paying all debts due by such insolvent
bank to Mie association (such debts being hereby declared
to be a first lien upon the paid-in capital stock), shall be
paid to the receiver of^the insolvent bank.
Whenever the capital stock of the National Reserve
Association is reduced, either on account of the reduction
in capital of members of the association or the liquidation
or insolvency of any member, the board of directors shall
make and execute a certificate showing such reduction of
capital stock and the amount repaid to each bank. This
certificate shall be filed in the office of the Comptroller of
the Currency.

■

}V




20 PER CENT. '

5
N
B
MONO. SEC.
EXEMPTION FROM LOCAL AND STATE TAXATION.
SEC. 13. The National Reserve Association and its;
branches and the local associations shall be exempt from
local and State taxation except in respect to taxes upon
real estate.

EXECUTIVE COMMITTEE OF THE NATIONAL RESERVE
ASSOCIATION.
SEC. 14. The directors of the National Reserve Associa­
tion shall annually elect from their number an executive
committee and such other committees as the by-laws of
the National Reserve Association may provide. The executiye committee shall consist of nine members, of which
the governor of the National Reserve Association shall be
ex officio chairman and the two rlrifiirt*-* and the Comp­
troller of the Currency ex officio members, but not more
than one of the elected members shall be chosen from any
one district.
.
The executive committee shall have all the authority
which is vested in the board of directors, except such as
may be specifically delegated by the board to other com­
mittees or to the executive officers, or such as may be
specifically reserved or retained by the board.

BOARD OF EXAMINATION.
SEC. 15. There shall be a board of examination elected
annually by the board of directors from among their num­
ber, excluding the members of the executive committee,
of which the Secretary of the Treasury shall be ex officio
chairman. It shall be the duty of this board to care­
fully examine the condition and the business of the
National Reserve Association and of the branches and to
make a public statement of the result of such examina­
tion at least once a year.

EXECUTIVE OFFICERS OF BRANCHES.
•

SEC. 16. Each branch shall have a managerjand a dep­
uty manager appointed from the district by the governor
of the National Reserve Association with the approval of
the executive committee and subject to removal at any
time by the same authority. The powers and duties of
the manager and deputy manager and of the various com­
mittees of the branches shall be prescribed by the by-laws
of the National Reserve Association.

EXECUTIVE OFFICERS OF LOCAL ASSOCIATIONS.
SEC 17. The directors of each local association shall
annually elect from their number a president, a vice presi­
dent, and an executive committee, whose powers and
duties shall be determined by the by-laws of the local
association, subject, however, to the provisions of this act.

LISTS OF SHAREHOLDERS.
SEC. 18. The National Reserve Association shall cause
to be kept at all times, at the head office of the associa­
tion, a full and correct list of the names of the banks
owning stock inJtoe association and the number of shares




annuatiy

- ----

dent, and an executive committee, whose powers a n a
duties shall be determined by the by-laws of the loca
association, subject, however, to the provisions of this act.
lists of shareholders.

S ec 18. The National Reserve Association shall cause
to be kept at all times, at the head office of the associa­
, *\
tion, a full and correct list of the names of the banks
i
owning stock in jh e association and the number of share
held by each. Such list shall be subject to the inspection
of all the shareholders and creditors of
association, and
a coov thereof on the first Monday of Ju ly of each year,
verified by the oath of the governor or deputy governor,
shall be transmitted to the Comptroller of the Currency.
S ec 19 The earnings of the National Reserve Asso­
ciation shall be disposed of in the following manner:
After the payment of all expenses and taxes the share­
holders shall be entitled to receive annually a minimum
dividend of four per centum on the paid-in capital, whic
dividend shall be cumulative. Further net earnings sha
be disposed of as follows: First, a contingent fund shal
be created, which shall be maintained at an amount equal
to one per centum on the paid-in capital,
shall not
exceed in any event two million dollars and shall be used
to meet any possible losses. Such fund shall, upon the
final dissolution of the National Reserve Association, go
to the United States and shall not under any circumstances
be included in the book value of the stock or go to the
shareholders. Second, one-half of additional net earnings
shall be paid into the surplus fund of the National Reserve
Association until said fund shall amount to twenty Pf*
centum of the paid-in capital, one-fourth shall be paid
to the United States as a franchise tax, and one-fourth
shall be paid to the shareholders, until the shareholders
/ \
dividend shall amount to five per centum per annum on ,
the paid-in capital, but no dividends shall at any time bg)
paid in excess of five per centum in any one year ( b a t
one-half of the additional earnings shall be added to the
surplus fund, and one-half shall be paid to the Unite
States as a franchise tax. (S te f, the surplus fund of the
National Reserve Association amounts to twenty per
centum of the paid-in capital all excess earnings shall go
to the United States as a franchise tax.

JrvK

V? \

6
N
B
MONOTYPE SECTION
GUARANTIES OF LOCAL ASSOCIATION.
S e c . 20. Any member of a local association may apply
to such association for a guaranty of the commercial
paper which it desires to rediscount at the branch of the
National Reserve Association in its district. Any such
bank receiving a guaranty from a local association shall
pay a commission to the local association, to be fixed in
each case by its board of directors. The guaranty of the
local association, in the event of loss, shall be met by the
members of the local association in proportion to the ratio
which their capital and surplus bears to the aggregate
capital and surplus of the members of the local associa­
tion, and the commission received for such guaranty,
after the payment of expenses and possible losses, shall
be distributed among the several banks of the local asso­
ciation in the same proportion. A local association shall
have authority to require security from any bank offering
paper for guaranty, or it may decline to grant the appli­
cation. The total amount of guaranties by a local asso­
ciation to the National Reserve Association shall not at
any time exceed the aggregate capital and surplus of the
banks forming the guaranteeing association.
clearing house.

/

ruJ^

If




>

S e c . 21. Any local association may by a vote of threefourths of its members and with the approval of the
National Reserve Association, assume and exercise such
of the powers and functions of a clearing house as are not
inconsistent with the purposes of this act. The National
Reserve Association may require any local association to
perform such services in facilitating the domestic ex­
changes of the! Reserve Association as the public interests
ay require.
suspension.

S e c . 22. The National Reserve Association may sus­
pend a bank^from the privileges of membership for a
failure for thirty days to maintain its reserves, or to make
the reports required by this act, or for misrepresentation
in any report or examination as to its condition or as
to the character or extent of its assets or liabilities.
privileges of subscribing banks.

S e c . 23. All of the privileges and advantages of the
National Reserve Association shall be equitably extended
to every bank of any of the classes herein defined which
shall subscribe to its proportion of the capital stock
of the National Reserve Association and shall otherwise
conform to the requirements of this act.
OOVEHNMBNT OF THB UNITED STATES AND BANKS OWNING

STOCK TO BE THE ONLY DEPOSITORS.
S e c . 24. The Government of the United States and
banks owning stock in the National Reserve Association
shall be the £ only depositors in said association. All
domestic transactions of the National Reserve Association
shall be confined to the Government and the subscribing
banks, with the exception of the purchase or sale of Gov­
ernment or State securities or securities of foreign govern­
ments or of gold coin or bullion.
0 f4




M

* iiV r

U ^ ru a ilU K S ,

S e c . 24. The Government of the United States and
banks owning stock in the National Reserve Association
shall be the £ only depositors in said association. All
domestic transactions of the National Reserve Association
shall be confined to the Government and the subscribing
banks, with the exception of the purchase or sale of Gov­
ernment or State securities or securities of foreign govern­
ments or of gold coin or bullion.

NATIONAL RESERVE JASSOCIATION FISCAL AGENT OF THE
GOVERNMENT.
S e c . 25. The National Reserve Association shall be the
principal fiscal agent of the^United States. The Govern­
ment of the United States shall upon the organization of
the National Reserve Association deposit its general funds
w ith 'said association and its] branches," and] thereafter
all receipts of the Government shall fee deposited with
said Association and its branches, and all disbursements
by the Government shall be made through said associa­
tion and its branches.

INTEREST ON DEPOSITS.
S e c . 26. The National Reserve Association shall pay no
interest on deposits.

REDISCOUNT OF BILLS OF EXCHANGE ARISING OUT OF
COMMERCIAL TRANSACTIONS FOR SUBSCRIBING BANKS.
S e c . 27. The National Reserve Association through its
branches may rediscount for and with the indorsement of
any bank having a deposit with it, notes and bills of ex­
change arising out of commercial transactions; that is,
notes and bills of exchange issued or drawn for
agricultural, industrial, or commercial purposes, and not
including notes or bills issued or drawn for the purpose
of carrying stocks, bonds, or other investment securities.
Such notes and bills must have a maturity of not more
than twenty-eight days, and must have been made at
least thirty days prior to the date of rediscount. The
amount so rediscounted shall in no case exceed the capi­
tal of the bank applying for the rediscount. The aggre­
gate of such notes and bills bearing the signature or in­
dorsement of any one person, company, firm, or corpora­
tion, rediscounted for any one bank, shall at no time
exceed ten per centum of the unimpaired capital and
surplus of said bank.




20 PI

MONO. SEC
REDISCOUNTS FOR SUBSCRIBING BANKS OF NOTES AND
BILLS OF EXCHANGE GUARANTEED BY THE LOCAL
ASSOCIATION.
S e c . 28. The National Reserve Association through its
branches may also rediscount, for and with the indorse­
ment of any bank having a deposit with it, notes and
bills of exchange arising out of commercial transactions as
hereinbefore defined, having more than twenty-eight days,
but not exceeding four months, to run, but in such cases
the paper must be guaranteed by the local association of
which the bank asking for the rediscount is a member.

DISCOUNT OF DIRECT OBLIGATION OF DEPOSITING BANK
INDORSED BY LOCAL ASSOCIATION.
S ec . 29. Whenever, in the opinion of the governor of
the National Reserve Association, the public interests so
require, such opinion to be concurred in by the executive
committee of the National Reserve Association and to
have the definite approval of the Secretary of the Treas­
ury, the National Reserve Association through its branches
may discount the direct obligation of a depositing bank,
indorsed by its local association, provided that the in­
dorsement of the local association shall be fully secured
by the pledge and deposit with it of satisfactory securi­
ties, which shall be held by the local association for
account of the National Reserve Association; but in no
such case shall the amount loaned by the National Re­
serve Association exceed three-fourths'of the actual value
of the securities so pledged.
S ec . 30. The power of rediscount and discount granted
to the National Reserve Association shall in each case be exercised through the branch
in the^listrict in which the bank making the application
is located.

R.VTES OF DISCOUNT.
S ec . 3 1. The National Reserve Association shall have
authority to fix the rates of discount from time to time,
which when so fixed shall be published, and shall be uni­
form throughout the United States.

