The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
F.D. 12A.3 9 0 02-1.2 No Federal Reserve Bank 875tiova District No. 2 Correspondence Files Division P#4,2672S SUBJECT .2) ,97--Rewuc 'S 0 f) Mtg, -7-71,E KEA.)-r'S r- 14/S C. /7, eih 002,9 ev1e9 E/2.A9Z- /RESE-ROE /9e-r- - 7/3 December 11th,191,. .lemorandum for mt. Porter and :Ir. Strong At the Aetropolitan Club after tr. Vanderlip's speech I promised to look up and sen0 a memorandum in support of my contention on the greenback situation. I find that the $346,681,016. outstanding greenbacks secured by gold reserve fund of $150,000,000. are redeemable in gold upon presentation, but the Secretary is required To restore the gold coin to the reserve fund immediately out of the gold coin in the general funds of the Treasury, if any, and place the greenbacks in the general fund, thus restoring the gold reserve to 150,000,000., He may exchange the greenbacks for the public at the Treasury, or 3. or gold coin presented by If necessary, he may go out and purchase gold coin "at such rates and upon such terms as he may deem most advantageous to the public interest," but he must pay therefor in the greenbacks. 4. If he fail to maintain his $150,000,000. reserve fund intact by the foregoing methods and the fund falls below 0100,000,000. then it is his duty to restore the fund to 0150,000,000. by selling bonds and purchasing gold with the proceeds. Finally the ,law of 4areh 14th,1900, also contains a clause, "that U.3.notes when redeemed in accordance with provisions of this section dhall be re-issued but shall be hold in reand the serve until exchanged for gold as herein provided; gold coin and bullion in the reserve fund together with the reOeemed notes held for use as provided in at no tine exceed the maximum sum of $150,000,000. this section shall j1;t-clefrual Pc2---n, fo, el) 111 PC.A.0 710' ttf, Ceetta0,-(_ t eitc 16t 5ittrit-e Walu. (47) Akre, a-3 w*-7174 .e2f4,b cwi,,,:k141.? jiikl,extetiCji - 1\ 1,o-ntirck.., wo CiviTL,~ort; Summary_ Page paragraph 2; Criticism of Democratic platform. 4 1 Large powers of Secretary of Treasury. 4 2 Committee hearings; 1 3 5-7 8 witnesses testimony. Pujo investigation. 2 General statement of defects in regional system. Inability of regional banks to care for needs of districts 9 10 Improper basis of loans. 11 Insurance feature. 12 Lack of mobility of reserves. 13 Comment on 14 System of circulating notes; 15 Distribution of circulating 15-16 Powers of Chairman. 17 Unavailability of circulating 17 18-19 limited in Advisory Council. Government guarantee. notes by Federal Board. notes for certain settlements. 3 ProteCtion of country's gold supply. 20 Exemjrations. 21 Publicity of maturities. 22 Necessity of hanks 22 Suspension of 22-23 Insurance feature. continuing present relations with city correspondents. payments (7) districts. 24 1 Making new 24 2 Competition for location, 24 3 lerious results if many Eat. Banks terminate charters. 25 1 Q1-sec. 1. Restoring money to circulation. Summary - 2. Page, 12sEasEL 25 2 Nat. banks must give assent before knowing in what located. 25 3 Liability of stockholders in Nat, banks increased. district Ql-Sec. 2. 26 Stock cannot be Ql-Sec. 2, 1 Severe penalty for failure to signify acceptance, and shifting of reserves, 2 26 sold. 27 - 26 Q1-.Sec, 3. 29 3) 29 ) Charters forfeited, Q2-Sec. 14 29 Penalties to Directors, and breach of contract with them. 3 Q2_9ec. 2, 30 2 Banks to subscribe for stock. Q2..Sec. 3, 31-a 31-a 31-b Government to buy stock. 2 31-a Secretary of Treasury to sell stock. 3 Q2-Sec. 4. 4) Powers of Federal Board; Q3-Sec. 1 & 2. 32- Establishment of 3 Voting branches - subscription control. inexact, necessary. 32- Stock Q3-Sec. 3. 33 Question of insolvent bank continuing 20-year term. Q3-Sec. 4. 5 2 33 3 Jurisdiction of Courts. 33 34 4 Issue of circulating notes.: Obligation of when ? Retirement .1'9,000,000 monthly Authority to print Amount limited. Q3-Sec. 5. Q5-Sec. 1, Comptroller to decide on bank opening. 35 2 35 36 - 37 3) ) Q4-Sec, 2. Federal R. Board to operate regional banks. Right of member banks to proportionate discounts. Dual position of chairman. Summary - 3. Page Paragraph 37 38-39 39 39 Selecting local board of Secretary of Treasury to be dominant. Federal Board electing all directors. 2 ) Possibility Possibility of 3: 06-Sec.2 ' 2 r5-So .. 3 Dhfair manner of group division. 3 Q6-Seo.2 Dual position of chairman. 40 2 Impossible duty of Organization Committee. 40 4 Capital to be proportionate to that of banks of distriot. 41 2 Stock aoquired not to be 41 3 Dividend adjustments. 1 Circulation and capital 42 sold. fluctuation. Q6-Seo.3. 42 Impairment of oapital. 42 3 Capital of member banks may be reduced only if regional bank reduces. Q6-Sec.4. Attitude of foreign bankers towards regional banks of small capital. 43 3 Insurance fund for net. bank deposits. Q7-.Sec .2 44 1 Secretary of Treasury to use Insurance Fund in his discretion. 44 2 Secretary Of Treasury to use earnings in purchase of Government debt. 45 3 Terms of office of Fed. R. Board. possible. Politioal control Q8-Seo.l. 46 46 3 Secretary of Treasursrauthority to distribute public funds. 4 Advertising maturities or paper. QB-Seo.2. 47 2 Q8-Seo.3 49 2 q9-Sec.2. Rediscounting feature. 1Tecessity of regional banks borrowing in normal times. Tax (indefinite provisions). Page Paragraph 50 Summary - 4. Reference to retaining reserve and central reserve cities. 2 Q10-Sec. 3. 50 3 Power of removal. I10-8ec. 4. 51 Ditto 2 51 Rediscounted notes to count as reserve. 8 Q10-Sec. 5. 52 Delegation of legislative powers. 3 Q11-Sec. 1. 52 4 Federal Advisory Council. Qll-Sec. 2. 53 2 Calls for information by Council. Q1].-Sec. 2. 53 Items that may be deposited with Fed. R. Bank. 3 Q11-Sec. 2.. ,54 2 System for collection of checks, etc. 2 Discount privilege tinlimited. Clearing Functions. Q12. 55 Q13-Sec. 1. 56 2 Speculation in commodities impossible. Q13-Sec. 2. 56 57 3 Discounts prohibited for carrying stocks and bonds. 2 Fed. R. Bank limited in discounting to half its capital. Q13 -Sec. 3. 58 2 Nat. Banks authorized to accept drafts having 6 mos. sight but to rediscount only 90 days. maturity, etc. Q14-Sec. 1. 58 3 Unlimited loaning power of regional banks to members. Q14-Sec. 2. 59 Federal Board to prescribe rules, etc. 2 Q14- Sec. 3. 59 3 Q14-Sec. 4. 2 60 Q15 61 2 Q16- Seca. Fed. R. banks permitted broad privileges: to buy commercial paper in open matket, etc. Fed. R. Banks permitted to purchase foreign bills. Protection of gold supply 0 Summary- 5 page paragraph 2 63 Purchase of revenue notes of municipalities, Q16-Sec.2. 1 64 Q16-Sec.3. 2 65 Authority of Fed. R. Board to review rates ad paper Foreign Exchange Bills. Foreign Agencies authorized. Q17.-Sec .1. 2 66 67-68 Authority of Seely. of Treasury over distribution of Government fuhds. Favoritism to localities. Q17-Sec .2. Q18-Sec .1. 68 2 Postal Savings Funds. Q18-Sec.2. Government guarantee of notes. 69 Q19 -Sec.1. 70 2 Custody of notes placed with Fed. R. Yoard. Q18,-Sec.3. 70 3 Use of circulating notes in settlements, and consequent value of issuing ability? Q19 -Sec.2. 71 2 Q20-Sec.2. In redeeming notes, who pays transporation charges? 72 2 QgO-Sec.3. Interest charge on notes ddvanced by Government. 4 73 Domestic exchange operations - circuitous and expensive. 74-76 Q21-Sec.2. Q22-0ec.l. 78 1 0,000,000. a month (?) Q22-Sec .2. 3 78 Lawful money deposited with Treasurer by Nat.Banks to retire circulation to be redeposited by Seely. of Treas. Q22-Sec.3. Q23-Sec.l. 79 2 Q23-sec .2. 79 3 80 1 Q23-Sec.3. Circulating notes issued under same terms, etc. as Nat.Barlir notes. Exchange of U. S. Bonds for circulating notes. (See Seely. of Treas. authority; Q24-Sec.1) 0c Summary - 6 3.2= 80 paragraph 2 q24-Sec.2. 81 2 Q24-Sec.3. 82 2 Reserve against Time Reserves Deposits. to be similar between country banks and banks in reserve cities. Connercial paper may constitute half reserve. Q25-Sec.2. 83 83 with 2 Interference 4 Indirect benefit to non-members prohibited. present State regulations. Q26-Sec.2. 2 84 System extended to possessions and territories. 26-Sec.3. 85 1 Retirement of circulation of Nat. Banks. Q27-Seca. 85 2 Special examinations; Sec,y. of Treas. authority. Q27-Sec.2. 86 2 Restrictions on directors of Nat. Banks. 86 3 (2377Sec.3. Liability of stockholders in Nat. Banks. 86 4 n28-Sec.2. w Farm loans, etc. 87 2 Q28-3ec.3. Segregation of catttal for fpreign branches. 0,st 11 (%) Secretary of Traaaary. !ay Sell Stock of Bank. Page 8, Lines 16 - 21. "Said United States stock shall be paid for at par out of anzr_maney in the Treasury not otherwise uppro-eriated, and shell be held by the Secretary of the Treasury and disposed of for the benefit of the United States in such manner, at such times and at such arice not less th.t:n par as the Secretary of the Treasury shell determine." Is thie unrestricted authority warranted, 'xhen it might as readily be provided. that the stock awned by the Government be Gold to thc highest bidder upon public offering, with no opportunity for discrimination or favoritism ? DiscretionariPower to Distribute Insurance fund. Page 26, lines 3 - 7. "the money to be kept in and losses from failures to be paid from it as a depositors insurance fand under a division of the Treasury to be constituted and maneFed under such reRvlations as may be prescribed by the iiecx!la_ty_af the Treasury. Can Use Earnings to Purchase Government Debt. Page 26, Lines 7 - 12. "All net earnings derived by the United States from Federal reserve banks shall be applied to the reduction of the outstsillii indebtedness of the United States uncitrIliEJ:ILITil. to be prescribed bv the Secretary of the ireas.E.L11." The Secretary of the Treasury may buy from his friends, at any price that he fixes. This is an unwarranted, indiscreet delegation S.T. 2 of authority to an officer of the Government, which even private corporations would not countenance today. Authority to Distribute Public hinds, and Authority to Overrule the 2ederal Reserve Board which he is a member. Page 35, Lines 5 - 13. "Nothine in this Act contained ehell be constYued as takinie con0,7 any :poeers heretofore vested by ley in the Secretary of the Treasure which relate to the supervision, management and contro3 of the Treasury DeAirtment and bureaus under such department, and whenever ay power vested by this Act in the Federal Reserve Board or the Federel reserve clant appears to conflict with the powers of the Secretary of the Treasury, such powers shell be exercised eubject to the supervision and control of the Secretary." Simply another indication of the intention to make the Secretary of the Treasury the supreme authority in the monetary affairs of the eountry. It certainly has the effect, in connection with other provieions referred to, of giving him absolute unrestricted control over the distribution of Federal funds. In 1907, the distribution of the general fund at the time of the panic was the subject of Congressional inouiry. Going back to the days of Andrew Jackson, "pet" banks have been a recurring cause of scandal. The present system is bad enough, and such bad features as it has will be magnified under the provisions of this bill. Additional Authority to Distribute Government Funds. Page 47, Linos 7 - 18. "Sec. 15. The moneys held in the Keneral fund of the Treasuey, except the five_per centum fund for the S.T. 3 redemption of outstandins national-bank notes and the funds_provided in this Act for the reeemption of Federal reserve notes may, upon the direction of the Secretau,pf.th.e Treasery,_be deposited in Federal reserve banks, which .banke, when required by the Secretary Of the Treasury, shall act as fiscal agents of the United States; and the revenues of the Government or ail, part thereof mu be deposited in euoh banks, and distureemento may he made by chocks drawn egeinst such deeosits." , The Secretary of the Treasury i.e placed in unrestricted eontrcl of over t200,000 ,000. of Govornvent fands to be deposited with the Federal reeerve banks, of which 0,00C,000. is now on deposit with national banks. Ile may say where it shall be so deposited, or whether it shall continue to be deposited in Netional banks or hold in lawful money in the Treasury. No single officer of the Government should have this power. Ar eteted before, the exercise of the power nor vested in the Secretary of the Tretsury, whether lawful or not, is unwise. This rill simply make it worse. Favoritism to localities is possible. The use of thc Government's fundn for political or partisan purposes as to section e of the country is possible. N6 such construction could enter into the handling of the Government's deposits with a central bank. The Secretary of the Treasury would have a power, unEer this provision, that would make it poesible for bin to nullify sound banking in the regional banks and make it dangerous banking. 1337 being in a position to transfer such large sums from one regional bank to another and from one part of the country to another, he could upset all of the arrangemente of any or every regional bank. If the vederal Reserve Board would not yield to his demands because they did not agree with his opinions,- which, while entirely honest 3.T. 4 might be dangerous to the country,- be could carry out his opinions in suite "of it. For instance, suppose the Federal Reserve Board, of which the Secretary of the Treasury was a member, feeling that a certain regional hank was unduly inflated and should net be allowed to borrow from other regional banks, but should be forced to curtail its operations, and every member of the Board with the exception of the Secretary of the Treasury co voted, this majority opinion could be rendered void through the action of the Secretary of the Treasury in transferring baleaces of the Government in other regional banks, to the regional bank under criticism. If this particelar regional bank happened to be situated in a district strongly of the political belief of the Secretary of the Treasury, great pressure could be brought to bear upon him. Again, if such regional district happened to be a crucial one., as far ae its votes for President were concerned, the ereesure might even be stronger to help it out. It has been admitted by those favoring this Bill that the preeent pcwer of the Secretary of the Treasury, in being able to depceit mcney with such Lational tanks as be might see fit, is subject to abuse, and it has been cjaimed in scme quarters that this power has been abused.' The extent of such abuse, however, at present is limited in the case of each favored institution, to its capital and the security it can put up, and no such eetraordinary amount can be placed with one bank as will be poseible in the case of a regional bank, where the Secretary of the Treasury could, if he wished, place $2-00,000,000. with a bank having a capital of $3,000,000. Every change of Administration involving a large difference in policies strongly affects business. How much greater will such changes of policy influence business. if any system is grafted upon this country S.T. 5 that will subject our whole banking syrtom to action based upon the whims of one individual ? Special Examinations. Page 69, Lines 16 - 21. "Sec. _21._ Every member bank shall be examined by the Comptroller of the Currency at least twice in eaoh calender year and as much oftener as the Federal Reserve Board shall consider necessary." As to special examinations, this places the Comptrorler of the Currency under the direction of the Federal Reserve Board, although he is now by law subject to the directicn of the Secretary of the Treasury. As the Secretery of the Treasury, in the paragraph on Pape 35, Lines E to 13. (emoted on page 2 of this memo.), is authorized to act in opposition to any provision of this Act which might curtail hie exieting rights, he Tould, under this provision, again be able to overrule the Federal Reserve Board fc he so desired. The Comptroller of the Currency is placed at the service of the Federal Reserve Board and the power is apparently given to them to require such exeminations. If S17 members of the Federal Reserve Board voted to have any special examination made, and the Secretary of the Treasury voted against it, be would be able to prevent the examination, as his instructions to the Comptroller would be greater authority than these cf the Federal Reserve Board. General Powere. You will find, upon analysis of this Bill, that the Secretary of the Treasury is giver a power beyond that accorded the President S.T. 6 of the United States, the King of England, or the Emperor of Germany, In his relation to the financial matters of the country. The Secretary of the Treasury, who is not elected by the people and whose personality is unknown to them when they elect the man who appoints him, is given such power that he could, of his on volition, in collusion with some banker, cause the failure of any regional bank, or of all of them, and could bring a panic upon this country, if he wished to abuse the power that he would have, such as has never been seen in the history of the world. QUMTIONS ,age 3, Lines 17 - Z. If ',,tional banks elected to resign their charters, and lawful money was deposited with the Treasury Devartment for their circulation, and this money was then paid over to regional banks whose stock cnned by the government, not having been subscri,-ed for by either banks or the public, how would such lawful money get back into kage 5, Lines 8 - 14. circulation ? .ige 4, Lines 11 - 17. Can the board of directors of a Jational bank fairly assume any such liability under such conditions I ,Jo salable investment is being suggested, but in effect an additional capital liability. _age 4, Lines 1E3 - f."2. Will it not only not be vise, but necessary, for National banks IT in the United States in reserve cites, in order to protect themselves, to immediately begin to curtail their lines, in order to make it possible for them to meet any condition that may arise that calls for a transfer of the reserve deposits that they may hold ? Would not their greatest safety lle in refusing to go into the system I? And could they, in justice to their depositors, go into the system uncler such circumstances Those depositors have a right, under custom and exist,,ng arrangements with their bankers, to borrow. If such borrowings are to be curtailed because of the establishment of a regional bank system, must not the banker, in order to fairly live up to his duty, Questions 2 resign his National charter ? .,:age 5, Lines B - 14. Would it not be necessary, under the terms of this Act, for suit to be brought at the end of sixty days after its passage, if a National bank had not et that time signified it intention to become a member bank ? l'age 5, Lines 14 - 20. What would the penalties to Directors consist of That dollar amounts would they probably amount to ? When a director of a National bLnk takes the oath of office, he enters into a contract with the Government to live uj to the requirements of his office, in accordance with the TTt=itional BPnk Act. IP Congress justified in breaking this contract before its expiration ? Cennot it be expected that many directors of banks will resign rather than subject themselves to any such liability ? keg° 6 Lines 1 - 10. If any considerable portion of stock is not token by banks, and the success of the regional banks is uncertain, what possible reason could the public have for subscribing for the stock ? Pare 7, Line 4. Why is the Secretary of the Treasury given this unwarranted power ? Questions .-age 7, Lines 15 - 14. 3 Could not a political Administration, by increasing the oapital of any properly organized regional bank, all the stock of which was owned by member banks, to such an amount that the voting trustees could elect all of the Clnss A end Class B directors ? iege 7, Lines 15 - 18. If such rules and regulations are unfair, who can review them ? Are Netional banks going to be obliged to accept them before they sea them ? iecee 9, Lines 7 - 4. How could a regional bank be organized if less that five banks accepted the system in a district, snd the balance of capital were subscribed by the public and or the Government ? 1-ege 10. Lines 14 - 17. If a regional bank suffers sufficient losses to wipe out its capital and surplus, could it not still continue to do business, under the law, for its full period of twenty years ? J2eF!e 11, Lines 12 - U. What is to be the character and form of the notes Issued by regional banks against United States bonds ? Are these notes to be guaranteed by the United Stites Government 1' Must regioral banks maintain a reserve against such notes ? If not, when they are presented for redemption, how is the regional bank going to keep its reserve good against its deposit and Questions 4 circulating note liabilities ? Does the limitation of the National Bank At apoly to the volume of notes, so that each regional bank may only issue notes to the amOunt of its capital ? If so, what is the object or necessity of this provision, as only $106,000,000 of the notes, based on National bank capitalization, could be issued, or about one-seventh of the total issue of National bank notes now outstanding ? If such limitation is not intended, are the regional banks to issue such notes proportionately to their capital until the whole 700 odd million of National bank notes are retired, or can any regional bank issue them to any amount ? Page la:, Lines 8 - 15. Could not the Federal reserve board, upon being appealed to by a member bank who had boon refused discount for proper reasons in the opinion of the directors of a regional bank, overrule such regional bank and demand that the discount be made ? Would any banker who is obliged to keep his reserve with such regional bank, feel jtistified in doing so under such circumstances ? Is it necessary or advisable to give the Fe6eral board such power, when it has its own agent as acting chairman of a regional bank, who can gat up out of his chair as a regional director and walk over to his corner as Federal agent and ask himself what he thinks about it ? Under this provision, would not the directors of every regional bank be obliged to stop their discounts to each member bank when its proportion of the whole had been asked for ? uestions 5 Is it not true that solvent bankers may differ in their loan requirements very materially at the same time, and that therefore this 'provision will curtail the mobility of the reserves of each regional bank and defeat one of the purposes for which the bill Is supposed to be drawn ? rage 12, Lines 22 5. Miy the third director in Class B be a banker ? Who is to decide whether Glass B directors are qualified for office, under this provision ? If two groups of bankers both desire to elect a Class B director who represents agricultural interests, Which group takes Precedence ? How is it eoing to be possible, under the system of election provided for in the bill, for the three different grouPs to elect men engaged in the three different kinds of pursuits mentioned, ? Page 13, Lines ,7 - 14. Is it right and fair to allow the small institutions, Which would have to assume the smallest in making deposits with the regional bank, to elect two directors out of three, while the largest banks Who would have the most involved in the regional bank could only elect one director, and then probably only in conjunction with a number of smell banks ? Even if, through the jugglery of words, this could be figured out as being fair, is it safe to allow smell institutions to elect two men, who would be obliged to handle immense amounts of money, all out of sroortion with the natural business that has been Questions who could outvote the 6 done by these men before their election, inntxxxatxxone who presumably may have had experience in large matters ? .age 15, Linos - 12. Is it desirable or safe to have the chairman of the board of directors of a regional bank the principal represent- ative of the Federal board, having control as he would, as agent of the Federal board, of all the gold and securities that he as chairman of the regional bank had placed with himself as Federal agent ? Does not the only reason for such an outrageous condition lie in the attempt to bring this regional system into line with a central bank ? ickes 17 and 18. Sec. 5. If a regional bank has outstanding circulation, issued under the provision of page 11, lines 12 to rl, and such circulation is based upon its capital, how is it going to handle such circulation in connection with the fluctuations of its capital ? .rage 18 (all) and i'age 19, Lines 1 - 11. Can foreign bankers, who arc naturally suspicious of alien institutions and who deal with them without any feeling of patriotism, but merely for such profit as they can make out of them, ever be induced to place any confidence in a system of regional banks, some of which are capitalized beneath their notice, realizing that even such capital as the regional banks may have can be dissipated without the directors or management having the slightest control in the matter; and, further, the failure that such dissipation may occur through of member banks, of whose condition and financial Questions 7 standing they know nothing: and, further, that such failures might not alone result in reducing the capital stock of a regional bank, but might also affect other assets if the failed bank was indebted to it ? How can institutions so organized be expected to take their part in the international markets of the world, in protecting our gold supply ? kage 19, Lines 13 - 25. The insurance fund suggested would only build up gradually during a course of years, even provided there were no failed banks. Such being the case, how is it going to be nossible to use this insurance fund in case of failure of several banks whose total losses,' that would have to be paid from the insurance fund, would exceed such fund ? Would the precedence of failure be of any value to the depositors of failed banks ? If not, in whet rossible manner could en adjustment be made, while in the very process of adjustment another bank might fail ? Again, it is not known at the date a bank fails what the loss to depositors is going to be. If Precedence of failure is to be used as a basis for adjustment, how is it ever going to be possible to determine how to proportionately divide up a changing insurance fund that does not equal the liabilities it is to cover ? If Precedence were of value, so that every bank would be induced to fail early end avoid the rush, suppose a second bank failed, and the emouet of deficiency became known a year or so before the deficiency in the case of the first bank was determined; how would this adjustment be made ? C:41estion5 Page 24, Sec. 10. 8 Would it not be possible for a President, during a single term, to change the political complexion of the Federal board ? This being true, would not this be a direct invitation to tale advantage of such an opportunity, and would it not greatly multiply the rower for disaster that any unfortunate choice for a ''resident might entail ? .age 28, Lines 18 - 23. Is it not extremely dangerous to tublish the maturities of the paper of a regional bank, which might make it possible for any member of the community who did not understand the banking business but who was of en Inquiring turn of mind, to see in Such figures at certain -eriods a condition that would appear dangerous to him and that might be the basis for starting a serious xxx story concerning the regional bank ? Would not the publishinf: of such statistics necessarily at times seriously handicar the directors in their operation of the bank ? Is not the present banking system, under which bankers in one district, say, for instance, in the South, arrange directly to discount with bankers in That would be another district, say Page 28, Par. (b). safer and better, carrying with it as it does an opportunity for the bankers in the discounting districts to be entirely familiar with the standing of these to whom they Chicago or New York, make loans, than the system proposed of permitting the Federal board to force regional banks to discount paper with which they Questions 9 are not familiar ? Would not a central banking system be far better and much safer than either our present system or the proposed regional bank system ? Bow could a regional bank whose assets are wholly based upon the capital and resources of the banks in its district, which is situated in a district such as that comprising the territory, say, East, West and North of New Orleans, pass through the season during which practically all of its member bunks would be obliged to borrow from it, when such member banks as they are constituted today are obliged to borrow outside of this district during the crop-moving season inamounts approximating 4200,0u0,000 ? . Would not such a regional bank be obliged to borrow every year ? age 29, Par. (c). As the dividend is cumulative to stock- holders, this tax must be paid out of that portion of the profits that would otherwise #o to the Government. Such being the case, would there be any objection whatever on the part of the directors, even those that represented member banks, to the tax suggested ? Is it intended that this tax shall be paid to the Governmerit If so, would it not in reality be an operation that would be represented by the Government taking money out of one pocket and putting it into another ? This being true, after the tax is paid, does not every one concerned stand inexactly the same relation as to profits that they Q.uestions 10 did before ? Thie being true, of what possible use is te tax ? sAge 29, Lines 6 - 11. What member banks, under the bill, are required to keep the same reserves as the Federal reserve bank ? Are not such banks the only ones that could be charged a tax, under the provisions of this paragraph as it is worded ? Page 29, Lines 18 . 23. Are the reserve cities and central reserve cities still to be maintained because it is realized that the regional bank system will not do the work recjlired of it, as would a central bank ? Lines 24 - 25 Page 30, Lines 1 - 2. ?a,cre 29 Is it wise or safe to make it possible for a banker who has applied for a loan and has been refused by an officer of his regional hank for geed cause, to be able to go over the heads of the board of directors of the regional bank in his district and demand of a politically constituted board,- or, if you prefer to call it a board that may upon occasion be polit!cally constituted,and obtain the discharge of such officer? page 30, Par. (k). If the Federal reserve board should authorize member banks to carry Federal reserve notes as reserve, how would it be possible to retire such notes from circulation ? Questions 11 (1). Can Congress, under the Constitution, delegate legislative power such as is contemplated in Pape 30, this provision ? Pape 31, Lines 16 - fl. What possible good could come from calls for information that might be made by the Advisory Council upon the Federal Board ? If the Federal Board was acting improperly, would it not and could it not answer sue' cel]s for information with any sort or a report it might choose to meke ? Is not the power to call for information nullified unless those who make the call can check it up ? Such being the case, would not this Advisory Council give a false sense of secutity to bankers connected with the system ? age 3L, Lines 1 -.11. ITow would clerks in member banks and tellers in regional banks be able to check up their deposits as they were being made, and find out whether all the banks that items were drawn upon were ()Nv member banks ? would it be possible for such clerks and tellers to keep themselves informed as to which member banks had failed ? Again, and what seems possibly more difficult to answer, how would such clerks and tellers, after having looked up these items and found that they were drawn upon member banks, and had by telegraphic communication or otherwise found that such banks were still in existence, be able to determine whether such banks, though still in operation, were solvent ? Questions 12 1B it intended that we shall have two systems for the collection of checks in this country: one for items drawn upon members and cnotLer for items drawn u7on all oter tixag banks, corporations, firms, and individuals ? -;luestions Pe,Fe 32, Linos 11" - 7. Page 33, Linos 1 13 Is it wise to allow members to borrow from regional banks without any limit in respect to their oapital Page 32, Lines 22 - 26. Is it intended thut this provision shall make it possible for ii of li.ose interests who may desire, to purchase and carry in warehouse for future sale and delivery, agricultural and other products Y If it is not so intended, how, in viow of tLi provision. can a regional bank prevent aiding cteculators who desire to carry agricultural or ot;,er roduot for peculutive purposes ? If regional bank in an nricultural district boomo so 1oade0 up with bills of exchange iscmed against warehouse commodities that it could not not the curren needs of its dlatrlot, is it going to be fAlowed to borrow from other regional banks and aloo curtail their ability to meet current business .f.p7e 33, Lines 8 - l5. y are Federal banks autYorize to mho lotns to member banks against bills of exchange which de not boar am to the full amount of their capital, or to rn urlilAted amount if the intent of the Act is so construed, on0 are only allowed to loam to th extent of one-.elf the capital and surplus acceptance of t member bank when the bir.s of axe-hence bEwr te additionla security of tn acceptnce ? Is it not possible that ti c provision rnlLt seriously curtail the ability of regional bans to derJ in foreign exchange ? ()ass; o4ou ci4 Jo ,14Tan000 eq4 woaj PariTao4vw 4oui4op 4ou 4T e,,.)0(1 (1, sanosT o4ou 24T o4 viAa4vIt00 oolt 411.2T-J 4T qoiqm '1,07.4.117W uado ou4 uT u0130TJ4saa 4noq4Tm ae,itiet uToaawwoo Snq o4 pomovD3 act piaoanssl Jo :vett 4uT14 4,414.1. uI .LT - 6 saum a2via spuelquan9TJ a.rou (34 woiq 2uTonpeA jasao400lTp aq4 1/44A., .zomo6. Jo pnalauT "7.1uvit eAle00J. t3.upe! sTg4 aAriat O. act e.to114 p/noo uoTioei7qo oIcassod 4,att4t90U1 UT ssouvoul 4TotTfload 4.V-cw 4op4sTp GUO UT AM1PapOU .1.. 40TM 413,41.4Z-1_0141M IWO UT 071aW 4431m vaoq TI/Jupaa a-44 ou rlons'suoT4aTn2o1 Iaaauo2 4v744 aTqucloxd puu aIqTssod 40u 4T sI .0 - sauvi 4gc., pouioouoo sT snIuJna pul Iu4rV;:to J;w44 uu lus su '4u1Lowv Auu sAuag JOqW9W UVOT o4 crquaq TnuoTOaa To; rruussod 4T aquut uocoTA0AA lou um "u! aauvi OJR 4unoo6p 4unoos:pea aoJ Jo o4up OT44 Jo sSup Jt4aup uTT4Ta S4T-1/14-.= VuTAuq zolovautio 343 Jo s4JIlap 1Tuo uoqm 'una o4 sq4uow xTo :411T41T wo1/4 uodn u:AuJp s4,pap 4aoon Z1 seuTI 'CO 04. Po/4I0ITri crituvict TvuoT4nE 0/14 ATU. suo.p.son Questions 15 Explain how recional bA-tnks are Fotng to work tosotler in the foreign marhot. Nhich one of these bsnks srould take rocelence over tho ot. ors. should forein operntions be necossary or advloable 9 Which. regional bank would st-nd such looses ss night occur through a necessity that might arise requiring the dissossl of foreign exchange held by sll of them ? Would the bsnk handling the operstion hnve to stand the loss, the other locnks turning over their exc,onge to it, psosided, of cosrse, tat any means is fovsd to require a joint c;erstion Might it n6t be fsir to arrortion the loss smong nll of the regional banIcs, whe'ner they were cssrying on a foreign bvsiness or not If this were done, would it bP fair to those Who wore not Is the foreign business, to subject them to losses beyond their control ? Agin, would it be fair to a regional bank whose msnsger had hsndled his exchenge in such manner as to enable him to take ;art in the oseration without lose, to have to stand a portion of such looses as might occur through the operstions of some other manager WitS a number of regional ban'ss, all doing a foreign business, would they not of necossity,- esch Torkinr for himself, based on the reserve situation and neods of membes banks,- be working along lines directly opposed to each other ? Is it not true that in the csre of n central bsnk, Rll of tsose serious matters would be olininated absolutely ? 2se.e 35, Lines 18 - P5. Please exnlain hos eight or toelve recioml banks, all authorized to Questions 16 o-serate in the sold msrket, can do so effectively and economically ? Would not a central bank solve all of the difficulties surrounding these important operations both economically and effectively ? Is it not extremely dangerous to authorize a board that may be politically constituted, to purchase securities issued by oolitical subdivisions ? Should not the tendency to borrow, on tile yart of ,olitical subdivisions such as those mentioned in this section, be discouraged ratLer than encouraged, on qeneral rinci-los ? What is to be gained through allowing reional banks to compete wtth meMber banks for business of this nature ? :Age 36, par (b). Are not member ban'ss situated in the oliticul di7isions mentioned, better able to judge, not alone of the safety of such issues, but as well of the advisability of encouraging teir issusnce ? Page 36, par (d). Are all classes of Faper that regional banks are authorized to purchase intended to be covered in this _Tovision Ii not, what classes of paper are to have special rates applied to them, and ich classes are to be exempt from t is extraordinary measure ? coul regional tanks over purchase foreigribills of' excllange on rates establishec by the ?ecleral reserve boa:T-(1 ? Questions 17 Page 36, par (e). Please explain how ettLt or twelve regional banks with branches ebroad could operate fectively and economically "for exchange purposes" ? There is no question but what a central bsnk could do business along these lines economically and with advantage to to country, but how is it going to be 7ossible for eight or twelve regional institutions to aa o not Would the representatives of the different Federal banks have to 7!ork for the benefit of their own institutions, and would not tIliT of necessity result in their operating against each oti;er a large fIrt of the time ? Page 37, Lines 6 - 15. If t' .::ederal reserve bonrd voted six to one against autorizinz a rerior,1 bank which was over-extending itself i--prorerly, from borrowing of otter regional banks, and the one nef,ative vote was cast by the Secretary of the Treasury, could he not, under the provisjons of this bill, nullify the action of the Federal reserve board by transferrinp Gove-nment deposits from other regional banks to thg- ore asking for itiC If the regional bank asking for the accommodation was in a district whose vote might decide a rapidly approaching presidential election, might not the pressure upon the Secretary of the Treasury to hel;-, out such district be almost too great to be resit/teal"! Would rot such condition of extension be more t to - occur in the fall, just before s presidontisl election, ,articulsrly if 'latform -olicies were involved that mit:)t represent serious uestionL difference of opinion,thwi at slmos 18 eny oter period, taken ir connection wft* t!le fact that te fall is ."ye to be moved sne wben root roroy 19 tek 7ime wi,er crops re,atta IS it not true that t. .!s united an unrarrentcd rower would not be possible in the coas of a central bank ? Is it also not true tl-at money derosited in a central brnk by the Governmert,ou3e. be far safer than money that might he -Joeed with reelonel barks in sumg fer exceeding the capital of Eueh banks ? Page $7, Lines 16 - 22. Postaa savings,repreaerting the do'i,osts of tLe people in the localities where .V.ley are made, and auch people beving eatabli.shed by ler systems of '.7ttite banks to carry on the17r buainess, is it riht or justifiable to exclude 3tate banks from actin-* as depoclitarics for postal savincs, w'.en ano. docrIlts are nr-de against collateral satisfactory to the Government ? May there not be mriny commuities tbrouhout the country ore thero ere no member banks., which would result in taking the 2ontal avvings of such Counities into other dfstricts, snd defat the provisions of the postal savings law intended to keep such funds at home ? lecl 37, Linea 4 - 25. On what ground do you justify the plac1n7 in the hands of which may be made ur rl Federal board of individuals who have no financial resonsibility, and which as a boord isS, no f1nane1t4 standing, of circulatin7 notes machinery, that aro reedy for issuance ? Is not this the introduction of another rdoco of dangerous nocessery in order to make a central bank of a regional PE-c-e 37, Soo. 16. Questions 19 Does the Government of the United 6tates own lc the .old and collaterf.1 that is to be held by the FeC.eral reserve board as security for the note issues of regional banks ? This Question having been answered in the negative, does not the guarantee of tese notes by the Government then become a fivt guarantee 9 In case of the failure of a regfonal bank that had outstanding a very large issue of notes, end it was found that the Yedeval reserve agent had disi,osed of the gold and security in his care, would tot the Vrited States be placed in exactly the same mition in regi,rd to tie redemption of these notes tLat it would be if it had issued its own flat notes pure and simple, without tLe intervention of any bank in betwe:n ? IPte 38, Lines 1 - V. meITIer banks borrow of a regional bank until it reserves are exhausted, and suc"c, toirowings are desired in ere its and not in circulating notes: that member banks draw drafts upon t) ese credits, whicI t,re 0-'esented to the regional bank and, if in gold or lawfu] money, would de lete its reserves. Would the regional bank, under this act, he authorized to pay such settlements in a Clearing Foume or direct in regional bank circulation, f.rovided it were not desired by Le]dors of the drafts ? Even if regional banks were authorized to make settlements in TI-C1' manner. could not t:oce who rec ived the circulating notes rresent them to the bank and demand cld and lawful money ? Under such conditions, of what value to the regional hank would be Its note-isouing ability ? uestions 20 not this regional bank system, representimt merely the consolidation of district demandn, its apt to be simultaneous, instead of giving such demands a mobility country-wide, without friction, loss of time or expense, as would be true in the case of a central bank ? Is it intended that Federal reserve banks receiving circulating notes of otner regional banks shall pay the trans ortation charges upon such notes when returning them for redemption, or are such charges to be paid by the issuing bank ? 