PURCHASE OF ACCEPTANCES BY THE NATIONAL RESERVE
ASSOCIATION.
S e c . 32. The National Reserve Association may, when­
ever its own condition and the general financial conditions
warrant such investment, purchase from a subscribing
bank acceptances of banks or acceptors of unquestioned
financial responsibility. Such acceptances must have
arisen out of commercial transactions, must have not
exceeding ninety days to run, and must be of a character
generally known in the market as prime bills. Such
acceptances shall bear the indorsement of the subscribing
bank selling the same, which indorsement must be other
than that of the acceptor.

INVESTMENT IN GOVERNMENT AND STATE BONDS.
S e c . 33. The National Reserve Association may invest
in United States
•rUterm obligations




-V V V |^

W V /A •

INVESTMENT IN GOVERNMENT AND STATE BONDS.

.

S e c . 33. The National Reserve Association may invest
in United States bond^algo in short-term obligations
laving not more than one year to runiof the United
States or its dependencies, or of any State, or of foreign
governm ents,^
**

jE*

-I

. - - r.|------------ — — ---------------------—■ * * ■ * « ■ I

-

— - |||T~I

H L_r

POWER TO DEAD IN GOLD COIN OR BUDDION.
S e c . 34. The National Reserve Association!*shall have
power, both at home and abroad, to deal in gold coin or
bullion, to make loans thereon, and to contract for loans
of gold coin or bullion, giving therefor, when necessary,
acceptable security, including the hypothecation of any
of its holdings of United States bonds.

POWER TO DEAD IN FOREIGN EXCHANGE.
S e c . 35. The National Reserve Association shall have
power to‘purchase from its subscribing banks and^to sell,
with or without its indorsement, checks or bills of exchange
payable in such foreign countries as the boardJpf theTNational Reserve Association may determine. These bills[of
exchange must hetmmmmfi out of commercial transactions,
must have not exceeding ninety days to run,- and must
bear the signatures of two or more responsible parties, of
which the last one shall be that of a subscribing bank.

POWER TO MAINTAIN BANK ACCOUNTS AND TO ESTABDISH
AGENCIES IN FOREIGN COUNTRIES.
S e c . 36. The National Reserve Association shall have
power to open and maintain banking accounts in foreign
countries and to establish agencies in foreign countries for
the purpose of purchasing
selling and collecting for­
eign bills of exchange, and it shall have authority to buy
and sell, with or without its indorsement, through such
correspondents or agencies, checks or prime foreign bills
of exchange
out of commercial trans­
actions, which have not exceeding ninety days to run,
and which bear the signatures of two or more responsible
parties.

.‘1

DOMESTIC EXCHANGES.
S e c . 37. It shall be the duty of the National Reserve
Association or any of its branches, upon request, to trans­
fer any part of the deposit balance of any bank having an
account with it to the credit of any other bank having an
account with the National Reserve Association. If a de­
posit balance is transfeired from the books of one branch
to the books of another branch, it may be done, under
regulations to be prescribed by the National Reserve As­
sociation, by mail, telegraph, or otherwise, at rates to be
fixed at the time by the~iUaftiM» of the branch at which
the transaction originates,
^ -itYrniilivr rnmniittiir:

1




20 PER CENT.

......

~

8 NB

MONO. SEC.
REAL ESTATE.

•

S e c . 38. The National Reserve Association may pur­
chase, hold, and convey real estate for the following pur­
poses and for no others:
First. Such as shall be necessary for the immediate
accommodation in the transaction of the business either
of the head office or of the branches.
Second. Such as shall be mortgaged to it in good faith
by way of security for debts previously contracted.
Third. Such as shall be conveyed to it in satisfaction of
debts previously contracted in the course of its dealings.
Fourth. Such as it shall purchase at sales under judg­
ments, decrees, or mortgages held by
association, or
shall purchase to secure debts due to it.
But the National Reserve Association shall not hold
the possession of any real estate under mortgage or the
title and possession of any real estate purchased to secure
any debts due to it for a longer period than five years.

RESERVES OF SUBSCRIBING BANKS.
SEC. 39. All subscribing banks must conform to the
following requirements as to reserves to be held against
deposits of various classes, but the deposit balance of any
subscribing bank in the National Reserve Association and
any notes of the National Reserve Association which it
holds may be counted as the whole or any part of its re­
quired reserve:
First. On demand deposits: National banks in differ­
ent localities shall maintain the same percentages of
reserve against demand deposits as is now required by
law, and the same percentages of reserve against demand
deposits shall be required of all other subscribing banks
in the same localities.
Second. On time deposits: All time deposits and
moneys held in trust payable or maturing within thirty
days shall be subject to the same reserve requirements
as demand deposits in the same locality. All time
deposits and moneys held in trust payable or maturing
more than thirty days from date shall be subject to the
same reserve requirements as demand deposits for the
thirty days preceding their maturity, but no reserves
shall be required therefor except for this period. Such
time deposits and moneys held in trust must be repre­
sented by certificates or instruments in writing and be
payable only at a stated time not less than thirty days
from date of deposit, and must not be allowed to be with­
drawn before the time specified without thirty days’
notice.
.
Thirrfr lj r r savings dcpusltl. flaviiigj depooitu, ay- do
n f nnf j f m thran U i i i I jh il Ij """ilul dm 11 1)T
tp f n w t n n

r ■■ w

t

x m l 11 ~ ,l

i nf thwfr n nr|1lip » 4

a g a in s t d e m a n d d e p e oit.1! i i u l h i ffttm . lu c a h ^ ."

RESERVE OF THE NATIONAL RESERVE ASSOCIATION.
S e c . 40. All demand liabilities, including deposits and
circulating notes, of the National Reserve Association
«di3ll be covered to the extent of fifty per centum by a
T

A




nonce.

Thirrir^OnTMa lings depusltT. 3a viitgn depooito, "gEr do
finpH i n ± h \ r

fr

of not jn e ttinn llmly il Ij ""lliil inlmll tTT hmmui(il Tir*'l
m r n rc nmniintinf tn fnrtj per r r ntmn of thnf Tm{Mirrd
a g a i n s t d e m a n d d e p e o i t i i i u l l i L fffiiiL l u r a l k j ).

RESERVE OF THE NATIONAL RESERVE ASSOCIATION.
S e c . 40. All demand liabilities, including deposits and
circulating notes, of the National Reserve Association
shall be covered to the extent of fifty per centum by a
reserve of gold (including foreign gold coin and gold bul­
lion) or other money of the United States which the
national banks are now authorized to hold as a part of
their legal reserve: Provided, That whenever and so long
as such reserve shall fall and remain below fifty per
centum the National Reserve Association shall pay a
special tax upon the deficiency of reserve at a rate increas­
ing in proportion to such deficiency as follows: For each
two and one-half per centum or fraction thereof that the
reserve falls below fifty per centum a tax shall be levied
at the rate of one and one-half per centum per annum:
Provided further, That no additional circulating notes
shall be issued whenever and so long as the amount of
such reserve falls below thirty-three and one-third per
centum of the outstanding notes.
S e c . 41. All note issues of the National Reserve Asso­
ciation must be covered by the legal reserves required by
section jp of this'act and by bankable commercial paper
as herein defined or obligations of the United States.
S e c . 42. In computing the demand liabilities of the
aonoeiation a sum equal to one-half of the amount of the
United States bonds held by the association which have
been purchased from the national banks, and which had
previously been deposited by those banks to secure their
circulating notes, shall be deducted.

REPORTS OF CONDITION OF THE NATIONAL RESERVE
ASSOCIATION.
S e c . 43. The National Reserve Association shall make
a report, showing the principal items of its balance sheet,
to the Comptroller of the Currency once a week. These
reports shall be made public. In addition, full reports
shall be made to the Comptroller of the Currency^coincident with the five reports called for each year from the
national banks.

i

■1




t

20 PER CENT.

■ !

1

9
'
N
B
MONO. SEC.
REPORTS OF SUBSCRIBING BANKS TO THE NATIONAL
’ RESERVE ASSOCIATION.
S e c . 44. All subscribing banks shall, under regulations
to be prescribed by the National Reserve Association,
make a report monthly, or oftener if required, to said
association showing the principal items of their balance
sheets.

EXAMINATIONS.
S e c . 45*
Nati onal Reserve Association may for all
ribing tbanks accept copies of the reports of the
subscribing
national-bank examiners for national banks and copies
of the reports of State-bank examiners for State banks
anc} trust companies, where the furnishing of such infor­
mation is not contrary to law: Provided, however, That
the standard of such examinations, both National and
State, meets the requirements
fFie’ NatTohal Reserve
Association. The National Reserve Association shall have
the right at any time to examine or cause to be examined
by its own representatives any subscribing bank. The
National Reserve Association may make such payments
to national and State examiners for any services re­
quired of them as the directors may consider just and
equitable.

FURTHER NOTE ISSUES BY NATIONAL BANKS PROHIBITED.
SEC. 46. There shall be no further issue of circulating
notes by any national bank beyond the amount now out­
standing. National banks may
maintain
their present note issue, but whenever a bank retires the
whole or any part of its existing issue it shall permanently
surrender its right to reissue the notes so retired.

PURCHASE OF TWO PER CENTUM BONDS BY NATIONAL
RESERVE ASSOCIATION.
S e c . 47. The National Reserve Association -^W fTfor a
period of one year, offer to purchase at a price not less
than par and accrued interest the two per centum bonds
held by subscribing national banks and deposited to secure
their circulating notes. The National Reserve Association
shall take over these bonds and assume responsibility for
the redemption upon presentation of outstanding notes
secured thereby. The National Reserve Association shall
issue, on the terms herein provided, its own notes* «pi frwtas the outstanding notes secured by such bonds so held
shall be presented for redemption and may issue further
notes from time to time to meet business requirements.

PROVISIONS REQUIRING DEPOSIT OF BONDS BY NATIONAL
BANKS REPEALED.
S e c . 48. All provisions of law requiring national banks
to hold or to transfer and deliver to the Treasurer of the
^United States
bonda^pthec. than those re­
quired to secure outstanding circulating notes and GovernmentMeposits are hereby repealed.

TAX ON NOTES OF NATIONAL RESERVE ASSOCIATION,
\ c / ! S e c . 49. Any notes of the National Reserve Associa"

'

'

onv

in pvnoss of nine hundred

,/i

(y

A 7




LUtC.'J

quired to secure outstanding circu itin g notes and GovernmenUdeposits are hereby repealed.

TAX ON NOTES OF NATIONAL RESERVE ASSOCIATION,
S ec . 49. Any notes of the National Reserve Associa­
tion in circulation at any time in excess of nine hundred
million dollars which are not covered by an equal amount
of lawful mone\uheld by said association shall pay a spe"Ttel fax a F tiie rate of one and one-half per centum per
annum, and any notes in excess of ;one billion two
hundred million dollars not so covered shall pay a spe­
cial tax at the rate of five per centum per annum.

•

CIRCULATING NOTES FIRST LIEN ON ASSETS.

S e c . 50. The circulating notes of the National R e­
serve Association shall constitute a first lien upon all its
assets and shall be redeemable in lawful money on pres­
entation at the head office of said association or any
of its branches. It shall be the duty of the National
Reserve Association to maintain at all times a parity of
value of its circulating notes with the standard estab­
lished by the first section of the act of March fourteenth,
nineteen hundred, entitled “ An act to define and fix the
standard of value, to maintain the parity of all forms of
money issued or coined by the United States, to refund the
public debt, and for other purposes.”

FOR WHAT CIRCULATING NOTES OF NATIONAL RESERVE
ASSOCIATION ARE RECEIVABLE.
S e c . 51. The circulating notes of the National Reserve
Association shall be received at par in payment of all
taxes, excises, and other dues to the United States, and
for all salaries and other debts and demands owing by
the United States to individuals, firms, corporations, or
associations, except obligations of the Government which
are by their terms specifically payable in gold, and for all
debts due from or by one bank to another, and for all
obligations due to a bank.

CIRCULATING NOTES FORWARDED ON APPLICATION.
S e c . 52. The National Reserve Association and its
branches shall at once, upon application and without
charge for transportation, forward its circulating notes
to any depositing bank against its credit balance.

EXCHANGE OF 2 PER CENT FOR 3 PER CENT BONDS.
S e c . 53. Upon application of the National Reserve As­
sociation the Secretary of the Treasury shall exchange
the two per centum bonds bearing the circulation priv­
ilege purchased from the banks dor three per centum bonds
without the circulation privilege, payable after fifty years
from the date of issue.

FRANCHISE TAX.
S e c . 54. The National Reserve Association shall pay to
the Government a special franchise tax of one and one-half
per centum annually during the period of its charter upon
an amount equal to the par value of such bonds transferred




10 N B

MONO. SEC.
SALE OR REDEMPTION OF BONDS.
S e c . 55. The National Reserve Association shall agree
to hold the three per centum bonds so issued during the
period of its corporate existence: Provided, That after
five years the Secretary of the Treasuryjmay at his option
permit the National Reserve Association to sell not more
than fifty million! of such bonds annually: And provided
, That the United States/eserves the right at any
time to pay any of such bonds before maturity, or to pur­
chase any of them at par for the trustees of the postal
savings, or otherwise.

FOREIGN BANKS.
S e c . 56. Sfcwtl 2a n k in g c o r p o ra tio n s fo r c a r r y in g on th e
business of banking and in aid of the commerce of the
United States or its citizens with foreign countries and to
act as financial agents of the United States may be formed
by any number of persons, not less in any case than five,
who shall enter into articles of association which shall
specify in general terms the object for which the banking
corporation is formed and may contain any other provi­
sions not inconsistent with the provisions of this act which
the banking corporation may see fit to adopt for the reg­
ulation and conduct of its business and affairs, which said
regulations shall be signed, in duplicate, by the persons
uniting to form the banking corporation and one copy
thereof shall be forwarded to the Comptroller of the Cur­
rency and the ether to the Secretary of State, to be filed
and preserved in their offices.
S e c . 57. T h atth e persons uniting to form such banking
corporation shall under their hands make an organization
^certificate which shall specify, first, the name assumed by
such banking corporation, which name shall be subject to
approval by the aem ptfsllfr; second, the foreign country
or countries or the dependencies or colonies of foreign
countries or of the United States where its operations of
discount and deposit are to be carried on; third, the place
in the United States where its home office shall be located;
fourth, the amount of its capital stock and the number of
shares into which the same shall be divided; fifth, the
names and places of residence of the shareholders and the
number of shares held by each of them; and, sixth, a
declaration that said certificate is made to enable such
persons to avail themselves of the advantages of this act.
SEC. 58. 'titewtA/o banking corporation shall be organ­
ized under this act with a
than two million
dollars.
^
S e c . 59.
fv e r y banking corporation formed pur­
suant to the provisions of this act shall from the date of
the execution of its organization certificate be a body
corporate, but shall not be authorized to receive deposits
in the United States n r compete with banks in the
United States organized either under national or State
laws for domestic business mH necessarily related to the
business being done in foreign countries or in the depend­
encies of the United States. Such banking corporations
shall not have any power to issue or circulate notes under
any of the provisions of the laws relating to national
banks doing business within the United States. Such
banking corporations shall have full power to make
acceptances of drafts, bills of exchange *or other com­
mercial paper and maturing subsequent to the date of

V

v
iy

business being done in foreign countries or in the depend­
encies of the United States. Such banking corporations
shall not have any power to issue or circulate notes under
any of the provisions of the laws relating to national
banks doing business within the United States. Such
banking corporations shall have full power to make
acceptances of drafts, bills of exchange *or other com­
mercial paper and maturing subsequent to the date of
acceptance. Every such banking corporation shall have
power to purchase or sell securities 'of the United States
or of any State in the Union or of foreign governments or
subdivisions or municipalities of foreign countries. Each
banking corporation organized hereunder shall have
power to establish and maintain for the transaction of
its business a branch or branches in foreign countries,
their dependencies, or the dependencies of the United
vStates at such places and under such regulations as the
board of directors may determine
A majority of the members of the board of directors of
such banking corporation shall be citizens of the United
States. Each director shall own in his own right at least
one hundred shares oi the capital stock of ill* Uuvffeing

y

t

r




S e c . 6 o . The annual meeting of every such banking
corporation*shall be held at its home office in the United
States, and every such banking corporation shall keep at
its home office books containing the names of all stock­
holders of such banking corporation and members of its
board of directors, together with copies of the reports fur­
nished by it to the Comptroller of the Currency exhibiting
in detail and under appropriate heads the resources and
liabilities of.£fef banking corporation. Every such bank­
ing corporation shall make reports to the Comptroller of
the Currency at the same time as national banks make
their reports under existing statutes, and shall be subject
to examination, when deemed necessary by the Comptrol­
ler of the Currency, through bank examiners appointed by
S e c . 6 i . Any bank doing business in the United States
and being the owner of stock in the National Reserve As­
sociation may subscribe to the stock of«4aw banking cor­
poration organized under the provisions of this act, but
the aggregate of such stock held by any one bank shall
not exceed ten per centnm of the capital stock of the

xA




<7

20 PER CENT.

1MONO.
N SEC.
B
r

P V
V ' y

A B IL L .

7 r {f (* ’ 17

To incorporate th e National Reserve Association of the
Lnited States, and for other purposes.

CHARTER, CAPITA L, AND LOCATION.

«uL
r 'T J t
'?
<heSc c " a t e and HotlSC
J
L ”tted States of A mcnca m Congress assembled, T h a t
lc N a t io n a l R e s e r v e A s s o c ia tio n o f th e l 'h i t e d S t a t e s b e.
a m i is e r e b y c re a te d a b o d y c o r p o r a te fa n d e s ta b lish e d
fo r a te rm o f fif t y y e a r s fro m th e d a te o f th e filin g w ith
t le C o m p tro lle r o f th e C u r r e n c y o f th e c e r t ific a te h e re in ­
a f t e r p ro v id e d , w ith a n a u th o riz e d c a p it a l e q u a l in a m o u n t

7
N P.

i r>a

K en,tUm ° f thC P a k l- in a n d “ " ^ . p a i r e d
b a " kS e h g lb Ic fo r m e m b e rsh ip in sa id

Hon T
.
“SerVl A s s o c ia tio " B e fo r e th e sa id a s s o c ia ­
tio n sh a b e a u th o riz e d to c c m m e n c e b u sin e ss tw o h u n -

e

million dollars of the capital stock shall be sub­

stock
hr ,n
dred
miili°
n d°
llarS ° stock
f the of
caP«ul
stock slmlM
shall be° nC
paid
cash.
The
capital
said
association shall be divided into shares of one hundred
t ° ai? C ach ‘

f he c a p it a l sto c k m a y be in c re a se d fro m

oH s
mT
aS, S, SCr‘binS banks increase their capital
or as additional banks become subscribers or may be
e c re a se d a s s u b sc r ib in g b a n k s re d u c e th e ir c a p it a l orI h / V J aS*OC' a t,o n b -v liq u id a tio n . T h e h ead o ffice o f
e N a tio n a l R e s e r v e A sso c ia tio n sh all be lo c a te d in
W a sh in g to n , in th e D is tr ic t o f C o lu m b ia .

corporate

powers of the n a t io n a l
association.1

reserve

tro M er'n f' i l T
dU' y " “ “ “ K an d filin g w ith th e C o m p ­
*
f th " C “ rre n c y th e c e r tific a te h e r e in a fte r re q u ire d
e N a tio n a l R e s e r v e A sso c ia tio n s h a ll b eco m e a b o d y
c o r p o ra te a n d a s su ch an d b y th a t n a m e sh a ll h a v e p o w e r fMrst. I o a d o p t a n d u se a c o r p o ra te se a l.
S e c o n d . T o h a v e su cce ssio n fo r a p e rio d o f fift y y e a r s
fro m th e d a te o f sa id c e r t ific a te .
' *
I b ird . T-a m aka^eont i j l

■a n v ° S ^
^
d
cornP,ai» a"d defend, in
y court-onsw -ahfi equity, as fully as natural persons.
fifth ,
m

a ^

l o e le ct o r a p p o in t d ir e c to r s a n d o ffic e rs in th e
g

g

g

^

p ro v id e d r e f i n e

t h e ir d u tie s ,

Z

Sixth. To prescribe by its board of directors' by-laws
not inconsistent with this act, regulating the manner in
ness coaducTPHrtV f t ' ' * trinsferrcdcxereised and
„ „ S enjoyed.
’™
PnV,'egeS g r a n t e d
exercised

J

Seventh. To purchase, acquire,
hereinafter provided.

y

t o i(

busib-V 'aw

Teal estate as

1

au horitod m rC'SC by ,tS board of directors or duly
authorized officers or agents, subject to law, all powers
and privileges conferred by this act.
A

J

J

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.c „

m iu .il

uc

n c n ia ic iie u ,

ns

gen eral

iju m

-

ness conducted, and the privileges granted to it by law
exercised and enjoyed.
•
Seventh? To purchaseTacquire, • a d lid d V ^ a l estate as
hereinafter provided.
y
E ig h t h , T o e x e r c is e

L MA

A*
Ai y ^ > ^v

b y its b o a rd o f d ir e c to r s o r d u ly

a u th o riz e d ^ a ffic e rs o r a g e n ts , su b je c t to la w , a ll p o w e r s
a n d p r iv ile g e s c o n fe rre d b y th is a c t .