2age 39, Lines 19 - age 41, Lines 1 - 7. This provision stltes that the bank shall be charged with the amount of such notes, and shall ray such rate of intert,st on said amount 88 may be established by the Federal reserve board. Under this provision, would not a regional bank to be obliged to pay interest upon such notes as it might have in its own vault or in the vaults of it branches ? Should not such-interest be paid only upon such amount of circulation as might be outstanding ? no would this interest be paid to ? If to the Government, what possible difference would it make whether any interest were neid or not, for if the regional banks were successfnl, the proportion of the profit that would accrue to the Government would be the part reduced through the payment of interest. The Government would not lose, therefore. 'Amid this not mean that instead of t'a Government's ,rofit from the regional banks being represented through payment of Questions 21 dividends alone, it eould be divided up into three eorts of -ayments, repreeented by dividends, taxes and intereet, all of whioh togethor would, exactly eual. the dividends ? Under such eircumstences, who would have the slighteet objection to te eaying of thie interest, which is apparently intended to act to prevent over-expaneion Page 44, Lines 7 - 13, Ie it not true, under this provle'on. in connection with the first paregraph ofotion 13, thet a regional hark tuated in Ohicago could forwerd exchange on banks, members of the New Orleans regional bare-r, to New Yor'k, for exchanEe Eury9008, in order to make New Yor eechange, if w Grleane eechunce were at a diseount ? Is it not also true that the 7!oe York regionsl bank could then forward theee items to 3t. Lcuis for collection, if it needed St. Louis exchange? Is it not true that the St. Louis reEional bank, reeniring Chicago exchange in preference to riew Orleans exchange, could then send these items to Chicago for eechange purpoees ? Is it not true that this circle might he kept up indefinitely, while New Orleane exehanoe was at a dieeount in these throe cities ? is it not true that the regional banks would naturally handle the items in this way, for their own profit, as ne one of them would feel that it was the one called upon to stand the lose in exchange ? 7s it not true that in the case of a central hank, it Questions 2E would havo everything to lose and nothing to gain if it handled the items in this way,- for, if the Chicago branch forwarded the items to the New York branch, and the New York branch to the St. Louis branch, and the St. Louis branch to the Chicago branch, etc., etc., the central bank as a whole would be out of.tbn money while the items were in transit,and it would therefore collect them as rapidly as pom:ible ? Is it not trne that the currants of domestic exchange, due to seasonal operationn, arc well defined in this country, without any consideration of our banking sytem 1 Such being the case, is it not true that regional banks, in trying to meet those exchange conditions, would first use up their balances with other regional banks, and then be obliged to ship lawful money for their credit,thich would deplete their reserves, although such lawful Loney would, of course, increase the reserves cf some other regional bank lc it not true that in the case of a central bank, whore the 1w:fill money in every branch would count as reserve, there would be no necessity of such shipments ? Is it not true, therefore, that a regional cystom would be such more expensive to the country in the handling of domestic exchange, as well as in handling foreign exchange Page 45, Sec. 18. .ould not such transactions be limited to 49,0()0,000. a month ? Page 46, nines 5 - 13. is it intended that such lawful money as might be deposited with the Treasurer Questions 23 of the United States by National banks, may be deposited by the Secretary of the Treasury in regional banks ? If such authority is not intended, might not a larp.e amount of lawful money be withdrawn from circulation ? If the Secretary of the Treasury is considered to have authority to deposit such funds with the regional banks, would net this add unknown proportions annually of 700 odd million dollars that he would be able to place at his discretion in any regional bank in the country ? Is it safe or right to the business interests and people of the United States, to place such absolute power in the bands of one man ? Page 47, Lines 4 - 5. If these circulating notes are issued under the same terms and conditions as National bank notes, is there any authority that could compel the regional banks to maintain a reserve against such issues ? 2age 47, Lines 5 - 9. Does not this provision, reading, "that United States bonds bought by a Federai reserve bank, against which there are no outstanding National bank notes, may exchange," etc., leave the power Open to Federal reserve banks to act under the provision 021( rage 11, Section 8, Lines 12 to 21, ), and issue circulating notes against any bonds of the United States, whether they at present bear the circulating privilege or not, thus increasing the amount of notes that might be outstanding against ( Questions 24 United States bonds from $743,000,000. to 4966,000,000., thus adding further to the power of the Secretary of the Treasury and also to the liability of regional banks that might not need to be covered by reserve ? Page 47, Lines 14 - 17 Lines 22 - 24. That possible use can there be of demanding that bankers hold reserves against time deposits,when they know the date of materity of such deposits and are in position to make loans against them that mature in time to meet such deposits ? Is it not really a tax upon time deposits that directly takes away from the bank the ability to pay the high rates of interest that depositors have a right to expect when they agree to leave money on deposit for a stated length of time Page 48, Lines 3 - 25 Page 49, Lines 1 - 21. If the regional bark system works as wen as a central bank would, and bankers situated in cities where regional banks or their branches were maintained could go to such banks at a moment's notice and secure further till money to meet emergency, or further revery() money, why are banks in such cities reoulred to keep a laroor reserve than country banks ? Is it not true that such country banks aswefre situated in towns were there was no regional bank, or branches, would not be able to obtain additional till money, or reserve money, in case of emergency ac cuickly as bank in reserve or central reserve citfos, out would reouire several hours, and in many cases a full Questions 25 dny's the, before being able to do so? auch being the case, is there any ground whatever for reouiring banks in reserve and central reserve cities, to keep a larger reserve than country banks, unless, I repeat, it is realized by those who create this bill that the regional banks cannot do the work that is expected of tlem 'age 49, Lines 22 - 25. Why should not member banks always maintain ono-half of the reserve required in the ioederal reserve bank in commercial parer, under this provision, no they could do so entirely without cost ? This being true, do not the reserves reeuired of banks resolve themselves into three kinds: Cash in vault, crefAts with the regional bank, and segregated eligible paper What difference does it make whether a bank segregates eligible paper in its own vault or in the vaults of a regional hank, as far as its value as s reserve is concerned ? Is not this a dangerous provision, that might induce banks to feel that they were better protected than they really are, for the comiercial paper could not, of course, be used as security to discounts, and until discounted would not really be of any value In case of emergency ? Why should not member banks be obliged to discount such .,Japer and have the proceeds credited to their reserve accounts with reional banks, and so be obliged to pay for this privilege, and make it to their interest to reduce the amount of paper so deposited at overy opportunity 9 Questions 26 Is not this provon bad banking, which accomplishes than to nothing,other xximaaxit give,: a false sense, of seourity sage 50, i.ines 13 - 16. how is it going to be possible for a State bank becoming a member bank, to do business with any other State bank and at the same time borrow from a regional, bank ? Is it not truo that many State banks are organized with capital that would not make them eligible to join the system ? Is it not true that such State banks do businese with other State banks which might be authorized to join the system i Is it not true, if member State banks loaned to any State bank not a member, if in the course of its business it were required to borrow from a regional bank, that beyond question it could be said that the -5tate bank which. was not a member bank was deriving indirect benefit from the system ? Does not this provision make class legislation, intended only for the benefit of eligible banks as against all other banks and such part of our people az deal with them ? Page 51, Lines 5 - 9. Viould not a central bank with ellch branches as it would be possible inexpensively to maintain in Alaska or ether points outside of the Continental United tates, be able to deal with and protect member banks in such localities with more certainty and greater safety than is possible in the regional bank system contemplated ? Questions 27 Will not this provision operate unfairly as hanks issue circulation in varying percentages to their deposits ? Is it fair to any banks, and particularly to those who msy signify their intention of going into the system, to discri:Anato against them in this manner, after they tali() made purchases of bonds at high rates in order to furnish circulation to the country, at euestionable profit, with the privilege of counting their five per cent fund as reserve ? Of what possible value to the new system of banking is this unfair reeuirement ? Page 51, Sec. 20. Is this provision intended to place the office ef the Comptroller of the Currency under the Federal reserve board, instead. of under the Secretory of tte Treasury 'age 51, Sec. 21. If such is the intention, is it not nullified by the ) provision in Page 27, Lines 11 to 19 In other words, if six members of the Federal reserve board voted to have the Comptroller make a special examination of some institution, and tte Secretary of the Treasury voted against it, would not his power outside of the Feceral reserve board enable him to overrule them ? What possible excuse is there for giving any one man ( such power ? Page 56, Lines 5 - 16. Is it not only possible, but very probable, that an individual will not care to own stock of a National bank, ,"onestions 26 under such oirounstanocs, on Le can invest tic money in °tier ways that might bring him as good or a better return, when be knows. tLut if he b000mos dionatinfied with the Lanagemont and fearful as to ti o standing of the bank, and', having too sonell an amount of stool-, maybe, to control its operations, he desires to sell, that le oannot do so without rotaining hi8 liability for sixty days Is not this provision, through inducing fear on tIol part tho public to hold stock in 'iotional bunks, going to do more harm tLan good 2age 65, Sea. 24. Pater them tie up tho funds of commercial banlre in longtime paper of this charactor, would it not be far better to create a new class of institutions for tho special purposo of loaning on mortKages T Page 66, Soc. 25. Boy is a National bank to cot aide a certain proportion of its capital 82 security for business to be undertaken by 8 branch of such bunk, and prevent liabilities assumed by the branch from applyiws to `tat portion of the capitol oupposo6 to be saved for thin country t If it rore poosible to accomplish tLis, how could any National bank expect It branch to do buoiness in a fore4n country with the branch capital so limited, particularly in competition with banks Laving capital many times that of the entire capital of the National banl estions 29 Would net ttie provision, if it wore possible to carry it out, which is doubtful, be apt to induce carelessness on the part of those managing the bank in this country as to those managing the foreign branch ? ight not they be willing to have the foreign manager accept larger risks than might be warranted, if the profit apreared unusual and the liability was limited to a small amount of segregated capital 1' Of what possible use iP such a provision Y Could not a bank operate with greater safety, facility and effectiveness, if it were in position to use such portion of its capitalpahroae or at home, as firancisl conditions might reduire ? 4,s Reasons why,Neponal Banks would not oars to become members of a regional bank system. Page 2, Line 25. Districts may be readjusted in a manner that might materially affect the business interests of country bankers along te borders. Page 3, lines 17 - 23. Bankers cannot determine before agreeing to join the system whether it is going to be a success or a failure; what the capital of their regional bank is to be, or the capital of other regional hanks or the assets of any o2 them; as they will be required to render their decision within sixty days of the enactment of the bill. Bankers must also give assent before knowing what district they are to be in, which might mean a serious matter in many cases. Page 4, Lines 11-17. The liability of stockholders in National banks is to be increased from a double liability on the whole stock, to a triple liability on 6%, plus a farther triple liability on such percentage of the stock as is represented by the proportion between the surplus and capital. Stock of a regional bank owned by a National bank cannot be sold, and, bearing a double liability, it might represent a real burden. If a National bank did not approve of the management of the regional bank, or such regional bank did not work out successfully, the Uational bank would have no means of disposing of its stock without relinguishlng its charter. V 2 Page 4, Lines 18 - 22. Outside of a central reserve city, a National bank cannot determine whether it is gbing to be able to retain, even for a time and while the regional system is being devel(4ed and its usefulness tested, its present banking relations with its reserve agent or not. Page 5, Lines 14 - 20. Additional liabilities are placed upon directors of -National banks that are unfair and that they should not be asked to assume. Pace 7, Lines 15 - 18. A voting trust is possible of organization that might outvote member banks in any regional bank. rage 12, Lines 8 - 15. The reserve deposits of 'National banks would apparently have to be used to make lane to banks of questionable standing, which might result in disaster, as long as such banks kept within the law. The credit standing of member institutions who might borrow from the regional bank would seem to be secondary to that of the right to borrow. National banks in the central reserve and reserve cities would rot have any power of electing. any director of the regional bank in which they were obliged to take stock and place reserves made up of the money of their depositors. Under the group d&vision of el.Ition outlined, only the small banks would have the power of election. For instance, on an average Page 13, Lines 7 - 14. N3 basic of eight regional banks, including se members all of the 7,488 National bunks mentioned in the report of the Comptroller for 1913, we find that each group, for voting purposes, would comprise 312 =mbar banks. In thee groups, under the system outlined, bunks having a capital of from $250,000. up would be placed in conjunction with banks having a capital of 4100,000. to $260,000. in the ratio of 85 to 227. In the next eroup, hanks with a capital of from 450,000. to 1100,000. would have 26,4 votes out of 312. In the last group, banks having a capital of $25,000. would have 254 votes out of e total of 3,12. Figuring this in connection with the amount of atock that each institution would have to buy and the deposits that would have to be placed with regional banks, it shows that considerably over half of the entire capital stock in amount and of deposits would only have a voice in eleoting one director, and that a minority voice. Page le, Lines 9 - 15. The capital of a regional bank would be subject to reduction, and. its standing in connection with the business of the country might be soriously curtailed, and member banks would have no power to prevent it or to leave the system and retain their charters if they desired to. Page. 19, see. 7. The insurance of deposits feature would unquestionably result in the establishment of banks by irresponsible parties, to compete with our present banks upon a false basis. The money to pay the depositors of such dishonest competitors would be earned from the use of the deposits of member banks in the regional bank. N Page 24, Sec. 10. 4 The terms of office of tte members of the ?ederal Reserve Board are such that political control would be possible, which might endanger the entire system. Page 28, Par (b). National banks would not wish to be compelled to put the money of their depositors, or to take etoek, in any bank whose essets could be used at will by some third party to make loans to another regional bank. Page 29, Lines 18 - 23. Banks in tLe reserve and central reserve cities are discriminated against in the amount of reserves that they axe obliged to maintain, even though the reserve& that thee are at present carrying are to be tel7en away from them, which is the only reacon that they are today obliged to maintain higher reserves than countel banks. Page 29, Lines 24 - 25. 30, " 1 - 2. Officere of a regional bank might fear . to eNereice their 2'111 judgment in refusit ing dangeroue lecne, as politeoians whom they refusod. might appeal over the heads of the directors 0; 1014 tank to the rederal Board. Thie Aold of necessity weeIen the safety and standing of a regionel bank in which :ational banks might have to maintain deposits. Page 34, Lines El - 22. i]omber banke might borrow of a regional'e bank to any number of tinee their cap- ital if they could pat up paper, which might result in limiting the ability of those who might not take out I5 loan early in any particalar to obtain thorn; and, under this provision, it would be imporsible for the direotore of a regional bank to figure out any way of living up to the provision demanding, in eaeon effect, that they treat all banks alike. Page 35, Lines 9 - 17. Regional banks are put into direct competition with Vational banks in the open market. Page 35, Lines 18 - 2t. A regloral system of banks would not r salt in protecting the gold supply, under ery syntom ontlined in this section of the bill or any other. It is apparently implied that the regional banks will protect our gold supply, but its futility to do so is apparently recognized by those who created the bill, as they have made no attempt to give any powers of regulation to the rederal Board in this matter, probably knowing that they would not work. Page 37, Soc. 15. The Secretary of the Treasury is empowered to transfer Government funds in a way that would. mako it possible for him to force the suspenaion of any regional bank. The only possible way that the directors of a regional bank oould: protect themselves from the action of the Secretary of the Treasury, would be to let Government deposits lie in their vaults unusued The faot that the ordinary 8eoretary of the Treasury might not have used this privilege would be all the more dangerous in case some Secretary die so, for it would lead regional banks to invest the Government funds. This is only one of many powers given to the Secretary of the Treasury that altoeether would make him a dictator in the financial A 6 affairs of this country, and would make him the most powereal individual in the world in money matters. Page 37, Sec. 16. The Government gaarentee of notes is recognized by bankers as being unsound and unsafe, and they would prefer not to be a party in authorizing such a syetom by becoming membere of a regionel bank. e'age 44, Lines 7 - 13. The domestio exchaage operatione oat- lined ere such that items might be in transit before presentation many days, and, if enyment were refused, member banks might meet with annsaeEsary loss. - 25 1 - 21. This le an exact statement of the differeeoes in reserve to be required between central reserve citiee, reserve cities, and eoeutry banks, and is unfair if tee two forzier clasees are to be shorn of their powers ae reserve cities. Page 48, Lines " 49, " Page 56, Sec. 26. Bach banks as might be interested le3eauso of the authority given to open foreign branehes could not make use of such authority. because of the division of capital requirei:. In general,- If a :atonal banker decided to have his Institution becomo a menber in u regionel bank, be would in effect be turning over a portion of his deposits to be managed ene controlled by those not interested in his bank, and who might exercise such control In a manner entirely foreign to his ideas of safe and oonserv N7 ative banking, and, further, be subjecting such deposits to tie arbitrary opinions of another separuto body of men with whom he might not have the slightest acquaintance, ana who could, in effect, lean such fends to another set of bankers in distant parts of the A banker in joining the syeter, tterefore, weuld be country. deliberately releasing the power of control over a certain percentage of his depositors money, which had been placed with him for oefekeeping, largely because such depositori had confidence in his pertieular integrity and ability to guard their money safely. Fan a banker any right to so dispose of resporribility entrusted to his care ? Under our present stem a banker can select his own reserve agent from many others, picking out tie one where tie interests of himself and his depositors would seem to teP bast served. As business continues, should ne consider that he had made El mistake and finds tha facilities offered or the security afforded were not satisfactory, he could change to eome ether reserve agent. Ile is free at al) times to use his judgment to protect his customers. In sedition to this, he car withdraw all funds with his reserve agent and place them in Ms on vaults. Foe different 'ill be his position if he joins the regional evetem, and is obliged to tie up money Jr stock that he cannot sell, end is then obliged to put his reserve deposits in a bank from which they cannot be drawn, and under the control of men whose judgment may materially differ from his, and where he has absolutely no power of discretion. Memoranda reg_WinK Answers The euestions which I propounded to the chairman of the Uommittee on 2an;cing and Ourrency, althouCe given careful attention and consideration, were not all satiefrIctorily answered. The answers to tnr cucetiens would lead one to lelieve that the Aderal Reserve Boerd rre to be ellercerful and act in eccordance with its judpment in all matters thct ern not oleerl,; state,: in the bill ane about ich there is nonfusion or uncertainty as to intent. This is so marVer' that it might eirlost seem as if the bill cculd be dieceroed entirely, tith tbe eeeeptien of the formetion of the Feerel ir eserve Ford, who might be told to go ahead and run the banlin edsine ee cf the eountry under eaah rules as they mie.tt care to promulgate. This Tederal Reserve Board, made up of unkne.e individuals, :.onsidered to have unerring judgment and -pee_oe, 'enowleage of the theoi7 and practice of han'eing. There would seem to be no cuestion whatever but that this wonEorful board, as it appears to the imagination b-foro any human belne are connected eith it, is going to he el-le to unravel every knotty problem that comerf before it, without regard to the provisions of the act, many of which it must apearently ignore. in looking: over the queetienz and anevers we find that no satiefactory reason hey been given rly the rederal recerve Board shoeld not crgenire the regional banks instead of an organization cotmi ttee in Questlon 3, the Senator from Colorado seemed to think that the Federal Reserve Board supplanted the ergenization committee after the oreanization of one regional bank. The Senator from Oklahoma stated elmoet positively that this wee true. The bill, A 2 however, does not say so; and it must be presumed, therefore, from the statement of the Chairman of the Senate Committee of Banking and Cursency, that the Federal Board is to usurp this power when it is reedy to do so. Question 4. No answer whatever was made as to where payments for stock subscriptions are to be Question 5. lodged. No satisfactory explanation was made as to whether sixty days is sufficient time to give a bank to decide whether It shall enter the syetem or not. Question 7.developed the fact that it is expected by those who created the bill, that a National bank will immediately resign its charter if there is any difference of opinion between it and the ?ederal Reserve Board as to its rights under the charter, rather than allow itself to be sued. The arguments upon this question, show- ii g the expectation and intention of the provision referred to, make it seem more unfair to banks and apt to do them greater wrong than would at first be supposed upon reading the bill. Question 10. This question was answered by stating that a portion of the rational Bank Act was copied; but such portion of the National Bank Act applies to the provisions under the National Bank Act and not to any provision under this new act. The dis- cussion brought out the fact that directors of National banks, under the proposed act, would have to determine all over again what their liabilities would consist of, and, further, in case of a difference of opinion between such directors and the Federal Reserve Board, that the directors would in effect have no defense, for the Senator A 3 from Oklahoma states that, in case the Federal Reserve Board said that a bank must forfeit its charter, the bank would Undoubtedly feel obliged to do so without contesting the ruling, in order to save itself from bankraptcy, because of the position that it would be in should it be sued. Instead, therefore, of directors of National banks being able to protect themselves by a satisfactory defence, their bank would have to suspend operations, and any losses that might occur would have to be paid by the directors. Or, if the National bank took out a State charter and lost any considerable amount of money because of being obliged to sell its Government bonds at a discount or at a less price than it had paid for them, the directors would have to personally pay such loss. Are National bank directors going to be willing to assume such unknown and undetermined liabilities, even tf the Federal Reserve Board, before its actual appointment, is expected to contain super-men The Federal Reserve Board is expected to answer and to decide upon when subscriptions are to be openee, to the public, and for how long, and when the Government subscription is to be made. To be sure; the bill does not give them any such authority, nor does it seem to authorize the Federal Reserve Board to spend the money of the United States for regional bank stock whenever they may see fit to do so; but the answers to the celestion would lead one to believe that they were going to assume this power. &Restion 11. iatEtlapL11. The answer to this question made it appear that reserve cities and central reserve cities are to maintain their present status, even though the act takes away from them their authority to act as reserve agents,- which was the only reason that 4 A they have been designated as reserve and central reserve cities. The fairnees or necessity of this provision was not explained. kliestion 16. Again the Federal Reserve Board is to sonder all decisions as to how and when branch offices are to be established, which continue further the sectional strife which is sure to ensue in this regional system, and does not alone confine it to the question of districte, but to branches within districts. while the bill states that every Federal Reserve further, Bank which may heve been suspended, etc., which, in as plain English as poesible, demands that if cne of twelve regional banks fails, the other eleven must esteblieh branches in its district, Committee states that only one suoh branch yet the Chairman of t'ee 6enate regional bank need establish a in the district and that the Federal Reserve Board will select such 'regional betake must break the law. In other words, they:ether ten regional banks If the intention of the Ccmmittee is to authorize the :Federal Peserve Board tc pick ont a regional bank and force it to open a branch in a bankrupt dietrict, and subject itself to all the risks and dangers that would probably ensue should anything as serious ns a reeional bank failure occur, does not the bill say so ? why Where in the bill is the Federal Reserve Board given authority to ignore the language of the bill and render decisions in opposition to it ? Question 18. The E....newer to this caestion clearly demands, in case the public is obliged to subscribe for Peeern1 stook,- and erovii 3 for each subeoeietion seems to admit Its possible necessity,- and, further, that in case the Government is obliged to eubecribe for a portion or all of the stock, because such a contingency; is seen to be poseible, that, after the building of A 5 such machinery and the carrying out of the provision, there would be no way whatever of organizing the bank. Again, the Federal Reserve Board is supposed to have power beyond the provisions of the act. The section referred Question 19. to distinctly continues the life of a regional bank twenty years, unless itsefranchise becomes forfeited by some violation of law, A regional bank might lose all of its capital through bad banking, without having broken any law. Its reserves might be maintained entirely in accordance with law; and, under such circumstances, the act specifloally provides that the life of such bank shall continue for twenty years. In spite of this fact, the Chairman of the Senate Committee states in effect that, ii in its judgment the Tederal Reserve Board considers it advisable. it will ignore this provision of the law and suepend the operation of the Federal Reserve Bank. This was answered merely by a repetition of the statement that the Federal Reserve Board woulu ignore the law If it saw fit and suspend a bank that became insolvent, even though Question 20. the act doeo not specifically authorize it to do so. Question 22. This question is answered by applying so much of the rational Bank Act as the creators of the bill consider desirable, even though the bill does not make it clear as to where the line is to be drawn. Admitting the construction put upon the provision by the chairman of the Committee, which is that the words, "such notes to be issued under the same conditions and provisions of law which relate to the issue of circulating notes by Bational banks," etc., a proposition in banking is authorized that is Against A 6 all principles of banking as outlined in theory and practice. A Federal bank with a capital of say $3,000 000., would, under this provision as construed, be able to issue, in connection with the provision upon page 61, over 0900,000,000. in notes secured by Suppose cthealderal Board were largely constiGovernment bonds. tuted of gentlemen of fiat faith, so to speak,- and we will, I think, all have to admit such a possibility, when we consider some of the suggestions that have been made regarding this bill,prevent such a board from using this what is to power to put out $900,000,000. in notes, and, if certain regional bank directors refused to act upon the instructions of such Federal Reserve Board without making so much friction that the Board decided to ignore them, would not the Board be in position to have such notes issued by any one of the Federal Reserve banks, the directors of whom were in accord The result would be the issue of ;900,00U,000. of with it. notes by a bank of say $3,000,000. capital. This must not be looked upon as unlikely as it would seem, when we consider how absurd and foolish it appears upon the face of it, for we all evidence before as in the hearings before the Senate and Committees that tends to.abow that there have Congressional are many advocates of fiat money still extant, and that to such there is no ouestion but that bond secured circulation would appear to be secured above all manner of necessity, even though the bank that pat it out might not be able to redeem it upon presentation and might not be able to sell its Government bonds in order to be able to do so, without loss. A bond secured circulation, divided up among 7,000 odd banks in proportion to their capital, is capable of constant redemption upon On the other hand, a bond presentation, and is safe on that account. A 7 secured circulation that exceeds the capital of a bank by a tremendous percentage, might force the suspension of such bank if presented even for temporary redemption in the natural course of business in great volume. What effect would it have upon the country If a bank, having a capital of 63,0e0,00., $5,000,0e0. or $10,0e0,030., had to suepend kende/ euch conditiens und hce oetstanding cured .700,300,000., $b00,000,000. or I:900,e3C,2.. of nete by United States bonds Y The notes could. nct be paid unti'l the bonde %aro sold, and who woule buy sucb an amount of bccee ander Don't ehie your heads, gentlemen, at the absurdity of thic proposition, because it i2 a far. safer one than woulo be true in the °ace of fiat money, such a-condition that would be sure to develop Y and ee :hive some of the strongest advocates of such money in our public life today. The right of appeal to tho Pederel Reserve tacitly aemitted, in ()ace a member bank is refused a loan aeax. Thie unrucetionably will put tremendous by a reglonel bank. preesure upon oe:',oere and eirectore of regional banks at times, hen some member bank owned by a uclitician of the political faith of thn Adminieteration may apply for a eaeetioeable loan. The ofiicers an direceore of the regicaal bank would know that their vetion in reiesing suoh loan might be reviewed with prejudice by a politically :fonatituted roeional board such ae this bill clearly Mal,'ES poyeible, and it would be very difficult for them to use their unbiased Ilogment in ooneieering such a loan. Coasetion 23. , elestion 24. The erovieionein regard to the oclection of eireceote are inceneistent and unworleable, and no answer was elven to show that they would be otherwise. Class B directors woeldIave A 8 to be selected from a list of directors of banks, even though they would not be authorized to act. Again, no way has been suggested that would make it possible to disqualify any one of three agricultural mon who might be elected at the same time by three agricultural communities in the same district. A t I Before considering the bill in detail we will now take up a general discussion of a central bank vs. regional banks. This country is confronted with a problem in currency refer, unicue in tle hietory of banking and unprecedented in the ciaracter and number of complications to be dealt with. The only instance in history comparable to ours is tlat of the German empire. Follcwing the consolidation of the German states, banking and currency reform wee undertal,en by tie Empire, the Act under which the Reichsbank was incorporated buying been promulgated larch 14, 1875, the gold standard having been definitely established by the At that date there were $1 quasi-public Coinage Act of July 1673. banks of iseue opereting under Governmental charters, iseued by twenty-two Uere.an state or municipalities. Au in the ease of 'ngland, where the Bank of 17:ng1and has gradually absorber', the right o note issue, loavieg but a negligible volume of notes of other "Ls in circulation, so in ...;esrmany the Reichebank, by the proviBi'le of the Act of 1075, has gradually been able to substitute its oa notes in place of the note of over thirty original banks Of 255116 The contraet -with conditions in *ale country is marked. Germany hkd established the geld standard by the Coinage Act, and consolidate, it paper money issues into one form of note, supported by the oredit of the Reichebank. God and the notes of the eichsbank, wi negligible exeeptione, constitute the currency of the nation. he United States has 7,500 banks of issue, operating under ieederal charter, twenty thousand odd State banking and credit institutions conducting their business under divergent lame of forty-eight different States, and seven forms of circulating 2 odium: Bational bank notes, United States gold certificates, United States silver certificates, United states notes, treasury notes, gold coins, and silver coins. While the situation in :;ermany wan vastly more simple thun the one we have to meet in this country, yet we Enr considering further complicating our system through the introduction of a proposed complex and untried syetem of regional banks, whose faults can plainly be seen and whose points of advantage arc not apnvrent, inatead of forming a central bank upon principles th soununoos of which have been thoroughly establiehed. The principles of u central bank, both in theory and in practice, have been proved beyond question as being capable of upholding tte commercial transactions of a nation. It can be soon, loth with the eyes of theory and nractice, that a central bank established in the United states would successfully meet every barking and currency problem that we have before us, whereas there are grave doubts about the successful operation of a system of regional banks in respect to many necessary functions that a public utility hank should possess. In noneidering the detail of the Owen bill, it will be found that, in general, a possibility of abuse of political :power in the case of regional banke is very groat and that the one man power placed in tho hands of the Secretary of the Treasury ia appalling. In the case of a central bank, there would be no necessity of subjecting the business interests of the country,- which include all interests,- either to conflicting political policies or the persona/ opinions of an incompetent Secretary of the Treesury. Aleng the lines of banking practice, one central bank with 3 branches could be used more effectively to 'bring about currency reform and banking reform, than a eeries of regional banks, eight or twelve in number. The points of differentiation are chiefly along the fellwing lines: gobilization of reserves. Equitable, stable, and uniform discount rates. Management, and sectional or partisan differences. Uniform note issues. The gold movement. (b) (9) The croeit of the Government. The fiscal agency. Refunding operations. Clearing functions and domestic exchange. "Mobility" means Mobilisation_efeseryps. "the quality or state of being movable, with elAreme fluidity," and, as applied to banking reserves, it means the ability to loan money in one pert of the country that is not needed in some other part or the country, with speed, without friction, and without :Lobility of reserves exists in a central bank with expense. branches, to a greater degree of perfection than it ie possible to (1) conceive in any other system. Re sere that may be held by any and all branches are still the reserves of a central bank. They may be shipped from the largest city to the smallest city, at distant ends of the country, and if held within tht control of branches of tho central bank, they count as reserve for the central bank. It i.e possible, therefore, to 1Gan money at any branch of a contral bank, no matter how small that branch may he, 4 or where eituated in the country in relation to ether branches, and have it measure in its effect upon the reserve egninet the total reserves of the central bank, instead of ageinst a small division of such total as ;ould be represented in a regional bank. The percentage of effect in such a transaction, therefore, would be vastly less in the case of a central bank than In the case of regional banks. In the United States we have a number of districts clearly marked in their nature as to the kind of business. All of the banks in certain districts, such as those which grow corn, wheat and cotton, are obliged to borrow money at the same time or the year. A number of other districts have Under our present money to loan during this same period. system, series of banks in one district, say the cotton district, borrow from a series of banks in another district, say the 1:ew York district, involving vast transfers of actual cash. Under a regional banking system, some of the demands of the cotton district would be consolidated into the regional bank (all of them could not be because the bank would not be large enough) ,and the only difference between LLe 'present system and the regional bank system in this connection eould lie in reducing the number of clannels of borrowing from the present number of borrowing banks in the cotton district to the same number of banks under the regional system, less those which wore able to obtain their requirements from the regional bank, which itselS would then be obli ed to borrow from the New York district regional bank, exactly as every other borrowing institution in the same district might be doing from its Uew York correspondent. In a central banking system, notes ti-at might be issued at its rew Orleans, 5 Galveston, Houston, Dallas, Atlanta, and other branches in the 6outh, would be based upon all of the reserves of e central bank wherever hold, and a perfection of mobility would be obtained not possible under our present cystem and net possible under a regional The power of t.e Peneral reserve board to force the bank syntem. Ne% York rcgional bank to lien to the New Orleans regional bank would not, and could not, place the reserves of the 'Jew York regional bank behind the note issues of the Uew Orleans regional bank. There o4ou3d be, therefore, no greater mobilization of reserves under e regional bank system tan there is tudey, even though the nulober of banks in the New Orleans district w'ich borrowed Crom the New York district vould be reduced. In connection with the mobilization of reserves, and preliminary to its succeosful operation, we must have concentration of reserves. In a central bank, such conoentration is again pertect. In a regional syutem such as has been proposed, it not only lacks perfection, but it actually extends the separation, for we are oropostng to increele our syrtem of three central reserve cities, which has been 'wanting in concentration, to eight or twelve central reserve cities in effect. The Owen bill in attempting to fortler centralize 14 greater deoentralizOion. Harmony exists in the minds of practical bankers and economists upon the necessity of an effective assembling of the lawful money reservos of all of tla Nntional banks, and the creation of an institution or inutitutions for this purpono vaict can be made avnilable ss reserve dppositury for State banking institotiOns, upon the pansape of state enabling Acts involving a minimum rotofore, credit strains modification of state banking laws. v/7 premiums for currency or gold have been distinguished by the inevitable hoarding process, wtich has added to the distress by reouiring a further curtailment of credit. Analyses of these occarronces indicate a sharp difference, both An character and eatent, of such a tendency in till, country and in Germany and France. In the United States, during 1907, 1890 and 1894, and 1873, hoarding of gold and currency was eonducted on a large scale by bankers and banking Institutions and was accomplished, first, by the withdrawal ol reserve depoeits from other banks, and, second, by reouiring a contraction of loans and diecounts. A certain amount of withan of gold ana currency was effected by inaividuals, but this v/ was insianificant as compared with the instant withdrawal, under stress, of reserve money by banking institutions. This phenomenon abroad ha z been vuite the reverse in characteristics. Inaividuals withdraw money from the tanks,- generally ignorant people of small means,- and lock it up in their homes. In this country the strain of such a process is unevenly distrantod among the 2b,000 institutione. Fear controls the action of the banker, and his disposition Is to save himself at all hazard, without regard for the welfare of his neighbor or his competitor. Ms portfolio contains notes and bills which are not available for new credits, and, at the period when he should be able to negotiate his bills an' use his reserves, he requires payment of his bills and increases his reserves. In Germany, where a certain boarding process has been noticed at intervals for the peat two years, the phenomenon is quite different. The Reiehsbank is able to increase its discount account, meet demands for currenoy by increased circulation, and protect its store of gold, at least temporarily, by the judicious use of a discount rate which drawal 7 it makes effective in all parts of the empire. The banks of Germany which depend upon the Reichshank in time of strain, are able to discount bills with that institution, and have a strong incentive to co-operate with the policy of the bank in protecting their own and ite credit and reserve position. in this country, we cannot hope by a stroke of the pen to bring about the chnrecter of co-operation with a central bank, such as eaists in Germany, and, to a considerable eltont, in England. The 20,000 State institetions cannot at once be brought into co-operation with such new system as is established. State institutions are, however, so largely dependent today x upon the National system,- the National banks being their chief i .sitaxima reserve depositaries,- that sound currency legislation which will strengthen the position of the rational banks will in turn enable the National banks to carry the load which is now imposed upon them by the State institutions, and which will continue for a long period under whatever system is adopted. Bo system of regional banks will prevent competition e/ for gold and currency in time of credit strain, as effectively as may be clone by a. central bank. With eight or twelve regional Institutions, etch section will seek the protection of its own district and the members of that district as distinguished from any other section and its members. Bad there been eight regional banks in 1907, it is inevitable that the powers of a central board of control would have been exercised to effect a readjustment of reserves beteeen the regional banks by enforced reeiscounts, and the very act on the pert of the Federal board of enforcing sueh rediscounts would have accentuated the rivalry between these sections for the accumulation of reserves. 8 It must be borne in mind what actually happened in 1907 in order to undorstend why such lloard4wou1d uncuestionsbly have occurred in the case of regional banks. No boarding was done by the banks of New York City, as is so commonly believed. Instead, such banks not alone shipped currency to their banking correspondents, ret,reIf sented by the amount of money that such corrosrondrets bad on deposit in New York, but they added to such deposits millions of dollars in loans, in order to accoamodate the West and south. They reduced their reserves through shipments to about one-half of the pereontRgo that the law required them to maintain. What Was done with this money that was shipped into the country ? Was it used to carry on business ? No; it found its wny into the vaults of the banks in the West and South_ until their reserves were built up to from ,(1 40% to 50%. It seems to be quite popular to attribute all this hoarding to VcAi York City, but the actual facts,- and they may be proved by reference to the Comptroller's report showing the reserves held by the Western and Southern tanks at that time,- show that the hoarding was not in New York City but in the country and smaller reserve mitilix city banks of the United 'States. If bankers were so frightened that they felt it necesoary to build up their reserves, oven asking for currency against loans in order to do so, knowing that such requests must of necessity increase the stringency, but hoping that they might be able to save themselves oven if all the rest of the country were forced into bankruptcy, how can we e.y.pect that they are going to view a condition of stringency which Nay aprenr in their regional Lank which carries v part of their reserves in time of stress not they present regional reserve notes for gold and laviful money as rapidly as they can obtain them, and build up 9 their own cash reserves as nuickly as possible ? Woald not the anxiety be increased if the Federal reserve board, in order to alleviate such condition, oven suggested taat bankers carry notes issue( by the Federal reserve banks as part of their as reserve ? What bank would want such notes in its reserve under such conditions ? Now, a point for your consideration. Under our prevent system bankers may withdraw every, dollar that they have with their reserve agent and carry it in cash in their awn vaults. New York benke have been criticised on the floor of this senate for not paying out such deposits on demand, and yet we are deliberately contemplating the forming of a system of regional banks in which the banks must deposit reserves that they are told before their Of deposit they cannot withdraw. at possible value are reserves xiYtkaiekima that cannot be used, place e aith a regional bank in a district where all members may wish to borrow at the same time ? In a large institution such as b central bank, where the reaerves held by every branch counted for all, there would never be any euestion as to its standing or its ability to meet the renuiremente of member banks. In other words, it would be far more valuable to member banks to be obliged to keep a portion of their reserve in such central bank, knowing that every other National bank in every part of the couatry were also required to keep a portion of its reserve in the central bank, than to be able to draw it out; because it would have the advantaac of being able to borrow against the reeerves of every district in the country that were not being used in that district; whereae in a regional bank system no such condition could exist, even on a compulsory discount basis. Tie defects of the regional eastern are admitted on the Ince of the Owen bill. If this country is so vat in territory 10 and its interests so varied in charKeter as to recuire rgional institutions to meet local conditions, why then require that they must be linked together through the exercise of arbitrary powers which must be exercised in conflict with economic conditions ? One institution holding all the reserves will make every dollar of reserve money the property of every section, avellable to every member, affording protection at all times tc all the members, whether lodged in the vaults of 17e, the branch in San Prancisco, the branch in York, or the main institution in Washington. (2) Zouitable, Stable and Uniform Lisoount Rates. the -eichsbank recently reduced its rate from Cs% WLon to 5-1/2:Z, that rate became effective to every one ot the 70,000 custovers of the bank in every part of the 6orman empire. The Bank of France has maintained unchanged a discount rate of 3% for es 'lone a period as seven years. ferent rates, The Unite' States toP no discount market. as nany osury laws as there erre 6tats, 26.00C difae many penalties as there are usury laws, and a ranee of cates oxtonding from a condition where money is unioanable to a maximam of over 100-7t. per annum, notnithdtanding the fact that this country has the largest store of gold, the greatest nature) resoorces, the largest power Of production, and the largest vo_ume of nation of the world. r.;25,00'),ODO,000. baking capitel of any The resources of our banking Pytem are, about Our 28,0C° hanks support the largest credit structure known in history. We are now attempting by the enactmelt of a bill, which is not even supported by a xajority of the Senate Committee on Banking and Currency and Nhich it is proposed shall be enacted by a majority of the majority in the Senate, who shall b reruired to sit in the Senate, chamber until eleven oic1Lc1 every 11 night, to se readjust the Landaelental coreiltions upon which this great credit establishment has grown, as to bring about uniform rates of interest, it cannot be done by the bill proposed,either safely or economically. Without referring to the shifting and withdrawal of redeposited reserves required by the terms of the Owen bill, and assuming that that prodigious task can be accomplished without convulsion in the period of time allowed, how may it be elpected that the surplus funds in the regional bank of the community where there exists a surplus of bank credits, may be made available to the regional institution in the district where there is a deficit of banking credits, by the natural economic law of supply and demand. So far as the regional institutions are concerned, those in seetione whore tlere is a continual elortage of credit will alseayc be borrowers; those in sections where there is a surplus of banking credit will always be seeking outlets for the surplus. If it is claimed that by the regional system the National banks of the district where credit is short will still be able to borrow from their correspondents, how may this be done without imposing upon the banks of that district the necessity of carrying balances at unprofitable rates with reserve correspondents just as heretofore, and thereby impairing the earning power of the country hanks ? And, on the other hand, how shall the reserve bank in the district with the plethora of money employ its funds other than by the purchase of bills In the open market, thereby bringing about an undue and uneconomic depression of discount rates ? It is difficult to see, under the terms of the Owen bill, how t[e country bank is benefitted by having its reserves at home, in a regional institution, if it must still maintain a balance with its Ohicago or New York correspondent for 12 purposes of discount. Certainly such a condition would not exert an influence towards uniformity or stability of interest rates throughout the different sections of the courtry. The difference between the lending cepecity of the creditor sections of the country and the borrowing needs of the debtor sections will noceeearily fall upon the regional bankc of the respective districts, sne must be adusted by the exorcise of the rediscount function between tl-e regional banks, thereby again irtroducing an uneconomic operation, likely to cue sectional difference of opinion, abuse of power and distract of With all the reserveo in one institution, the credit of management. that institution may be directed, through its branches, towards these sections where oredit is needed without the intervention of It may be claimed that the regional bank of arbitrary power. Nee York, having a surplus, welcome the opportunity to rediscount bills for the regional bank of New Orleans be developed ? Who shall fix the rates Y tow may this process Lees this bill intend that every time a difference of opinion arises between New Orleans and New York, a hearing in arbitration shall take place in Washington,- and who are the mon who will hear and arbitrate these differences ? May their time not be devoted to arbitretion exclusively ? And how may uniform rates be brought about by mandate or regulation of a board of control ? In contradistinction to the regional plan proposed, how simple would be the problem with a central bank. Twenty per cent, of the capital and eurelue of the National banks of the country amounts to about 4275,000,000. A rate of discount can be established with due regard to conditions and to th4a extent to which transfers Of reserves, Government deposits, and the general fund is being affected, which 13 will allow discounts to approximate the maximum seasonal fluctuation ceased by the harvesting and movement of the crops, which hae been estimated at 000,000,000. A central bank, by establiehing a rate with regard to these factors, would automatically meet the fluctuatien at the eeacon when required, and as to its base or normal rate through an increase or decrease, would control the extent to which all member banks would rediscount. As the demands increased in any locality or an to any individual member, the rate would automatically increase to the extent that the demand vas. met. With no distinguishing mark upon the reserve money in a central bank, no queetion could arise respeeting the extent to which any locality was impairing the reeerves of the bank with refereace to the needs of any ot.er lecality. No grouo of banks in one city, by large borroaings, coule so affect the rate in that locality as to impose penalties upon a more conservativoly managed institution which had been a more moderate borrower, for they would undor the central bank bill have to pay a higher rate of interest as they increased the proportion of their leans to capital. Uo elle great institution overchedowinc, a number of smeller institutions in one 1 cal ity could ever impose penalties in the way of increased discount rates upon its Jeep poreafnl competitors or neighbors. Furthermore, those institutions whose credit wee so high as to be able to borrow in the cheapest market ronid be able to rediscount pacer throughaat the naturel channels of rediecount in different sections of the country ro long as t WW1 profitable to do so, at rates below the rate fixed by the bnnk. We cannot expect for many years to bring about uniform, stable, or low rates of interest throughout this country. We can, however, establish an institution which, over a lung period 14 of years, will effect a gradual redistribution of credit and banking reserves, no that both uniformity end stability of rates may come about by thn natural operation of economic law. Such uniformity and stability must be based, first, upon the elimination of comoptition for bank rooervos in times of strain4 second, upon a discount market hand upon a sinRle reserve reservoir; third, upon the creation of in institution of sufficient p war ano of such singleness of purpose that it may exorcise the same influence over internntional exelworze as is now exercised by the three, great central v/ banks of urope. and the central banks of all of the principal industrial countries of the world. A pradusted increase in the discount rate on excess discounts over a normal uniform rate upon a minimum volume of discounts, will apply a brake upon expansion by the borrower where it will be eflectite, and assist in bringing about both stability and uniformity, and no such influence can be exercised either by artitrary nower or by the imposition of t tax upon earnings which go to the Government an in which the respeotive borro.crs will Lave but a trifling, if any, interest. Mmagement, and 3ect1onal or Partican Differences. harmony of tanaglelaent direoted towards a single purpose is essential to cope with tte vent probloms and the readjustment of our currency V/ and monetary laws. MEI we expect that this ie possible of accomplishment wit: boarda f clrectors, partisan to their distrioto A/10 may never moot together for exciange of vies, and who will be subject to tle orereise of arbitrary powers by a Government board ? (Z) to rot this plan contrary to all human experience in the management of Government or private affairs ? how mny this systom 15 In this country of keen political partisenehip, where each Party grasps every advantage within ite reach to secure the dominant poeition, or oaintain it once secured lay it be expected that a board of nortrol, upon which it officers of the Government whoee appointments are partisan an-e. politioal, whieh i$ eubject in many important respects to the direction or influaneo of the officers of the Government, to be free from political influenee and fre,4 discrimination, particularly having reger. to the politicel complexion of the: different eeetions of the eountry The first and_ essential protection aeainst partisanship v/ muet be a lencl enough. term of office to remove appointees from the influences of patronaz;e. Those managing dietrict offices muet be reeponeible to e board of this ehareter, free from politic or seetional influences, and not responsible to a lecal constituency or clientele which nay he influenced by political or sectional prejudices, rivalries or competitions. With one President having the power to appoint a mejo ity of s board of control durire one term of office, and with one or more rembers of the Board merAers of his official family or subect to ter direction, it le .never impossible that the powers eIercised by that board may be used for pCitical or partisan purposes. In the present temper of the people of this cou-rtry, how would suoh a board resist the preseure for radis0ou ,ts from a eection of the countr,y elfich Fad been guilty of overspeoulation if tle section including Wall 3treet lad resources aveilable Can it he expected that the distribution of the funda of the de .Government throughout twtive resionel tante CC.E1 be effected without diecord Such a system ae is proposed inetartly interjects sectionalism and partisanship. A beard of management responsible directly // 16 to Congress, appointed for long terms, themselves appointing their 1(cal management, would necessarily be free from such influences, the monies of the Government ioould be assembled in one institution, no questions of sectionalism or partisanship could arise as to their distribution, and the credit operations of tho institution would more surely be directed along economic liras. The very introduction of the idea of local obnership an manaeomant of regional tanks implies sectionel rivalry. Ile introduction of a board of oontrel to regulate the relations betwcen locally owned and managed regicnal banks, admits the weahness of the regional plan and throws coubt upon its elective cnaracter. Uniform tote Issues. Bere agiin the weakness of the regional bank system appears upon the face of the bill. A cretit instrument to circulato freely among the cop le mast be tree from (4) doubt us to its goodness and as to the ability of tho obligor to redeem it in gold. Two regional institutions may not necessarily be of eeuai credit strength. Twelve institutions rili certainly very considerably in their strength and resources. Our Natienal bank notes have a uniform value by reason of the Governmoot bond scourity. notes secured by paper %ill vary in quality according to the quality of the security and the percentage of gold reserve. In order that this vicious regional bank schome aiay be launched end the impediment of variable credit be removed, the Jolted Ltatos Government, for a consideroion, is adding Its obligation to the notes. This aspect of tLe Owen bill reouires soparato ocuooion. The praotical fEntores oi the plan as to regional banks may, however, be distinguished from the possibilities under a central bank plan in a nuolber of ' 17 imprtant roupect. volumo of not fl.c rc.lation between volue ofdivete and notes, issues ounnot to coatrelled ty a tux upon rtich tax la paid out of t earnings of tho bank, N17:c:n ttose applied tc.:, the earninra eo to the Governcent or even when tbox enrnin of tLe mezter banks. Inaamnot ae the volama of tha of noteo by a central bank or regional banks ill depend non the or;e:ration c the disoount ac:::::unt, it bccOlLea imperative that the uc z measure (34: contro: board of control .1.4..:11 exerci i:iscoutt ratE; os r.111 erablt- it to cl..t?ck unduc ctoxpanion in any occtlon. row max tlet be efictod without aunin intsrlariag exercisin poero whith srr:a3nrerra.clted intorfernoe with 9conomio las of oupply and demenA 1. A graduated ratofqlseount All bogin to Eopplv a chock in each lccality as tlr. tndoncy devolopc. Ir that becomos ineffoetive, the ncr:It;1 cr bln!s rato (thtlt Ls, the adv,!,:rtised . le direct bank rnto) can then be raised, the offset of 7(hlot vill tle Interchange cl:f orstlit fyteen tho totiona of tba countr without. tiig th voluo of ditc,zunts of a central btnk. nec,7=art4 Oath a procw.ls, w11a.iF fom.rf4rOje to V-.1at wh:tch occare in GerzLany, wc,uld haraly be possible ander thr: regiottl tank plan. There are, in fact, possibilities of notp inflation in ecti'nsct tie ::ountry where unutel eomanils for cnrrno: arise, rlich, under ti,e proposed pltn, woold ennually reculre to t)F. nIct b th,s, amerclso of ob;!octioneble arhltrarx poors. ome'-t. Cnrronn legialation 1E. icing oonnt7y itE tJ17r. rin, for seoror-:.ic reteone, the ondertaken:in world 11),L7, 0,treespd an unpartillod ocmotition for ge3d. The (Li S.44) Go:id German hark tat r.deted t1CC,C7,0,00',). to Its toldlne,L it year. 18 The French bank hac expanded its note iesaes and limited the amount of ito gold payments, in °roar to conserve ita gole loldifigs. The burden of readjustment of tto gold supply as largely fallen upon England, wtore a fren gold market is maintnined, and our gold supply in tlis pnly been protected to tIo degree tat it las during tle past to yerra by the provalonce of unusually high rates of intorest. The market or gold in this country ia absolutely unoontrelled, save 000ntry ty economio law. -Lay not the proposed loEislation have suci en influence upon our otoro of 6o-d az to wouoon our position ratJoar tho.oa otrengthen it, anc, poscibl4 cause large exportations ? This is cilia an important: matter that wr nust not lead ooreolves into a v// false position blindly. There aan be no doubt but tiat eiott or tweivo regional tants cannot tot &Al effeotiI;cly to control our gold supply az central bank. It woald not ooem to b,? a cueLtion for argamonL; it lu o apparent. Ihia boing true, the next consideration is wl tter a oystem of ro61ona1 uanks AOLLIC, bettor our prosont position or wean it. Ioo,re arc man; rouoono to boliove that it might wealon It naterially. any clange in the law wtich mstOes it necessary for our bonlbAng ayotem 81,3 a %tole to maintoin reserves in gold of any smaller per3entage than that which now applies to tie stole, sy,tem, willro:oessarily rooult in 1 4er intorDut rates, expanoion, hie,er rates of exorange, and gold exports. It tee beon voriously estimated that foroin invost&ento in our socurities amount to from four to six billions of ,ollaro. be enforced reparchaes (f these soculities would impose a strain upon our credit syatem of unparalleled importance. ioa ave t enacted a law reducing to tariff upon iol.porte by nearly 40i. A sharp deolino in our balanoe of trade, LrotbeM about by a great enlargement of our imports, would 19 likeviise require the export of gold. A considerable reduction in the activity of business throughout the country may release credits and reduce rates to such an extent that the rate of interest will no longer afford protection to our gold reserves. It is important that the institution or institutions to be created shall be able to exercise an effective influence upon toe international movement of gold and to conduct international operations, either throuch its own agencies or toroogh the agency of its members and correspondents, which toil' be substantially equal to ttat exercised by the great central banks of Europe. By the terms of the Owen bill, the eight or twelve regional tanks may each establish agencies without number defined, in any an all foreign coontriee, and without uniformity of purpose or action. Without the consolidation of their foreign Vv eredit operations it i.e difficult to conceve tow the influence required to be exercised could posoibly be brought about, and in the eas of regional banks of voryint financial strength, havinc different demands from meAer hanks, any method that voult result in their consolidation seems beyond comorehpreion. Those rho created the Owen bill evidently recognized. this fact, for they Lcve not made the slightest attempt to briog together the foreign operations of the ./ regional banks, but have left than to take care of themselves, so to speak, apparently hoping that by some mysterious means a way might be found out of the difficulty. Is it not better to face this problem before it is too late ? Oan this country afford to de otherwise It is not only perfectly clear theoretically that a co-IA:1 hank ii4ould serve to protect our gtld supply, but actual practice has prove( beyond ouestion that it would do so. It mey well be that the bank of the region where most of our foreign operatior arc conducted willbo able to exerc.se a predominating influence in 20 that class of business, but ehould this be true, it would always be handicapped by the operations of the other regional banks which would often be working against it. May it not also develep that its ability to defer exports of god will be impaired by demands made upon the other eleven institutions which it does not control, or, on the other hand, ttat in the import of gold under conditions rocuiring its purchase abroad, the cost of the operation may all be borne by the only institution which is able to effect such purchases ? If that is not the case, the cot of such operations must. once more be arbitrarily enforced by the exercise of mandatory poters which are contrary to economic law and which will give rise to distrust and criticism. Are we to create a eyetem where any one of twelve reservoirs of go]d is free to conduct international exchange operations, without co-operation or ueity of purpose If so, let us abandon the idea that this necessary object of monetary legislation is accomplis'ned under the provisions of the Owen bill. One institution with a branch in one or more or in each of the leading countries of Europe, as necessity develops, conducting its dealings on uniform principles and with a single pureoee, carrying its accounts with rorein7n banks under one control, is necessary for the protection of our country's store of gold. It cannot be deied by argument based on theory or practice, end if the Owen billis passed there is every reason to believe that instead of strengthening our position in the foreign financial eiarkets, it will weaken it to the point of disaster. The failure or mere rumor of insolvency of any regional bank would blast our credit throughout Europe almost beyond recovery and might result in calling forth. exports of gold such as the world has never seen. We are playing w El with fire Arconsidoring this great national experiment. Iredit is the greatest asset of nations, iust as It is of individuals. If Ito credit is rood, a country may rise an from the depths of destruction by earthquake or conflagration to reater heights than ever before, but if its creait is lust, neither magnificent cities nor vast resources can nrovent sufferine and degradation to it people. The Credit of the Government. The issue of paper money, bearing the obligation of the Government, must be examined (6) in its historical and economic aspects, and, further, with regard to the protection of the credit of the Government itself. Discussing only the latter features of tiAos subject, wtat are the possibilities under the Owen-Glass bill of difficulty or disaster as coptra4ed with the accepted plan common to all the great '&uropean nations, of a hank note isoue under Government regulation, Out without the Government oblieation. Should tbis country 'ncome involved in a foreign war, a ioreat economic disturbance, or, what is more possible, shiould oar credit situation be subjected to the dtsturbing influenoes of a great conflict between foreign nations, ho;. :fiay the demand obligations of the Government created by the Owen bill affect the credit of our Government billrovides that the notes shall be redeemable in go4.O., on demand, at the Treasury liepartment of tbe United Stats, or in goad or laofni money at any Peoeral reserve tank. The bill perLits the Tederal rtsorve bank to authorize meriber hanks to use Federal reserve notes or notes of the National banks as reserves. Under these conditions, any great eoonomic disturbanoe in this 22 country, or any world-wide disturbance of credit which might react upon this eountry's credit establishment, involves a danger to the credit of the Government, so long as the Government's obligation is attached to the notes, to the extent, in fact, that a saspencion of the reserve reouirements of the regional banks as permitted by tin bill might involve a suspension of specie payments by the United States Government. iL great European war, necessitating huge expenditures, would raise rates of interest in fore4n countries that would react in turn upon our banking system, requiring the exercise of every possible measnre, first ,to retain our store of gold; second, to the extent that it became impaired, to enable the regional banks to pay their notes in lawful money; third, to enable Will a system of regional banks, which is the instrument for issuing untOld millions of Government obligations, be able to protect the Government inrch an emergency, and is it not the duty of Congress to see tlFnt any legislatio0 now enacted shall afford every means which can he devised to that end A drain upon the gold of the country in such emergency would be due to the necessery repurchase of foreign investments, to the interruption of our foreign comnerce the Government to redeem its lawful paper money in gold. and the disturbance of the balance of international trade, tc the floating of foreign loans in this market, to the nithdrawal of foreign bank credits now extended to ti s country, and to the position upon our own credit establishment of the bnrden of inancing trade which is now largely carried by England. Gold, in this emergency, would be withdrawn through the presentation of Federal reserve notes at the regional tanks, so long an ti y, were able to furnish gold in payment. When unable to furnish gold, presumably they would exercise their right to pay in lawful money. The dealand for Eola would tlereby te transferred to the United 3tatei by tie preenntation of tle laAful money. This prooess might nec. ssitate tLa suspension of tle reserve re(uiremAnts as to the roKior:al banks throu61out tle courtry. The ability of tlt Government to ;my gold would b.c lia)::ted to t;C,..)_ now hsid in " its trust fund reserve, and its ability to obtain gold frur tie regional banks. By weLat process might tie eovernmert redfsm its notes in gold if tle regional bf-rke Lad suvmnded tbeir rcs,prve rosuirements and the Government were forced to rly upon its on ability to purohacie cold by VAc uor of ite ow n obliutiona ? markets of Europe %ould be closed. Our gold supply at home coald be aubcct to influences laresily corresponding to those ,-hich now f,r4.so in ti.is country in titio/ of panic. ' o will have pcoPibly 2o,000 Loco, to tke 3fate institutions, tho, influo-ced by tie strain credits of the oountry, due to ec:ditions -eseribf-d ar4 tc tle ri suspension of tl:e resrve rqou'remento of tle regional at, °nee endeavor to strong then their cold reervos, fd:d ti es by presenting Tecaral resPrve notes to tic rricnal banT7s snd dettnding sold for nom. 6houldAyitont be made in lalfal money, the dovand .lA woulc be transferred tJ 'no Governu_rnt. Uur t,stem for many yeslre w;.11 be unable to ovoccom;7 tle in'lu,nce oi to prsi 1 hoarCing on pert of Jtate institutions v,11,1;:' aro not eub:ect to eederai control or to the infL,ence .;re6ion 1 bans. As contrasted win this -.:ondition, Ve notes Err tlobli6at1oa ci a central bank, tbe absolute susTension of resr,rvreoairo=nts could be ;.lade witbOut involving t'e=., credic lr Uiite 6tat36 for the rede:_tption of tc=- nots, and the lact roscrt of banking practicil could bo caployed b)fore oo p-nsion of 24 payment in gold would be forced 'upon the Government. The United states is already obligated for the redemption on demand in gold of a sum of paper money greater than the entire funded debt of the Government. Why add to the peril ? Why offer gratuitously the credit of tile Unite C States when it is not required. ? Why create a note issue with a redemption fund hardly more then one-half of te amour,t which experience shows to be recuired in urope, and then attempt to (!.re it defects by the ordoree2xnt of the Government (7) The l!'iscal Aency. The General Fund of the United States at the present time consists of about W),0,-)0,0. on deposit with Government depositaries, nn. approximately :ii:53,(4,0 net in addition, avoi:.bblo for deposit itc regional banks. Ey an extraordinary provision of the Owen bill, the disposition and dietribution oi this huge sum is pieced absoiutely vittin the discretion oi orc ofiioer of the United States Uovernment. It may be elLic that ttis power is exorcised et tie present tiLe. It might also 1:e said that powers not autlorized et the present time aro reciuired to be exercised-in order to make deposits with the Government depositaries by the present syc%em. Is it intended that one officer of the Government shall be the supreme monetary power of the Unit;c States ? This bill puts at within the vw,..r of the Secretary of the Treasury, should he lave the courage to eTeroise it, to bring about an inglation N in one section oi thas country suroassind the pe o ihflation possible under ony blii which has been offered to Congress as the cure of our ourrency and Lionetary ills. io officer of the U itec States should be empowered to distribute i200,000,0,0. at will in any section of this country; 25 and to vest that power in the partisan political mentor of the crioas menace to tLa financial lndeFederal reserve board i pendenae of ti.e people of this country. 'net may be expected on the eve of a :National election ? One institution acting as the Government's fiscal sent woalC. render impossible te character of abuse vl:ich is only toe poseible atder tie provisions of tie Owen bill. no rnfanding of tire Goverr,'Tient bore nov4 3el2ntora1 to ''.tiona1 bank notes, on better te conducted throat) tle aeoncy el one institution co-trelline the (fl Refund1J.1g Operetiona. Lanoline ot all of to bene.e, tttn tlmeelvos inoomictitIcn wlth etch oth,r in decline with mcy CifAcult probiam. larket coneidarationa LotA,een different sectiore of the eoantry, the ability I one bar) to carry it slam of the batten without 11;8E, Sc cmearea with a tank in another emotion, the necessity libich one bank au be under of using short-time Govetr.a.ent obliFations icl tht parchase of gold, lalon tt.ocn bonds aro sonttcrod in te terdL of trelvA inatitwtions, all vaF8est a concition tf discord :vatLor than of coLoelong and an ineffective plan ratter ',Ian t comor,honsivc one. A really dan&orcue cituation might feed:4 develop .ith twelve rr,gjonzAl tanks atiompting to refund bundrede of millions of donetre of of-orations, am3antinf to na'7 times ti o orApttil of all and ar4 mor' times tle capitn1 of oaoh. bone of tlf, rogiot,&3 batike an rec4airea to coneloor tie siso o tieir enpital In eny refardin6 option authorized under the law. lnstead, it de to 'Lc a tif,rt of hit propos...Von, eactly ae it true In tho oust of the forel;n work cut all ri operctione, with evoxybody hoping that it or 26 Regional banks with a capital of 43,000,0.A. might be attempting to refund bonds amounting to one hundred million dollars or more. The proposition might look feasible to the board of directors under some conditions, if the reserves were unasoally high and the demands of member banks seemed to ran light for a period, and they might feel c sort of pride in sOowinK that they could du more than their share. CircuTht rij notee thnt would be out out etainst such bonds as they might be purchased from the National banks in order to retire the National bank circulation, would represent an outstanding liability, against which they are apparently oblige( to keep no reserve in the bill, and that might result in a preemntation for redemption, in one day, of an amount maoy times the capital of the bank. Again, it would seem to be us-:lese and unnecessary to call the attention of anyone to the great difference in safety to tbo couotry an in ability to oanole such refunding operations as would be necessary in order to retire National bank circulation through a system of regional banks under the terms of the proposed act, or unaer any imaginable terms that could be drawh up, and a central bank, that would be large enough to handle all such operations with safety and without friction. (9) Clearingjunctions and Domestic Faohante. TAiny of the same reaeons which make for the real mobilization of reserves in a central bank as against entire lack of such mobilization in revional banks, apply to clearing functions and domestic eychane. Under the Oren hill, Federal reserve banks are aottorised to remit other rA3deral reserve banks clocks of certain deEcriled cJonees that:they may rooeive on demand from membfr bans. The methods untLr which the handling of those cleelis, as authorized nAler the law, naturall an logic;relly developed, would chrry nith them a delay', for tl,o same reasons and in somewrat to same manner as existo lc our 'present 85ster. Insteae of accomplishing the ia-ediate presentation ane colleotion of itemo, a roundabout collection would continue to he onoouraed. A regional bank in ChicaFo, having authorized iteme deposited with it tit were dr!:lwn upon banks, members of the New Orleans regional district, wduld uneueotionably forward them to I;ew York for collection, if liew York exchane worr at a premium and Vey; Orleane exehange Et a disount. The Clhictwo reAlonal bank would not feel cOled upon to etad tla loss oi exchane involved. Even ii it charged the customer saoh ! exoLange, it might, in order to maa it, forward the items to the The New lork bank might very easily have /ere of a. demand for Bt. Louie exchange tten for tee Orieans exol.ange, whieh eould result in suet items then going forward St. 1,NA8. 