J f

d

1

iM

MEMBERSHIP.

■ 3- *^li national banks, and all banks or trust com­
panies chartered by the laws of any State of the United
i
States or of the District of Columbia, complying with the
requirements for membership in the said National Reserve
.
(.
i
xa \
(**A "N Association, hereinafter set forth, may subscribe to its
capital to an amount equal to twenty per centum of the
/ v . ;
.<?: paid-m and unimpaired capital of the subscribing bank,
and not more nor less; and each of such subscribing banks
■7
r . . . u 7* t'
shall become a member of a local association as hereinafter
f' t f
provided. Fifty per centum of the subscriptions to the
‘ Icapital^of the National Reserve Association shall be fully
!
paid in; the balance of the subscriptions yell remain a
r
liability of the subscribers, subject to call and payment
thereof whenever necessary to meet the obligations of the
National Reserve Association under such terms and in
accordance with such regulations as the board of directors
of the National Reserve Association may prescribe.

'"

A J i a n k _ o r tr u s t c o m p a n y in c o rp o ra te d u n d e r th e la w s
o f a n y S t a t e ^ m a v s u b s c r ib e to th e c a p it a l sto c k o f th e
N a t io n a l R e s e r v e A s s o c ia t io n ; provided:

r

F ir s t . T h a t (a) i f a b a n k , it sh a ll h a v e a p a id -in a n d
u n im p a ir e d c a p it a l o f n o t less th a n t h a t re q u ire d fo r a
n a tio n a l b a n k in th e sa m e p la c e ; a n d t h a t (6) if a t r u s t
c o m p a n y , it sh a ll h a v e a n u n im p a ir e d s u r p lu s o f n o t le ss
th a n t w e n t y p e r c e n tu m o f it s c a p it a l, a n d if lo c a te d in
a p la c e h a v in g a p o p u la tio n o f s ix th o u sa n d in h a b it a n t s
o r less sh a ll h a v e a p a id -in a n d u n im p a ir e d c a p it a l o f n o t
less th a n f i f t y th o u sa n d d o lla r s ; if lo c a te d in a c it y h a v in g
a p o p u la tio n o f m ore th a n s ix th o u s a n d in h a b it a n ts a n d

<L
V
'

J k
r

: S
u
/

■ ''

v (;

n o t m o re th a n fif t y th o u s a n d in h a b it a n t s , sh a ll h a v e a
p a id -in a n d u n im p a ire d c a p it a l o f n o t less th a n on e h u n ­
d re d th o u s a n d d o lla r s ; if lo c a te d in a c i t y h a v in g a p o p u a tio n o f m o re th a n fif t y th o u sa n d in h a b it a n ts a n d n o t
m o re th a n tw o h u n d re d a n d f i f t y th o u s a n d in h a b it a n t s
s h a ll h a v e a p a id -in a n d u n im p a ir e d c a p it a l o f n o t le ss
th a n tw o h u n d re d th o u sa n d d o lla r s ; i f lo c a te d in a c it v
h a v in g a p o p u la tio n o f m o re th a n tw o h u n d re d a n d f if t y
th o u s a n d in h a b it a n t s a n d n o t m ore th a n fo u r h u n d re d
th o u sa n d in h a b it a n ts sh a ll h a v e a p a id -in a n d u n im p a ire d
c a p it a l o f n o t less th a n fo u r h u n d re d th o u sa n d d o lla r s ;

? located in a city having a population of more than
four hundred thousand inhabitants shall have a paid-in
and unimpaired capital of not less than five hundred
thousand dollars.




2
N
B
MONOTYPE SECTION
Second. 1 hat

it

sh a ll

have

and

agree

to

m a in ta in

a g a in s t its d e m a n d d e p o s its a r e s e r v e o f lik e c h a r a c t e r
a n d p ro p o rtio n to th a t re q u ire d b v la w o f a n a tio n a l b a n k
in th e sa m e l o c a l in?T: Provided , however, T h a t d e p o s its
w h ich it m a y h a v e w ith a n y s u b s c r ib in g n a tio n a l b a n k ,
S t a t e b a n k , o r tr u s t c o m p a n y in a c it y d e s ig n a te d in th e
n a tio n a l b a n k in g la w s a s a r e s e r v e c it y o r a c e n tr a l r e s e r v e
c it y s h a ll c o u n t a s r e s e r v e in lik e m a n n e r a n d to th e sa m e
e x t e n t a s s im ila r d e p o s its o f a n a tio n a l b a n k w ith n a tio n a l
b a n k s in su c h c itie s.
T h ir d . T h a t it sh a ll h a v e a n d a g r e e to m a in ta in a g a in s t
a ll o th e r c la sse s o f d e p o sits th e p e r c e n ta g e s o f r e s e r v e
re q u ire d b y th is a c t.
F o u r t h . T h a t it sh a ll a g re e to s u b m it to su c h e x a m in a ­
tio n s a n d to m a k e su ch r e p o r ts a s a r c re q u ire d b y la w a n d
to c o m p ly w ith th e r e q u ire m e n ts a n d c o n d itio n s im p o se d
b y th is a c t a n d r e g u la tio n s m a d e in c o n fo r m ity th e re w ith .
T h e w o rd s “ s u b s c r ib in g b a n k s ” w h en u se d h e r e a fte r
in th is a c t s h a ll b e u n d e rsto o d to r e fe r to su ch n a tio n a l
b a n k s , a n d b a n k s o r tr u s t c o m p a n ie s c h a r t e r e d b y t h e '
la w s o f a n y S t a t e o f th e U n ite d S t a t e s o r o f th e D is tr ic t o f
C o lu m b ia , a s sh a ll c o m p ly w ith
m e m b e r sh ip h e re in b e fo re d efin e d .

th e

r e q u ire m e n ts

fo r

ORGANIZATION COMMITTEE.

S e c . 4. T h e S e c r e t a r y o f th e T r e a s u r y , th e S e c r e t a r y o f
A g r ic u lt u r e , th e S e c r e t a r y o f C o m m e rc e a n d L a b o r , a n d
th e C o m p tro lle r o f th e C u r r e n c y a re h e r e b y d e s ig n a te d
a c o m m itte e
th e

to e ffe c t

N a tio n a l

R eserve

th e

p r d im iiw y y

A s s o c ia tio n ,

o r g a n iz a tio n

and

th e

of

n ecessary

e x p e n s e s o f sa i^ c o m m itte e s h a ll b e p a y a b le o u t o f th e
T re asu ry upon

v o u c h e rs a p p r o v e d

sa id c o m m itte e ; a n d th e

by

T r e a s u r y sh a ll

th e m e m b e rs o f
be

re im b u r s e d

b y th e N a tio n a l R e s e r v e A sso c ia tio n to th e fu ll a m o u n t
p a id o u t th e re fo r.
,
W ith in s ix t y d a y s a ft e r th e p a s s a g e o f th is a c t sa id c o m ­
m itte e s h a ll p r o v id e fo r th e o p e n in g o f b o o k s fo r s u b s c r ip ­
tio n ^ to th e c a p it a l sto c k o f sa id N a tio n a l R e s e r v e A s s o ­
c ia tio n in su ch p la c e s a s th e sa id c o m m itte e m a y d e s ig n a te .
B e fo r e th e s u b s c r ip tio n o f a n y b a n k to. th e c a p it a l s to c k o f
th e N a tio n a l R e s e r v e A s s o c ia tio n sh a ll be a c c e p te d , s a id
b a n k s h a ll file w ith th e o rg a n iz a tio n c o m m itte e o r a f t e r
o r g a n iz a tio n w ith th e N a tio n a l R e s e r v e A s s o c ia tio n a
c e rtifie d c o p y o f a re so lu tio n a d o p te d b y th e b o a rd o f
d ir e c to r s o f sa id b a n k a c c e p tin g a ll th e p r o v is io n s a n d
lia b ilitie s im p o se d b y th is a c t a n d a u th o r iz in g th e p r e s i­
d e n t o r c a s h ie r o f sa id b a n k to s u b s c r ib e fo r sa id s to c k .
LOCATION OF KRAN CH ES AND DIVISION OF T IIE COUNTRY
INTO DISTRICTS.

S ec . 5. W h e n th e s u b s c r ip tio n s to th e c a p it a l sto c k o f
th e N a t io n a l R e s e r v e A s s o c ia tio n sh a ll a m o u n t to th e su m
o f tw o h u n d re d m illio n /
d o lla rs th e o r g a n iz a tio n c o m ­
m itte e h e re in b e fo re p r o v id e d s h a ll fo r t h w it h p ro c e e d to
se le c t fifte e n c itie s i/i th e U n ite d S t a t e s fo r th e lo c a tio n o f
th e b ra n c h e s o f sa id N a t io n a l R e s e r v e A s s o c ia t io n : Pro­
vided, T h a t o n e b ra n c h sh a ll b e lo c a te d in th e N e w E n g la n d
S t a t e s , in c lu d in g th e S t a t e s o f M a in e , N e w H a m p s h ir e ,
V e r m o n t, M a s s a c h u s e tts , R h o d e Is la n d , a n d C o n n e c tic u t;
tw o b ra n c h e s in th e E a s t e r n S t a t e s , in c lu d in g th e S t a t e s o f
N e w Y o r k , N e w J e r s e y , P e n n s y lv a n ia , a n d D e la w a r e ; fo u r
b ra n c h e s in th e S o u th e rn S t a t e s , in c lu d in g th e S t a t e s o f
M a r y la n d , V ir g in ia , W e st V ir g in ia , N o rth C a ro lin a , S o u th
C a ro lin a , G e o r g ia , F lo r id a , A la b a m a , M ississip p i, L o u is ­
ia n a , T e x a s , A r k a n s a s ,

K e n t u c k y , T e n n e sse e , a n d

a lso

select fifteen cities i;i the United States for the location of
the branches of said National Reserve Association: P r o ­
vid ed , That one branch shall be located in the New England
States, including the States of Maine, New Hampshire,
Vermont, Massachusetts, Rhode Island, and Connecticut;
two branches in the Eastern States, including the States of
New York, New Jersey, Pennsylvania, and Delaware; four
branches in the Southern States, including the States of
Maryland, Virginia, West Virginia, North Carolina, South
Carolina, Georgia, Florida, Alabama, Mississippi, Louis­
iana, Texas, Arkansas, Kentucky, Tennessee, and also
the District of Columbia; four branches in the Middle
Western States, including the States of Ohio, Indiana,
Illinois, Michigan, Wisconsin, Minnesota, Iowa, and
Missouri; four branches in the Western and Pacific
States, including the States of North Dakota, South
Dakota, Nebraska, Kansas, Montana, Wyoming, Colorado,
New Mexico, Oklahoma, Washington, Oregon, California,
Idaho, Utah, .Nevada, and Arizona.
t*'
When the cities in which the branches are to be located
have been selected the organization committee shall forth­
with divide the entire country into fifteen districts, with
one branch of the National Reserve Association in each
district; provided that the districts shall be apportioned
with due regard to the convenient and customarv course
of business and not necessarily along State lines.
The districts may be readjusted, and new districts and
new branches may from time to time be created by the .
directors of the National Reserve Association.
ORGANIZATION OF LOCAL, ASSOCIATIONS.

^




A

(

S ec . 6. All subscribing banks within a district shall
be grouped by the organization committee or after organi­
zation, by the National Reserve Association, into local
associations of not less than ten banks, with an aggre­
gate capital and surplus of at least five million^ o i dollars,
for the purposes hereinafter prescribed: P r o v id e d , That
the territory comprised in each association shall be con­
tiguous and that in apportioning the territory due regard
shall be had for the customary course of business and for
the convenience of the banks forming the association:
P ro v id e d further, That the territory included in the local
associations comprising a district shall be so apportioned
that every bank in said district shall be located within the
boundaries of some local association: A n d pro vided f u r ­
ther, That every subscribing bank shall become a mem­
ber only of the local association of the territory in which
it is situated.
The banks uniting to form such association shall, by
their presidents or vice presidents, under authority from
the board of directors, execute a certificate in triplicate
setting forth the name of the association, the names of
the banks composing it, its principal place of business,
its territorial limits, and the purposes for which it is
organized. One copy of this certificate shall be filed
with the Comptroller of the Currency, one copv shall be
filed with the National Reserve Association, and one
copy shall be filed with the branch of the National
Reserve Association of the district in which the local
association is included. Upon the filing of such certifi­
cates the associated banks therein named shall become a
body corporate and by the name so designated may sue
and be sued and exercise the powers of a body corporate
for the purposes mentioned in this act.
Th^Jocal associations in each d istric tm a ^ fe readjusted
3rom time to tTnieSahcT new associations may^>e created
by the directors of the National Reserve Association.
T




20 PER CENT.
T

3
N
B
MONOTYPE SECTION
ELECTIO N OF DIRECTORS B Y LOCAL ASSOCIATIONS.

S ec . 7. Each local association shall have a board of
directors, the number to be determined bv the by-laws
of the local association. Three-fifths of that number
shall be elected by ballot cast by the representatives of
the banks that are members of the local association, each
bank having one representative and each representative
one vote for each of the positions to be filled without
reference to the number of shares which the bank holds
in the National Reserve Association. Two-fifths of the
whole number of directors of the local association shall be
elected bv these same representatives of the several banks
that are members of the association, but in voting for
these additional directors each representative*’ shall be
entitled to as many votes as the bank which he represents
holds shares in the National Reserve Association. In
neither case shall voting by proxy be allowed. The
authorized,representatives of a bank, as herein provided,
must be eiw Sf Hie president, vice president, or eashierof*s
idi? Inn1' hr rrprrnnntni
^
Each director when appointed or elected shall take an
oath that he will, so far as the duty devolves upon him,
diligen.ly and honestly administer the affairs of such
association and will not knowingly violate or willingly
permit to be violated any of the provisions of this act.
The directors originally elected shall hold office until
the second Tuesday in February immediately following
their election, and thereafter the directors shall be elected
ailnually on that date and shall hold office for the term of
one year.
The board of directors of the local association shall have
authority to make by daws, not inconsistent with law,
subject to the approval of the directors of the National
Reserve Association.
.*

4 „ ,

)

ELECTIO N OF DIRECTORS B Y BRANCH ASSOCIATIONS.

s/

S e c . 8. Each of the branches of the National Reserve
Association shall have a board of directors, the number, not
less than twelve, to be fixed by the by-laws of the branch.
These directors shall be elected in the following manner:
The »oards of each local association shall elect by ballot
a voting representative q rffio xy hok^E- One-half of the
directors of the branch shall be elected by the vote of such
representatives, each representative having one vote for
each of the positions to be filled, without reference to the
number of shares which the banl^composing the associa­
tion which he represents holds in the National Reserve
Association. One-third of the directors shall b£ elected by
the same voting representatives
proxyTioTder^y m t each
voting representative at this election shall have a number
of votes equal to the number of shares in the National
Reserve Association held by all the banks composing the
local association which he represents. The remaining onesixth of the directors shall be chosen by the directors
already elected and shall fairly represent the industrial,
commercial, agricultural, and other interests of the dis­
trict and shall not be officers or, while serving, directors of
banks, trust companies, insurance companies, or other

financial institutions. The manager of the branch shall be
ex-officio a member of the board of directors of the branch
ahd shall be chairman of the board.
Each director vvhen appointed or elected shall take an
oath that he will, so far as the duty devolves upon him,
diligently and honestly administer the affairs of such asso­
ciation and will not knowingly violate or willingly permit
to be violated any of the provisions of this act.
All the members of the board of directors of the branch
except the ex officio member shall at the first meeting of

1 ‘4
..A

K {kl-Aat




t n c t a r i a s n a i l n o i r>e o n i c e r s o r , w i u i c s c r v m K , a i r c c i o r : , o f

banks, trust companies, insurance companies, or other
financial institutions. The manager of the branch shall be
ex-officio a member of the board of directors of the branch
ahd shall be chairman of the board.
.
v.
Each director vvhen appointed or elected shall take an
oath that he will, so far as the duty devolves upon him,
diligently and honestly administer the affairs of such asso­
ciation and will not knowingly violate or willingly permit
to be violated any of the provisions of this act.
All the members of the board of directors of the branch
except the ex officio member shall at the first meeting of
the board be divided into three classes. One-third of the
directors shall hold office until the first Tuesday m March
immediately following the election; one-third of the direc­
tors shall hold office for an additional period of one year
after the first Tuesday in March immediately following
the election; the remaining one-third of the directors shall
hold office for an additional period of two years after the
first Tuesday in March immediately following the election.
All elections shall be held on the first Tuesday in March
of each year, and after the first election all directors shall
be elected for a term of three years.
The board of directors of the branch shall have author­
ity to make by-laws, not inconsistent with law, subject to
the approval of the National Reserve Association.

DIRECTORS OF THE NATIONAL RESERVE ASSOCIATION.
S e c . 9. The National Reserve Association shall have a
board of directors, to be chosen in the following manner:
First. Fifteen directors shall be elected, one by the
board of directors of each branch of the National Reserve
Association. In case the number of districts shall be
increased hereafter, each additional district shall be enti­
tled to elect an additional director.
Second. Fifteen directors shall be elected, one bv the
board of directors ^)f each branch of the National Reserve
Association, who shall fairly represent the industrial, com­
mercial, agricultural, and other interests of the country,
and who shall not be officers por, while serving, di­
rectors of banks, trust companies, insurance ^companies,
or other financial institutions. In case the number of dis­
tricts shall be increased hereafter, each additional district
shall be entitled to elect an additional director of this class.
Third. Nine directors shall be elected b^^Tfoting repre­
sentatives of ane various districts, each of whom shall cast
a number of votes equal to the number of shares in the
National Reserve Association held by the banks in the
district which he represents. Not more than one of these
directors shall be chosen from one district.
Fourth. There shall be seven ex officio members of the
board, namely: The governor of the National Reserve
Association, who shall be chairman of the board, two
deputy governors of the National Reserve Association, the
Secretary of the Treasury, the Secretary of Agriculture,
the Secretary of Commerce and Labor, and the Comp­
troller of the Currency.
No member^of any national or State legislative body
shall be a director of the National Reserve Association,
nor of any of the branches, nor of any local association.

/




20 PER CENT.

4 NB

MONO. SEC.

fV

All the members of the hoard, except the ex officio
members, shall at the first meeting of the board be divided
into three classes. One-third of the directors shall hold
office until the first Tuesday in April immediately follow­
ing the election; one-third of the directors shall hold office
for an additional period of one year after the first Tuesday
in April immediately following the election; the remaining
one-third of the directors shall hold office for an additional
period of two years after the first Tuesday in April imme­
diately following the election. All elections shall be held
on the first Tuesday in April of each year, and after the
iirst election all directors shall be elected for a term of
three years..
hach director shall take an oath that he will, so far as
the duty devolves upon him, diligently and honestly
administer the affairs of such association and will not
knowingly violate or willingly permit to be violated anv
of the provisions of this act.
The board of directors of the National Reserve Asso­
ciation shall have authority to make by-laws, not incon­
sistent with law, which shall prescribe the manner in
which the business shall be conducted and the privileges
gianted to it bv law exercised and enjoyed.

APPOINTMENT of officers of tiie national reserve
ASSOCIATION.
The executive officers of the National Reserve
Association shall consist of a governor, two deputy gov­
ernors, a secretary, and such subordinate officers as may
be provided by the by-laws. The governor of the National
Reserve Association shall be selected bv the President of
the United States from a list of not less than three sub­
mitted to him by the board of directors of said association.
T :e person so selected shall thereupon be appointed by the
said hoard as governor of the National Reserve Association
for a term of ten years, subject to removal for cause
by a two-thirds vote of the board. There shall be two *
deputy governors, to be elected by the board, for a term
of seven years, subject to removal for cause by a majority
vote of the board. The two deputies first elected shall
serve for terms of four years and seven years, respectively,
n the absence of the governor or his inability to act the
deputy who is senior in point of service shall act as
governor. The board of directors shall have authority to
a P P ° m t such other officers as may be provided for by the
a m
U
t im
nr j]lf| by-laws.
v
S ec

.

io .

Organization paters or tiie national reserve
ciation.

a sso

­

S ec. n . When the board of directors of the National
reserve Association is duly organized it shall call upon
the subscribing banks for a payment of fifty per centum
° V & y ' mount. of thcir subscriptions to the capital stock
o Ike association. When one hundred millioiuf df dollars
of such capital have W en paid in the t» a rd of directors

try

:

Z

l PrOCCCr r °

« * with

Seere-

the Comptroller of the
^
♦ .•♦I
ii
..
,
currency a certificate showing tho
title and locat.on of each bank which has subscribed to 1
capital stock of the National Reserve Association, the num
ber of shares subscribed bv each itul 1i,,,
’
.
thereon.
'
’
1
amount paid
owners .