'A;st is flare to .0x,:.vent t t,Louie regional bank Nev Yor reEionnl bank- . from then foreerding the items to Ohleago, should it require Chicago exehange, ane ehati tere to prevent thiti circling ok items whole) period that 74e, Orleans eichaw might be at a diseount t in the cave oi a centre,' bank thero would not be the dro:ine, slightest teptation to handle the itelis in any Suet %.anner, for it would t o to 70at interest of the .central bank to have tho clecks cashed immediately, Tle division of Interest thet eould be represented in .Lm rolonal banks woule not in a eentrni for ee -,eona the Oblcao branch obtained oredit in 'Lew York, its lose of inture.st vould oeaeo, ai,11 ae soon as the ?Jew -York bank obtained credit in t. u18 Its loes of Interest would active, and 28 so on, whereas, in the case of a central bank, its loss of interest would continue until the items were collected, as every one of its branches would be in the name relation to it an itself. Again, in tin handling of the country'c business, a central bank would be economical and would reduce the shipping of currency baok and forth between aistricts to a negligible minimum, whereas, with a regional syetemAiekust of necessity be based upon dietricte homogeneous as to their line of business, and which as districts have seasonal trade between Kiel) other, shipments of currency almost in as large an amount as those at present would probably occur; while the central bank would count money received in CIicego and paid out In New Yor17 as reserve, and could censerecently rodeo° its actual cash in hand in te _Nev. York branch to the smalleet amount thet would handle its natural business before currency might have to be shipped. Yet similar transactione between the Chicago regional bank and the ee. York regional beek might necessitate shipmente of currency back and forth, because money deposited in tee Chicago regional bark_ would not count as reserve for tIn New York regional bank, when called upon Le pay it out. There is no comparison between the two systems as to economy add facility, and the regional bank system will arn,aestionably put upon the people as e :hoe a tax that, while unseen, will be many tiees the cost of clearing items and ma'eing the domestic exchanges that would be true if these matters were handled through the branches of a central bank. 4.-e- I vet- f / /*I° ((t,/,,,,6 BENJ. STROEG-, Jr. ? Present Reserves. PERSONAL. Reserves Proposed. Country Banks. In Vault. 219,110,588 $182,592,156 With Reserve Agents...4328,665,882 $182,592,156 In Local Association... $182,592,156 Reserve Cities. In Vault. $246,782,394 $197,425,915 With Central Reserve Agents $246,782,394 $ 98,712,957 In Local Association $ 98,712,957 (After three years: (In Vault $ 98,712,957) (In Local $197,425,915) Association Central Reserve Cities. In Vault $398,230,116 In Local Association... $159,292,046 $159,292,046 The above figures are compiled on the basis of the Comptroller's report on National Banks on April 4, 1913. The "present reserve" represents the requirement and not the actual amount held by the banks, in order to make the comparison a proper one. The difference, however, is really very slight between the actual and required reserves. The cash required in all banks April 4 was $864,123,098, whereas under the proposed plan it would be $539,310,117, or $324,812,981 less than is required at present. The local associations, however, would have deposits of $539,310,117, against which they would have to maintain a reserve -2- that would vary depending had outstanding, but upon the amount of currency they figuring that such reserve would amount to 50%, or $269,655,058, the total cash reserve would be $808,965,175, or $55,157,923 less than at present. The re-. serves of the present reserve cities and central reserve cities would, however, be considerably less even under present percentages of figuring, as they would lose deposits to local associations amounting immediately to 0440,597,159, and in three years based on present figures to $539,310,116. It is impossible to state definitely what reduction in the cash reserve this would mean, as a portion of the loss in deposits would be met by the reserve agents, who only hold 12 1/2% in cash, and the balance by central reserve agents, which must hold 25% in cash. Figuring on an average of 20%, the amount would be for the present $88,119,431, and in three years $107,862,023. Now going back to the cash released, or $55,157,923, we find that $32,961,508 more could be released at present and still have the banks' present portion of reserve and $19,742,592 more' at the end of three years. Inflation, based on present deposits, could only take place at the end of three years on cash reserve of $163,019,946, which, figuring the average reserve required in all classes of banks at 8%, would allow an extension of loans amounting to $2,037,749,325. The reduction of deposits in the banks would partially be due to elimination of the duplication -3- of deposits, where reserve cities deposited funds received by them from country banks in central reserve cities. It would not seem as though the reserves of state banks would be affected in any particular, except as new state laws might require or allow. For instance, if a state should authorize its banks to count as their reserve money in local associations, it might have an effect on the deposits of national banks, or if the banks were prohibited from counting as reserve notes of the reserve associations, It would contract the lawful money in circulation by the amount of national bank notes at present held by state banks as a part of their reserve. In some states it might require a special act of Legislature in order to make it possible for the state banks to count reserve association notes in their reserve, but in most states I think there is nothing to prevent the state banks from counting such notes as reserve, provided no exception is taken to their action by the state bank examiner, and even if the examiner did object, he would not be able to enforce his opinion. Regarding the effect upon the deposits of central reserve cities, the proposition is somewhat problematical, as it is impossible to determine what proportion of the 4% the country banks would have to transfer from reserve agents to local associations would consist of balances at present with reserve agents and with those in central reserve agents. As New York, Chicago and St. Louis exchange would probably still be in demand, it might be fair to figure that say 2% -4- would be taken from each. In preparing the figures I will take this basis, although there is a possibility that the reserve associations might be handled in such manner as to lessen the demand for exchange on.central reserve cities (this would probably not be true, however, even if some Giro-Conto system were established). The reserve required to be held by country banks with reserve agents April 4, 1913 amounted to $328,665,882. Of this amount under the proposed plan $146,073,725, representing 4% of the net deposits of $3,651,843,139 would have to be transferred to local associations. Figuring that half of this amount is taken out of central reserve cities, it would reduce their deposits $73,036,862. On the same date the reserve cities had deposits of $1,974,259,154, requiring a reserve of $493,564,788, of which half, or $246,782,394, could be carried with central reserve cities. Under the pro- posed plan 5% of the deposits, or $98,712,957, may be carried with central reserve agents instead of $246,782,394, which would represent a reduction in the deposits in central reserve agents of $148,069,437 that are at present maintained by banks To this $148,069,437 must be added the in reserve cities. $73,036,862 that would be withdrawn by country banks, making a total of $221,106,299 in bank deposits, which would be withdrawn from reserve cities immediately when the law went into operation, and a further reduction of $98,712,957 in three years, amounting all together to $319,819,256. national The total banking deposits of the central reserve A cities April 4, 1913 amounted to $563,609,971, and they would -5- be reduced at the end of three years to $243,790,715, with a possible further reduction of $73,036,862 immediately should the country banks withdraw the whole of the 4% that they must transfer from reserve agents to local associations. The cash reserve required by central reserve banks April 4, 1913 was $398,230,116. Accepting the reduction in bank deposits in central reserve cities as being $243,790,715, their total net deposits would be reduced from $1,592,920,465 to $1,349,129,750. Under the new plan 10% of this amount, or $134,912,975, would have to be held in the banks' vaults instead of $398,230,116, or a reduction in cash in the central reserve cities of $263,317,141. Of this amount suppose that $243,790,715 was used to pay off the bank deposits that would have to be given up. This would leave $19,526,426 in cash which could be paid out by the central reserve banks (and still maintain their cash reserve) toward the $134,912,975 which the central reserve banks would have to maintain with the local associations. This would leave $115,386,549 that would have to be withdrawn by the central reserve banks from other channels in order to complete their reserve. a.-(1- 4 )91z 011.17(1 27 BENJ. STRONG, Jr, ../;:r't - g SOC-itle 0, % ciA24. /) PERS NAL. xer,,c506, /c , /ix (ri; "fas 91.014.5evik----R./.0. arr.: et-o 1`66"` 4) 6,6 .0-0 fr2ci,eg 00, CP 0 q.000ioc 6-4 oo Ito 0-0,060 '2714,000.000, p&k. Qe3t c.t.2 .*2 )6 Oil ,octo OthAt.0. f0 f?i, gaD an-, 7,06-o .06-d A/21/143- 11), '4 90 (644. 71440 90 ,Le_w gisu)7- n10,50.00-6, ke-6-tzd2t-er,I 0.avi 2 7 lb 06 evvrcti-etfo,1c /(J1, t /0 o-zto- 0 0-o, eel o / LLF,, a kt.o. ° tv7 rcgci \ qtptc9-6-15 0 9e I 6-1,6 4o 0 6-0 , Kdca-62-t? 113000-ii.97, (Ti (c,. & (km, ettatoi, 4at,r9 oc A, c.6tio, t '71i,c9eoolo c, ).9 . ee C9 to-rr Atvi ga Oc9,0,0 '2vee,0 0-0 --t 0714 IV/y 747,o-o-o.uo-o 41. ict 39 &/C'o . 161D 99,ece,eieko 1-0 e 0 e ti9 2-10,0ao ciao 2- 161.ten.te 0 1_6- -7 ,vedeo---0 .ect ";-cv (19 ort/6-ft, 6-(Ff-a- fRAiRAAA Cjic Pviaci, (CM*: /24).3 Axs // 3 pi,t, 47, wfe@to (?LotI >4 - 10o;d-6 52X Cner, ate e .0 0--0 ar-19-4 f:)," c90 V' V, / ( ,660,011 ISo , d e 0-6 BEkON AL. C-Z ...... #9-0----0 Nit,- 8- I 7g-, II, 'g C7 to.--0-6 r-e) 3-k 0-1,- P2I- 620476(2C 7--at---ra,&-- erzenuatp let,atrurt-, 221u7d-- fL.iat .4,z.e.,4 Alec az_ _ 4w-eta monist chuL.,_ leteta-0 zahLaft9-ittat,t- LA /twat,- fat=t91467 /wk.- 0/X4-4._.//ad 14 ;9 .16 (Piv,,, fro 7z,.6 trate?, .at. .714tz.u_et-ciehtivAvt(W--40At itenta Antean,-- ea-atzD 1.)6t62-kg-Cr d.UaJ Rkam.ile.--br-gAi azdt t; 9/timaskideuwit 6.1.41eit a444( 7\a41.441/72-14444_ 16--K4 jPJ cw.i494:1-te # ,,tex\ -rrt- (flu 744. istA, 14,a7 eto- eek-m?/1: 64,--ate9ieree ebdtutAat eiCatt teetwiz) arlitu-) etfitt eki770 A ei,c, 14.4/2,- la d /2 7g favaiA-2 ilaiekntAzati-TiLf ap---mhziltit 4/774 irk;.- -6/1/4-444.- ktedit 01.45. 4.ca, ten4t. catkv- -es- r4ir egAttEeL7ftretag jel-49-4441-67.4w -M4444(40 , dteTinc-(6 aitxtta;:a pect 0.4 Srk-atealI 0-*-1074-of 4ev-1;742 069.04,8-61.14 orcerrmis ettfhtturix.,4 ,..&yrry-\ /lay- quif f It-V=At2u4a- Ot-tzt hsecto-te a0.4-716,1 aCcuqt. Acultalet Aitrita htQuA;te, PfAgen _ 41,44---ztfck._ frie4utio.471.144A-- da;clui 77- 0444c4 autitaA,Ak:do Oti7i4e7kict twit-4 4cuiti 60-0-At gatti< 447tt detil Ad-rrite;z- y:aeir,ru tit.pnw 4-4,teA, /NA elit/driftil et9 '32u44PL #1,1194x# a fiCo /9.124,Ftiei ett. 44-Alai* 72Laatpie2viytli Ak- cliet.."AL7-ke. 010144, etti) 411(1-roA:i44 R1A-t- ..eetiMAL Aft A-01,611,n: PA4 .244 iffkottik71- 7);:Jt'O' 4,44 Cie' V Cat.,4_1714,P. kur&----"Ao 1-etei_14 Witat-q/e/nVil4/1 6140- Autr-z4;to r 444' fret-teete et4 dailitati at C-1 A rAvx. ai-1.1 444 104144,- wat.4 04,4,4 .tiro.Lria 6Aitaf'LA *4\2t 17.T:7; h(rikz; i4lufilliW ,et:trptdAaiov2iCk- P;1-114m4 &&miso oi4.4.4. 51g 144t4- if- 1:T4jJc/.4A4__(4-71A4_e 44g4td9'442.) lamtat 4ffitith" ga":"AtAficedzik.tre triad act--6 ii\vtt.e.x4v2ViCK 42- Ma_ fa4a-r-c-fs OrArEvo thit4A-c. R4/20/tit___00,44 acai Oett4---PL/owr-e /4,1- 7 de -Z,Lck- fget Av-tfiewe7tö data At" L-4 evg * 1,6 7Le-7.4 eltiiecat -s; 8671:4 ,944.4A 77v4- (/ a44e2A2 /t att ovieCtaa pew40p4 e-4 c19 aitetid: 61_4_ treal/tveas____7)wd AfIIj evamipleo:ilLIPAlvovo, &tufo 06,41, ttmvict eid, aiRkww-6 outet--114-4$711A-4- tka_ ir ale7( #444"-r-- 11 ll,14.4 1.,;; 9-X k /A--Arl 71- A / (9itt---6(441 cei/t t0-co; klimer.. aw2/771-4-Pti9 L TT'09. \9t/rk-ny-ti 4,&4( ifrierCiaL ',4,12/20telte Mrls_ 1 d4,44.) Awfrt-o Afetk,14,614_ le-A.L_ 172144__ 4rer-c 444J14.07-tikeyaa,1 OW, 44427),?--ak4' tirrYk 0/eAswa,r cud STRONG, . P11:1-610NALA The development tram day tl (lay of =rims tentative amendments to the Owon-Glaae Bill by the IS Condi:too on DoZine and. Ourle_y_17 throws met interesting licht lepton the rime of the Individual umber() of the Oosemittee that in entructed pith thin import= locinlation. Batedisre who havo appe-Area before the Oloittteo eerie to be divided into two ana =fortunately the larcoet, nhoulna interont principally in the prefit elesoeo - and loss accounts of t institutional the other mil erellor oleo° being corarvoed of thous whe ovidence Lc). honest desire to oontribute to emend intollactual coneideration of the oubjaot. 4 e clasp, annll in nuelbore, coo= to 1 repreeentod ltIrc,oly by /Ter York batewre. These centleman. have Given an /men attention to the attitude of the varioue nerabore of the Committoo.,ae e4ce1ona4 by their queetions, an have the nortborn of the Conaittee to the propounanc of paint:Ito/dm intorrocationn. /Tow that the Committoo ii,131),V121C vp the remit of its labor, a nitration in Oinolonod to thone %lie have foil:mod the roceedings That lo *iz ainoofound inpreemilla hao boon anemed by Senators OTornan, Ititch000k and Reid. I rofer 'be the attitude "Vieth /Tot only have they evidenced a iiob. wider =0 rore profouni lemorloace of the,...1.2bjeot than hae horotoforo been agpre- ciatod, but what io etill bettor and /10r0 onceurneing, they wit to be leadinc their oolleacuen in the Comittoo toward the adoption of cafe, fandenontal principles, notwithetanainc that it involvee imorine on outbarot of :votes* which the Committee han been forced to hon./Aaron benkern troll' all over the malty/ who are inspired by nolfich and poe,rtimm, =tiler Urn by patriotic rrtivoe. meretonteln that in the "bony strac turd; nro neither an rramy nor an con liected an they appearod to IA before the Marines boren ne doolnion for a reduction in the -2- umber of institutions to be organized, disclosed a leaning on the part of these three Senators toward the organization of one instead of a number of banks. This is decidedly in the right direction. The evidence now afforded., largely by the efforts of the 13 a three Senators to resist the adbption of a hasty and ill-considered legislative plegrain, has been the means of protecting the countrj from the consequences of 'hasty action which might have been serious. The further evidence that they believe that this plam must be -out into operation by gradual stages, rather than by instant readjustment of the vat structure of our bmeleang busin.ese, indicates the eareful consideration which these gentlemen arc giving to soeuld procedure, as well as sound legislation. The elirninat/ion of ex-officio members from the Federal Reserve Board and lengthening the terms of service of appointees indicates a desire to safeguard the new system from political or partisan con- trol. Bvery disoussion of popular subscription to the stock of regional banks strengthens the possibibity of a central bank organization, which is much to be desired. The oountry still awaits, and with anxiety, a disclosure o-f their attitude as to the obligation of the uovernment upon the currency to be issued, To the some degree that this great piece of constructive legislation is receiving the earnest attention of thoughtfal men all over the country, just to that degree will these Senators, who are re framing the bill, receive judgment upon the ir fitness or unfitness for the t ask,, Only history, after the legislation is enacted, can make the verdict the final one. Present clay opinions will be formed, however, and it is to be hoped that these gentlemen will direct their ability ,notwithstanding oi3eposition from many quarters, to safeguarding the credit of the United States Government TO the Editor of the New York Times. The statement from Chairman Glass, of the Committee on Banking and Currenoy, published in your columns this morning, seems to miss or avoid the point as to the principal features of the plan for currency legislation submitted to the Senate Committee by Mr. Vanderlip last week. The principal features at variance with those of the HOMO Bill are:m Mr. Vanderlip proposes a Board of seven As to management: directors appointed by the President, with the advice and consent of the Senate, with terms of fourteen years eaoh, a director retiring every whioh would two years, and with no ox-officio administration members; seem to assyre oontinuity of management, independent of politioal or The Owen-Glass Bill provides for a Board partisan control. of seven, three of whom are officers of the Government, and subject to ohanEp by each new President; at least one of the four to be appointed, probably two, and possibly all four would also be within the appointment of every This would certainly assure a partisan and political board President. of control. As to note issues: Mr. Vanderlip proposes that these be issued by a central bank. The Owen.-Glass Bill provides that they shall be issued by, and be the obligation of, the United States Government. be added to the arguments which Nothing can have been made in opposition to any plan for the Government to lend greenbacks to the banks against collateral to be provided. The function of the Government mast be that recognized by all civilized countries:- the coinage of metal money of a fixed standard of weight and fineness and the protection of its citizens, thereby, from the imposition of fraudulent standards of value- The function of the bank should be to iB51.10 a credit instrvment redeemable in established and protected by the Government. coin of the standard If a Committee of Congress today arbitrarily fixes 100% of discounted paper, with a 33 1/3% gold reserve as safe protection, how may not do we laeowthat ten years hence they decide that Flunicipal and State Bonds, or Real Estate Mortaaaes, or any kind of bonds, or even stocks, may afford adequate protcotion or how do we know but what they will be satisfied with a 10% gold reserve, or none at all? currency or The greatest safeguard against either an over issue of a reduction in its credit value is the united judgment of mog,wa all the people. They will daily decide whether a bank note is adequately protected by collateral, and whether it will be redeemed in gold on presentation. Therein lies the greatest responsibility of the nanagemeht, and consequently the greatest insurance to the public that the parity of the note of the bank with gold will be maintained. 3. Mr. Vanderlip proposes one institution, with branches; Glass-Owen Bill 12 separate institutions. the These two proposals must be considered in connection with the difficulty heretofore considered unsurmountable of fixing a uniform discount rate. The experience of the Bank of France peculiarly illustrates the advantage of a uniform and stable rate of discount. condition; Sentiment in this country would favor such a practical considerations seem to :render it impossible. EX. Vanderlipte plan, however, as contrasted with the Owen-Glass plan, seems to afford a satisfactory solution of this difficulty, and one far better than an ineffective tax applied to the earnings of the institution., which in large part would go to the Government; would not afford anrcheok upon expansion. a tax which The restraint must be applied to the borrower and expressed in the discount rate, but should not be made to penalize institutions which have not over-borrowed and which should not be required to pay higher rates because of the over-borrowing of others in their district. EX. Vanderlipts plan, providing for one institution, with branches, with a uniform minimum discount rate applying to a small percentage of the total amount, which a bank is authorized to re-discount and progressively increasing as amounts in ex- cess of such original percentage are increased, appears to solve the knottiest practical problem in monetary legislation. The nsun-tax!' is applied to each institution as its borrowings increase, and will be effective in either Checking money market. This is as it its borrowings or forcing it to a cheaper should be. Er. Glass's statement above referred to misses the point in each case. He does, however, raise one point which merits scrims oonsidera, tion. If a plan ,embodying as few radical changes as does this one results in delay in the passage of currency legislation, it is the best -3evidence that the bill under oonsideration is not acoepted as sound, and dhouid not be passed. New York., October 27, 1913. Banker. :s/ iko.. tAirt"." Aida I ti) u) hotAing ibr f:lee. 4 AIWA be oftprepriatiez for :tit,AIIIMMiss Pogo 4s At iOle one,. of Secs 5 It ilbeeld Irovido thzt the earritmo raid lo oSo rasehree of Olit%ell rUtos bonds. the MAW atistell *MA be a3.1. Poirp 5. eth name elatitisr Paw Cto o!loold b rittan hotten of M., It 10 IMPVided aoltdro r4101 ootAe, r.;ettl Cal. tho bomk raw lotiao elioaid oiralitriz 114 Irk,lowored to saa-iet I'M .sorter," endiAl with Vile wor:lo ''',reelboNe of -7zotectimre Ow*. Polo 11 ot nUffiairi/Tti,7 deitiolto, t,rti oeuld bo tiolleted b reuantr se mitten)" t follows n'tiontifoo of : ::iylentive Clornitteee Iltxt bo mrt111111417 Bus2411.1111 alad alub. sot than bo eacfkatttV rommed for MAW by the .1:-Wtti aftor 4110 mime at the Dermot of Mil SOSO Ilhon ses...ss ,?piTIOtra of tele 401:0051tOrt of a district omIromod kr votes of the Bogrda of Arootaro of ou0h 'Wootton,. tho next lino. botwont It* roordlO nuarsiellv, eel °tate". odd tho soilmlle *NA 11111re froquont17 If roll:gad 17 tie :Boillrd.0 'Pee() 13. twrvio The firot two ilneta Olould Oat, tleeeroirecfl 12:10 dation, or INInottons o-lvecified or Irrgiod In this Mt." ,t'ficv 14; ozte of 35:to. 12, if tit:. twooltette crel tratvIt3tifES Ot)d. de-2egallore (IT *vetoed 10 V14) 117artOt mtb lomnohes of Ito ben-047 diotriot vtlit*the," cre1ot, forelm brepohes of .netiionel b4Pall er 3teito bade' votoulA not bio T-b141 tt,to losolooso with We forkeito br6rIches of tbo Peden& Ticeorvo N-etto eal cf. fow 'exile at V* eeti Of the nentanet 41,1 .oforreet this error. c;oo. 14. Ihe , NOD '-araixtzvii. (oh lot 'emibm," In Olose of "Oent.,1 "ealoroecont rrtia-spollo4. L!.t 4VI, Mao ohould mad ,L1r,g8 %G fle Inrwmws,rartt (4) of Lleci 15 of tIlio Acts" leet ok..ird In Not 111-3ra o.:X1 10 novrol thie ° WOrdO .4tbc Oast, alwold be ollercedto thair wale Slid the 14-zet Ul.r3 or thtt lection should awl ''tte o;:411 In411kOs" alp 22; I So mirk lade Mad b. tot ,ibrAcs.# meow** PIM alit bo Stitt irsuM rot IMMO it eta* or Gut* widow 6iik ILnSS On IT bonica.t1 Peso aot rlrat *moo Ibises Z VII,* biotin" aid notio ticommiste ianonme would ito, 43,1rou1ntins. wtoo of 4:Zt SOMA 69,13411 tO und sue-ht4f 71,ctr oarlike per tartin," oto. tbilo tint rereirOn..ettt itr4b'' lb* wont IOWA nip cos WW1 linos Ilb lellb INNS 4.11111111.*"ou next onro.81:41,, 11ntv4 ee bo angenelli tiv 'lord nwrat.rm lare ahrottlil be tons. " titA 14* Pleaao rofor tt,t 01t7 Da& el/ its). itt 24. '410 Woo la imptikthein to Prialletten pit4tP 14* L5 Inetitubton. I tirt /tat alc, to mole, efKother that le of v 110064311047 Or not, bat UV DMICOI PIS woad. ettttc- a !lavebr.onvIstviltn ko jurisetiollieit et 311624 *mats mr MALMO. bake? it istlits be well to pat SUVA*ofdoelsratifil in tint 3111 6$ tit Ithe jesteettetten of tha courts. ?* Oj telarologle of pato/MO se the ,{:oseltilitly of prom ixtrvoimist in trItar7aerfil deettriottInt of Ow 4enttml !wore of thfs 'Aprat 71'isservo Mae nee Z.% pay. *.4. 1 11;:-4v;-r not pII(k t divnetorri eat hag ome.rnti1 ther an or bow bean appointed ma :Law inalifiolie f3lis DM* ma be oorresetod Iv a seallim.affi the foot of 11.40$ I et ft..r.o.p,gonti 4E4 NagNO Itsikt it tslett bo *toe 10 "hase Veis dirtietors Pederal UMW SOW noaosavrilq citiale of the nited rervqtwitt 441 ems ts$;A. 3umeet Viet Vte fora or .fivah ,n1.131 to in the Act ALO dukt yeI b7 riee. 5147 of the Ti4ve2e4t parTraTt, 50, rainco taw Ineetioninrr nin4 4.te to vhetber Tvim we have properly dit with Uriotito of tf7A Postal Scrimp Punii. Ilkey are nerrOSSeri 1ae InWS 1111001,9. Wgrit tt) 111Zke, requiro the offleers lade tIrtren UM' VOA faitre tha the flonerta. izalpip of the Act Mee net tho Sovartrient to diffturb emistiws twrtrw3ents. It lattpt bo wen te .000erto.in jItot bow .theseTec aunts are kept, and nos veletitr *Uwe weal?! be revli ttrod in 10.w Pill to cover thin sitantica .Pairtworph 61, etkmote Vat va haw:. no provision in 'the IU otztine ibo.t tho Padova P41141011M PArit shall not pay intorost uPoa ,5Roctoitta. '14411oh Shedd be throe" twkd it f#tenid be *MOO Taellitlestlen, Pace 201 paroart* 600 in roUtiec to 'Vol ,;nnana F-4zal bonds mi,es questien an VP 14,AttrA*7 'WO 112M esmined witts eaffielent ooze into the dc.r.stuitse with volatile& to thaw bond tame. end ascertained. .clefinite1r vf-1/thor our rveurlark?: 40111etIon would extend too far. Pukr1l 500« 50 dhoold made to ertend to the refondina bends too be isnot to rr.Asmi tbe figs. ?am3 AVOTIASii I beLteve it 'Mutt be vies Uri lade wattle be 90 Mit it dUnot interfeeil wica: Ve Tirovieliro in the 3111 IA fogpra, to tbo rirtiroiont otono-1),74fc.ftivl civraation of Batiemal, bents. It tlev- be ti:let oar Dili awl Zile partxraoh tiro in eenfliot Tem No of t'4") bait ow pare4vrarb 00. in deseribing tibe poomorte for ,;44eitt 'the mew rooelwd Na omitted Arwerims tor '11:Atale landie. It Stye, war liVortest, Isze.os AO* ao well isAre it oonfooli to tIVP was of eke IIMILtonal. :Mut nat. that UMBOf ialti Nes pinapidt Pam 40« P1IN0 04011idert 7.4 hove seed thie4 'words TO4tilstai be,* =Asa Vorinemin the Ma. It toielt have lyx0. bettor In) hutm pttt in a 41601/1114n of etronIptiszalia oar raragraOh of dodultions, bn4 attune* Ur Mao "MMILumel nOtai" 100 notoo- throtktotat We BM« Age f&t.n providing trAlt rIational Waco rr:f heVe onelemeat 10 Sae. 6190 of the Bilied Rtnistee. Ch00.d. oebsoisev14 provide far fige W. Oar retinale to mei 4161,1001U as defined b the Oemptrolior tle Amaral*, dhoula tn 601.111 lay refer to the eoetiono Of tNil nUtiona Dark Aot 4.MOctrtnq rttruAiaTtes 12:2 ore rio so tt hie aeritrAttia Of nOt deeseille sttht sot imply aimilkina difftwill true tbut alsoadlywribled In Ihe i7ortlt Koh 64,1 top of 3,6410. trotAnont of the Iftt hrmo °triad my refereroo to VA0 LiI1011 Tryt ptiftnyttiat rixott tho norm; of nattelal loot definite ?timed** to *stoat* a 12,7. reserve and bow It stall be WA to oostrnry to th of e. antes *,t deliorstae )vi4tOfl f to nattona 11314c MA. I osmorit rAttition Ui plaoc; it witn the pairs' et tho Naomi nosarvo Nord to othor vy4r OfOs 01.10ap4iaa nook una /met now, rtv bo comma m hallotoOb3ootion.tc Ulla eountine tv toM 40611116 sat rest or gm 135 retwvits OS 'AktroOrgialr :art of the roemew .0(1161.1 is to be bola tbvir +Won hitleir own lomat** Poo Beg vows* 1,?4%. Nlaw ailPINI as sucteLlerrlice, to the oubleet of utorri. If the leaorel, rtesorve IX** alveoli*" only for °ono otiose, thtit to, Nottorita aid state th et the tasktry etntratev weal tiburden at *mole for alooOverts PaZots Vat V"st. would NUM ot tko limit of usury nom the NettingWag, vo,ttiob wad not in turn inerooloo Om tato tx) its isolisor Mort, in nothixe ote do abate tide in the Bill, but it socesino t mtiro rouriodcen of our NW otaldis to tlaxr elm in thls ocAntirr 'Pam 02g illoortiob 14114 Soo. SW.* of t7.)a rioviass ate:butts, Wit It iZattr 'ammo, *Oat 104 odleaott in *14U1J IMAM, ethor avairttte a4) United States gq,):kly to fraud of tho atlisaater asseribodin thio sootiest. Psi* 104$ ps.-4,471,1) Lot. 74) MI. StO flo tilted or Illstosittes moriaimed avidatulo movido4 inithsa mat 091 rtaroertrot 16111. IMS not tram viteifter thin SWUM iliktit to am be man to our av.Tt eIP the rItirergett of sirottlation. 'Page 12. ',14 should htvo a ratatelleho unless it hot elroakv 11.7oes raxiss zg:3117,alat1zs to 3oe. ;5:,11* of tho liwriood !,--tottitoo. Paco 111* ..Turioaotioto of 'Ate veation in reload win b7 74r4-vmritt 194, a.s tO (motet ovor thi o ooroflabitibi ity Moat zTad I Iltiro b dioeurelsi Sim flsoimavo of Vie 141.1 todow I 1:avort*Ii tiro to omploills this dlotAtae, but 1v3 will. 41e co, foil thasoruthor illooliew MOS toy/other with his orkzeistionn foLlootte v411, I am tntro, piotoall Ito wtn, thA) an* Nomootionxt *At hero amoroxso41 to os aireso yait loft for "W"4:34544111 3.34r. Ntot 1 of the Bill, :lionV not the word r608. nnt "The*" Follow the wolts word 'Thor fi110 ie words ,30e0 POW 4. 164m24 ntt thr, word "Mato follAv tho twee Mloo, At tno ere et tho nh lino from the botiOne lhe word ntIone,,niejlt pessib1, 441 Utter *hanged to *issammelk. rev it lino fresaillis oupitint end top$ the word Ilearem to spelled firot in with a oral lottOrs, Xn this conaciotion,iu12rllottion thx5 word 010111116* %gnat) N paws in intv, ittfinitiono ov.rAtainlii IWOMieID tIA, nu. Lonyneas, i* not NIP 15: SeeUe Zsa there olonr authority for thIKK-0. to divert aorniiiaot ottritto, *low it so hamxsa OA, .tLf/.2er t oun Df 3600100,000-, It woro 41aminielled throult l00000. ri 1.4s Soo. 13.s.."M word ''dovolijarirr it to/. .osrtrili by rraue rt.kflohod The o rot word Mirposkillles.." Paw 15, Ses. 14- An Matiotimi inyaoted 14 %wit of to United t4e. ubloh woro dapOsitel as oroemtrit for Oirralatiola. tith Vie ,oidov6. xngfkint, yet the C. Itmildekvm4t44 it th,4 Oevornmant yiTym14 ovunt alo .ch ice,*oni fOr 'tut VATly tetAraVa t alnt o4Ltirrao oootratina it. Adis Le mount is anal, rot ItAIM must '',mservii. oontrielorutlo amonc bnalvre iffine Crlatial Otnuoti. 3X)1 Soo. VS (1). 116.114 net tho wools VW* triny uot ;Non bolitOit eatut, .r.vt fmonrity for ;4, otte4P Ourpme" a4toli Mora It) ;eat tAwt gm* slorb tin; Coubt tve,a110011, otca1I7, a t ttatevris would oiccrly inoitopounii it ne t stones: but it !might lowitont Crittetso 119 birli sew mot !='f' fixed. of (e). o Unite Ntoto00 34t eAt,I) o 1,7 tito Mak of 41 YMA A it oulti b 1110100,1 :41V aaVLMO If 1t is 13101111101 %hot the be* 0943, leo in wetnialti to llorcean4) salh edittaao, OrY1.60 I t4 tivat oonntrwod he loft /4 tt iltztrAD it &wad bo. COICONti. .1) 16 (). abOULtw t1i/orto 'This or to 'ortavtioirL middle tho thiK Zino; *tine the w follow portation or importation fraN or to the Uhltod - t,Atos of troth's monsi," eto. %Mout Cabe words the bank would not be authorised to °Tomtit, cnuiti in London t3ir f04oE,Ance tor worts tad ber*rtd Lotween foreim ocAtntrio ottomit in tie Loudon Waft thor wvolel not bon' 14,134 tho Igtfortgi400 or olViorscront of a dopoator. Pam 17* (f). Zaa first lino rttifAtt better road ar folionit tron deTtoeitoro, Tor Sgr VCIttla that on purtiwoocli posilloso *Ito of ocrryrim to vrttorit7, or tz' soli," oto., otos Inv o onotriatIon 14 pat Ivo the wooticst sons WINO it wooer/47 for 00 teak to soil mforrithine that it it Mk, a oinsUoration (loos see 00t11 0 yes reeelne 7111101016,2* o'hou,14 *tore no it is* Palm 170 (g). third lino is 'tors" 1.* let out 'Om 17. W. Litlite t'tweinn ootintritin, eionte ' Uio"mutt oollntries ).rAlso it nielt b th4 tTAW& that aleagevet eiveibl elietaly in emotrios Lo V41011 forolm aommelii 09111101. (h) lit 01,0 ibjr8 hap,the watt dim- thctbiThe word. lissiik 14111 soonntine Ohog14tosaild es it pro4ably be A daliy pOPOSints Pais' 17. foram." Ohl. eth lino 5th U. Tha word "oudh" uhould bo Oh;:miled to "its the mord soarrne7 reloulti to MUM** h7 eirate "sudh. Paco la. Soo, IT, ?he word "IA" in lino 3 dhould bo °bawd to MM. In line 6 tio word "it" ?':hcruld vaso be 11.z-:n3nd to *tflon.** paco 26. In the: 000,1nt Tessers.N*. iv th* now Immo of borola olccrly rema4171,1 bY th* letsuo of Allikerisod In to mopes lie Ohell asocmAilh Soo. 20 stntoo tIlatsTfarehosdit Shall be 1A40 froll the eovorn1 rational barikeu) to zasountslatmazaw the vier vamp," ote,4 4 and thorlipin limylkat obeli be responsible for the meetomeost redostrtien tzta, rotsvomoss of tho rot., of sash sadh Notional bank to the amount of the perehort price of the inwft, is intimate etc. $upposo aenditien arose mar "inh.bone0'f,4ere offared to the 3evoulmeat et, ge vill r, 904 iftef wqre reedelieed el %hut prift. If 4100,000 of bondo mire purobmsed mt 90, the bnnk nemnso liability for v3117 4,60000 ir !If:Along bAk WWI. It IOW unTmostIonab17 redeem $110#000 of vudh notos, but it would not beompolloA to eo!: go unitor to leroi Soo. ra, mdor '6a* ',!',xamIrntIVno," 1lty014 ol.tt,er to 4urlioato to A o9rtrIn extent t%* orT-,111ati:xas to be 171Ae ir the Com7trol3er or to 'km, orl ftlem if t%v fewor to n tdIottimihe envednntior. of rutionzlbwIto. is in erten if the lottor It ig not. intondod tho vrAor Ob. 300* 10. voret Nisowit" is lio( tn ho reknit' lino. rzz !.T paeu zr gee* 20. trtits of Thc tho posOmt 1Pasteal Mt tor tiatimid book notes, would stv tweak. WON sio øUgs ta lopitit 1f4t40Fini Mk the Ihrsanixia. of its i3nitod Staten Le overt to rtz(tir tAmsly eIrsels ion. if cze auk. indor Mao ;,xt,'esod thottimaw *At is sarroo revenelbtliV for cry nEttozeta bank antes, bebe .4d 12:41. Fialtmal btras vAttoh 'how oold their bon& to Vs iwvotriollah radLo natter dog& *Ay paid to the De* and not to tho tabould oo olozalo on-tod Wit thoro a'An ether In lts1 or iitt te:VSt. tin Cietiallie Jour/Grand* Statec bt le "mutton of Ito operration ellatlazte of 00 UNA Met be ote 011617 '2ho nada vioniet rYyrito TIMIS Ms Its assets for the United 2 itir w,uirofraroant a omtoonliis triSenotiteu V/Ima oullod /Ironti rotiro 7ationta 'mat note!) thereror VOW INN* 1111011 Irmo) notUnci that it 000ld IO tha'4 Mid not mcww ItakItnal rrAlotIon of its Mists wawa tas lawful now 1tttno Vatinnal Larks vforo oblimd to roloono thar bonds that "oz_-4 boon dopoattod ws,v, to w not with the 2,081111r, nortilhorne trotn order -oar olronkitl on PAZ* (To follow oni of first pmiL of lees 117) and thareipon also mph nallieftl Willt shall in relieve* team all farther liability in rospeot of wash noteo of auoh natiosel bank, the responsibility for tho rodemption and retirement of which has been so elleellei bg teal Dank, easept to MY the ewe on demand and rooster, in =Many theratOr tram the sank lawful oma to ths taco amount of mob notes. ao sash edtMmida... MOW the Revised Astute, of the United Itstno (Act of Aso W. 1074, Chap. 646, Moo. 4, 10 et. M66, 124) end of the Act of July 12, 1864 Chap. 290, .4:10., fig 22 U. MI, St. 1644 Act of march 4, 1907 and Aot of My 30, 1900, as provides for the within.* WOW natiOlai bank of its circulating notes by the deposit of loot* money with Was Tronouror of the United antes, and the taking up of the bonds whioh such national bank hes on deposit with the Troasurer for the seearity of nuoh ciroulating notes, end as proridos that the immat of bonds on deposit for (simulation shall not be radueed belcw $60,000 for sny sash national bank, and as providoa that not mere than $9,000,000 oft/00a annoy shall be IV deposited with the Trowel, of the Units& °tab o during any oalendar math ter the purpooe *twit/a/raring oiroulating notes of mor such national bank, are bereby repealed. 0 63D CONGRESS, 1ST SESSION. H. R. 7837. IN THE HOUSE OF REPRESENTATIVES. NOVEMBER , 1913. AN ACT To incorporate THE FEDERAL RESERVE BANK OF THE UNITED STATES, establish banking districts, mobilize bank reserves, refund and retire a portion of the national debt, provide for an elastic currency, afford means for rediscounting commercial paper, establish more effective supervision of banking, and for other purposes. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled : That the short title of this Act shall be "The Federal Reserve Act." DEFINITIONS. SEC. 2. The words and phrases used in this Act, except where the context clearly indicates a contrary intention, shall be defined as follows : The word " Committee " shall mean the Organization Committee of the Federal Reserve Bank of the United States. The word " Bank " shall mean the Federal Reserve Bank of the United States and shall include all the branches, sub-branches and agencies thereof. 2 The word "Board " shall mean the Board of seven directors of the Federal Reserve Bank of the United States, known as the Federal Reserve Board. The word " Branch " shall mean a branch of the Federal Reserve Bank of the United States established in the United States. The words "Executive Committee" shall mean the Executive Committee of a branch of the Federal Reserve Bank of the United States. The words "national bank" shall mean a national banking association now or hereafter organized or existing. The word "depositor" shall mean such a bank or trust company, organized under the laws of a state or the laws of the United States relating to the District of Columbia, or such a national bank, as shall have a deposit in the Federal Reserve Bank of the United States. The word " district " shall mean a banking district from time to time created and designated by the Federal Reserve Board. The words "net depolits " shall mean net deposits as from time to time defined by the Comptroller of the Currency. The words " sub-branches " shall mean subordinate offices of branches of the Federal Reserve Bank of the United States. The word " agencies " shall mean agencies of the Federal Reserve Bank of the United States located in foreign countries. ORGANIZATION COMMITTEE. SEC. 3. That as soon as practicable after the passage of this Act the President shall appoint a committee of five, to be designated 3 The Federal Reserve Bank Organization Committee. The Committee: Shall select a Chairman and Secretary and such other officers as it may deem necessary from its own members and appoint assistant officers, clerks and other necessary employes ; Shall organize the Federal Reserve Bank of the United States and branches thereof ; Shall adopt a seal for the Bank, which shall, during the process of organization thereof, be the seal of the Committee, and adopt seals for the several branches, which shall cor- respond to the seal of the Bank with the name of the branch added; Shall invite and receive popular subscriptions at par to the capital stock of the Bank, in accordance with the provisions of Sec. 5 of this Act and under regulations to be prescribed_by the Committee ; Shall make the certificate provided in See. 6 hereof ; Shall do all other things necessatY to effect the corporate organization of the Bank.' SEC. 4. That there is hereby appropriated out of any money in the Treasury not otherwise appropriated, a sum sufficient to establish and provide accommodations for the Bank and its branches, not to exceed five hundred thousand dollars for the Bank and an equal amount for each branch thereof, and for the purpose of carrying out the provisions of this Act, in accordance with the following limitations, viz : Each member of the Committee shall receive in full compensation 4 for his services the sum of $10,000, besides his actual and necessary traveling expenses, and in carrying out the pro- visions of this Act the Committee is authorized to incur such expenses as it shall deem necessary, not exceeding the sum of $250,000, all of which compensation and expenses shall be pay- able by the Treasurer of the United States upon vouchers approved by the Committee. The balance of the appropriation herein made shall be disbursed by the Board for the purposes herein set forth, payments to be made by the Treasurer of the United States upon vouchers approved by the Board. The total amount of the appropriation herein made shall, from time to time, be reimbursed to the United States by the Bank from its net earnings after the payment of dividends to the stockholders and before the establishment of a surplus fund. STOCK ISSUE. SEC. 5. That the capital stock of the Bank shall be $100,000,000, divided into one million shares of a par value of $100 each ; such stock shall have no voting power, and shall be free of all Federal, State, Municipal or other taxes, except that the holders thereof shall be subject to the provisions of federal income tax laws with respect to the income derived therefrom. The holders of such stock shall be entitled to dividends thereon at the rate of five per centum per annum and no more, which dividends shall be cumulative, and upon dissolution of the Bank such holder shall receive the par amount of such stock and all the balance of the assets shall be paid to the United States. 5 Such stock shall be offered for popular subscription at par by the Committee under regulations to be prescribed by it and within six months after the passage of this Act. In case the amount of capital stock is over-subscribed, the Committee shall first allot the shares of stock to the subscribers for the smallest number of shares. Every subscriber shall accompany his subscription cash or a certified check for five per centum of the total-amount thereof. The proceeds of the five per cent ._pent of the stock subscription, shall be deposited in national banks to the credit of the Committee, and by the Committee assigned and transferred to the credit of the Bank upon its organization. ORGANIZATION CERTIFICATE. SEC. 6. After the popular subscriptions to the capital stock of the Bank shall have been closed, the Committee shall make an organization certificate specifying The names of the several subscribers to the stock, with the number of shares allotted to them respectively; The form of stock certificate adopted by the Committee and the methods for the transfer thereof and such other details in connection with the organization as the Committee may determine. Such certificate shall be executed under the name of the Committee by the Chairman and Secretary thereof a,nd attested with its seal and shall be forthwith transmitted to the Comptroller of the Currency, who shall file, record and carefully preserve the same in his office. 