. , stock in the national reserve assoc, a-

ION, IN C REA SE AND REDUCTION OF

u :SRf : . / U ShareS of

CAPITAL

capital stock of the National




tary O f State u certificate showing the payment of one
hundred million dollars^rffuTTIirr-Tshatt fuithei life with
the Comptroller of tlie Currency a certificate showing the
title and location of each bank which has subscribed to the
capital stock of the National Reserve Association, the num­
ber of shares subscribed by each, and the amount paid
thereon.
1

7TV\
\

OWNERSHIP OF STOCK IN TIIE NATIONAL RESERVE ASSOCIATIO>j, INCREASE AND REDUCTION OF CAPITAL,.
12. Shares of the capital stock of the National
Reserve Association shall not be transferable, and under
. no circumstances shall they be hypothecated nor .shall
they be owned otherwise than by the subscribing banks
nor may they be owned by any bank other than in the
proportion herein provided. In case a subscribing bank
increases its capital it shall thereupon subscribe for an
additional amount of the capital of the National Reserve
Association equal to twenty per centum of the bank's
increase of capital, paying therefor its then book value
as shown by the last published statement of said asso­
ciation. A bank applying for membership in the
National Reserve Association at any time after its for­
mation must subscribe for an amount of the capital
of said association equal to twenty per centum of the
capital of said subscribing bank, paying therefor its then
book value as shown by the last published statement of
said association. When the capital of the National
fL‘S,erVe AsSOeiatl° " has been increased either on account
of the increase of capital of the banks in said association
or on account of the increase in the membership of said
association, the board of directors shall make and execute
a certificate showing said increase in capital, the amount
paid in and by whom paid. This certificate shall be
hied in the office of the Comptroller of the Currency
In case a subscribing bank reduces its capital it shall
SEC.

•t
i-'

Z i t s . f 3 .Plr° POrtionate
of its holdings In the
capital of said association, and if a bank goes into volary liquidation it shall surrender all of its holdings of
s h lin T
,S!,ld associationvt Tht shares surrendered
shall be canceled and the bank shall receive in payment
, ' r j ,o ,he,r th™ b~ k
<* » ! « » . ,
by the last published statement of said association
If any member of the National Reserve Association
shall become insolvent and a receiver be appointed, the
stock held by it in the association shall be canceled and
the balance, after paying all debts due by such insolvent
bank to the association (such debts being hereby declared
to be a first lien upon the paid-in capital stock), shall be
paid to the receiver outlie insolvent bank
Whenever the capital stock of the National Reserve
Association is reduced, either on account of the reduction
in capital of members of the association or the liquidation
or insolvency of any member, the board of directors shall
make and execute a certificate showing such reduction of
capital stock and the amount repaid to each bank. This
certificate shall be filed in the office of the Comptroller of
the Currency.

t
m

4




20 PER CENT.

i

5
N
B
MONO. SEC.
EXEM PTIO N FROM LOCAL AND STATE TAXATION.

S e c . 13. The National Reserve Association and its
branches and the local associations shall be exempt from
local and State taxation except in respect to taxes upon
real estate.
e x e c u t iv e

c o m m it t e e

of th e

n a t io n a l

reserve

ASSOCIATION.

S e c . 14. The directors of the National Reserve Associa­
tion shall annually elect from their number an executive
committee and such other committees as the by-laws of
the National Reserve Association may provide. The exec­
utive committee shall consist of nine members, of which
the governor of the National Reserve Association shall be
ex officio chairman and the two
and the Comp­
troller of the Currency ex officio members, but not more
than one of the elected members shall be chosen from any
one district.
The executive committee shall have all the authority
which is vested in the board of directors, except such as
may be specifically delegated by the board to other com­
mittees or to the executive officers, or such as may be
specifically reserved or retained by the board.
BOARD OF EXAM INATION.

SEC. 15. There shall be a board of examination elected
annually by the board of directors from among their num­
ber, excluding the members of the executive committee,
of which the Secretary of the Treasury shall be ex officio
chairman. It shall be the duty of this board
fullyc ^ a m n h e r tlT(r condition and the business of the
National Reserve Association and of the branches and to
make a public statement of the result of such examina­
tion at least once a year.
EX EC U T IV E O FFIC ERS OF BRANCHES.

S e c . 16. Each branch shall have a managerjand a dep­
uty manager appointed from the district by the governor
of the National Reserve Association with the approval of
the executive committee and subject to removal at any
time by the same authority. The powers and duties of
the manager and deputy manager and of the various com­
mittees of the branches shall be prescribed by the by-laws
of the National Reserve Association.
E X E C U T IV E O FFIC ER S OF LOCAL ASSOCIATIONS.

S e c . 17. The directors of each local association shall
annually elect from their number a president, a vice presi­
dent, and an executive committee, whose powers and
duties shall be determined by the by-laws of the local
association, subject, however, to the provisions of this act.
LISTS OF SHAREHOLDERS.
S e c . 18. The National R eserve Association shall cause




duties shall be determined by the by-laws of the local
association, subject, however, to the provisions of this act.

LISTS OF SHAREHOLDERS.

V

SEC. 18. The National Reserve Association shall cause
to be kept at all times, at the head office of the associa­
tion, a full and correct list of the names of the banks
owning stock in
sociation and the number of shares
held by each. Such list shall be subject to the inspection
of all the shareholders and creditors of the association, and
a copy thereof on the first Monday of Ju ly of each year,
verified by the oath of the governor or deputy governor,
shall be transmitted to the Comptroller of the Currenc^
SEC. 19. The earnings of the National Reserve Asso­
ciation shall be disposed of in the following manner:
After the payment of all expenses and taxes the share­
holders shall be entitled to receive annually a ( S m u
dividend of four per centum on the paid-in capital, which
dividend shall be cumulative. Further net earnings shall
be disposed of as follows: First, a contingent fund shall
be created, which shall be maintained at an am ourde^ual
to one per centum on the paid-in capital, ancUSTiall not
exceed in any event two million dollars and shall be used
to meet any possible losses. Such fund shall, upon the
final dissolution of the National Reserve Association, go
to the United States and shall not under any circumstances
be included in the book value of the stock or go to the
shareholders. Second', one-half of additional net earnings
shall be paid into the surplus fund of the National Reserve
Association until said fund shall amount to twenty per
centum of the paid-in capital, one-fourth shall be paid
to the United States as a franchise tax, and one-fourth
shall be paid to the shareholders, until the shareholders’
dividend shall amount to five per centum per annum on
• the paid-in capital, but no dividends shall at a n y ti
paid in excess of five per centum in a ty i^ en ^ y e a r, but
one-half of the additional earnings^fiall be added to the
surplus fund, and one-half shall be paid to the United
States as a franchise tax. Affel- the surplus fund of the
National Reserve Association amounts to twenty per
centum of the paid-in capital all excess earnings shall go
to the United States as a franchise tax.

.A

,/Q

^

1c

k

6
N
B
MONOTYPE SECTION
G U A R A N T IES OF LOCAL ASSOCIATION.

S e c . 20. Any member of a local association may apply
to such association for a guaranty of the commercial
paper which it desires to rediscount at the branch of the
National Reserve Association in its district. Any such
bank receiving a guaranty from a local association shall
pay a commission to the local association, to be fixed in
each case by its board of directors. The guaranty of the
local association, in the event of loss, shall be met by the
members of the local association in proportion to the ratio
which their capital and surplus bears to the aggregate
capital and surplus of the members of the local associa­
tion, and the commission received for such guaranty,
after the payment of expenses and possible losses, shall
be distributed among the several banks of the local asso­
ciation in the same proportion. A local association shall
have authority to require security from any bank offering
paper for guaranty, or it may decline to grant the appli­
cation. The total amount of guaranties by a local asso­
ciation to the National Reserve Association shall not at
any time exceed the aggregate capital and surplus of the
banks forming the guaranteeing^association.
CLEARING HOUSE.

SEC. 21. Any local association may by a vote of threefourths of its members and with the approval of the
National Reserve Association, assume and exercise such
of the powers and functions of a clearing house as are not
inconsistent with the purposes of this act. The National
Reserve Association may require any local association to
perform such services in facilitating the domestic ex­
changes of the Reserve Association as the public interests
may require.
SUSPENSION.

S e c . 22. The National Reserve Association may sus­
pend a bank from the privileges of membership for a
failure for thirty days to maintain its reserves, or to make
the reports required by this act, or for misrepresentation
in any report or examination as to its condition or as
to the character or extent of its assets or liabilities.
\

p r iv il e g e s

of

s u b s c r ib in g

ba n k s.

S ec . 23. All of the privileges and advantages of the
National Reserve Association shall be equitably extended
to every bank of any of the classes herein defined which
shall subscribe to its proportion of the capital stock
of the National Reserve Association and shall otherwise
conform to the requirements of this act.
GOVERNMENT OF TH E UNITED STATES AND BA N KS OWNING

STOCK TO BE THE ONLY DEPOSITORS.

It




SE C . 24 . T h e G o v e rn m e n t o f th e U n ite d S ta te s a n d
b a n k s o w n i n g sto ck in t h e 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
sh all be th e o n ly d epositors in said asso ciatio n .
A ll
d o m e sticJtra n sa ctio n s of th e N a tio n a l R e s e rv e A sso cia tio n
sfm llTvpTcfm fined to
G o v e rn m e n t and the su b scrib in g




S e c . 24. The Government of the United States and
banks owning stock in the National Reserve Association
shall be the only depositors in said association. All
d omestic^transactions of the National Reserve Association
shall be^cbnfined to the Government and the subscribing
banks, wiih the exception of the purchase or sale of Gov­
ernment or State securities or securities of foreign govern­
ments or of gold coin or bullion.
NATIONAL

R E S E R V E ASSOCIATION FISCAL AGENT OF THE
GOVERNMENT.

S e c . 25. The National Reserve Association shall be the
principal fiscal agent of the .United States. The Govern­
ment of the United States shall upon the organization of
the National Reserve Association deposit its general funds
with said association and its] branches, and thereafter
all receipts of the Government shall be deposited with
said Association and its branches, and all disbursements
by the Government shall be made through said associa­
tion and its branches.
IN TER EST ON DEPOSITS.

S e c . 26. The National Reserve Association shall pay no
interest on deposits.
REDISCOUNT

OF B IL L S

OF EXCHANGE

ARISING

OUT OF

COMMERCIAL TRANSACTIONS FOR SU BSC RIBIN G BA N K S.

S e c . 27. The National Reserve Association through its
branches may rediscount for and with the indorsement of
any bank having a deposit with it, notes and bills of ex­
change arising out of commercial transactions; that is,
notes and bills of exchange issued or drawn for
agricultural, industrial, or commercial purposes, and not
including notes or bills issued or drawn for the purpose
of carrying stocks, bonds, or other investment securities.
Such notes and bills must have a maturity of not more
than twenty-eight days, and must have been made at
least thirty days prior to the date of rediscount. The
amount so rediscounted shall in no case exceed the capi­
tal of the bank applying for the rediscount. The aggre­
gate of such notes and bills bearing the signature or in­
dorsement of any one person, company, firm, or corpora­
tion, rediscounted for any one bank, shall at no time
exceed ten per centum of the unimpaired capital and
surplus of said bank.

.

4




20 PER CENT.

7 NMONO.B SEC.
REDISCOUNTS
B IL E S

OF

FOR

SU BSCRIBIN G

EXCHANGE

BANKS

GUARANTEED

OF
BY

NOTES
THE

AND

LOCAL

ASSOCIATION.

S e c . 28. The National Reserve Association through its
branches may also rediscount, for and with the indorse­
ment of any bank having a deposit with it, notes and
bills of exchange arising out of commercial transactions as
hereinbefore defined, having more than twenty-eight days,
but not exceeding four months, to run, but in such cases
the paper must be guaranteed by the local association of
which the bank asking for the rediscount is a member.
DISCOUNT OF DIRECT OBLIGATION OF DEPOSITING

BANK

INDORSED BY LOCAL ASSOCIATION.

S ec . 29. Whenever, in the opinion of the governor of
the National Reserve Association, the public interests so
require, such opinion to be concurred in by the executive
committee of the National Reserve Association and to
have the definite approval of the Secretary of the Treas­
ury, the National Reserve Association through its branches
may discount the direct obligation of a depositing bank,
indorsed by its local association, provided that the in­
dorsement of the local association shall be fully secured
by the pledge and deposit with it of satisfactory securi­
ties, which shall be held by the local association for
account of the National Reserve Association; but in no
such case shall the amount loaned by the National Re­
serve Association exceed three-fourthsbf the actual value
of the securities so pledged.
S e c . 30. The power of rediscount and discount granted
by sections 27, 28, and 29 to the National Reserve Asso­
ciation shall in each case be exercised through the branch
in the district in which the bank making the application
is located.
RATES OF DISCOUNT.

S e c . 3 1. The National Reserve Association shall have
authority to fi?<TH^ rates of discount from time to time,
which when so fixed shall be published, and shall be uni­
form throughout the United States.
PURCHASE OF ACCEPTANCES BY THE NATIONAL R E SE R V E
ASSOCIATION.

S ec . 32. The National Reserve Association may, when­
ever its own condition and the general financial conditions
warrant-such investment, purchase from a subscribing
bank acceptances of banks or acceptors of unquestioned
financial responsibility. Such acceptances must have
arisen out of commercial transactions, must have not
exceeding ninety days to run, and must be of a character
generally known in the market as prime bills. Such
t(larTtjVaC^oi

^cctptor° ^n^orsement

^ 1C subscribing

INVESTM ENT IN GOVERNMENT AND STATE BONDS.

33. The National Reserve Association may invest
in United States bonds, also in short-term obligations
having not more than one year to run of the United
States or its dependencies, or of any State, or of foreign
governments.
Sec.

POWER TO DEAL IN GOLD COIN OR BULLION.




tnan tnat ot the acceptor.
IN VESTM EN T IN GOVERNMENT AND STATE BONDS.

S e c . 33. The National Reserve Association may invest
in United States bonds, also in short-term obligations
having not more than one year to run of the United
States or its dependencies, or of any State, or of foreign
governments.
POWER TO DEAL IN GOLD COIN OR BULLION.

S e c . 34. The National Reserve Association shall have
power, both at home and abroad, to deal in gold coin or
bullion, to make loans thereon, and to contract for loans
of gold coin or bullion, giving therefor, when necessary,
acceptable security, including the hypothecation of any
of its holdings of United States bonds.
POWER TO DEAL IN FO REIGN EXCHANGE.

S ec . 35. The National1 Reserve Association shall have
power to purchase from its subscribing banks andUo sell,
with or without its indorsement, checks or bills of exchange
payable in such foreign countries as the board of the Na­
tional Reserve Association may determine. These bills'of
exchange must have arisen out of commercial transactions,
must have not exceeding ninety days to run, and must
bear the signatures of two or more responsible parties, of
which the-last one shall be that of a subscribing bank.
POWER TO MAINTAIN BA N K ACCOUNTS AND TO EST A BLISH
A G EN CIES IN FOREIGN COUNTRIES.

S ec . 36. The National Reserve Association shall have
power to open and maintain banking accounts in foreign
countries and to establish agencies in foreign countries for
the purpose of purchasing and selling and collecting for­
eign bills of exchange, and it shall have authority to buy
and sell, with or without its indorsement, through such
correspondents or agencies, checks or prime foreign bills
of exchange which have arisen out of commercial trans­
actions, which have not exceeding 'ninety days to Lrun,
and which bear the signatures of two or more responsible
parties.
DOMESTIC EXCH AN GES.

S e c . 37. It shall be the duty of the National Reserve
Association or any of its branches, upon request, to trans­
fer any part of the deposit balance of any bank having an
account with it to the credit of any other bank having an
account with the National Reserve Association. If a de­
posit balance is transfeired from the books of one branch
to the books of another branch, it may be done, under
regulations to be prescribed by the National Reserve As­
sociation, by mail, telegraph, or otherwise, at rates to be
fixed at the time by the directors of the branch at which
the transaction originates, or an executive committee
thereof.




20 PER CENT.

8 NB

MONO. SEC.
REAL, ESTATE.
SEC. 38. The National Reserve Association may pur­
chase, hold, and convey real estate for the following pur­
poses and for no others:
First. Such as shall be necessary for the immediate
accommodation in the transaction of the business either
of the head office or of the branches.
Second. Such as shall be mortgaged to it in good faith
by way of security for debts previously contracted.
Third. Such as shall be conveyed to it in satisfaction of
debts previously contracted in the course of its dealings.
Fourth. Such as it shall purchase at sales under judg­
ments, decrees, or mortgages held by the association, or
shall purchase to secure debts due to it
But the National Reserve Association shall not hold
the possession of any real estate under mortgage or the
title and possession of any real estate purchased to secure
any debts due to it for a longer period than five years.
reserves of su b sc r ib in g b a n k s .

S e c . 39. All subscribing banks must conform to the
following requirements as to reserves to be held against
deposits of various classes, but the deposit balance of any
subscribing bank in the National Reserve Association and
any notes of the National Reserve Association which it
holds may be counted as the whole or any part of its re­
quired reserve:
First. On demand deposits: National banks in differ­
ent localities shall maintain the same percentages of
reserve against demand deposits as is now required by
law, and the same percentages of reserve against demand
deposits shall be required of all other subscribing banks
in the same localities.
Second. On time deposits: All time deposits and
moneys held in trust payable or maturing within thirty
days shall be subject to the same reserve requirements
as demand deposits in the same locality. All time
deposits and moneys held in trust payable or maturing
more than thirty days from date shall be subject to the
same reserve requirements as demand deposits for the
thirty days preceding their maturity, but no reserves
shall be required therefor except for this period. Such
time deposits and moneys held in trust must be repre­
sented by certificates or instruments in writing and be
payable only at a stated time not less than thirty days
from date of deposit, and must not be allowed to be with­
drawn before the time specified without thirty days
notice.
Tkiid

Uf W fTte * than thirty
al required
r e » w amounting to forty per c e n t a l
n??mTrt"clemand deposits iuU ie s a u * e 4 e r e h t y .
reserve of the national reserve association.

S kc 40. All demand liabilities, including deposits and
circulating notes, of the National Reserve Association
shall be covered to the extent of fifty per centum by a
. .. r-f
fnrpio-n <rn1d coin and gold bul-




reserv e

of

the

n a t io n a l

reserve

a s s o c ia t io n .

S e c . 40. All demand liabilities, including deposits and
circulating notes, of the National Reserve Association
shall be covered to the extent of fifty per centum by a
reserve of gold (including foreign gold coin and gold bul­
lion) or other money of the United States which the
national banks are now authorized to hold as a part of
their legal reserve: Provided, lh at whenever and so long
as such reserve shall fall and remain below fifty per
centum the National Reserve Association shall pay a
special tax upon the deficiency of reserve at a rate increas­
ing in proportion to such deficiency as follows: For each
two and one-half per centum or fraction thereof that the
reserve falls below fifty per centum a tax shall be levied
at the rate of one and one-half per centum per annum:
Provided further, That no additional circulating notes
shall be issued whenever and so long as the amount of
such reserve falls below thirty-three and one-third per
centum of the outstanding notes.
SEC. 41. All note issues of the National Reserve Asso­
ciation must be covered by the legal reserves required by
section 40 of this'act and by bankable commercial paper
as herein defined or obligations of the United States.
SEC. 42. In computing the demand liabilities of the
association a sum equal to one-half of the amount of the
United States bonds held by t&e association which have
been purchased from the national banks, and which had
previously been deposited by those banks to secure their
circulating notes, shall be deducted.
repo rts

of

c o n d it io n

of

the

n a t io n a l

>

reserv e

a s s o c ia t io n .

S e c . 43. The National Reserve Association shall make
a report, showing the principal items of its balance sheet,
to the Comptroller of the Currency once a week. These
reports shall be made public. In addition, full reports^----- /
shall be made to the Comptroller of the C u rre n c y ^ n c i*
dent with the five reports called for each year from the
national banks.

..... .

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20 PER CENT.

9
*
N
B
MONO. SEC.
REPO RTS OF SU B SC R IBIN G BA N K S TO THE NATIONAL
R E S E R V E ASSOCIATION.

S e c . 44. All subscribing banks shall, under regulations
to be prescribed by the National Reserve Association,
make a report monthly, or oftener if required, to said
association showing the principal items of their balance
sheets.
EXAM INATIO N S.

S e c . 45. The National Reserve Association may for all
subscribing banks accept copies of the reports of the
national-bank examiners for national banks and copies
of the reports of State-bank examiners for State banks
and trust companies, where the furnishing of such infor­
mation is not contrary to law: Provided, however, That
the standard of such examinations, both National and
State, meets the requirements of the National Reserve
Association. The National Reserve Association shall have
the right at any time to examine or cause to be examined
by its own representatives any subscribing bank. The
National Reserve Association may make such payments
to national and State examiners for any services re­
quired of them as the directors may consider just and
equitable.
FU R T H E R NOTE ISS U E S BY NATIONAL BA N K S PRO H IBITED .