6 CHARTER. SEC. 7. Upon receipt of such certificate, the Comptroller of the Currency shall issue a charter of incorporation to the persons who shall have been appointed by the President and confirmed by the Senate as the directors of the Bank, which charter shall contain a recital of the compliance with the provisions of this Act by the Committee and a statement of the sub- scriptions that have been stock of made to the capital $100,000,000 of the Federal Reserve Bank of the United States; and the issuance of such charter by the Comptroller of the Currency, countersigned by the Secretary of the Treasury, shall com- plete the corporate organization of The Federal Reserve Bank of the United States. Upon such organization, the Board and their successors and the stockholders of the Bank as they may from time to time exist, shall be a body corporate, to be known as "The Federal Reserve Bank of the United States," to have a term of existence of fifty years from the date of the issuing of the organization certificate by the Comptroller of the Currency, countersigned by the Secretary of the Treasury, to have the power to contract, to sue and be sued, to acquire, own, lease, and hold such real and personal property as may be necessary for its business, to buy, sell and deal in gold coin and gold bullion, promissory notes and other evidences of indebtedness, and to dis- count notes, bills and acceptances and to have such further powers, privileges and functions as are hereinafter specified in this The Bank shall be Ydated in the City of Washington, D. C., Act. and shall have twelv wanches located in cities selected by the Board and sub-b<anches wherever designated by the board,---'GOVERNMENT OF THE BANK. SEC. 8. That the government and control of the Bank shall be and hereby is vested in a board of seven directors to be known as the Federal Reserve Board, whose powers shall be the same as those conferred upon boards of directors of national banks under existing law not inconsistent with the provisions of this Act. Such directors shall be appointed, and one of them shall be designated as Governor, and another of them shall be designated as Deputy Governor by the President of the United States, all by and with the advice and consent of the Senate. Such selections shall be made from persons qualified by experience and training for the proper discharge of the duties imposed upon them by this Act, and in making such selections due weight shall be given to the various commercial interests of the different sections of the country, and at least three of the members shall be persons of recognized wide banking and financial experience. The term of office of each member of the Board shall be fourteen years, except that the terms of office of six of the persons first appointed shall expire at the end of two, four, six, eight, ten, and twelve years, respectively. The President shall have power to remove any member of the Board for cause after due hearing, such removal and his reasons therefor to be communicated by him to 8 the Senate. The Governor and the Deputy Governor shall, subject to the supervision of the Board, be the active executive officers of the Bank. No member of the Board shall be an officer or director of any bank or banking institution, or hold stock in any bank or banking institution, and before entering on his duties as a member of the Board, he shall certify under oath that Ile has complied with this requirement. Vacancies caused by death, resignation, retirement or removal of the Governor, Deputy Governor or other members of the Board, shall be filled by the President, by and with the advice and consent of the Senate, and any person appointed to fill such vacancy shall hold office for the unexpired term of the member to whose place he is appointed. Members of the Board shall take an oath of office, which shall be filed with the Comptroller of the Currency, shall devote all their time to their official duties, and shall retire at the age of seventy years. The Governor, or in his absence the Deputy Governor, shall act as Chairman of the Board. The salary Of the Governor and Deputy Governor shall be $17,500 and $16,000 per annum, respectively, and of the other members of the Board $15,000 per annum. The Board shall make report annually of the operations of the Bank to the Speaker of the House of Representatives, to which shall be attached the certificate of the Comptroller of the Currency certifying that he has made an audit and examination of the books, accounts and affairs of the Bank. The Board shall fix a date which shall be within six months after its appoint- ment and qualification, upon which subscriptions to the stock of the Bank shall be paid in full. Such date may be extended by 9 the Board with the approval of the President of the United States. Any subscriber failing to pay for the shares allotted to him by the Committee shall forfeit his right thereto and to his five per cent. deposit, which deposit shall be so forfeited to the Bank, and such shares may thereupon be allotted by the Board to other subscribers. In case the full amount of the capital stock shall not have been subscribed for and paid for in full, the Board shall forthwith allot the portion so unsubscribed and not paid for to the several national banks then in existence in proportion, as nearly as may be convenient, to their respective amounts of capital, and each such allotment shall fix a liability upon each of the said national banks to subscribe for and take the number of shares so allotted, such liability to accrue as of the date of such allotments. Upon the payment of the ninety-five per cent. residue of the stock subscriptions, the proceeds shall be deposited with national banks by and to the credit of the Bank, and shall be so kept on deposit pending the opening of the Bank foi. business. BRANCH RESERVE BANKS. SEC. 9. That the Board shall create and designate in the continental United States, exclusive of Alaska, twelve banking districts for the purpose of establishing within each of such districts a branch of the Bank. Such districts shall be established with due regard to the convenience and customary course of business of the community and shall not necessarily coincide with the boundaries 10 of such state or states as may be wholly or in part included within any given district. The Board shall also establish within each district a branch of the Bank which shall be designated by prefixing the name of the city in which such branch is established to the words "Branch, Federal Reserve Bank ". The number of such branches and of such districts may be reduced by the Board when in its judgment the interests of trade and commerce so require ; and in like manner the number of such branches and districts may be increased by the Board after two years from the time of the organization of the Bank. The management of such branches shall be vested in an Executive Committee consisting of five persons to be appointed by the Board, who shall be residents of the districts in which they serve, shall devote all their time to their official duties, and shall retire at the age of seventy years. Each member of an Executive Committee before entering upon the discharge of his duties shall take an oath of office which shall be filed with the Board. The term of office of each member of such Executive Committee shall be ten years, except that terms of office of four of the persons first appointed by the Board upon each such Execu- tive Committee shall expire at the end of two, four, six and eight years, respectively. The Board shall fix the compensation to be received by the members of the Executive Committee and shall designate a chairman and vice-chairman for each Executive Committee. The chairman, or in his absence the vice-chairman, shall preside over the meetings of the Executive Committee and, subject to the supervision of the Executive Committee, shall be 11 the active executive officers of the branches. The Executive Committee shall have authority to establish and discontinue sub-branches, within their respective districts. No member of an Executive Committee shall be an officer or a director of any bank or banking institution, or hold stock in any bank or banking institution and, before entering upon his duties member of under oath that he as a Committee, such has complied he shall certify with this requirement. Vacancies caused by death, resignation, retirement or removal shall be filled by the Board and any person appointed to fill such vacancy shall hold office for the unexpired term of tile member to whose place he is appointed. Members of ExecutiVe Committees may be summarily suspended and subseque moved for cause by the Board after-trii so removed at the reqiie,st--Of re- aring, and shall be depositors of adra-rict ex- yytcr(16 ' pressed by *vote o the board-of-girectors of such depostors.---Each such Executive Committee shall annually make a report of the operations of its-branch to the Board to be by it trans- mitted with its annual report to the Speaker of the House of Representatives. Such report of the Executive Committee shall contain reports from each sub-branch established in the district. All actions of the Executive Committees shall be subject to the approval of the Board. 15- . 12 POWERS OF THE FEDERAL RESERVE BOARD. SEC. 10. That the Board shall be authorized and em- powered: To govern and control the operations of the Bank; To supervise and control the actions of the Executive Committees ; To supervise and regulate the issue and retirement of notes of the Bank, and to prescribe the form, tenor and denominations of such notes ; To suspend in whole or in part in an emergency all reserve requirements of the Bank for thirty days, and to continue such suspension for periods not to exceed Mteen days ; To suspend in whole or in part in an emergency all reserve requirements relative to national banks for thirty days, and to continue such suspension for periods not to exceed fifteen days; To examine, at its discretion, the accounts, books and affairs of depositors ; To call for statements of condition of all depositors, in such form as it may prescribe; To open and maintain banking accounts in foreign coun- tries, to establish agencies in foreign countries and to make regu- lations for the conduct of the foreign business of the branches through such agencies. The enumeration of the powers hereinabove set forth shall not be deemed to be a limitation upon the general authority of 13 the Board to perform and exercise all the duties, functions ,elp. tervives specified or implied in this Act. APPLICATION OF EARTNGS. SEC. Ill. That the net earnings of the Bank, after deducting taxes, expenses and proper reserves against the acquisition of permanent property, shall be devoted, first, to the payment of a five per cent, cumulative dividend upon the stock, and second, after the reimbursement to the United States of the advances appropriated under Sec. 4 of this Act, to the accumulation of a surplus of Twenty million dollars, and after the accumulation of such surplus, one-half of such earnings above said dividend require- ments shall be paid to the United States and the other one-half devoted to the accumulation of a further surplus until the total surplus reaches fifty million dollars, and thereafter all earnings beyond such dividend requirements shall be paid to the United States so long as such surplus is maintained. The earnings so distributed to the United States shall be applied by the Secretary of the Treasury, not more than three months after the receipt thereof, to the redemption of outstanding bonds of the United States, after advertisement published in each district at least once a week for four successive weeks immediately preceding the date fixed for such redemption, which advertisement shall call for the tender of bonds, and the Secretary of the Treasury shall thereupon in his discretion purchase of the bonds so tendered those offered at the lowest prices up to the amount of such earnings in his hands at such redemption date. aftnAn-eth (tit 14 BUSINESS OF THE FEDERAL RESERVE BANK. SEC. 12. That the Bank shall conduct business solely with the United States Government, with the national banks, and with such other banks and trust companies as may from time to time be permitted to deposit their reserves with the Bank, except as otherwise provided in this Act. The accounts and transactions of all depositors shall be confined to the branch and sub-brancheg-of the banking district in which they are located-------FISCAL AGENCY. SEC. 13. That the Bank shall be the fiscal agent and sole depositary of the United States, except that for purposes of collection and transfer only the Secretary of the Treasury may designate national banks as Government depositories. The Secretary of the Treasury shall gradually effect a trans- fer of the General Fund of the Treasury to the Bank, which transfer shall be completed within twelve months after the organ- ization of the Bank. Such transfer, however, shall not include the five per centum fund for the redemption of outstanding national bank notes, nor that portion of the General Fund of the Treasury held by government depositories in the insular possessions or territories of the United States or balances of disbursing officers there held so long as no branch or sub-branch of the Bank exists in such possessions or territories. On and after a date to be determined by the Secretary of the Treasury and the Board, but not later than six months from the organization of the Bank, all the revenues of the United States e ty &woe 6-10 el`'`Au CA". Oistp-' 601'1°' 15 shall be regularly deposited in the Bank and disbursements shall be made by checks drawn against such deposits, except revenues and disbursements in the insular possessions and territoOf the United States. FIVE PER CENT EDEMPTION FUND. SEC. 14. That the Bank shall be required in behalf of, the national banks which have notes in circulation to make good the five per centum redemption fund held in the general fund of the United States Treasury and any deficiencies in the said fund shall be forthwith paid by the Bank to the Treasury of the United States upon demand, and the Bank shall be forthwith reimbursed by the national bank in whose behalf such payment is made. GENERAL FUNCTIONS OF THE FEDERAL RESERVE BANK. SEC. 15. That the Bank shall have power: To purchase and sell the obligations or other securities of the United States, as defined by Section 5413 of the Revised Statutes, and also such of the obligations of the Territories and Insular possessions of the United States as are guaranteed principal and interest by the United States ; To purchase, sell and deal in gold coin and gold bullion, to make loans thereon, and to contract for loans of gold coin and gold bullion, with or without giving security therefor, which security may include the bonds and other obligations of the United States owned by the Bank ; To receive from any depositor for deposit or collection 16 current funds in lawful money, national bank notes, notes of the Bank, or checks, drafts, notes or bills of exchange payable upon presentation With the acceptance or endorsement of any depositor, to discount notes, drafts, and bills of exchange arising out of commercial transactions, such notes, to be of a character to be determined and Board. drafts and defined bills by the Such definition shall only include notes, drafts and bills of exchange issued or drawn for agricultural, industrial or commercial purposes, or which shall represent a bona fide sale of agricultural products or other goods, wares or merchandise, or which shall have been issued for the purchase or sale of the bonds or other obliga- tions of the United States. Such definition shall not, however, include notes, drafts or bills of exchange issued or drawn for the purpose of holding for future sale and delivery agricultural pro- ducts or other goods, wares or merchandise, or for carrying or trading in stocks, bonds or investment securities, other than the bonds and obligations of the United States. Notes, drafts and bills of exchange admitted to rediscount, as so defined under this paragraph, must mature within not exceeding ninety days from the date of rediscount. With the acceptance or endorrent of any depositor to discount notes, drafts or bills of exchange which are based upon the exportation or importation of goods, wares, merchandise or agricultural products, as determined and defined by the Board, and which mature within not exceeding six months from the date of rediscount ; 17 To purchase from depositors and to sell, with or without its endorsement, bills of exchange arising out of commercial transactions as determined and defined by the Board and payable in foreign countries, but such bills of exchange must mature in not exceeding ninety days from the date of the purchase and must bear the signature, endorsement or acceptance of two or more responsible parties, of which at least one shall be that of a depositor ; Under rules and regulations prescribed by the Board, to purchase and sell in the open market, either from or to depositors or through its agencies or from or to banks, firms, corporations or individuals in foreign countries, notes, drafts and bills of exchange of the kinds and maturities by this Act made eligible for re-discount, and cable transfers ; To open and maintain banking accounts in foreign countries, and establish agencies in such countries, for the purpose of pur- chasing, selling, collecting, and dealing in foreign bills of exchange, gold coin and gold bullion, and cable transfers, and to buy and sell, with or without its endorsement, through such correspondents or agencies, prime foreign bills of exchange, arising out of commercial transactions, as may be defined by the Board, which have not exceeding ninety days to run, and which bear the signature, acceptance or endorsement of two or more responsible parties. DOMESTIC EXCHANGES. SEC. 16. That the Bank shall receive at par all checks, drafts or other obligations of the Bank branches or sub-branches. and each of its The Executive Committee of each 18 branch shall from time to time, subject to the approval of the Board, determine and publish exchange and collection charges to be made with respect to all checks, drafts and other exchange and collection items, other than those of the bank, received in accord- ance with paragraph (c), Section 15 of this Act. Such charges shall not be in excess of the approximate actual cost of collection of such checks, drafts and other items. PRIORITY OF LIEN. SEC. 17. That the Bank shall have a first and paramount lien upon all of the assets of every national bank for all debts and liabilities due from it to the Bank, except as to the claims of the United States, and the Bank shall likewise have a first and paramount lien upon all the assets of every other depositor for all debts and liabilities due from it to the Bank, except debts due by such a depositor to the United States and to the State of its incorporation, and except with respect to trust funds held by trust companies. Liin TATIONS OF DISCOUNTS. SEC. 18. That no depositor shall be entitled to discount notes, drafts, bills of exchange or acceptances, with the Bank, in excess of the amount of the unimpaired capital and surplus of such depositor, nor shall the aggregate of such notes, drafts, bills of exchange, and acceptances, upon which any one person, company, firm or corporation shall be primarily liable rediscounted for any one depositor, at any time exceed ten per centum of the unimpaired capital stock and surplus of such depositor ; 19 but this restriction shall not apply to the discount of bills of exchange payable outside of the continental United States, drawn in good faith against existing values. RESTRICTION OF INDEBTEDNESS OF NATIONAL AND STATE BANKS. SEC. 19. That no national hank shall at any time be indebted or in any way liable to an amount exceeding the amount of its capital stock at such time actually paid in and remaining undiminished by losses or otherwise, except on account of demands of the nature following : Notes of circulation ; Moneys deposited with or collected by the national bank ; Bills of exchange or drafts drawn against credits due the national bank, or money actually on deposit to the credit of the national bank or due thereto ; Liabilities to the stockholders of the national bank for dividends and reserve profits ; Liabilities incurred under the provisions of paragraph (d), Section 15, of this Act ; Liability as endorser on notes, drafts and bills of exchange, arising out of commercial transactions, as defined in para- graph (f), Section 15, of this Act ; Liability as acceptor of drafts or bills of exchange, subject to the limitations of Section 20, of this Act ; Section 5202 of the Revised Statutes of the United States is hereby repealed. Depositors other than national banks, shall be subject to the limitations defined in Section 18 of this Act. 20 top, otA° ACCEPTANCES. SEC. 20. That any national bank may at its discretion accept drafts or bills of exchange drawn upon it, having not more than six months' sight to run, and growlirg out of commercial trans- actions as described inhiAct and as defined by the Board, but no national bank shall accept such drafts or bills of exchange to an amount at any time exceeding in the aggregate one-half its paid-up and unimpaired capital stock and surplus CIRCULATING NOTES. SEC. 21. That the Bank may issue its circulating notes, which shall be receivable at par in all parts of the United States in payment of all taxes and excises and all other dues to the United States and also for all salaries and other debts and demands owing by the United States to individuals, corporations and associations within the United States and its possessions except interest on the public debt. Such notes shall be a first lien on all of the assets of the Bank and shall be redeemable on demand at any office of the Bank in lawful money of the United States. As long as any such notes are outstanding the Bank shall segre- gate in its own vaults and carry in a special reserve account on its books gold coin or gold bullion or United States gold certifi- cates to the amount of the face value of the notes from time to time so outstanding or, at its option, shall so segregate gold coin or gold bullion or United States gold certificates to the amount of not less than fifty per centum of such face value, and collaterals, consisting of promissory notes and bills accepted for rediscount Iv's) 21 under the provisions of Sec. 15 of this Act, or refunding notes of the United States, hereinafter provided for, or bot imidi alue to one laterals and and refunding notes, equal at hundred per centum of the face value of the notes from time to time so outstanding. Such collaterals may be exchanged from -- time to time for other collaterals or refunding not within the limitations aforesaid and of equal faceir-g;.-PRINTING, DENOMINATIONS AND FORM OF THE CIRCULATING NOTES OF THE BANK. SEC. 22. That in order to furnish suitable notes for the Bank, the Comptroller of the Currency shall, under the direction of the Secretary of the Treasury, cause plates and dies to be engraved, in the best manner to guard against counterfeiting and fraudulent alterations, and shall have printed therefrom, upon the distinctive or special paper which has heretofore been or may hereafter be lawfully adopted by him for printing United States notes, and numbered, such quantity of notes; in blank, of the denominations of five dollars, ten dollars, twenty dollars, fifty dollars, one hundred dol- lars, five hundred dollars, one thousand dollars, and ten thousand dollars, as may be required by the Bank. Such notes shall express upon their face the promise of the Bank to pay on demand, attested by the written or engraved signature of the Governor or Deputy Governor and Cashier, and bear the engraved imprint of the seal of the Bank. 22 RESERVES OF NATIONAL BANKS. SEC. 23. That from and after a date to be fixed by the Board, in no event longer than five years nor less than thirty months from the date of the organization of the Bank, all national banks shall be required to keep and maintain a reserve of not less than twelve per centum of their net deposit liabilities, as defined by the Comptroller of the Currency. Any part of such reserve, but in no event less than one-half thereof, may consist o a deposit with the Bank, and the remainder shall be in go and lawful money in the vaults of the national ban From and after the organization of the Bank the Board shall effect as rapidly as it may deem wise under commercial conditions from time to time existing, and complete within the periods herein provided, the change to the minimum reserve requirements above set forth. Such change shall be effected by the publication of notices to all national banks which shall state the percentage of the total reserve which must thirty days thereafter, and until further deposited with the Bank be held in gold notice, be riire amount which thereafter may awful money in its vaults. Such requirements, however, shall fairly consider the commercial and industrial con- ditions of the country and its various sections and be so apportioned and determined as to cause the least restrictions upon the business of national banks, and compliance with such directions of the Board shall be mandatory upon national banks, and in such direction the Board shall give due weight to the distinctions a,s 23 recognized under existing laws between country banks, reserve city banks and central reserve city banks, but such directions shall be uniform with respect to banks of each of such classes. ABOLITION OF NATIONAL BANK CLASSIFICATION. SEC. 24. That from and after the organization of the Bank no action shall be taken under the provisions of Section 1 of the Act of March 3, 1903, or Section 2 of the Act of March 3, 1887, providing for the designation of cities as additional reserve cities and additional central reserve cities, respectively, and from and after the establishment of the new minimum reserve provided in this Act the classification of national banks, as now provided by Section 5191 of the Revised Statutes of the United States, as amended, shall be abolished. RESERVES. SEC. 25. That the Bank shall establish and maintain at all times a reserve equal to not less than fifty per centum of the net deposit liabilities of the Rank. Such reserve shall consist of coin, gold bullion, United States gold and silver certificate,s.raild other lawful money of the United States. RATES OF DISOMP SEC. 26. The Board shall.---eStablish from time to time a normal rate of discount which shall be uniform at branches and sub branches of the Bank, except as herein provided, and the Board shall renew or change such normal rate at stated meetings to be held at least once in each week and shall immediately publish the normal rate so renewed or changed. The normal rate of 24 discount so established shall be charged by the branches and sub branches of the Bank to depositors with respect to all rediscounts of such depositors up to an amount not exceeding the amount of twenty per centum of the unimpaired capital and surplus of each such depositor ; and the rate of discount charged by the branches and sub branches of the Bank upon all rediscounts in ex- cess of such twenty per cent, shall be increased by the Board for each ten per centum of increase in such rediscounts above such twenty per centum. The additional rates of discount established by the Board upon such rediscounts in excess of said twenty per centum shall in like manner be uniform throughout the United States, but such additional rates B4.3r5e,established by the Board in progressively increasing amounts for each ten per centum of excess rediscounts above the said twenty per centum, and such additional rates of discount above the normal rate shall, in like manner, be published from time to time by the Board. REFUNDING NOTES. SEC. 27. That the Secretary of the Treasury is hereby author- ized and directed to refund one-half of the two per centum United States bonds having the circulation privilege and on deposit with the Treasurer of the United States to secure national bank note circulation at the date of the organization of the Bank. He shall accomplish such refunding by the issue of refunding notes. Such refunding notes shall be a direct obligation of the United States, shall bear interest at the rate of three per centum per annum, shall be payable in gold of the present standard of weight and fineness and only at the Bank or 25 any of its branches, and shall mature at various periods as determined by the Secretary of the Treasury not exceed- ing one year from their respective dates of issue, and shall be issued under regulations to be prescribed by the Secretary of the Treasury as to the form, tenor and denominations thereof ; provided, that such notes may, at the option of the Secretary of the Treasury, be extended for periods of one year during a period of twenty years from the date of the organization of the Bank. The Secretary of the Treasury is further hereby authorized and dit ected to refund such of the two per centum United States bonds having the circulation privilege, the refunding of which is not hereinbefore provided for. He shall accomplish such refunding by the issue of bonds. Such bonds shall be a direct obligation of the United States, shall bear interest at the rate of three per centum per annum, shall be payable in gold coin of the present,staridard of weight and fineness, shall mature twenty years from the '-date of issue thereof, shall not have the circulation privilege, and shall be issued under regulations to be prescribed by the Secretary of the Treasury as to the form, tenor, denominations and nature thereof. Both the refunding notes and the three per centum bonds hereinabove authorized shall be exempt from Federal, State, municipal and other taxation both as to income and principal. The Secretary of the Treasury shall upon the first day of July, nineteen hundred and fifteen, and annually thereafter, under regulations to be prescribed by him, allot among the several national banks, in proportion to the respective 26 amounts of their circulating notes outstanding upon such dates, an aggregate amount of two per centum United States bonds with the circulation privilege, which such banks shall be entitled to exchange for the three per centum United States-bonds hereinbefore authorized, provided, that in no one-year shall he allot a greater ag- gregate amount than,t5enty million dollars thereof, and upon the receipt of such two per centum bonds from such national banks, the Secretary of the Treasury shall effect the exchange. Should any national bank fail in any year so to exchange its full allotment of two per centum bonds for the three per centum bonds as herein provided, the Secretary of the Treasury may permit any other national bank or banks to exchange bonds in an amount equal to the deficiency caused by the failure of any one or more banks to make exchange in such year. At the expiration of twenty years from the passage of this Act every holder of United States two per centum bonds then outstanding shall receive payment therefor at par and accrued interest, and thereafter such bonds shall carry no interest. Nothing contained in this Act shall be cOnstrued to alter, impair or restrict the circulation privileges now given by law to any bonds of the United States. PURCHASE AND REFUNDING OF Two PER CENTITM BONDS. SEC. 28. That the Bank shall from time to time purchase from the several national banks at prices not exceeding par and accrued interest two per centum bonds of the United States up to an amount not exceeding one-half of the total of such bonds on deposit at the date of the organization of the Bank with the Treasurer of the United States to secure circulation. Such pur- 27 chases shall be made from the several national banks up to amounts not exceeding the par value of one-half of the amounts of bonds owned by the. respective national banks and securing, their circulation/outstanding at the date of the organiza the Bank, and thereupon the Bank shall be respo n of le for the redemption and retirement of the notes of each such national bank to the amount of the purchase price of the bonds, less interest, so purchased from it, which responsibility shall constitute payment to such national banks, respectively, for such bonds. Immediately after purchasing such bonds the Bank, under regulations to be prescribed by the Secretary of the Treasury and the Board, shall, from time to time, as and when the national bank notes secured by such bonds are redeemed, exchange such bonds with the Treasurer of the United States, to au amount not exceed- ing at par the aggregate amount of the face value of such reSuch exchange shall be for an equal amount at par of refunding notes bereinbefore authorized, and upon the deemed notes. maturity of any such Refunding Notes the Bank shall pay such Notes, for the account of the United States, to the holders thereof, but it shall, at the option of the Secretary of the Treasury, for a period the organization for such of twenty years from the date of the Bank, payments, accept in in lieu exchange of of reimbursement for such Notes new Refunding Notes of an equal aggregate amount and of analogous form and tenor. The Bank shall pay semi-annually to the United States out of its earnings and before reimbursement of advances made by the United States under the provisions of - 28 9ift Sec. 4 of th. Act, a tax upon its circulating notes @lama Iv an amount at one and one-half per centum per annum, calculated upon the amount of refunding notes from time to time so outstanding. STATE BANKS AS DEPOSITORS. SEC. 29. That from and after the organization of the Bank any bank or banking association or trust company organized under any law of any state or under any law of the United States relating to the District of Columbia may make application to the Board and shall by the Board be authorized to become a depositor in the branch organized or to be organized within the district .where the principal office of the applicant is located, but before granting such application, and from time to time thereafter, the Board shall satisfy itself that no provision of the charter of such applicant or of any law applying to such applicant prevents a lawful compliance by the applicant with the requirements of this Act and the regulations of the Board, and unless so satisfied the oard shall refuse such application or require the retirement of such depositor. Before being admitted as a depositor, and during the period when it shall continue as a depositor, each applicant shall comply with the regulations promulgated from time to time by the Board, and with the following requirements To establish and maintain a reserve of the character defined in this Act equal to twelve per cent, of its net deposits as defined by the Board ; To establish and maintain a paid-up and unimpaired capital to an amount not less than that required of national 29 banks under the provisions of Section 5138 of the Revised Statutes, as amended ; To be subject to such examinations of its books and affairs as the Board may from time to time direct ; To prepare and submit reports of its condition and transactions at such times and in such forms as the Board shall direct. Upon the issuance of a certificate of authority by the Board each applicant shall be entitled to have all the rights and privileges enjoyed by national banks as depositors in the Bank. If at any time it shall appear to the Board that any such applicant which has become a depositor has failed or ceased or become unable to comply with the provisions of this section or the regulations of the Board, it shall be within the power of the Board to require such depositor to surrender its rights as a depositor and to pay and discharge in full any and all of its obligations to the Bank and to the United States. No such applicant admitted as a depositor may surrender its rights or withdraw from its obligations as such until after the ex- piration of six months from the giving by it to the Bank of a written notice of its intention so to do, nor unless and until it shall have paid or discharged in full all indebtedness and obligation of every kind owing by it to the Bank and to the United States. BANK EXAMINATIONS. SEC. 30. That the Board shall, at least once in each calendar year, cause an examination to be made of the assets and affairs 30 of every depositor, and more frequently if the Board shall consider special examinations necessary, in order to furnish a full and complete knowledge of the condition of any such depositor. The reports of such examinations shall be made in triplicate, one copy thereof filed in the office of the Comptroller of the Currency, one copy in the principal office of the Bank and one copy in the office of the branch of the Bank of the district in which such depositor has its principal office. The person assigned to the making of such examinations shall have power to call together a quorum of the directors of the depositor being examined, who may he required to state under oath the character and circumstances of any asset or liability of such depositor. All examiners, their assistants and clerks, other than those appointed by the board, shall be appointed and employed by the Executive Committees of the respective branches, subject to the approval of the Board and for service within the districts where such branches are located. They shall receive fixed salaries, the amounts whereof shall be ..determined by the Board. The expense of the examinations herein provided for shall be assessed by the Executive Committee upon the depositors of the respective districts, in proportion to the assets or resources held by such depositors upon the dates of the examinations. Upon request of any depositor the Executive Committee of any branch may arrange for special or periodical examination of its affairs, the cost and expenses of such examination to be borne by such depositor. All examinations, whether thus regu- larly provided or specially authorized, shall be so conducted as to 31 inform the Bank of the actual condition of the depositor examined, and the lines of credit being extended by such depositor, and any other information essential to a knowledge of the condition of such depositor, as may be required. The Board shall, at least once each year, order an examina- tion of each branch and sub branch, and a report of such examination shall be made in triplicate and one copy thereof filed in the office of the Comptroller of the Currency, one copy in the principal office of the Bank, and one copy in the offices of the respective branches. Such examinations and reports shall be so conducted and made as to exhibit the actual condition of the assets and liabilities of the respective branches, and the amount and character of their reserves, and of the amount, character and maturity of all of their investments and rediscounted paper. The Comptroller of the Currency shall, at least once in each calendar year, make an audit and examination of the books, accounts and affairs of the Bank, a report of which he shall include in his annual report to the Congress. The cost of such examination shall be borne by the Bank. No depositor, nor any officer, director or employe thereof, shall make any loan or grant any gratuity to any examiner. Any bank officer, director or employe violating this provision shall be deemed guilty of a misdemeanor, and shall be fined not more than five thousand dollars, and a further sum equal to the money so loaned or gratuity given. Any examiner accepting a loan or gratuity from any depositor shall be deemed guilty of a misdemeanor, and shall be fined not more than five thousand dollars, 32 and a further sum equal to the money so loaned or gratuity given, and shall forever thereafter be disqualified from holding office as an examiner for the Bank. No examiner shall perform any other service for compensation while holding such office, nor shall he be an officer or director of any financial institution. The Comptroller of the Currency shall file one copy of every report made in accordance with the provisions of Sections 5211 and 5240 of the Revised Statutes with the Board, and one copy in the office of the branch within the district in which the respective depositors under examination have their offices. Section 5241 of the Revised Statutes is hereby amended to read as follows : "No association shall be subject to any visitorial powers other than such as are authorized by this title, or are vested in the directors, officers or employees of the Federal Reserve Bank of the United States, or are vested in the courts of justice." PROHIBITED COMPENSATION. SEO. 31. That no officer, director or employe of a national bank shall be beneficiary of or receive, either directly or indirectly, any fee (other than the usual salary or (lirector's fee paid to such officer, director or employe by the national bank and other than a legitimate fee paid to an attorney at law for legal services) or any commission, gift or other consideration other than as aforesaid for or on account of his services, vote or influence as such officer, director or employe, in connection with or in respect of any loan, purchase, sale, payment, exchange or transaction with respect to stocks, bonds, or other investment securities or notes, bills of exchange, 33 acceptances, bankers' bills, cable transfers or mortgages made by or on behalf of a national bank of which he is such officer, director or employe. Any person violating any provision of this section shall be punished by a fine of not exceeding $5,000 or by imprisonment not exceeding five years, or by both such fine and im- prisonment, in the discretion of the court having jurisdiction; Provided, that this restriction shall not be construed to cover transactions in good faith and in the ordinary course of business between a national bank and another national bank or a banking firm or a state bank or a trust company. POWERS OF NATIONAL BANKS. SEC. 32. That from and after the passage of this Act any national bank having a paid up and unimpaired capital stock of not less than one million dollars shall be authorized to establish agencies or branches in foreign countries, and such agencies or branches shall be established and maintained under regulations to be prescribed by the Comptroller of the Currency ; and any national bank whose place of business shall be in a city of not less than fifty thousand population shall be entitled to establish branches within the corporate limits of the municipality within which its principal office is located and all national banks shall be authorized to exercise such trust company powers and functions as may be permitted by the laws of the state within which its principal office is located. 