S e c . 46. There shall be no further issue of circulating
notes by any national bank beyond the amount now out­
standing. National banks may,
maintain
their present note issue, but whenever a bank retires the
whole or any part of its existing issue it shall permanently
right to reissue the notes so retired.
PU RCH ASE OF TWO PER CENTUM BONDS B Y NATIONAL
R E S E R V E ASSOCIATION.

f




k

S e c . 47. The National Reserve Association wmbt, for a
period of one year, offer to purchase at a price not less
than par and accAed interest the two per centum bonds
held by subscribing national banks and deposited to secure
their circulating notes. The National Reserve Association
shall take over th e * bonds and assume responsibility for
---- Hie^reS^nption upon presentation of outstanding notes
secured thereby. The National Reserve Association shall
w
issue, on the terms herein provided, its own notes
as the outstanding notes secured by such bonds so Held
^ t f a ll be presented for redemption and may issue further
notes from time to time to meet business requirements.
PROVISIONS REQUIRING DEPOSIT OF BONDS BY NATIONAL
BAN KS R EP EA LED .

S e c . 48. All provisions of law requiring national banks
to hold or to transfer and deliver to the Treasurer of the
United States
S*"*™ bondsfotlier than those re­
quired to secure outstanding circulating notes and Gov­
ernment deposits are hereby repealed.
TAX ON NOTES OF NATIONAL R E S E R V E ASSOCIATION.

%
\

9




S e c . 48. All provisions of law requiring national banks
to hold or to transfer and deliver to the Treasurer of the
United States Ir r fff1
bondsfotKeF than those re­
quired to secure outstanding circulating notes and Gov­
ernment deposits are hereby repealed.

TAX ON NOTES OF NATIONAL RESERVE ASSOCIATION.
S e c . 49. Any notes of the National Reserve Associa­
tion in circulation at any time in excess of nine hundred
million dollars which are not covered by an equal amount
of lawful money held by said association shall pay a spe­
cial tax at the rate of one and one-half per centum per
annum, and any notes in excess of:'one billion two
hundred million dollars not so covered shall pay a spe­
cial tax at the rate of five per centum per annum.

CIRCULATING NOTES FIRST LIEN ON ASSETS.
S e c . 50. The circulating notes of the National Re­
serve Association shall constitute a first lien upon all its
assets and shall be redeemable in lawful money on pres­
entation at the head office of said association or any
of its branches. It shall be the duty of the National
Reserve Association to maintain at all times a parity of
value of its circulating notes with the standard estab­
lished by the first section of the act of March fourteenth,
nineteen hundred, entitled “ An act to define and fix the
standard of value, to maintain the parity of all forms of
money issued or coined by the United States, to refund the
public debt, and for other purposes.”

FOR WHAT CIRCULATING NOTES OF NATIONAL RESERVE
ASSOCIATION ARE RECEIVABLE.
S ec . 5 1. The circulating notes of the National Reserve
Association shall be received at par in payment of all
taxes, excises, and other dues to the United States, and
for all salaries and other debts and demands owing by
the United States to individuals, firms, corporations, or
associations, except obligations of the Government which
are by their terms specifically payable in gold, and for all
debts due from or by one bank to another, and for all
obligations due to a bank.

CIRCULATING NOTES FORWARDED ON APPLICATION.
S ec . 52. The National Reserve Association and its
branches shall at once, upon application and without
charge for transportation, forward its circulating notes
to any depositing bank against its credit balance.

EXCHANGE OF

2

PER CENT FOR 3 PER CENT BONDS.

S e c . 53. Upon application of the National Reserve As­
sociation the Secretary of the Treasury shall exchange
the two per centum bonds bearing the circulation priv­
ilege purchased from the banks for three per centum bonds
without the circulation privilege, payable after fifty years
from the date of issue.

FRANCHISE TAX.
S ec . 54. The National Reserve Association shall pay to
the Government a special franchise tax of one and one-half
per centum annually during the period of its charter upon
an amount equal to the par value of such bonds transferred
to it by the subscribing banks.

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10 N B

MONO. SEC.
SA L E OR REDEMPTION OF BONDS.

S e c . 5 5 . T h e N a tio n a l, R e s e r v e A s s o c ia tio n sh a ll a g r etk,
h o ld th e th r e e p e r c e n tu m b o n d s so issu e d d u rin g th e
p e r io d o f its c o r p o r a te

e x is te n c e :

Provided, T h a t a fte r

fiv e y e a r s th e S e c r e t a r y o f th e T r e a s u r y jm a y a t h is o p tio n
p e r m it t?ie N a tio n a l R e s e r v e A s s o c ia tio n to sell n o t m o re
t h a n f if t y m illio n s o f su c h b o n d s a n n u a lly :

And provided

jurther, T h a t th e U n ite d S t a t e s j e s e r v e s th e rig h t a t a n y
tim e to p a y a n y o f su ch b o n d s b e fo re m a t u r it y , or to p u r ­
c h a se a n y o f th e m a t p a r fo r th e tr u s te e s o f th e p o s t a l
s a v in g s , o r o th e rw ise .
FOREIGN BAN KS.

S e c . 56. That banking corporations for carrying on the
business of banking and in aid of the commerce of the
United States or its citizens with foreign countries and to
act as financial agents of the United States may be formed
by any number of persons, not less in any case than five,
who shall enter into articles of association which shall
specify in general terms the object for which the banking
corporation is formed and may contain any other provi­
sions net inconsistent with the provisions of this act which
the banking corporation may see fit to adopt for the reg­
ulation and conduct of its business and affairs, which said
regulations shall be signed, in duplicate, by the persons
uniting to form the banking corporation and one copy
thereof shall be forwarded to the Comptroller of the Cur­
rency and the other to the Secretary of State, to be filed
and preserved in their offices.
S e c . 5 7 . T h a t th e p e rso n s u n itin g to fo rm su ch b a n k in g
c o r p o ra tio n sh a ll u n d e r th e ir h a n d s m a k e an o rg a n iz a tio n
c e r t ific a te w h ic h sh a ll s p e c ify , fir s t,r th e n a m e a ssu m e d b y
su c h b a n k in g c o r p o ra tio n , w h ieh _n ain e s h a ll b e s u b je c t to
a p p r o v a l b y th e C o m p tro lle r S e c o n d , th e fo re ig n c o u n t r y
o r c o u n tr ie s o r th e

d e p e n d e n cie s o r co lo n ie s o f fo re ig n

c o u n tr ie s o r o f th e U n ite d S t a t e s w h ere it s o p e r a tio n s o f
d isc o u n t a n d d e p o sit a re to b e c a rrie d o n ; th ir d , th e p la c e
in th e U n ite d S t a t e s w h ere its h om e office sh a ll b e lo c a te d ;
fo u r th , th e a m o u n t o f its c a p ita l sto c k an d th e n u m b e r o f
s h a re s in to w h ic h th e sa m e sh a ll b e d iv id e d ; fifth , th e
n a m e s a n d p la c e s o f re sid e n c e o f th e sh a re h o ld e rs a n d th e
n um ber of

sh a re s h eld b y each o f th e m ; a n d , s ix t h , a

d e c la r a tio n t h a t sa id c e rtific a te is m a d e to e n a b le su ch
p e rso n s to a v a il th e m s e lv e s o f th e a d v a n t a g e s o f th is a c t.

S e c . 58. That no banking corporation shall be organ­
ized under this act with a less capital than two million
dollars.
S e c . 59. T h a t e v e r y b a n k in g c o rp o ra tio n fo rm e d p u r ­
s u a n t to th e p r o v is io n s o f th is a c t sh all fro m th e d a te o f
th e e x e c u t io n o f it s o rg a n iz a tio n c e rtific a te b e a b o d y
c o r p o r a te , b u t sh a ll rot b e authorised to re ce iv e d e p o sits
in th e U n ite d S t a t e s
w ith b a n k s in th e
U n ite d S t a t e s o rg a n iz e d e ith e r u n d e r n a tio n a l o r S t a t e
la w s fo r d o m e stic b u sin e ss n o t n e c e ssa rily re la te d to th e
b u sin e ss b e in g d o n e in fo re ig n c o u n trie s o r in th e d e p e n d ­
e n c ie s o f th e U n ite d S t a t e s .

S u c h b a n k in g c o rp o ra tio n s

s h a ll n o t h a v e a n y p o w e r to issu e o r c irc u la te n o te s u n d e r
a n y o f th e p ro v isio n s o f th e la w s re la tin g to n a tio n a l
banks

d o in g b u sin e ss w ith in

b a n k in g

.

c o r p o ra tio n s

pf

sh a ll

th e U n ite d S t a t e s .
have

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in the United States - w m fi vpftVg* vyit 11 banks in the
United States organized either under national or State
laws for domestic business not necessarily related to the
business being done in foreign countries or in the depend­
encies of the United States. Such banking corporations
shall not have any power to issue or circulate notes under
any of the provisions of the laws relating to national
banks doing business within the United States. Such
banking corporations shall have full power to make
acceptances of drafts, bills of exchange, or other com­
mercial paper and maturing subsequent to the date of
acceptance. Every such banking corporation shall have
power to purchase or sell securities of the United States
or of any State in the Union or of foreign governments or
subdivisions or municipalities of foreign countries. Each
barking corporation organized hereunder shall have
power to establish and maintain for the transaction of
its business a branch or branches in foreign countries,
their dependencies, or the dependencies of the United
States at such places and under such regulations as the
board of directors may determine to be expedient.
A majority of the members of the board of directors of
such banking corporation shall be citizens of the United
States. Each director shall own in his own right at least
one hundred shares of the capital stock of the banking
corporation of which he is a director.
S e c . 60. The annual meeting of every such banking
corporation’ shall be held at its home office in the United
States, and every such banking corporation shall keep at
its home office books containing the names of all stock­
holders of such banking corporation and members of its
board of directors, together with copies of the reports fur­
nished by it to the Comptroller of the Currency exhibiting
in detail and under appropriate heads the resources and
liabilities of the banking corporation. Every such bank­
ing corporation shall make reports to the Comptroller of
the Currency at the same time as national banks make
their reports under existing statutes, and shall be subject
to examination, when deemed necessary by the Comptrol­
ler of the Currency, through bank examiners appointed by
the Comptroller.
S e c . 6 i . Any bank doing business in the United States
and being the owner of stock in the National Reserve As­
sociation may subscribe to the stock of any banking cor­
poration organized under the provisions of this act, but
the aggregate of such stock held by any one bank shall
not exceed ten per centmn of the capital stock of the
subscribing bank.
S e c . 62. That the provisions of all laws relating to
national banking associations organized hereunder so far
as applicable and not inconsistent with the provision* of
this act shall govern and control banking corporations
organized hereunder.