34 REPEAL OF BOND REQUIREMENT. SEC. 33. That so much of the provisions of Section fifty-one hundred and fifty-nine of the Revised Statutes of the United States, and Section four of the Act of June twentieth, eighteen hundred and seventy-four, and Section eight of the Act of July twelfth, eighteen hundred and eighty-two, and of any other pro- visions of existing statutes, as require that before any national bank shall be authorized to commence banking business it shall transfer and deliver to the Treasurer of the United States a stated amount of United States registered bonds .be, and the same is hereby, repealed, and hereafter a national bank, having retired all of its national bank note circulation, may withdraw all United States bonds deposited with the Treasurer of the United States. From and after the organization of the Bank, no national bank not having Government funds on deposit with it shall be required to maintain on deposit with the Treasurer of the United States any bonds of the United States in excess of the amount required to secure the outstanding circulating notes of the national bank. EXEMPTION FROM TAX. SEC. 34. That Sections 19 and 20 of the Act of February 8, 1875, shall be amended to read as follows : " SEc. 19. That every person, firm, association other than national bank associations, and every corporation, State bank, or State banking association other than the Federal Reserve Bank of the United States shall pay a tax of ten per centum 35 on the amount of their own notes used for circulation and paid out by them." "SEC. 20. That every such person, firm, association, corpora- tion, State bank, or State banking association, and also every national banking association, shall pay a like tax of ten per centum on the rmount of notes of any person, firm, association other than a national banking association, or of any corporation, State bank, other than the Federal Reserve Bank of the United States, or of any town, city or municipal corporation, used for circulation and paid out by them." SEC. 35. That all existing statutes relating to the control and examination of the plates and dies for the printing of the notes of national banks, and relating to destroying and replacing of worn out, lost, stolen and mutilated notes of national banks, and to the maceration of notes of national banks, and prescribing penalties for imitating or mutilating all notes of the national banks, and for counterfeiting notes of the national banks, and for using or having conttol, custody or possession of any such plates without authority, and for passing counterfeit circulation, and used in for the taking unauthorized preparation of impressions notes of of tools national banks, or having the same in possession, or for dealing in counterfeit circulation, shall apply in all respects to the notes of the Bank and to the plates, dies and tools of all descriptions connected with the issuance thereof as fully and with the same force and effect as such statutes now apply to the notes of the national banks and to the plates, dies and tools connected with the issuance thereof ; and 36 all penal provisions of existing laws in connection with any acts done with respect to any of the matters or things above described shall be applicable to such acts done with respect to the matters and things relating to the issuance of notes of the Bank. REPEAL. SEC. 36. That all provisions of law inconsistent with or superseded by any of the provisions of this Act be, and the same are hereby, repealed. AMENDMENT. SEC. 37. That the right to amend, alter, or repeal this Act is hereby expressly reserved. [10674] i SESSION. H. R. 7837. IN THE HOUSE OF REPRESENTATIVES., NOVEMBER , 1913. AN ACT Toincerporate THE FEDERAL RESERVE BANK OF TIIE UNITED STATES, establish banking districts, mobilize bank reserves, refund and re- tire a portion of the national debt,:provide for an elastic currency, afford means for rediscounting commercial paper, establish more effective supervision of banking, and for other purposes. Be it enacted by the Senate and House'of Representatives of the United States of America in Congress assembled That the short title of this Act shall be " The Federal Reserve Act)' DEFINITIONS. SEc. 2. The words and phrases used in this Act, except where the context clearly indicates a contrary intention, shall be defined as follows : The word " Committee " shall mean the Organization Committee of the Federal Reserve Bank of the United States. The word " Bank " shall mean the Federal Reserve Bank of the United States and shall include all the branches, sub-branches and agencies thereof. The word " Board " shall mean the Board of seven directors of the Federal Reserve Bank of the United States, known as the Federal Reserve Board. 1a The word " Branch " shall mean a branch of the Feder4 Reserve Bank of the United States. The words "Executive Committee" shall mean the Execu, tive Committee of a branch of the Federal Reserve Bank of the United States. The words "national bank" shall mean a national ba . . a.33a3Lattoa now or hereafter organized or existing. The word "depositor" shall mean a bank or trust com- pany, organized under the laws of state or the laws of the United States relating to the District of Columbia, or such a national bank, as shall have a deposit in the Federal Reserve Bank of the United States. The word " district " shall mean a banking district from time to time created and designated by the Federal Reserve Marl The words "net deposits shall mean net deposits as from 'time to time defined by the Comptroller of the Currency. The words " sub-branches " shall mean subordinate office branches of the Federal Reserve Bank of the United States. The word " agencies " shall mean agencies of the Federal Reserve Bank of the United States located in foreign countries. ORGANIZATION COMMITTEE. SEC. 3. That as soon a )racticable after the passage of this Act the President shall appoint :a committee of five, to be designated The Federal Reserve Bank Organization Committee liallard-tIoniail=nzitizer The Committee : Shall select a Chairman and Secretary and such other officers as it may deem necessary from its own members and appoint assistant officers, clerks and other necessary employes Shall organize the Federal Reserve Bank of the United States and branches thereof ; 2 Shall adopt a seal for the Bank, which shall, during the process of organization thereof, be the seal of the Committee, and adopt seals for the several branches, wilich shall cor- respond to the seal of the Bank With the name of the branch added ; Shall invite and receive popular" subscriptions at par to the capital stock of the Bank,- in accordance with the provisions of Sec. 5 of this Act and under regulations to be prescribed by the Committee; Shall make the certificate provided in Sec. 6 hereof ; Shall do all other things necessary tO effect the corporate organization of the Bank. SEC. 4. That there is hereby appropriated out of any money , in the Treasury not otherwise appropriated, a sum sufficient to establish and provide accommodations for the Bank and its branches, not to eiceed five hundred thousand dollars for the - Bank ank_each branch thereof, and for the purpose of carrying out the provisions of this Act, in accordance with the following limitations, viz : Each member of the Committee shall receive in full compensation for his servides the sum of $10,000, besides his actual and necessary traveling expenses, and in carrying out the provisions of this Act the Committee is authorized to incur such expenses as it shall deem., necessary, not exceeding the slim of $250,000, all of which compensation and expenses shall be pay- 'able by the Treasurer of the United States upon vouchers apiroved by the Committee. The balance of the appropriation hdrein 'Made Shall be disbursed by the Board for the purposes herein set forth, payments to be made by the Treasurer of the United States 'upon vouchers approved by the Board. The total amount of - 3 appropriation herein made shall, from time to time, be reimbursed to the United States by the Bank from its net earnings after the payment of dividends to the stockholders and before the establishment of a surplus fund. STOCK ISSUE. SEC. 5. That the capital stock of the Bank shall be $100,000,000, divided into -444tiwer5ne million shares of a par C value of $100 each; such stock shall have no voting power, and shall be free of all Federal, State, EMunicipal or other taxes, except that the holders thereof shall ba" subject to the provision of fedd: 'income tax laws with respect to the income derived therefrom. The holders of such stock shall be entitled to dividends thereon"at the rate of five per centum per annum and no more, which [dividends shall [be :cumulative dissolution of the Bank such hol upon BIT receive the par amount of such stock and all alance of the assets shall be paid. to the United States. Such stock shall be offered for popular subscription at par by the Committee under regulations to be prescribed -13y it and within six months after the passage of thisjAct. In case the amount of capital stock is over-subscribed, the Committee shall first allot the shares of stock to the subscribers for the smallest number of tr" (Yr1 a4M617;;;ittea shares. SEC. 6. After the popular subscriptions to the capital stock of the Bank shall have been Cosed, the Committee shall makean organization certificate specifying (a) The names of the several subscribers to the stock, with http://fraser.stlouisfed.org/ the number of Federal Reserve Bank of St. Louis shares 00.1iiiiilaM&4040-iiiy them respectively; A aittnt 4 (b) The form of stock certificate adopted by the Committee and the methods for the transfer thereof and such other foot*. in connection with the organization as the Committee may determine. Such certificate sh01 e executed under the mune of the Committee by the ,chairAn4n and ,Secretary thereof and attested with its seal and shall be forthwith transmitted to the Comp- ducticteio ,troller of the Currency, who shall file, record and careful] serve the same in his office. SEC. 7. Upon receipt of such certificate, the Comptroller of the Currency shall issue a charter of incorporation to the persons who shall have been appointed by the President and confirmed by the Senate as the directors of the Bank, which charter shall contain a recital of the compliance with the pro.risionSOrtfurAct by the Committee nndAthe Subscription to the capital stock of $100,000,000 of the Federal Reserve Bank o tad- Sta1es1---- and. the issuance of such charter by the Comptroller of the Currency, countersigned by the Secretary ofthe Treasury, shall complete the corporate organization of The FeZleral Reserve Bank of the United States, Upon such organization,. the Board and their successors and the stockholders of the Bank as they may from time to time exist, shall be n, body corporate, to be known "The Federal Reserve Bank of the .United States," to have a term of existence of fifty years from the date of the issuing of the organization certificate by the Comptroller of the Currency, countersigned by the SeCretary of the Treasury, to have the power to contract, to sue and, be sued, to acquire, Own, lease, and hold such real and personal property as may be nece_wary for its business, to buy, sell and deal in gold and 9 rei bullion, $ if4 moorgek 5 promissory notes and other evidences of indebtedness, and to dis, count notes, bills and acceptances, and to have such further powers, privileges and functions as are hereinafter specified in this Act. The bank shall be located in the City of -Washington, D. C., and shall have twelve branches located in cities selected by the Board and sub branches wherever designated by the board. - SEC. 8. The government and control of the Bank shall be and hereby is vested in a board of seven directors to be known as the Federal Reserve Board, whose powers shall be the same as those conferred upon boards of directors of national 44,414;44.g, -fts.s44is under existing law not inconsistent with the provisions of this Act. Such directors shall be appointed and one of them shall be designated as Governor and another of them shall be designated as Dvn_ty Governor by the President of the United States all by and with the advice and consent of the Senate. Such selection shall be made from persons qualified by experience and training for the proper :discharge of the duties imposed upon them by this Act, and in making such selections due weight shall be given to the vArious_commercial interests of the different sections of the country, and at least three of the members shall be persons of recognized wide banking and financial experience. The term of office of each member of the Board shall be fourteen years, except that the terms of office of six of the persons first appointed shall expire at the end of two, four, six, eight, ten, and twelve years, respectively. The President shall have power to remove any member of the Board for cause after due hearing, such removal and his reasons therefor to be communicated by him to the Senate. The Governor and the Deputy Governor shall, subject C kt,,7 to the supervision of the Board, be the active executive officers of the Bank. No member of the 13oard shall be an officer or director of any bank or banking institution, or hold stock in any bank or banking institution, and before entering on his kzi duties as a member of the Board, he shall certify under oath that he has complied with this requirement. Vacancies caused by death, resignation, retirement or removal of the Governor Deputy Governor or other members of the Board, shall be filled by the Presidentiby*nd. with the advice and copsent of the Senate, and persons appointed to fill such vacancies shall hold office foP---- ae6Afr/ the unexpired term of the member to whose place he is appointed. Members of the Board shall take an oath of office . 171iicli shall be filed with the Ckiptroller of the Currency, 4 devote all their....,0 time to their official ditties,--and shall retire at the a e of seventy years. The Governor, or in his absence the Deputy Governor, shall act as Chairman of the 43oard. The salary of the Governor and Deputy Governor shall be $17,500 and $16,000 per annum, re pectively, and of the other members of the Board ............2 annum. 15,000 per The Board shall make report annually of the operations of the Bank to the Speaker of the House of Representatives, .Gryn The Board shall 44k-a -date --AQ:t within si:s. months after its appointment and qualification, upon which subscriplion, to the stock of the Bank shall be paid in full. Such date may be extended by the Board with the approval of the President of the United States. Any subscriber failing to pay for the shares allotted to him by the Committee shall forfeit his right thereto and to his five per cent, deposit which deposit shall be so forfeited to- the 7 Bank, and such shares may th Tupon be alotted by the Board to other subscribers. Eve subscriber shall accompany his. subscription with cash or a certified check for five per cent, of the total amount thereof to 12t forfeited ii.-,n,Lfailia.r.e.a.----ti+eRITbscriber-trrparhis -sub's-mt.= tioadu_aillar-the-aulgit444.-144444444-4thn. The proceeds of the five per cent. payment of the stock subscription, shall be depos- ited in national banks to the credit of the Committee, and by the Committee assigned and transferred to the credit of the Bank Upon its organization. In case the full amount of the capital stock shall not hare been subscribed for and paid for in fall, the Board shall forthwith allot the portion so unsubscribed and paid for to the several national banks then in existence in proportion, as nearly as may be convenient, to their respective amounts of capital, and each such allotment shall fix a liability upon each of the said national banks to subscribe for and take the number of shares so allotted, such liability to accrue as of the date of such allotments. Upon the payment of the ninety-five per cent. residue of th e stock subscription, the proceeds shall- be depysited with national banks by and to the credit of the Bank, and shall be so kept on deposit pending the opening of the Bank for business. BRANCII RESERVE BANKS. SEC. 9. That the Board shall create and designate in the continental United States, exclusive of Alaska, twelve banking districts for the purpose of establishing within each of such districts a branch of the Bank. Such districts shall be established with due regard to the convenience and customary course of business of 8 The community and shall not necessarily coincide with the boundaries. ,,f such state or states as may be wholly or in part included within: :).ny given district. The Board shall also establish within each district a branch off the Bank which shall be designated by prefixing the name of the city in which such branch is established to The words " Branch, Federal Reserve Bank ". The number of strch branches and of such districts maybe reduced by the -Board when in its judgment the interests of trade and commerce so require; and in like manner the number of such branches and districts may be increased by the Board after two years from the time of the organization of the Bank. The management of such branches shall be vested in an Executive Committee consisting of five persons to be appointed by the Board, who shall be residents of the districts in which they' serve, shall devote all their time to their official duties, and shall retire at the age of seventy years. Each member of Executive Comrnittet before entering upon the discharge of duties shanake an oath of office which shall be filed with the Board. The term of office of each member of such Executive Committee shall be ten years, except that terms of office of four of the persons first appointed by the Board upon each such Execu- tive Committee shall expire at the end of two, four, six and eight years, respectively. The Board shall fix the compensation to be received by the members of the Executive Committee and shall Mesignatecl1/4....2!,i22:2211d vice-chairman for each Executive Committee. The chairman, or in his absence the vice-chairman; shall preside over the meetings of such Executive Committee and subject to the supervision of the Executive 'ComMittee, shall be the active executive officers of the branches. The Executive 9 Committee shall have authority to establish discon-. districts ,t4ryer-- tinue sub-branches, within their respective ta--f,14.e-e+rrt,errfrl--a--4+e--Bes#4. and No member of an Executive Committee shall be an officer or a director of any bank institution, or banking banking as member hold stock any bank in or and, before entering upon his duties institution a or of such Committee, he shall certify under oath that he has complied with this requirement. Vacancies caused by death, resignation, retirement or removal shall be filled by the Board and any person appointed to fill such vacancy shall hold office for the unexpired term of the to whose place he is appointed. member ecutive Committees_, pay be Members of Ex- summarily suspended and sub- sequently removed for cause by the Board after due bearing Each such Executive Committee shall annually make a report of the operations of its branch to the Bard to lie by t.144)44 mitted with#44.e: of Representatives. anig"---)---A-ial report to the Speaker of the House Such report of the Executive Committee shall contain reports from each sublvanch established in. the district. All actions of the Executive Committees shall be subject to the approval of the Board. POWERS OF THE FEDERAL RESERVE BOARD. 10. SEC. That the Board shall be authorized and em- powered : To govern and control the operations of the Bank ; To supervise and control the actions of the Executive Committees .10 ,(c) To supervise and regulate the issue a4 retirement qf notes of the1.31,Jak, and to pveseribe the form, tenor and denomi.----'" nationtof such notes; To suspend,tin an emergency all reserve requirements of ail air& Gr the J3ank for thirty days, and to continue such suspension for periods not to exceed flfteen dap; To suspend in an emergency all reserve requiremen,ts relative to National Banks for thirty days, and to continue such suspension for periods not to exceed fifteen days; To examine, at its discretion, the accounts, books and affairs of depositors; it To call for statements of condition of all depositors, in such form as pi.er-may prescribe; (11) To open and maintain banking accounts in foreign coun, teies, to establish agencies in foreign countries and to make regu- lations for the conduct of the foreign business of the branches VAC a/71. through such agencies. The enumeration of the powers bereiiiabove set forth shall not be deemed to be a jon upon the general authority of the Board to perform W." all the duties, functions or services specified or implied in this Act. art~. SEC. 11. That The net earnings of. the Bank, after deducting takes, expenses and proper reserves against the acquisition of permanent property, shall be devoted, first, to the payment of a five per cent, cumulative dividend upon the .stock, and second, after the reimbursement to the United States of the advances appropriated under Sec. $ of this Act, to the accumulation_of a A surplus of Twenty million dollars, and after the accumulation of such surplus, one-half of such earnings above said dividend require- 4 ments shall be paid to the United States and the other one-half devoted to the accumulation of a further surplus until the total surplus reaches Fifty million dollars, and thereafter all earnings beyond such dividend requirements shall be paid tothe United States so long as such surplus is maintained. The earnings so distributed to the United States shall be applied by the Secretary of the Treasury, not more than three months after the receipt thereof, to the redemption of outstanding bonds of the United States, after advertisement published in each district at least once a week for four successive weeks immediately preceding the date fixed for such redemption, which advertisement shall call for the tender of bonds, and the Secretary of the Treasury shall thereupon in his discretion purchase of the bonds so tendered those offered at the lowest prices up to the amount of such earnings in c- his hands at suCh redemption date. afeet BUSINESS OF THE FEDERAL RESERVE BAN-E. SEC. 12. The Bank shall sconduct business solely with the United States Government, with the National banks, and with such other banks and trust companies as may from time to be permitted to deposit their reserves with the bank, except as otherwise provided in this Act. The accounts and transactions of c epositors shall be confined to the branch and subbranches of itO Cal C46) tot/ the banking district inwhichAoiz. Ste. 13. That the Bank- shall be the fiscal agent and sole Wow deposit ry of the except that for purposes of collection and transfer only the Secretary of the Treasury may designate national it ories. bngaIoamtioac as Government depos- ant7i) 44-tdeo ase-- The Secretary of the Treasury shall gradually effect a trans- fer of the general fund of the Treasury to the Bank, which transfer shall be completed within twelve months after the organ- ization of the Ilank. Such transfer, however, shall not include the five per centum fund for the redenifition of outstanding national bank notes, nor that portion of the general fund of the Treasury held by government depositories or balances of disbursing officers in the insular possessions or territories of the United States so long as no branch of the Bank exists in such possessions or territories. On and after a date to be determined by the Secretary of the Treasury and the Board, but not later than six months from the organization of the Bank, all the revenues of the United States 8bitil be regUldity deposited in the Bank and disbursements shall be made by ehe-el.'s drawn Nsgainst such deposits, except revenues and disbursements in the insular possessions and territories of the icetient 1029096 2uirtte United Stat. SEC. 14. That the Bank shall be required to maintain in behalf of the national banks Which have notes in circulation the five per centum redemption fund held in the general hind of the United States Treasury and any defieiencies in the said fund shall be forthwith paid by the Bank to the Treasury of the United States upon demand and the Bank Shalt be forthwith reimbursed by the national such payment is made. in whose behalf )4(.1aNdeit) 13 GENERAL FUNCTIONS OF THE FEDERAL RESERVE BANK. SEC. A. That the Bank shall have power : To purchase and sell the obligations or other securities of the United States, as defined by Section 5413 of the Revised Statutes, and also such of the obligations of the Territories and Insular possessions of the United States as are guaranteed prin. ?&Cd. cipal and interest by the United States ; To purchase, sell and deal in gold coin an u lion, to ?ea. make loans thereon, and to contract for loans of gold coin and bullion, with or without giving security therefor, which security may include the bonds and other obligations of the United States owned by the Bank ; To receive from any depositor for deposit or collection current funds in lawful money, national bank notes, notes of the ?it& Crt Bank, or checks71.6. drafts tapommaxwignisonts payable upon presentation ef--9.4eaiLto-Pt With the _acceptance or endorsement of any depositor, to discount notes, drafts, and bills of exchange arising out of transactions, commercial such notes, drafts and bills to be of a character to be determined and defined by the Board. Such definition shall only include notes, drafts and bills of exchange issued or drawn for agricultural, industrial or commercial purposes, or which shall represent a bona fide sale of agricultural products or other goods, wares or merchandise, or which shall have been issued for the purchase or sale of the bonds or other obliga- tions of the United States. Such definition shall not, however, include notes, drafts or bills of exchange issued or drawn for the purpose of . -* agricultural products or other goods, wares or eijiitg attt:4* 14 -merchandise, or for carrying or trading in stocks, bonds 9r inyest, ment securities, other than the bonds and obligations of the Unite(il States. Notes, drafts and bills of exchange admitted to rediscount, as so defined under this paragraph, must mature within not ex,ceeding ninety days from the date of ediscount. With the acceptance or endorsment of any depositor to discount notes, drafts or bills of exchange which are based upon the exportation or importation of goods, ...v,aixes,,--nirrcban7 dise or agricu ural products, as determined and defined by the Board, end which matureWithin not exceeding six months from the date o is,count; To purchase from depositors and to sell with or with, out its endorsement, bills of ex,change arising out of commercial transactions as **mined and defined by the Board and payable in foreign countries, but such bills of exchange must mature in not exceeding ninety days from the date of the purchase and must bear the signature, endorsement or acceptance of two or more responsible parties, of which at least one shall be that of a depositor ; Under rules and regulations prescribed by the Board, to purchase and sell in the open market, either from or to depositors or through its Agencies or from or to horoiri banks, firms, corporations or individnals,notes, drafts and bills of exchange of the kinds and maturities by this Act made eligible for re-discount, and 'cable transfers; To open and maintain banking accounts in foreign countries, and establish agencies in such countries, for the purpose- -of purchasing, selling, collecting, and dealing in foreign bills of ex- change, gold coin and bullion, and cable transfers, and to buy and iN" 15 sell, with or without its endorsement, through such correspondents or agencies, prime foreign bills of exchange, arising out of commercial transactions, as may be defined by the Board, which have not exceeding ninety days to run, and which bear the signature, acceptance or endorsement of two or more responsible parties. DOMESTIC EXCHANGES. SEC. 16. That the Bank shall receive at par all checks, drafts or other obligations of the Bank and each branches or sub-branches. of its The Executive Committee of each branch shall flom time to time, subject to the approval of the Board, determine and publish exchange and collection charges to be made with respect to all checks, drafts and other exchange and collection items of bank-a and +runt co..n ..riv,s---erthertban those Itotialitia4444.iiieerll received in accordance with paragraph (0, Section 15 of this Act. Such charges shall not be in excess of the approximate actual cost of collection of such cheeks, drafts and other items. SEC. 17. That the Bank shall' have a first and paramount lien upon all of the assets of every national bank for all debts and liabilities due from it to the Bank, except as to the claims of the United States, and the Bank shall likewise have a first and paramount lien upon all the assets of every other depositor for all debts and liabilities due from it to the Bank, except debts due by such a depositor to the United States and to the State of its incorporation, and except with respect to trust funds held by trust companies. 16 LIMITATIONS OF DISCOUNTS. SEC. 18; That no depositor shall be ntitled to discount itotes, drafts, bills of exchange of ace p ances, with the Bank, in excess of the amount of the nimpaired capital and surplus of such depositor, nor shall the aggregate of such notes, drafts, bills of exchange, and acceptances, upon which any one person, company, firm or corp'Oration shall be primarily liable tediscounted for any one depositor, at any time exceed ten per centum of the unimpaired capital stock and surplus of such depositor; but this restriction shall not apply to the discount of bills of exchange payable outside of the continental United States, drawn in good faith against existing values. RESTRICTION OF 'INDEBTEDNESS OF NATIONAL AND STATE BANK rtiterlarsb-oriTrittrs. SEC. 19. That no national bank shall at any time be indebted or in any way liable to an amount exceeding the amount of its ;. capital stock at such time actually paid in and remaining undi-- minished by losses or otherwise, except on account of demands of the nature following : Notes of circulation ; Moneys deposited with or collected by the national bank; (0 Bills of exchange or drafts drawn against credits due the national bank, or money actually on deposit to the credit of the national bank or due thereto; (d) Liabilities to the stockholders of the national bank fOi. http://fraser.stlouisfed.org/ dividends and Federal Reserve Bank of St. Louis reserve'profits ; 17 Liabilities incurred under the provisions of paragraph (d), Section 15, of this Act; Liability as endorser on notes, drafts and bills of exchange, arising out of commercial transactions, as defined in para- graph (f), Section 15, of this Act ; Liability as acceptor of drafts or bills of exchange, subject to the limitations of Section 20, of this Act; Section 5202 of thelRevised Statutes of the United States is hereby repealed. Depositors other than national banks, shall be subject to the limitations defined in Section 18 of this Act. ACCEPTANCES. SEC. 20. That any national bank may at its discretion accept drafts or bills of exchange drawn upon it, having not more than six months' sight to run, and growing out of commercial transactions as described in this Act and as defined by the Board, but no national bank shall accept such drafts or bills of exchange to an amount at any time exceeding in the aggregate one-half of its paid-up and unimpaired capital stock and surplus. CIRCULATING NOTES. SEC. 21. That the Bank may issue its circulating notes, which shall be receivable at par in all parts of the United States in payment of all taxes and excises and all other dues to the United States and also for all salaries and other debts and demands owing by the United States to individuals, corporations and associations within the United States and its possessions except interest on the public debt. Such notes shall be a first lien on all 18 of the assets of the ILIA and shall be redeemable on demand at any office of the Bank in lawful money of the United States. As long as any such notes are outstanding the Bank shall segre- gate in its own vaults and carry in a special reserve account on its books gold coin or gold bullion or United States gold certifi- elites to the amount of tte face value of the notes from time to time so outstanding or, at its option, shall so segregate gold coin or gold bullion or United States gold certificates to the amount of not less than jier centum of such face value and collaterals consisting of promissory notes and bills accepted for rediscount 104t Under the provisions of Sec. 15 of this Act, or refunding notes Of the United States, hereinafter provided for, or both such collaterals and refunding notes, equal at the face value to 4:05: per - CAI 60441.0064.4 Aiit of the face value of the notes from time to time so outstanding. Such collaterals may be exchanged from time to time for other collaterala or refunding notes within the limitations afore. said and of equal face valae. 1311INTING7 DENOMINATIONS AND FORM OF THE CIRCtLATING NOTES OF THE BANK. SEC. 22. That in order to furnish suitable notes for the Bank, the Comptroller of the Currency shall, under the direction of the Secretary of the Treasury, cause plates and dies to be engraved, in the best Manner to guard against counterfeiting an fraudulent 'alterations, and shall 'have printed therefrom, itiihon the distinctive or special pal5er which has heretofore ormay hereaftel e lawfully adopted. bY him for printing United States notes, and numbered, such quantity of notes, in blank, of the denominations of five 'dollars, ten dollars, twenty dollars, fifty dollars, one hundred dol- 4ery,1 19 lars, five hundred dollars, one thousand dollars, and ten thousand dollars, as may be required by the Bank. .goolifterTirail o oamo. Such notes u er alla.14.111.e..4411:41 shall cla:= A- ' express upon their face the promise of the b o pay on demand, attested by the written or engraved signature of the Governor or D3paty Governor and Cashier and bear the engraved imprint of the seal of the Bank. RESERVES OF NATIONAL BANK4ftitr,Jeerirrirrrr. SEC. 23. That from and after a date to be fixed by the Board, in no event longer than five years nor less than thirty 'months from the date of the organization of the Bank, all national banks shall be required to keep and maintain a reserve of not less than twelve per centum of their net deposit liabilities, as defined by the Comptroller of the Currency. Any part of such reserve, but in no event less than one-half thereof, may consist of a deposit with the Bank, and the remainder shall be in gold and lawful money in the vaults of theThational bank. From and after the organization of the Bank the Board 'shall effect as rapidly as it may deem wise under commercial conditions from time to time existing, and complete within the periods herein provided, the change to the minimum reserve requirements above set forth. Such change shall be effected by the publication of notices to all national banks which shall state the percentage of the total reserve which must thirty 444riiii.44. thereafter, and until further notice, be deposited with the Bank, 4-411eamount which thereafter may -20 be held in gold or lawful money in its vaults. Such requirements, however, shall fairly consider the commercial and industrial :confri\ ditions of the country and its 'various sections and be: so apportioned and determined as to cause the least restrictions upon the fte business of national banks, and compliance with such directions of, the :Board shall be mandatory upon national banks, and itn such direetion the Board shall give due weight to the distinctionS recognized under existing laws between country banks, reserve city banks and central reserve ,city banks, but sucli directions shall be uniform with respect to banks ach of such classes. SEC. 24. That from and after the organiiatio ----------the BeP. 1=VO Bank no action shall be taken under the provisions of Section 1 of the Apt of March 3, 1903; or Section 2 of the Act of March 3, 1887, providing for the designation of cities as additional reserve cities and additional cexitral reserve cities, respectively, and from and after the establishment of the new minimum reserve provided in this Act the classification of national banks., as now provided. by Section 5191 of the Revised Statutes of theVT-n1 ed States, .amended shall be abolished. SEC. 25. That the Bank shah establish and maintain at all times a reserve equal to not less than fifty per centum of the net deposit liabilities of the Bank. Such reserve shall consist of gold coin, gold bullion, United States gold certificates, and lawful money of the United States. RATES OF DISCOUNT, SEC. 26. The Board shall establish from time to time a normal rate of discount which shall be uniform at branches and sub branches of the Bank, except as herein provided, and the lbre cee,i-A.e:ortz 2 Board shall renew or change such normal rate at stated meetings.. to be heal atileast once in each week and shall immediately pub, lisli the norm d rate _so renewed or changed. The normal rate of discount so-established shall be charged by the branches and sub branches of the Bank to depositors with respect to. all rediscounts of such depositors up to an amount not exceeding the amount of per centum of the unimpaired capital grid surplus of each such depositor ;- and the rate of discount charged by the __,--- bnaily33 all subbranches of the baii-pon all rediscounts in excess of such twenty per centAshall be increased by the Board for each ten per canof increase in such rediscounts aloove such twenty per cen, The additional rates of discount established by the Board upon such rediscounts in excess of said twenty per cent/L- arm/ ki-tv shall in like manner be uniform throughout-ther but such additional rates may be established by the Board in progressive y e0144--d increasing amounts for each ten per cent of excess rediscounts above the said twenty per cenAt and such additionf"-' discOunt above the normal rate shall, in like manner, be publisTed arh, from time to time by the Board. s REFUNDING NOTES SEC. 27. -vie Secretary of the Treasury is hereby authorized and directed to refund one-half of the 2 per cent. United States bonds ... having the circulation privilege and on deposit with the Treasurer of the United-States to -secure National bank note circulation at the date of the organization of the Bank. He shall accomplish such refunding by the issue of refunding notes. Such refunding notes shall be a direct obligation of the United States, shall bear interest at the rate of three per cent6per annum, shall be payable 14,k)%001- 1,7v` Tne Secretary of the Treasury is further hereby authorized 11,i and directed to refund such of the two per centum United States bonds having the circulation privilege, the refunding of which is not hereinbefore provided for. He shall accomplish such refunding by the issue of bonds. Such bonds shall be a direct obligation of the United States, shall bear interest at the rate of three per centum per annum, shall be payable in gold coin of the present standard of weight and fineness, shall mature twenty years from the date of issue thereof, shall not have the circulation privilege, and shall be issued under regulations to be prescribed by the Secretary of the Treasury as to the form, tenore nature thereof. Both the refunding notes Oft, 07,1,wyN 0, ilArvov and the three per centum bonds hereinabove authorized shall be exempt from Federal, State, municipal and other taxation both as to income and principal. The Secretary of the Treasury shall upon the first day of July, nineteen hundred and fifteen, and annually thereafter, under regulations to be prescribed by him, allot among the several National banks,_in proportion-to tile---respeCtive amounts of their circulating notes outstanding upon such dates,. st an aggregate amount of two per centum United States bonds with the circulati privilege, which such banks shall be entitled to ex- change for the three per celitaii United States bonds hereinbefore authorized, provided, that in no one-year shall he- allot a greater ag- gtegitte amount than twenty million 'dollars thereof, and upon the receipt of such two per centum bonds from such National banks, the 01.r. Secretary of the Treasury shall effect the exchange. Should any National bank fail in any year so to exchange its full allotment of two per centum bonds for the three per centum bonds as herein provided,,the Secretary of the Treasury may permit any other /Le-- I National bank or banks to exchange bonds in an amount equal-to, the deficiency caused by the failure of any one or more banks to make exchange in such year. At the expiration of twenty years from the passage of this Act every holder of United States two per centum bonds then outstanding shall receive payment therefor at par and accrued interest, and thereafter such bonds shall carry no interest. Nothing contained in this Act shall be construed to alter, impair or restrict the circulation privileges now given by law to any bonds of the United States. Immediately after purchasing such bonds the Bank, under regulations to be prescribed by the Secretary of the Treasury and the Board, shall, from time to time, a3 and when the national bank notes secured by such bonds are redeemed, exchange such bonds with the Treasurer of the United States, to an amount not exceed-. ing at par the aggregate amount of the face value of such redeemed notes. Such exchange shall be for an equal amount at par of refunding notes hereinbefore authorized, and simpillir ,22 in gold of the _present standard of weight and fineness .and only at the Bank or any of its branches, and ,shall mature at variious periods as determined by the Secretary of the Treasur not exceeding one year from their re,spective dates of iss e, and shall be issued under regulations to be 7. Secretary of prescribedlithe ,a( ihe Treasury as to the form, tenor n denomination thereof ; provided, that such notes may, at the option of the Sectetary of the Treasury, be extended for periods of one year during a period of twenty years from the date of the organization of le Bank. SEC. 28. That the Bank shall from time to time purchase from the several national banks at prices not exceeding par and accrued interest two per cen bonds of the United States up to an amount not exceeding one-half of the total of such bonds on deposit at the date of the organization of the Bank with the Treasurer of the United States to secure circulation of witionnl hanlis. st.,1t Such purchases sshall be made from the several national banks up to amounts not erceedinglthe par value of one half of the amounts of bonds owned by the respective national banks and seeming their circulations outstanding at the date of the organization of the Bank, and thereupon the Bank shall be responsible for the redemption and retirement of the notes of each such national bank to the amountof the purchase price of the bonds, less interest, so purchased from it, which responsibility shall constitute payment to such national banks,-:respectively, for such bonds. the Bank shall, Immedi tely after purchasing such b under reoulati ls to be prescribed by the 1 1 1 ecretary of the 4-11 MsA (04:4A1 'garvtufir' 23 of tito UnitecL.ator- an equal anuulat.patorptivr.4-Refifortimirg ,upon the maturity of any such Refunding Notes the Bank shall pay such Notes, for the account of the United States, to the holders thereof, but it shall, at the option of the Secretary of the Treasury, for a period of twenty years from the date of the organization of the Bank, in lieu of reimbursement for such payments., accept in exchange for such Notes new Refunding Notes of an equal aggregate amount and of analogous form and tenor. The Bank shall pay semi-annually to the United States out of its earnings and before reimbursement of advances made by the United States under the provisions of Sec. of this Act, a tax upon its circulating notes equal to ftri amount of one and one-half per cen per annum, calculated upon the amount of refunding notes from time to time so outstanding. STATE BANKS AS DEPOSITORS. SEO. 29. That from and after the --organization of the Bank any bank or banking association or trust company organized under any law of any state or under any law of the United States relating to the District of Columbia may make application to the 13oard and shall by the Board be authorized to become a depositor in the branch organized or to be organized within the district where the principal office of the applicant is located, but before granting such application, and from time to time thereafter, the Board shall satisfy itself that no provision of the charter of such applicant or of any law applying to such applicant prevents a lawful compliance by the applicant with the requirements of this unless so satisfied the 21 Before being admitted,as a depositor, and during the period' when it shall continue as a depositor, each applicant shall comply with the regulations promulgated from time to time by the Board, and with the following requirements To establish and maintain _a_ reserve of the character defined in this Act equal to twelve per cent, of its net deposits as defined by the Board ; -- To establish and maintain a paid-up and unimpaired capital to an amount not less than that required under the pro- visions of Section 5138 of the Revised Statutes 44-463-44/irtrtr -St-Ae4, as amended ; To be subject to such examinations of its books and affairs ag,the Board may from time to time direct ; To prepare and submit reports of its condition and transactions at such times and in such forms as the Board shall direct. Upon the issuance of a certificate of authority by the Board each applicant shall Qe1titlecLto have all the rights and privileges enjoyed by national banks as depositors in the Bank. If at any time it shall .appear to the Board that any such Applicant wh has become a depositor has failed or ceased or unable to comply with the provisions of this section or become unable the regulations of the Board, it shall be within the power of the Board to require such depositor to surrender its rights as a depositor and to pay and discharge in full any and all of its obligations to the Bank and to the United States. No such applicant admitted as a depositor may surrender its rightAor withdraw from its obligatione=ch until after th liration of six months from the aivin b it to the Bank of a eaftkx 25 written notice of its intention so to do, nor unless and until it shall have paid or discharged in fall all indebtedness and obligation of every kind owing by it to the Bank and to the United States. BANK EXAMINATIONS. SEC. 30. That the Board shall, at least once in each calendar year, cause an examination' to be made of -the assets and affairs of every depositor, and more-frequently if the Board shall consider special examinations necessary, in order to furnish a full and complete knowledge -of the condition of any such depositor. The reports of such examination shall be made in triplicate, one copy thereof filed in the office of the roller- of- the Currency, one copy in the principal. office of the Bank and one copy in the office of the branch of the Bank wthe district in which such depositor has its principal office. The person ass!gned to the making of such examinations shall have power to call together a quorum of the directors of the depositor being examined, who may be required to state under oath the character and circumstances of any asset or liability of such depositor. All examiners, their assistants and clerks, other than those appointed by the board, shall be appointed and employed by the Executive Committees of the respective branches, subject to the approval of the Board and for service within the districts where such branches are located. They shall receive fixed salaries, the amounts whereof shall be determined by the Board. The expense of the examinations herein provided for shall be assessed by the Executive Committee upon the depositors of the respective dis- The Comptroller of the Currency shall, at least once in each calendar year, make an audit and examination of the books, accounts and affairs of the Bank, a report of which he shall include in his annual report to Congress. The cost of such examination shall he by the Bank. 26 Upon request of any 4epositor ,the Executive Committee of any branch may arrange for special or periodical examination of its affairs, the cost and expenses of such examination to be borne by such depositor. All examinations, whether thus regu- larly provided or specially authorized, shall be so cowlucted as to inform the ;lank of the actual condition of the depositor examined, and the lines of credit being extended by such d positor, and an pther information essential to a knowledge of the condition of such depositor, as may be rewired. The Board shall, at least once each year, order an examina- tion of each Branch branch, branch, and a report of such ....._... examination shall bk made in triplicate and one copy thereof led 1--_o __--- in the office of the Comptroller of the Currency, one copy in tl principal office of the Bank, and one copy in the office o ___._ (11"-fThiS respective Brands. Such examinations and reports shall be so conducted and made as to 4,14,gelaseA the actual condition of the assets and liabilities of the respective B ranches, and the amount and character of their reserves, and a the amount, character and maturityall of their investments and rediscounted paper. Notgfepositor, nor any officer, director or employe thereof,shall make any loan or grant any gratuity to any examiner. Any bank officer, director or employe violating this provision shall be deemed guilty of a misdemeanor, and shall be fined not more than five thousand dollars, and a fmther sum equal to the money so loaned or gratuity given. Any examiner accepting a loan or gratuity from any depositor shall be deemed guilty of a misdemeanor, and shall be fined not more than five thousand dollars, and a further sum equal to the money so loaned or gratuity given, and shall forever thereafter be disqualified from holding office as oLlo 27 an examiner for the Bank. No examiner shall perform any other service for compensation while holding such office, nor shall he be an officer or director of any financial institution. The Comptroller of the Currency shall file one copy of every report made in accordance with the provisions of Sections 5211 and 5240 of the Revised Statutes with the Board, and one copy in the office of the Branch within the district in which the OW, respective depositors under examination have their offices. Section 5241 of the Revised Statutes is hereby amended to read as follows : "No association shall be subject to any visitorial powers other than such as are authorized by this title, or are vested in the directors, officers or employees of the Federal Reserve Bank of the United States, or are vested in the courts of justice." 13/ROHII3ITED COMPENSATION. SEC. 31. That no officer, director or employe of a national bank shall be beneficiary of or receive, either directly or indirectly, any fee (other than the usual salary 'or director's fee paid to such officer, director or employe by the national bank and other than a legitimate fee paid to an attorney at law for legal services) or any commission, gift or other consideration other: than as aforesaid for -- ør account of his service-srVOte or influence as such officer, director orenomin connection with or in respect of any loan, purchase, sale, payment, exchange or transaction with respect to stocks, bonds, or other investment securities orfnotes, bills of exchange, acceptances, bankers' bills, cable transfers or mortgages made by or on behalf of a national bank of which he or employe. sfiCh officer, director Any person violating any provision of this section shall be punished by a fine of not exceeding $5,000 or by 28 kiboth such fine...-----'-and im. prisonment not exceeding five years, o prisonment, ,......, _ the discretion of the co t having jurisdiction Provided, that this restriction shall not be construed to cover transactions in good faith-and in the ordinary course of business between a national bank and another national bank or a firm or a-state bank or a trust con )any. SEC. 32. That from and after the passage of this Act any national bank having a paid up and unimpaired capital stock of not less than one million dollars shall be authorized to establish agencies or branches in :foreign countries, uch :agencies branches shall be established and maintained under regula ions to be prescribed by the Comptroller of the Currency- and au y national bank 'whose place ofbusiness shall be in a city of not less than fifty thousand population shall be entitled to establish branches within the corporate limits of the municipality, within which its principal office is located and 43.1.kt...q11 national banks shall be authmized to exercise such trust company powers and functions as may be permitted by t4e laws of the state within which its principal office is located<L SEC. 31 That so much of the provisions of Section fifty-one_L hundred and fifty-nine of the Revised Statutes of the United iewal States, and Section four of the Act of June twentieth, eighteen hundred and seventy-four, and Section eight of the Act of July twelfth, eighteen hundred and .:eighty-two, and of any other provisions of existing statutes, as ire that before any bankiaggaitmaimiu shall be authorized to commence banking -to business it shall transfer and deliver to the Treasurer of the United States a stated amount of -United States registered bonds be, and the same is hereby, repealed, and hereafter CL/ 66-r-tc. /0 joiner-. roo and after the organization of the Bank, no national bank not hrviug Government funds on deposit with it shall be required to maintain on deposit with *e Treasurer of the United States ilnY bonds of the United States in excess of the amount required to secure the outstanding circulating notes of the national bAl'k. , 29 bank, having retired a11 of its National bank note circulation, may withdraw all United States CtiftWernMaft bonds deposited wall e Trea urer of the United:State SEC. 34. That Sexlywald_ Se_ 20 of the Act of Februtkry 8 __,,,...---:1179444) 4875, shall be amended to read as That every person, firm, association other than national-bank associations, and every corporation, State bank, or State banking association other than the Federal Reserve Bank of the United States shall pay a tax of ten per :centum on the amount of their own notes used for circulation and paid out by them." SEC. 210, That every such person, firm, association, corpora, tion, State bank, or State banking association, and also every national banking association, shall pay a like tax of ten per centum on theAmount of notes of any person, firm, association other than tate bank a national banking association, o any corporation a." 4;(1 other than the Federal Reserve Bank of the United States, or of any town, city or municipal corporation, used for circulation and paid out by them. 9 SEC. . That all existing statutes relating to the control and examination of the plates an dies for-fhb-Wiltingof the notm- of national banks, and relating to destroying and replacing of worn out, lost, stolen and mutilated notes of national banks, and to the maceration of notes of national banks, and prescribing penalties for imitating or mutilating all notes of the national banks, and for counterfeiting notes of the national banks, and for using or having control, custody or possession of any such plates without authority, and.iver_z_issing counterfeit circulation, and used in for taking unauthorized impressions of tools the preparation of notes of national banks, or 80 having the same in possession, or for dealing in counterfeit circulation, shall apply in allrespects to the notes of the Bank and to the plates, dies:and tools of all descriptions connected with the issuance thereof as fully and with the saw force and effect as such statutes now apply to the notes of the national banks and to the plates, dies and tools connected with the issuance thereof ; and all penal provisions of existing laws in connection with any acts ,tione with respect to any of the matters or things above described shall be applicable to such acts done with respect to the matters and things relating to the issuance of notes of the Bank. REPEAL OLAVSA- SEC. Or That all provisions of law inconsistent with or superseded by any of the provisions of this Act be, and the same are hereby, repealed. AMENDMENT -OLAFIgE.-,`-'.4°SE0.0. That the right to amend, alter, or repeal this Act is hereby expressly reserved, Insert In Soo. 28; 12.01 boucle th. Bealk4unocr zw.-;ulations to bo prom.,arlia#4 by ti-:a3 30arobary of ti y2 Trasury anti the Board, shall, il*ota time I:m*4118;1;ely ai'ter platallaaluL: to ti, nd vht7n the .143.tiono,1 Janlz note° scoured try ol.i.oh bonds art-t redeonLed, excal+iniA ouch bOnd0 With the Tre4, atgror of ti a (mac:oiling atatas, to az mount not t 74)ar the argre9Mte =Cunt of %Ivo faoe wane of auoli redeene4 uttes. tp.oh o:=Trace Ohall bo for on equal amount 8.t par of roftindine notea bereinbeore author:1 zsd .oaid, eta ato. Oec. The Conptroller in each calendar yea tr.(' Currency shall. at least once make an audit and exaninttion of the books, accounts and. sZfairs of tho Pen17:. 'Alich he ahgl/ inoltIde in hia annual -report to Congreee. The coat o ouch examinatIon shall be paid by the AtOrsatiall' CLIUVA. See. 3:i. tfshlt the riptit to Ileroby expreosly roaerved. c_vrtencl, alter, or repeal thlt 4ct ntr2AL mom. 17sc. 32. That n11 provisions of /e, inconsistent rith or suporsocied by -try of tho provisions f this Act bo, end the sere are herob:T, ropel?deds provided, thnt nothinc in this Act cant red ø'1l be construed to reptni the parity provi ion or provisions contained ir en Aot nppreved :nrell fourtoonth, ninstoon hundred, entitled "An Act to define and fi7 the stondnrd Of vnlue, to maintin the pnr1t7 of all ferns of rene7 issued or coined b:7 the Ih!tee Etatos, to refund the public debt, mi for other purposes." rriatt; NATIONAL BI1IE16 + lorn° Sec. 31. That from ad after the passage of this Act any national banking association having a Paid up and unimtaired capital stock of not less than one million dollars shall be autaorined to establish agencies or branches in foreign countries and that any nntional banking association Whose place of business shall be in a city of not less than fifty thousand population shal/ be entitled to establish branches wIttin the corporate limits of the municipality within which its principal office is located and that all national bathing associations shall be authori7ed to exercise such trust company' powers and functions as nay be pernatted by the laws of the state within Which its principal office is located. mat Soc. 50. Thal no officer, direetor or ettplve or a national bilk shall to beneficiary of or receive, eithor Irootly or Indiroctly, uny foo (other thnn tho unool salary or director's The paid to ouch officer, director or employe by the national bank nnd other than m Itmitimate foe pi id to an attorney at law for lona/ sorvicoo, or ony commission, gift 'w other consideration other than, so aforennid for or on account of his orvioes, vote or influence in connection or In rospect of any loan, purohoes, sale, payment, czchange or trInsAntion with roziiot to stocks, bonds, or other investment toonritios or notna, bills or ezobonge, acceptancoo, bnnkers' bill, cable tronsforo or mortgagee mode by or on behalf of a national bank of rtich ha Is boort officer, director or employe. 4ny person violnting any. provision of thin section shail ho punished by a fine of not onedIng. 45,000 or by imprisonment not emoseing five ?ears, or both &Inch fins and imprisonnant, in thp discretion or the court having jurisdiction. 7rovide, that this restriction shall not be construed to oovor transactions in good faith and in the ordinary ocurne of business betncon a nations/ bmnk nnd another nations/ bank or banking firm Or a stoto bank Or a trust company.. First Revise. 27.411INATIONS. Sec. 29. That the Board shall, at least once in each calendar year, COMBO an eeemination to be made of the assets and affairs' of eatery depositor, and more frequently if the Board shall consider liseecial examinatioWneceseary in order to tarnish a full arid complete knoeledee of the condition of any such depositor. The reports of such examination shall be made in triplicate and one copy thereof filed in the office or the Comptroller of the Currency, One COpy in the principal office of the Bank and one copy in the office of the branch of the Bank within the district in whioh such depositor has its principal office. The person assigned to the makine of such examinations shall have power to call together a quorum of the directors of the depositor being examined, who may be required to state under oath the character and eireumstanees of any asset or liability of such depositor. All examiners, their assistants and clerks, other then those anpointed by the Board, shall be appeinted and employed by the :executive Committee of the res,ective branches, subject to the approval of the Board and fer service within the districts where such branches are located. They shall receive fixed salaries, the amounts whereof shall be determined by the Board. The expense of the examinations herein provided for shall be assessed by the :executive Committee upon the depositors of the reseective districts, in proportion to the assets or resources held by such depositors upon the dates of the examinations. Upon request of env depositor the -,zecutive Committee of app. branch =7 arranee for special or periodical examinations of its affairs, the cost and expenses of such examinetion to be borne hr sudh depositor. All examinations, whether thus regularly provided or epecially authorized, shall be so /conducted as to inform the Bate of the actual condition of the depositor exelned, and the lines of credit being extended by such depositor, and any inations) (Bank 2 other information easential to a knowledge of the condition of such depositor, as may be required. The Board shall, at least once each year, order an examination of each Branch and of each sub branch, and a report of such examination shall be made in triplicate and one copy thereof filed in the office of the Comptroller of the Currency, one Copy in the principal office of the Bank, and one copy in the Office of the reepective Branches. Ouch examinatione end reports shell be so oonducted and maxio oe to disclose the actual condition of the assets and liabilities of the respootite Branches, and the anount and character of their reserves, and of the amount, character and maturity of all of their investments XJ14, and discounted paper. No depositor, nor any officer, director Or employe theroof, shell make any loan or grant any gratuity to any exerainersgeoisedtirer. Any bank officer, director or employe violating this proVision shall be deemed gutity of a misderoanor, and shall be fined not more than five thourand dollars, and a f further aam equal to the money so loaned or gratuity given. Any examiner accepting a loan or gratuity from any depositor 4xmmtze*,Atrotirc shell be deemed guilty of a misdemeanor, and shall be fined not more than five thousand dollars, and a further mne equal to the money so loaned or gratuity given, and shell forolear thereafter be dieouslifled from bolding office es an examiner for the Dank. To exardnor shall perform any other service for compensation while holding such office, nor shall he be an officer or director of any financial institution. The Comptroller of the Currency shell file one cony of every report made in accordance with the provisions of Sections 5211 and 5240 of the Revised Statutes with the Board, and one copy in the office of the Branch within the district it which the respective depositors under examination have their offices. (Bank 7Aaminat1ons) 3 aectien 5241 of the Revised Statutes is hereby amended to rend a0 follows: n110 association shall be subject to any visitorial powers other than such as aro authorized by this ti40. or are vestedip,1142stors officers or e lo os of the vederal lssorTo Bank of the the courts of jurtlee. ta or are vested in STATL BAN= g3 DEPOOLTORS. Soo. R. Tnat from and after the organization of the Bank arty bark or bat%inE, aseocial;lon or trust oompany orgarioed unceo sry law of any eta/a or otrol,ir llr of lobe United Statae rrleting to the r.istriot of Oolumbia, viRe wako ap211oalAan to the Boqad are she'll by th. , Board be mo.thorimed to b.eoom0 doperitor in the branch or6anised or to be organized vi,,hin the dintrlet whore the offleeor -Wall applicant is 'coated, but be- fore eantipc eudi arplicntion, end from ti; theresfter, the :!oar d sball sativfy itnelf ftt Ti') orovoitien of the charter of much .t,pr.licant or of any ler opplyinzo to each aloplioant prclionts a :metal oomplianoo by the applicant with the requirements of this Aco and the re lalations of the Board, and =less so satisfied tho :ward ahall refuse such application or require the retirement of svoll depositor. Before 'osing admitted as a depositor, and darinc the period when It shall oontinue as a depositor, each appllohnt shall oomply with tho reg- ulations promulgated fro time to tic by the Board, and with the following requirements: To ostablish and maintain a reserve of the einractor defined it this Act equal to twelve per cent. of its net deposits, To establish and maintain a paid-up and unimpaired capital to an amount not less than tnat required under the provisions of (:ection 5138 of the Revised Statutes of the united etates, as amended; To be subject to such examinations of its books and affairs as the Board may from ti on to time direot; To prepare and submit reports of Ite condition and transactions at ouch times and in ruoh for as the Board shall direct. Mum the issue of a certificate of authority by the Federal Reserve X4Ziot 4? Boar). ,,,e4.0,4 -iopplyis64issAt shall become entitled to have all the rights and privileges enjoyed by national banks as depositors in the Pederal Reserve 2. Bank. No such applicant admdtted as a depositor may surrender its right or withdraw from its obLgation as such until after Vas expire, tion of one year frois the giving by it at to the 3ank of a written no.- tloo of its intention so to do, nor uhless aad until it shall have val4 or discharged in fall all indebtedness and obligation of every kind. owing by it to the !Auk and to the United States. If at any ti ms it shall appear to the Board that any such applicant who has becalm a depositor has failed or ceased to comply with the provisions of this sootion or tile regulations of the Board, it shall be 1,4thin the power of tee said Board to require mach depositor to sur- render its rights as a denositor and to pr and discharge in full any and all of its oblU;stions to the :lank and to the United States. n'rt.v.r Soo. 27. That the Mnk shall from tiro to tiro purohnse from the :oocral national t0000 at priCou not 414t444 par nd oceured Internet too per cent. bonds of the United :Antes up to an irozt not enceeOing one- half of the total of voch Lando on dopositot the date of tho organigation of the 3an with the 'reasuror of the :Jnitod Otaoes to secure_oirollotion of such national bank°. aucb purohosos ahol/ be made from the oovora national banks up to amounts not coing the par value of one-half of the =aunts or bonds 'cored by the roopective national banks and Nmuring thoir eiroolations outstanding at the date of the organization of the Bonk theroupon tho ZamO ahall be rosponsible for the redomption ald retiro- nt of the notoo of ach such national bank to the amount or the purchoso price of tbo bonds, less toteroot, ao porohased from it, +Joh responsibility shall constitute payront to such national bonos, rozpootivoly, for such bonds. Immediate:1y aftor ourohnsine such Lando, oho BanO shall, under rogu- latiorc to bo proscribed by the Oneratary of the Treosury ve the Board, Tr000urer soohongo uoch bonds with the PalcOUNIXax of thoUnited Dtateo for on equal amoont at pnr of kofunding rotes heretnOeforo authorised and upon the moturity of any such lefunding !;)too the BatIr shall poo such WAGS, 'or the Recount of the United btotos, to the holdors therrof, but tt ahill, at the option of the :a.meretary of the Troaoury, for a period of twonty poor& from the date of the organization or the !Oink, in lieu of reinbursonont for such payments, accept in oxchange f'or G;ich Votes now Pvfunding rotet of an equal uggregato amoont and of analaoous form and tenor. The Balk shall pn7 semi-annually to the Otitod states, out or its earnirgo ard before reimborsenont of advancos mado by the Untted 5tates undor the provisions of Oeo. of this Act, tax upon its circuloting: notes equal to on =runt of one and ono-holf per cent. per onnum, calculated upon the amount of roeunding notes from tiro to time so outstonding. Soo. That from tbo ortAnisation of the Bon144 no batik not bovine Govnramant fixndo on depoolt with it &loll b rotd to maintain on dopoolt with the TrotwOrme of *be thited Mateo ari7 bon& of the United Statco in =soy of the amount rorllirod to seourt the aatstandinc Oroulatinc notoo of tho National bank. Add to the 2nd half of Seetion 27c The Secretary of the Treasury is further hereby authorized and directed to refund the balance of such of the two per contum United States bonds having the circulation privilege:, the refunding of which is not hereinbefore provided for. He shall acoomplish such refunding by the issue of bonds. Such bonds shall be a direct obligation of the United States, shall bear interest at the rate of three or centam per annnm, shall be payable in gold coin of the present standard of weight and fineness, shall mature twenty years from the date of issue thereof, shall not have the oiraglation privilege, and shall be issued. under regulations to be prescribed by the Secretary of the Treasury as to the form, tenor and nature thereof. Both the refunding notes and the three per centum bonds hereinabove authorized shall be exempt from Federal, State Iced municipal eeeci-e* taxation both as to bloom and nrineleal. 6neeetet. The seoretary of the Treaeury NOE,A. shall upon the first day of jUly, nineteen gam4aan, and. annually thereafter, under regulations to be presbribed by Mn, allot amone: the several Fational banks, in proportion to the respective amounts of their circulatinc notes outstanding upon such dates, an aggregate amount of two per oentum bands United states bonds with the circulating privilege, which such tanks shall be entitled to 0:enhance for the three per centum United States bonds hereinbe fore authorized, provided, that in no one year shall he allot a greater aggregate amount than twenty million dollars thereof, and upon the receipt of tueh per cent= bonds from such National banks, the Secretary of the Treasury ohall effect the exchange. Should any National 1)a:tit fail in any year so to exehange its full allotment of two per oentum ands for the three per eentam bonds as herein provided, the Seoretary of the Treasury seny permit any other National bank or banks to exchange bonds in an amount eeual to the deficiency caused by the failure of any one or more banks to make exchange in =oh year. expiration of twenty years from the passage of this Act every holder of At the 1,1) -go. 27) Mited 71;atos tro per gout= bonde thnn OrU1 eiU1 rgootre roratt thorefer at par mxI. accrued int:err trt, and the rAladt;: otrAtoriott v4is mot total titv tratagdtari. tIrt4411000 '31: atr,11 7con:44; be Mrgra74344 V44- 6,1***,. rt. al= eaanv Lattlr'etvt irmar or rcoltattat fki,3aotv 1)036 re itho *AU* tioiyao, Piret Revise. 4 AO Sec. 26. i'The , 111121ZIDI1G NOTES. 6 -Pir secretary of the Treasury is hereby authorized and directed to refund one-half of the 27, United States bonds having the circulation privilege a/0 din deposit with the Treasurer of the United States* to secure National bank note cift!OS circulation at the 44re/e of the organization of the Bank. He shall accomplish such refunding by the issue of refunding notes. Such refunding notes shall be a direct obligation of the United States, shall bear interest at the rate of three per cent, per annum, shall be payable in gold of the present standard of weight and fineness and only at the Bank or any of its branches, and shell mature at various periods as determined by the Secretary of the Treasury not exceeding one year from their respeotive dates of issue, and shall be iseued under regulations to be prescribed by the Secretary of the Treasury as to the form, tenor and denomination thereof provided, that such notes may, at the option of the Decretary of the Treasury, be extended for periods of one year during a period of twenty years from the date of the organization of the Bank. First Revise. /tat . "the Board shall establish from tile to time a normal rate RATE OF DIMWIT. Sea. A of discount which shell be uniform at all branches andweill! sub branches of the Batik, except as herein provided, and the Board Shall renew or Change such normal rate at stated meetings to be held at least once in each meek and shall immediately publish the normal rate so renewed or changed. The normal rate of discount so established shall be charged by the branches and sub branches of the Bank to depositing banks and trust companies. with respect to all rediscounts of eueh banks and trust companies up to but not exceeding the amount of 20 per oentum of the unimpaired eapital and surplus of each such bank or trust company; and the rate of discount charged by the branches and sub branches of the bank upon all rediscounts in excess of such twenty per cent shall be increased by the Board for each ten per cent. of increase in such rediscounts above such twenty per cent. The additional rates of discount established by the Board upon such rediscounts in excess of said twenty per cent. shell in like manner be uniform throughout the country, but eV444:74140 such rates may be established by the Board in progressively increasing amounts A, for each ten per cent, of excess rediseounts above the said twenty per cent., and such additional rates of'diseount above the normal rate shall, in like manner, be published from time to time by the Board. . GEKIRAL MERVMS. See. 24. That the General Reserve i4 of the 7oderal Reserve Bank shall be established rad maintained at all time at not loss than fifty per omit= of the total amoaat of the deposit llities and tho outstanding notes of the bank. 3uoh reserve sh412 consist of gold coin OT bullion, mid gold oortifloatos, Treasury notes, United States notes and silver oertitleates. RESZITES OF 11A TIC L 1.410:11iG That from and after a enta to be fixed by the No40,44-40ww.140Board, in no event longer than five years nor less than thirty months from the date of te orGanization of tae 440ssrift'lMlIrlhr' Bank, all national bor ,s,elseepotiksershall be required to 4eep and maintain a reserve of rot less *i,par eft. liabilities, as defined 4.,-144,...Act. lire per ntr of its net deposit QIM444At, Such reserve shall consist, ftS to 44, ,, one-half thereof, of a, deposit dth the ,Pe4erwerrtYlos_Aank, and. as 1146624 0A144 one-half of gold and lawful money in the vaults of the Bank, but the entire amount of such reserve my ponsist of a deposit with the Peaseva lireirerros Bank. From end after the organization of the PedemT-TtrmwTro Bank the 444eirs4-4.ieweloir4, ?:soare . ehallliffect as rapidly as it may deem wire under commercial conditions from time to time existing, and within the periods herein provided, the chanke to the minimum reserve reouirements abovo set forth. Suoh change shell be effected by the publication of notices to all national.m.N.otiolepa04,44AX0 which shall state the per- centace of the total reserve which must thirty months thereafter, and until farther notice, be deposited with the iio*e.re-1.-iteffm***03ank, and the mount which thereafter mtv be held in Gold or lawfal money in its vaults. Such requirements, herever, Aaall fairly consider the co:Dmercial and industrial conditions of the country and its various sections and be so apportioned and determined as to (mare the least restrictions upon tho business of na1444464) tional Ii.a44r.Lutaom-mlinttenll and compliance with mach directions of the Board shall be mandatory upon national blrednifrix iTscretat tons , and in such directions the Board shall Give due weieht to the distinctions recognized under existine Im7s between country banks, reserve city banks and central reserve oity banks, but such directions shall be uniform withix respect to Reserves of rational Banking Asroc. banks ithin each of vuch classes. Sec. k3. That from and after the organization of the Federal Reserve Bank no action shall be taken under the provisions of :Action 1 uf the Act of :arch 3, 1903, or Oection of the Act of Mare' 3, 1887, prov1din6 for the dosiolation of cities as additional reserve cities and additional central reserve cities, resoectively; and from and after the ustablishment of the new/ mintmam reserve provided In this Act the class- 64-,A) ificatIon of national loaeleioeiaiilliaz.,§.. as nor provided by Section 5191 of the lievised Ztatutos of the Unit4tate6, aa amended, shall to ubolished. 7/118T TSVIS.E. CIRCULATITTG rn INS. Sec. DO. The Bank nay issue its circulating notes, eittich shall be receivable at par In all parts of the United States in payment of all taxes and excises and all other dues to the United States and also for all salaries and other debts and demands owing by the United States to indlviduagtei (15 kewutAtirgA,,a ale, corporations nd associations within the United States except interest I\ on the public debt. of the Bank Such notes shall be a first lion an all of Lhe assets ,eszt-wm-41.ef- 4mertkeand shall be redeemable on demand at any office of the .Pank lawful money of the United States lf Az long as any such notes aro out- standing the Bank shall segregate in ts awn vaults and cprry..in aspecial etron fio-c4Iathern -Woeme to the ewe reserve account on its bookeI kttt ts A filet 4eiet ot the tear value of the notes tra.-1 tine to tine so outstanding er, (1.01 Cettell* at its option, shall so segregate sch4 4111 tql,90- to the em4e.get of 5,0", lace, of such Iwo value. and eollaterals, consisting of promissory motes and bills accepted for rediscount under the provisions of Sec. of this Act, or one year ell:chequer notes of the United States, hereinafter nrovided for, Ot4444, or both such collaterals and one year Emeheuer notes)equal atAlow to 1001 7ti '0412 of seAell-pai value of the notes from time to time no outstanding. eidatE4,4,0 Such rawar,..,atailbfi-uxagazz.a.mTaxawww.4022-44-a.eitaii-lies--.4,4"11141Yr-rrsi- aented-Zer,peyeterate,set4 nay be exchanged from time to tire for other 4eesFerk morter,-e, collateral i or one year exchequer notes within the limitations aforesaid and of equal par value. First Revise. AOCTIMINMS. 3co. 19. Any National bankine association may at its d1t4cretion aaaept drafts or bills of =Chance drawn upon it, Lavine not more than sir ronths' sight to ran, and growing out of commercial transactions as described in this jection and ao defined by the Federal neoerve 3oardi but no National barking association sha11 accept swill drafts or bills of exahonge to an )ant at any tirle exceeding in the aggregate one-half of its paid-up and unimaired capital and surplus. PiPet Revise. an 'MOTION OPINIEBTNIBIESS or NATIONAL AND STATn BANKING ASSOCIATIONS. Sec. le. That no National banking association ahall at any time be indebted or La any wu.y liable to an omount exceeding the mount Of Its °apnea stook at mach time actual:y paid in and ramnining undiminished by losses or otherwise, except on account of demands of the nature following: (a) Notes of oiroulation4 fb) none:fa deposited with or oolleCted by the association; (a) Bills of exell or drafts 4ra41 against credits duo 000 aeaooiatian, or money actually of deposit to the credit of the assioiation or due thoret0; 411 Liabilities to the stockholders of the association for dividends and reserve profits; (e0 Liabilities incurred Indio* the provisions of psragraph Section 14, of 'ho Federal Reserve Act; Liability az endorser on notes, draft° and bills of exohange, arising out of commercial transactions, as definod in peregroA Section 14, of the Pedoral Reserve Act; Liability as accepter of drafts or bills of =bongo, subject to the limitatiofla of paragraph Seetiaa , Of the rederal Reserve Act; $ection 5232 of the Revisod Statutes of the United States is hereby repealed. That balks, banking associations and trust comoanies orgEnized under .ate laws, shall be subject to the limitations defIned in 3et:4ton 17 of this Act. First Revise. LIMITATION OF lecio 17. DISCOUNTS. That no depositing bank, banking association or trust corkany shall be entitled to discount motes, drafts, bills of exohange or acceptances, with the Federal Reserve Bahlt5 in excess of the ansaht of the unimpaired capital and surplus of such depositing bank, banking association or trust company, nor shall the aggregate of such notes, drafts, bills of exchange, and acceptances, bearing the signature Or endorsement of any ono person, company, firm or corporation, rediscounted for any one depositing bank or trust company, at any time exceed ten per centum Of the unimpaired capital and surplus of such depositing bwik or trust company; but this restriction shall not apply to the discount of bills of exchange payable outside of the continental United States, drgrn in good faith Against existing values. rzrzs, t5oc. 16. That the Federal ''eserve Bank shell have a first and pare- nOunt lien Won all of the assets of ever; nttional banking association for all debts and liabilities of such banking associations due to the edoral i'eserve 3arh. anoopt as to the claims of the ' Inited .tatos, rd that the 'federal l'osorve nant shall liker!se have a first Aad paramount lien upon all the asoets of ever; state bank and bankinfT =owlet/ on lrganired under the laws of the various statee for all debts and liabilities due to the ?ederal leserve Bank, emoopt debts due b7 such banks and banking association° to the Limited etates and to the °tate of their iteorporation, and. esoopt rith respect to truet funds held trust comranioei Pirst Revises ORMATIOn AHD COLIEOTIIN OFIARaga6 Joe. 18. The ?edema reserve bank ankl eh of its branches and sub- branches Shall reoelve at par all cheek°, drafts or other 0/1tentions of the said bank and each of its branches or sub-brandhes. The 7cativv Committee of oadh branch shall from timp, to time, subject to thAs approval or the Federal 7;,:servs. Board, determine and publish exohanee end oolleotion oharges to be made with moppet to all *hooks, drafts and other exeL and oolloction items of bankv ana trust odmpanice, other th4in those hereinbofore mentioned$ received in accordance with paracreeh (01, 5ootion It of this !lot. 3ach oharTes &nal not be In excess of the approximate netual cost of collection or such °hefts, drafts not other items. FIrst (17si1la Pumnarn al, TV n7=nvn Arr. cbtal haw. rowers nGt tho 7sg1er!1 rwxir/a) porohzzo (a) mai /to obliaittiono orotlior sw.o.A.Aritivo of Vie 4sotion 5415 of tl* aorlood 3tatitoo,- and tap°. "L'1t alio% or tho oIslit?,tionto of the Torritorims Inno.lar pooresitiona ti nre trAnraitend prinoint4 0.knd intornat 13? VA) tbited 3atoag itoti -Ctatc,0 TI:kLvviumer, sell and etitSal irt gold oin tot:3. bst1Tion to it1,-). loam thereon. rod to oortraat for loam of Gold twin tealion, givimc sonority therefor V= neotit,,r7. viel4;11 1i4eUrq. of tho :Inited Autos OF imlnliO the: bonds': stre °then* obiLgtFni Nderra 2104.43.-Wo ti443V.4 ora0C,i1W) f9x, delloslit or oolloetien froo z:kny Asrositim beal< or (0 ) trust oompany 4epottitfr; r onrrent funae in le..A111 ry.+Iwyr natitqnet. bask notes. notea Or the 7silor1 reeerve Welk, o(37,*(coor drats tn ytnt beni,;s pezabao lk:on pro ;ittton; (d) rith th 0atTiptir.7 icpbeeneliverx>nt of tr4 di4iwtryt 4721` 4.1.4 of ozohtimp artoine out or aorrorolai. tr:anatotions. tnit0h nototo, drafts and bilis to bc of defir,v5 lvthe Pedra'fa). JAt.nervo 3t4;:rd. :412. dtspollitire 'Wink or trust ar4.23, tivr to bo elotm.nirtati 3ich definition !Pall ma:" inolltdo notes, eir41}.tiI and bills of omoivinco issuA or ttrrorn Or law pror,t4e(is or -,11..1oli W341 'be load for hi7louitlral, industrial or ootoloroini pkir:,004,3e0 or sholl rl)roscot hIC.1 bOna fido.;t F4o1e of acrionitizrza riroilletz or ot)r.1* zpotla. VIttIVEJ or raorcfnandive., or vehicki sivai huge° been Irvine/1 tor Ur vo.rac.oe or sale o.f the bonds or other obliztions of the United Atates. definition Shz.;k1.1 solt holvevor, inoluder rioter, drattesor bino of (ma:iv/410,o ittrood or. drawn for taw parpose NsriakaiNircd, ,...7.ttodtsotn or ether ;poilts, or for t.,t,,,rr,-/irk: thf5 bon& tradina WOO Or rerCittZtaiV , tteittits, bonds cy±. Invelittnent Seottritiot4, othor than o:.1itottione of tl'or, United ritotee. Notes.. drz,,rte 4nd bil?.v of (14311.4=1 Atuationo or the nederal rieverve Bait) maw adkeittod to redisoonnt, v ondor this pare010., mot mature within not 4uo,i0:41;v ntnotr diva frml the) titAtott of dieconnt,, (,9) With V* eookvAtew or qniclortArni,tnt of eav ao:..00ttlog; bank or tmlt ofxripav to .di000tait roton, dreteG bill of *Iv:llama(' :hie% .aro Wood tp)rett, norolvindiPo or upon. t!tp.: ox:,,.ortation or iravortntion of t;soodz, eerieu.ltara pro&Loto, and whioil txttum (fl i dotrIminod defined kir Vit,s, Podtsvral Iotforvo 3otrd, in not oxoeodin'l el= northes f'or t thtl date of dtrooltit; orartatitio ftrAt Yierabwr 1:41,*.s Awl tf) :men omlortowit bile r without ootor7Amoiii trwleactione 71.16e)ra Heborwotratt.4 min:Able in :ora.3.01 determine of:AvItri it fro=t .4.3.1111 orozo:itaTtp ;,:vet J-Ilture in not oroco4inc ninety dzys dato of tilt PZU*01127-44 433,1 rtuxt bepr the tili,;naturos onitot*oyAnt m000ptanoo of to or rnre- roty.ponotAe particfre, of sthioh et leart oT.to **al tau'.xt of a dopoatini; 1,447,r tit oi:*aiaozr; (4; to .r.)ardIvo.e4 oolkvzioot Iln.der rlleo ooti mfluintione vrenoribed b.y the 7sodorta :;1-,,00rvi71 3,--)E1rd, fivul sola.th tho opon z3arl:ot., eitbar from or to aol-,,otlitinebtsand trugt ta f.Ore tallV)41. drafts andet00.014Aso 4.): the kin& arid poratIong or thdisridoalo, lasturi.tioz oor- tqpnOtos rrom or to folvip ba.a4-1, i14 Aot Air4isoovoit, one: oable tram:14)70re; Ch.) To opon one. maintain bunkAn- 0400UAtt,in rOrOier.i 00401'100, and outaliLIA 00-,naiosineAzoll oountrtoo for tho purpoea of purol-tto 001:,:eatina, (14:V. laatit;roPe, doti.linc in Amato billo of xohiip,c7a14 (loin -and. b/C.lion, 1;0 14,ky ctul .0,411%,10/14241teti or wit.IA or without itti ontlorvanant, thrtyagli ,-kzww..)..1.3o. prink foreitx billd or ozcollondoo aa-ioing oAt of oorreroial tranotA,Afione, rarsq de.rinod i thvthloh have TVA oxoeedtrk rsinoty awn to ran, 44nd. whia4 b.-aar tie cloroonont of tmortram rooronelblo portioa, volIina, evo,aeparton Sec. 13. That the Federal Reserve Bank shall be required to maintain in behalf of the national banking associations Whin have notes in circulation the five per centum redemption fund held in the general fund of the United States Treasury and any deficiencies in the said fund shall be forthwith paid by the Federal Reserve Bank to the Treasury of the United States upon demand, and the Federal Reserve Bank shall be forthwith reimbursed by the national banking associations in whose behalf such payment is made. Sec. 12. That the Federal Reserve Bank shall be the fiscal agent eat sole depository of the Government, except that for eurroses of collection and transfer only the Secretary of the Treasury may desigmite national banking associations as Government depositories. The Secretary of the Treasury shall gradually effect a transfer of the general fund of the Treasury to the Federal Reserve Bank, which transfer shall be completed within twelve months of the organization of the Federal Reserve Bank. Such transfer, however, shall not include the five per °entries fund for the redemption of antstandirg national bark notes, nor that portion of the general fund of the Treasury held by government 6epositories or -11A-24441-eett-crf disbursing officers in the insular possersions or territories of the United F:tates so long as no branch of the Federal Reserve eank exists in such possessions or territories. On and after a date to be determined by the 3ecretary of the Treasury and the Federal Reserve Board, but not later than six months from of the orPanizationl the Federal Reserve Bank, all tho revenues of the Government shall be regularly deposited in the Federal Reserve Bank and disburseAnts shall be made by cheeks drawn against such deposits, except revenues and disbursements in the insular possessions and territories of the United 3tates. Oricinal durinc Revise. ii13iNt28 OP THE MDURAL =NE wiz. sou. U. The Pedoral lleserve BazIk ahall conduct buntnens solely with the Dnited tat en Oovernment, rith the Rational baUke, nna !mch State banks and trurt co,;,pantos no nay from tine to t17lo be permitted to deporit thetr reserves with the Federal reserve bank) except an otherwise pro- vided in thin 'let. OM BEV 1131: Sec. 10. That the net earnings of the 7edere1 'reserve Bank, after deducting taxes, expenses and proper reserves against the acquisition of permanent property, shall be devoted, first, to the payment of a :?iee per cent. cumulative dividend upon the stock, and second, after the reimburse- ment to the United States of the Seven million dollars appropriated under Sec. 3 of this Act, ts the aenumulation of a surplus of Twenty minion dollars, and after the accumulation of such surplus, one half of such earnings above said dividend requirements shall be paid to the United States one and the other/half devoted to the accumulation of a further surplus until the tot/ surplus reaches rifty million dollars, and thereafter all earnings beyond such dividend requirements shall be paid to the United States so long as such surplus is maintained. The earnings so distributed to the United States shall be evened by the Secretary of the Treasury. not less than three months after the receipt thereof, to the redemption of outstanding bonds, after advertisement published in each redera/ reserve district at least once a week for four successive wee17.8 Immediately Proceeding the date fixed for such redemption, *ich advertisement shall call for the tender of bonds by the orners thereof at prices to be fixed by them in such tenders and the Secretary of the Treasury shall thereupon purchase of the bonds no tepeered those offered at the lowest prices up to the amount of euch earnings in his hands at such redemption date. Oricinta 6arinc Pavta !;100. In,urceln ttr4 ic&orvo 9 bo nuthorlood And .ornparornalt orerntiono of the v,04cra1 row,r,11. bnnkr Tfl sovorn 4,41(.1 move!! To nupervAse hfla control tho Notions of the '.:meoutive nlonnittoen of Vte covoral bnh'aiYiko; (0) tiCtato the ignue ottl rotirdIttwit or notogOf the tikorvimo ANder0 resorstA b.*, told to proforibe Thri forme tenor fvrtol ionordnation of noob nottm; !t1t To puevena .in (t11 evaeripnog tal rokorro re4:141ror!,,,ntri of the ?edema regerro bzznic for thirti 41,7, rmd to oontinne nnob seepstylon for periods not to orooed fiftqen dar; (e. To txprond. in nn orierconcy ar t, relntivo to 0 Nttiotal beztitirz aprooLltiona Ayr thirty' titt7s4 ana to continuo izach vaut7,vawion for periods not to oxeced fiftenn dr,7m; ff, To axmAnl, nt itn disorsttyn, the ,,.cconfltei, boat Nationel bankt and dopovitine Stnto beex t, nti ICfniro rust elm:anise; tllernovf.0 or r4n7lber. ..r of "F'xogpat 1.1m f:'(,)!Init tee S t (h) To no recultItions for tho zowrning of the redern1 reveme bdric and itn branches- not inelnoisteint ArM1 the ter To onlo1o7, rilrond ?edema roraric bulk znd Ci eovv* b&; of this Aotl dirdhar!v officier or r,Irlo:po or tbc brgnchco; limo/WM) Tr) ix nut , avnee 1 ort1f itei; of ,etook in the Origina during rvvise (k) To *all. fOr liteitlents or candition of oll depoeitisc lar2nk,s, such form sktl, they nv prescribe; 'tufalealaier, crwr (1'; To XV t4:.) writing off, by the .T.,xeoutive Corrittneo or the A sevcr1 i3rart3h bare,:o, -FAg dot/St:Ill or vort,Uose itteote tlIO)}1 tho hooks mid bulztnoe she.,ets o.0 stioh To determine the prafits of tiv) balk end deolaro dividende nnd fix priod of rement; lho enumeration of the powem horein&bovo sot forth shall not be onod to bo a ltr2:1tation upon the euthority of the ?odoral "qorcrvo Iloard to lAaform all the dutios fu.aotions or F.i.rvtoo Ppeolfied or tylplied In this Mt. (n) to este.blieh ir tar) bar:Icing acoarcts in foreign countries, smiles in forele,n °Gantries 4;11 to maks regulations for the To open ond an,J conduct of the fareizn buvirxiss of the branches throuch such tc.encies. "TrZT nee.7'. 77110 government of the Federal Reserve Bank Shall be vested in a board of eeven directors to be known as the Poderal Reserve 3ohrd (hereinafter called the Ioerdt, whese payers shall 'be the siese as those conferred upon boards of clirectors of national balkinE: assoolatious under eristirv ism not inconsistent with the Irovisions Øf this Act. 3u.oh t3 iv 0 c tore 1.3hall be arpcirteil by the President of the '..Inited. ')tat es with the advice aril ooneent of the Senste, 4/1"1if ;.-----Irjlee°6-..--,- /.. ' `,1nralified71-14-44"4-4C by ex- perience end treinine for the Toper di soharge of the .ciuties imposed upon them by this aot, and at least three or v-ve asaib6rs shall be i,*reorx, of tested l'Arikinti; experience. Such selection evil be lasAle from residents of different sections of the ocurt/7, the Yi e WI t beina Elven to te various mwmasrai al interests of SU Oil secti one . T1X5 term of ()Moe of each ft%mber of the el, d Flu- I be feurteet years, except that the terio of office of six of tir persons first nopointod to the or by the President shall expirk4 at the end of two, four, six, oight, ton, end tv%olve years, respectively. The President St U. have power to remove am member of the "Aoard for cense after ,'1.1co hearine. =oh rev:II or,d his reasons therefor to be commactated by hiA to oho ;:enate. The :Fres deoiaate from ident shell lorxxxostumard= more the Mrabers of the iioare.,,. one e mu as ;(yeernor and one Peruly Governor wh,o sha.1.1, fl4b,j(Jet to the supervision Of the board, be the active executive offieeve of the Vedeml eriAnk. No amber of the 3oar1 rhali be em officer or director of r.ily bara or bank- ir 1rt1tutton, or hold stook in eny tank or banicint institution, auj. before enteri; on hie (3utiege so a istiod5or of the Isoard,heshclIl curtify under oath that he bus ootarale ith this re:;u1r4lent. Vaearcies,,ei be filled lay the Pent with the advice end oorment of the 5!4nate, en 7,A/isms appointed to fill ettob visearioies shall hold offioe f.or the unexpired torts of the member to '4:vest place he is appointed. ':. e.eabers of the 3oard shall devote 4 FIRST REVISE 2 all their time to their official seventy years. The Governor, or in his absence the Deputy Governor, shall act PS Chairman of the Board. The salary of per annum, and of the other members of the Board shall make Bank to the ase of duties, and shall retire at the report annually of Speaker of the Governor shall be ,17,500 Board .A5,000 per annum. the orerations The Reserve of the Federal who shall cause the the House of Resresentatives, same to be printed for the information of Congress. BRANCH RESERVF MM. The Federal Reserve Board shall create and designate in the continental banking districts for the United States, exclusive of Slaske, purpose of establishing tricts a branch of the Federal Reserve Bank. lished with due regard to rithin each of such dis- Such districts shall district. or states as may be wholly The Board shall be estab- the convenience and customary course of business of the community and shall not necessarily coincide such staten trelve or in Part with the arrangement of included within any given also establish within each district a branch of the Federal Reserve Bank which shall be designated by prefixing the name of the city in which such branch is mestabliehed to the words "Branch, the Federal Reserve Bank". The number of such branch banks and of such dis- tricts may be reduced by the Board when in its judgment trade and commerce so require; and in like manner branch banks and districts may be increased from the time of the organization the interests of the number of such laxandk by the :board after two years of the original number of branch banks and districts. The government of such branch banks shall be vested in an Executive Committee consisting of five persoxs. to be appointed by Board. The term of office of each member of such be five years, except that terms of office the Federal Reserve Executive Committee shall of four of the persons first ap- pointed by tae Board upon each such Executive Committee shall expire at the end of ones twee throe tal4oir verso respeCtively. Thc Federal Reserve Att ftard shall fix tht (=remotion to he roceiveti by tho :lambert; of the cutivCaaaittee aLd daWnata the alLairnm and vice-chairman for xutjComitt. 7110 cleirman, or it his absenoe the vioc-chairman, shall preqde over the 1:teat1me of such nacative Committbes ate, subject to the sm.vervision of tao Exeoulive Coomittoes, anali be the active execu- tive °Moors. of the brio h miervo haM:11. The 'FWACUti743 ecorlittess stall elitcGo have authority to est&blish cud Usctntin iub-1nh bantv, withlr their respective disicts, sajeet to the approval of Uht Federal eserve 73ohrd. No member of such 3xecutive Committees shal be an officer or a director of any bank or banking institution, or hold stock in any bank or banking in- stitution and, before entering upon his duties as a member of such Committee, he shall certify under oath that he has complied with this requirement. Vacancies caused by death, resignation ar removal shall be filled Federal Reseive Board and any person hold office for pointed. appointed to fill such by vacancy the shall the unexpired term of the member to whose place he is ap- Meffbers of such Executive Committees glay be summarily suspended and subsequently removed for cause by the Federal Reserve Board after due hearing. Each such Executive Committee shall annually make a report of the operations of the branch Reserve bank to the Federal Reserve Board to be by them transmitted with their annual report to the Speaker of the House of Representatives. Such report of the Executive Committee shall contain re- ports from each sub-branch bank established in the district. All actions of the executive committees shall be subject to the approval of the Federal Reserve Board. Each executive committee shall select a president and other executive officers to conduct the business of the branch. Such officers shall have no official or financial relation with any other financial institution. 0=====:-8ec.7. Upon receipt of sech certlficrite, the Cam/troller of the tharretcy shall issue a charter of incorporation to the persons rhe hall hnve 1een4e=se- appointed by the PreaiSent xed confirrea Iv the Senate as the Airsetors of theZada=41-1.4seasteeBesk, rhich charter shall contein a recital of the cemplinnce rith the provisions ot this Act by the 410Neeee4,141444w '.:ommittee and the subscription to the-4461,-womsa4.-470 capital 3tock.eI,rtt,e7,fter90erof the'.iile:ksigeklee Ink and the issuance of 0401 Seg,retary charter by the Comptrcale of tho Currenow, countersigned of theTreasu , Mor2M'' 0110.1 complete 2xx the corporete erganization of- the 4)044V trfliqpon aci.such Slake; organization, the41e4eleek-e*ereeeeftsrd and their encoece- Innlytt ors and the stockholders of the 4244egririi-44evertle Bank as they may from time to tire exist, shall be a body orpornte, to be known as Thco reserve 'lank of tbs United r.tatea," to hnvn m term of existence of fifty years from the organization to of the issuing of the/certificate by the Comptroller of the Currency, countersigned by the Oeerotery of the Treacury, to heae '444and hold such real and personal the power to sue and be sued, toaoquire, ernA property as maw be necessary for its business, to buy, eel/ mut deal in gold and silver bullion, promiseory notes and other evidences of indebted- nee, *iall-wee.ivtiverazer-TftIrtrttriltr usgoili to ii o te h-va or,44 - tb iitttt, 91.(Ac, 74400,,Z0444t6e0.--fi a-1.,044,,04*07ftrWrIrtM-- ectot* Oda in t1-.e it of 7ash1ngton. D. C., and 42,c.** twelve branches located in cities selected by the lelIrTrt-arilPen and Board and sub branches wherever desimated by LA6 board ,-,-, ,,, ,----,,----, LO have ouch further powen5 privileges and functions as nre hereinafter , cow if le& eireaisaigle=":' STOCY MILE. eeo. That the enpitM1 stord,: of the 0e0we4iefilemmlime.lImak deal; be Ip 0,00 /I Avt, Tem, Usit ttnA,ThtrTiiqiptyttrEni a7r1 $100,000,000, divided intwhares of ft00 each; such stock shall be free to Of ell ?Moral, State, trunieipeleor other taxes. except that the holders Att thereof shall be subject to_rederal income tax with reenact to the income te derived therefrom. The holders of such stock sha// be entitled to divi- nds thereon st the rate of five per contum per annum end no more, which Alviderda shell be eumulWve. Such stock shall be offered for popular subscription at par by the Committee under regulations to bo proscribed by it. In case the amount of capital stock is over-subscribed, the Committee shall first allot the shares of stock to the eubscribere for the smallest number of Shares. In case the full amount of the capital stock is not sebscribed for, the Con- eittee shall allot the portion unsubscribed for to the several netionel benke in existence at the date of the public offering in proportion, as nearly as may be convenient, to their respective emounts of capital, and each 0120/ allotment shell fix a liability upon each of the said national enn1ls to eubscribo for end teen the number of aheres so allotted, each liability to acerne as of the e:ate of public offering by the Coredttee. Any aubscriberfailinz to pay for the shares allotted to htm at the tine renuired by the Committee shell forfeit kis right thereto and such shares mey thereupon be allotted to other subscribers by the Committee. 'Avery subscriber shall accompany his subscription by cash or a Certified check for five pee cent. of the total amount thereof, such five eer cent. of the subscription to be forfeited upon failure of the subscriber to pay his subscription for the mount allotted to him in full, as above provided. The Committee %hall call for such subscriptions and meke such ellotr*Ent within six months of the dete of the passem of this Act, and the balance of the subscription shall be paid by each subscriber upon the enount allotted Tnrvp 1VI31.: of pager. 2. to him by the :ommittee ppon n date to be 'ized by the Board, nt a period tted thnt the date upon allotment p within six nonths from the to which wach subscriptions shall become payable my be e7tonded by the teard, nith the approval of the President of the United btates. The proeseee of the five per cent. payment of the stock nutscription. 6ha11 be deposited In national banks to the credit of the Committee, nd by the Committee aseigned and transferred to the orodit of the 'Flank upon its organisation. upon the pa:front of the ninety-five :er cent. residue of the stetW subscription, the proceeds shall be depositerl rith notional banks by and to the credit of the ')anit, and Shall be so 1!;ept on deposit pending the opening of the Bank for businees. TO if; c5a tr.f Sec. 4011 6. . 74 ,git :Ma Arta d 6,74 After the - . the Committoo shell wake an orr ImtIor4 certificate sic- ;a) The names of the,aeveral subscribers to the stook, rith the respective number of stares subscribed for; The form of stock certificate adoptee by t Committee and tro nethods of the transfer thereof anc . such othor facto in connection r"ith the (b) organisation as the Committee may determine. Such certificate Shall be osecuted under the warm of the Cemnittee by the Chairman and Elocrotary thereof and attected rith its seal and shall be forthvith transmitted to the Comptroller of the Currency, to Shall file, record and carefully preserve the WACO in his office. - AN ACT To incorporate T:'; TV'lRAL 7 wen SAW or TVA trtm ntr45, eetablish banetag dietriote, mobiliee belok reserves, refund and retire m portion of the national debt, provide for an elastic currency' afford means for relecounting commercial paper, establish more effective enparvieion of banking, ard for other purpooes. Be It ennatefl by the Senate nnd Youee of repreeentatives of the United atoteo of Amerion in Cfmgroos assembiedt That the short title of this Act shall be "The 7ederal 7'eserve Act." TaAmnzAnOr Sec.; the ' That rs soon as practicable after the passneo of thie Act resident obeli appoint n committee of five, to be ces-pmated The 7"edera1teserve Bank Irganisation Committe mittc.0 (a) hereinafter called the "Com- The Committee: Shell select a Chairman and Secretary and eneh other officers ae it Ttany deem neceseary from its on mentors and appoint assietant offieors, clors end other neceseary employes; z Sf vft- ktatee, ih) i,'ha/1 organise The eadanAii-oesesere-en 7 of the United States, ldwr.a.Lue.;tt4r.-e-elleoi-s////ee-feeoh*eeel-11s, and branchee thereof. (0) 1l edopt a seal for The 2e4e+A1-aeame znk, ehich shall, during the process of orgneiration thereof, be the noel of the Committee, and adopt seals for the several branches. 'Ada °hell cerrespend to the seal of The Asee.se4.4.,,atimmAa Botmk itt the mele of the branch elided: (d) Uboll Invite and receive popular subscriptions at par to the capital stook of The -?1410411-4044440son Lank, in accordance rith tho previsions of Sec. 5f Vhis 4ct fled under roguIntions to be proscribed by the Colp- mittee; (el hall make the certificate provided in 50c. 6hereof; (f) Shall do all other thinge necessary to effect the corporate t Nmn. \?.' orLanization of the atommgivIRIoweempr-_,.. 2erlita, Sec. mttee-461,11,reof ae-;64*.:ha-arraa&uarr, is hereby appropriated out of any money in the A Feribtiok 6,4 Autrajd obvini 000tC4TvfTreasury not otherwise appropriated, for the purpose of carryinc; out the ew vizIcr provisions of this Act, in acoordance with the followino 7f!ach member of the Committee shall receive in fall compensation for his services the sum of :-;10,000, besides his actzal nal necessary travel LIE expenses, and in carryiris. out the trovisions of this ,t.ct thccommittee 14e, d_.F e,\.47' authorized to incur such expenses as it shall deem neces,sary, all of .1,.111- compensation anl expenses shall be payable by the Treasurer of the United Staten upon voudhers approved by the Committee. ..aaL4,-1,f,zy,,,,tikowsial.;-:41e41-eire.,-eiverti-tre-emireire-&-.4trm,rtrry+ntr--cetki-4ein-eoevisiene,,v,, -01...L13.1.2...k.almeseklevtoknfrterarsixtitea. The balance of the appropriation herein made shall b di ebursed Ty,v. the -Pearrr '..th--itereerre Board for the par- 101,11 at 101A, ,,,,:444,044,44,42,4,641vovali.ArrzkYtellEfirltre 0 (.4) payments to be made by the Treasurer of the United States upon vouchers approved by the 73card. The total amount of the appropriation herein :nade shall, from time to titue, be reimbursed to the Stetti,4 ntrsPerrmmonoi by the 440441444-1-4er" ere..tev<r'- Bank from its net earn- is aftey the ppyment of dividends to the stockholders arid before the a_,41 -seemertstri-cdt of aforturp ("C? aRGAITIZATION ADVISORY BOARD That there is hereby created an Organization Advisory Board to consist of twelve members who shall be selected by the Organization Committee, one member, as near as possible, from each section of the country in which there is to be es tablished a branch of the Federal Reserve Bank. The members of the Organization Advisory Board shall be chosen with reference to tneir practical ence. banking and business experi- They shall serve without compensation, except that they reimbursed for their actual and necessary traveling expenses. shall be The Organization Advisory Board shall, upon the completion of the duties of the Organization Committee, serve in a like capacity to the Reserve Board, with lie reimbursement for their Federal actual and necessary traveling expenses, until the completion ant of its work of organization and the beginning of actual operation of which time it shall cease to exist. the Federal Reserve Bank, at POINTS STILL TO BE ElIBODIED. Embody .3' ettrar Applicatren of earnines torestire debt of U.S. See page 16;,;(7lass Bill. 3.-÷lot es Inv-be-rest -tatter," en r ncleeifird. --,Atate -enainrifnc Amend-Trevi si orr-er-IPederal lay; as to le: terer" tops now applicable te"'" ti =al bank InsiiPtnote circulation-as, tc destretot i on of mut ilated on of notes notes, counterfei or emitinE, and penalties, cars of plates,' perm, etc. J.flivil and criminal sections ap,p cable to banlrnotes. Lttorney General as, ailyteorr*8 wA,44ditiOna1.L40fIni ti ens: 9 .1'.4-741tral on-ree.e47ving the rizlit to-ritstill--,or, amend. 10. ---ileneraireneal section. d.f-any-proistItt"SYPTI-14w,e,made,Irrtr'refe-rence-,k0,..45I1V24,44944L1.17P Extend the provisions of 4 appropriations section to,e rer the expenses of organization by the deral Doard as well as byUte Organization Committee. Consider w .her it should also provi4e."6r housing the bank and branches; and sd be repayable to the Gov ment before the establishment of any Deposit the capital of th sank in National Banks business of the 7edera.,oserve an g the opening for 4 Consider the creation of an isory T3oard, consisting o ankers and perhaps business men, to serve wi u. compensation, and to and advioe to both the Organization ittee and, the "ederal "pied on mattpme'ef organi- 5,p'aid ,,/ zation. Perhaps this board o1d be selected by the.,AM5Asory Committee. ;;;;z72r, /e MX R q: ',OR cur= .tar, ADDITIM TO =VT ar ,'tf bran4bas in relation 3hall there be a kipttation on the numb 0, that no branch to tho deposits, posits than (b BILL. I be orwalised with less 0,o- aoutit. nk olwa .e to ititly t1e Insert potcr to a branni or a sub-branch. rrohlb .1 on that a d ep os tire Lank en have only one stocount with a branch or nib-brarich hP uggeS. tell to 41 thi s ,e0- ,*4. 'the effect that within five e1the Feaeral , Lase rt proV 1 ei it a plan end r oetionjthe appropriate 3escrve Board shall Committees of t rtouse And Senato for the retpoement an cancellation of areenbacks f:oe 3action ri$6, 7aCona1 Bank tst, pace 14/f X.C.B. book, are specified. poor :i that uaght to -f anbodiea; see bit powers of 3ection 4, dictated,Artift. It is necessaxy to proylde that mentors of the redoral Res rve 4eard shall not bo conaectodiefill any otner financial inotil:ut !q1plication of nuiv debt. ,. s earnincs for tbe :-faymoat ar the public .e. in connection w a that road Hr. Fivne ° aoran4ute robarainb re- ,. tiremcnt of Oni* In the f"tates bonfle./I at or Ass° ution, stock holders pr value and nothinK more, ar., Of tho public debt. the balance shall be fvlied to the pay:sent Insert i 'OrosniaatI on eot ederi ::. serve 72.initz shonIe. be mXeirtpt fro., tion, except with rem rek.leive back t to tax on real estate. t.ate and local tn2szt1 4 Nix\ Ine 20 of the Bill. 0.4 Nemo. of obanc,-,ee Put in t.1 provie 3-; that the It.m1( rhell contract. Zralthit..2.-44ior4-rentre,- efir rd to by-laws and ret,u3.at Provitl, on in r to be made by the Pederal Recerve 4 Btate biz nat 4ctulation. Leave t to tinepeotIoii out the woro reculatdrou? .e law aryl the If a Lank fails to cop1 vith the provivione 9kihe t is to happen to it-hat le, what Is to be regulations of the Bo, thaeiharao ter of the pOntro 1 of ztate bank the prov in ions bore who fa 11 to comply vi ith the law. :!einbere of the Bsaffd 6)76.1.1 clevote thei datie e . Insert "entj tiT3e to their tie. lievairement that Federal rteeerve Board el-18.3.1 publish weekly th,o'IW doral Ileaerve '3 ai a to ,oertain items a tate:I:ant of trio coal it ion of *Ainte to Tablieh w:ilch wifl be epeolf fed in USIA clause, and it the Bari, week4 or otherAorakori bark they mot furnish a firtate=nt etater4ent of all wise. 12aw ere pe Board, pace LO of the ,' of the notes to the 3ank. Ilaehiner7 for the printing an ti delivers all TbieiehOuld be at Govermkent. tire of the notee ehould be doii bythe racleraption. so provide lachinet7 the expense of the Government. wreay/for bancelk.ition upon preriotee should kl) to tprItipor Govern:amt sentatioli for refoliiptiort 3. ar/ It should be f %%poll thi totes upon vc,rniint to .ral Reserve :ord. the application of the Federal Beserve Odid should have power to pet-the form and tenor of such notes"Aie Glars-Ower Bill. /// Power to reissue notes.= when thf4-ereprec,ented for_xe4tATien. distinction between ,-. roeard to section of National Bank Clause in Act to r9-1).- try, reserve and centramilierve citz Ten Per 99.40L Isxprovisiore oas s-tatsbrutte vaned 'mast not ispp17. Power to re vve ea officer or smployee wept those al:pointed book. by the President. AOSetion ZOZ, pRel*83 T Give Board poser to erform the duties and espfbiss the fUnctions necessary or conveniett _te.'the carryinv out of toe'provisions of this %et". liubstitute for preegnt paragraph Elvirlg ',44016 led" pavers. Thore ehould be provision. for depoaitors it ins r possessions under the provision where ,OsaFnderal Reaerve Ban4,,,inclu1in6 its branohes and sub-branches ernment. See sl sole depository of the ors.. be the fiscal a6ent i2O of the bill. Insert "temporarily fo in the above rn le si on' ' seraph waere, e made the depositories of tner Goverment, 'ard the Secretary of ty0,7reatury my derionate otherAnpasitoriss temporarily, eto" the ank ard its branches . i'4,- ,,, There ,ahc4,114 be provisicgurlissitircti 4avtrniumt and 4*mi:ter b, eat fur kiodestin trsoinotlome moopt as provido4 it the. .. .1a,ralersell roittine- to open operationo. oast arc dipic Collovirt thirea: (1) the- right cf 'NW delve!. tire br.4 reoolpt .44. aopoelt& to t.() a aloorottat. mid (4) tage Acht of a daPOS I Utile boric kf jet notee of the Atak ac,tirist Jittoutte, or it brtizmoe. clar4se ?ro- vioinv, for the latter Wicra3 contain, "Isc far at not vioIttl.w the roacrve provisIOns of tno At'. Reed previa= rooraimt collection of It, 44 line 4. -oonnectiou wit4 0.1, pace 9;41 tht, bila. 7he 7Wersta 74toorvo Umrd s4,11 aa:en roports to lotereso Ufld the reports shell be nocomreAnied by the orrtlfloate of t4c Cotroller of the 'arrevoy as to audit, and Orr. should, be stnted periods provided for tax* No nem ban4 no44 btr (ow ilamt bkv.f.de. ro ckistte bubk need am Coverament bonds. Woo sit.all be 42L4c, speolfloyil turh Lu 0 ytrLre. 'inch yts,r, flavortgent ohall buy or, tarter, ht not oxeoodire par, up to a0.0,)04,0610. MAI &ballo lorcor Irmo --itopeta---ttnr-tttiostrttteotuxtureig; - 4+ of sewrixt lireolation -arro". '614 tabkir-fillar .ilssorvek,404011*c rwtr4 to ertlargitit to establish foroLm of rlatiol1 include power to eetabliA incliade or wo41(3.* P*1-4110INA NIk. rftonesti rkr , WWI vosalti brr:ro,'45. pouor pmer to conextot,tstn1noe5 of trust oorkavr 3.rtue of-Akrlous states. / Sootians of the now ,i11: Obort Litle. j ,, 4: ..., ,/4, Orranizatn ommittee. Comensation and ,Tpropriation for the Committee. :::.tocly, Inoue. S. 7. O. U. 14. 1E. Certificate oe 'Irganization Committee: Issue of charter by Comptroller. Orcanicatien of per-,enent 7ord. Mr= of office. etc., of !ord. Powers of Federal 7eserve ?oard. Itarninps. Dusinoss of the rederal :uoserve Beard. riscn1 ,,qotc7 and depositor:7. Goneral fund and transfer tneroof. Oencral functions of the 171,t. Operation end colloction charges. Liens of "ej.eral reserve 7. 9.?*.. Limitation on discounts. Ecstrictions on imiebtoftess. Acceptances. a. r ..o. ,o to lettme and clmantion. 2rintinr note6. Feserves of nationnl bnnks. classification of national banking aseociatiOns abolished. General reserves. no.to of dizovant. 7ofur3luc notes. ?urolia.se of 27, bonds. Btate banks as depositors. Bank examtnations. .'":., 41,N .7,,,, v. , ? --Et4411,4 ko vol 4 44 ' ( .,.,,,,, ,,,, 1 ,,,./.,,,tftk.t.ku,f44 74 Ft v ii x,,,, ,...--tettcte 40 . Xit41,40,:444,t41., -, ,,. '7'1 a,,,,t"i)tkia 0.4414 UNCOMPLETED MAT,..,h Lanuage specilypg the right of a depositor to obtain a discount which must be limited by the reserve provisions of the Act, etc. The Controller of the Currency shall make an annual examination of the Pederal Reserve Bank and its branches and the Board shall make an annual report to Congress or to the Spear of the House, accompanied by a certificate of the Controller of the Currency as to the examination. No new national bank reauired to buy Government bonds. No existing national bank renuired to maintain Government bonds on deposit with the Treasurer of the United States except for an amount sufficient to secure outstanding national bank notes. All two per cent bonds which have the circulation privilege and which are not refunded into refunding notes shall be purchased on tenders at not exceeding par and accrued interest and to an amount not exceeding 20,00,030. per annum until the untire amount is retired and cancelled with authority to the proper officers to issue a new bond to be authorized or to issue bonds which have already been authorized for the purpose of such refunding. Provision that pending the retirement of all 2/s no impairment of the circulation privilege shall occur by reason of the Act and at the end of twenty years after passage of the Act no national bank shall,hereafter have the privilege of issuing circulating notes. LEN.T. STRONG-, Jr, PERSONAL. 112EIMRAIMUL. ma CHANGES AND ADDITIONS TO DRAM' OF BILL. Shall there be a limitation on the number of branches in relation to the deposits. That is, that no branch shall be organized with less de- posits than (blank) amount. Insert a clause to distinctly tie a depositor to a branch or a sub-branch. Prohibition that a depositing bank can have only one account with a branch or sub-branch is suggested to do this. Insert provision to the effect that within five years the Federal Reserve Board shall submit a plan and recommendation to the appropriate Committees of the House and Senate for the retirement and cancellation of greenbacks. See Section 5136, National Bank Act, page 14 of N.C.B. book, powers that ought to be embodied; see that powers of Board are specified. Section 4, dictated draft. It is necessary to provide that members of the Federal Reserve Board Shall not be connected with any other financial institution. Application of surplus earnings for the payment of the public debt. In connection with that read Mr. Fisher's memorandum regarding re- tirement of United States bonds. In the event of dissolution, stock holders shall receive back par value and nothing more, and the balance shall be applied to the payment of the public debt. Insert in "Organization Section". Federal Reserve Bank should be exempt from state and local taxation, except with respect to tax on real estate. Page 13, line 20 of the Bill. (Memo. of changes) 2. Put in a provision that the Bank shall have the right to contract. Provide a short route for state bank to enter National system. Provision in regard to by-laws and regulations to be made by the Federal Reserve Board. State bank must submit to "inspection and regulation". Leave out the word regulation? If a bank fails to comply with the provisions of the law and the regulations of the Board, what is to happen to it? That is, what is to be the Character of the control of state bank members who fail to comply with the provisions of the law. Members of the Board shall devote their entire time to their duties. Insert "entire time". Requirement that Federal Reserve Board Shall publish weekly a statement of the condition of the Federal Reserve Bank as to certain items which will be specified in that clause, and if the Bank wants to publish a statement of all members bank they must furnish a statement weekly or otherwise. 'Powers of Board, page 20 of the bill.) Machinery for the printing and delivery of the notes to the Bank. Auditing of the notes should be done by the Government. Thisisnould be at the expense of the Government. Also provide machinery for redemption. Notes should go to the proper Government bureau for cancellation upon presentation for redemption 3. It should be mandatory upon the Government to issue notes upon the application of the Federal Reserve Board. Federal Reserve Board should have power to fix "the form and tenor of such notes". See Glass-Owen Bill. Power to reissue notes when they are presented for redemption. Clause in Act to repeal section of National Bank Act in regard to distinction between country, reserve and central reserve city banks. Ten per cent, tax provision on state bank notes must not apply. Power to remove any officer or aniployee except those appointed by the President. Section 202, page 83 N.C.B. book. Give Board power to "perform the duties and exercise the functions necessary or convenient to the carrying out of the provisions of this Act". Substitute for present paragraph giving "implied" powers. There should be provision for depositors in insular possessions under the provision where the Federal Reserve Bank, including its branches and sub-branches, shall be the fiscal agent and sole depository of the government. See pate 28 of the bill. Insert "temporarily for transmission" in the above paragraph where the Bank and its branches are made the depositories of the Government, "and the Secretary of the Treatary may designate other depositories temporarily, etc" 4. There should be provisions limiting the receipt the Government and member banks, and for domestic of deposits to transactions except as provided in the paragraph relating to open market operations. The Act must anecifSrz the following things:(1) the right of a depositing bank of get notes viding for to a discount, and (2) the right of a depositing bark to the Bank against discounts or its balance. the latter should contain, "so fax The clause pro- as not violating the reserve rrovisions of the _Act". Read provision regarding collection of items in connection with line 23, etc., page 22 of the bill. The Federal Reserve Board shall make reports to Congress and the reports shall be accompanied by the certificate of the Comptroller of the Currency as to audit, and there should be stated periods provided for this. No new bank need buy Government bonds. No existing bank need on Government bonds. Tuos shall be made specifically maturing in 20 years. Each year the Goverment shall bay on tender, at not exceeding par, up to $20,000,000. MOOK shall no longer have privilege of securing circulation. Repeal the classification of central reserve cities. Leave out Sec. 21. Leave out savings bank clause. Give power to call for reports as vie 11 as make examinations at 5. their discretion. Make Comptroller's reports available to the Federal Reserve Board. Provision in regard to enlarging powers of national banlos, which viould include or would not include power to establish domestic branches, power to establish foreign branches, paver to conduct business of trust company where permitted by laws of various states. a tit PI aritro et, -(erelq--ik4_I7CIt fvetoofil 7IP.6 DrAT'T Foation 4c, exari,-*,0 oht 4., .0er.tt, ,-.40,nion 3;31 of Vv.' It oE 1,6 noolE!tion No ora4 authorised lt7 4)400 .ntiocit 46:2-.4a raw -11 rc',0inj vifitortul zomerr thor than etioh d/)%Ora, 9flo!re, .:t1;4341, 91. juntioo. ftro vot4tet:/,tnti*.e ooerts 21.02,roos ot the rollers,111jeLl,orve itct of ovr,:a7 Mirdrol.:,..er 0.f the thkrroney man hereort4,,r ,fil report roflmirod byOections 5211 1.mti 40 of the rai,tityesta :itztk Mot, omit, vdttt OPC,, Ono in Vel orrice of tix, bru=1:1 of the Iredoora;. Reserve ;Were: Nodarea roterVr 'balk within thr, clivAxcot whioh tt rorteotiwi; bz.'4274Xu unaer ir off 1 Cif:s. exatli,',0140.21 htnrtt f11,41,'6.1c. 400,04,eurt .6ttal1., at leapt ortoe t ndix nn, a:ca.:It:nation of .the er.,eeta anti effely.v o.f every doTocittnr; bark. WI:kirk; Oetar oonpani to be rite*, az.7zootation unet .arvt rre.,-,:%tontl.7 tr t4t, Aideml oortridor topoolaa czt;irlizetion tx,00nntry, in order to rtalitfah r trazt fell end oorty,,1c,t9 1,-..npv,,Tedo of tile eons:lit/on of renortE filed in ono ft?..,41-42. 9ffice: 1." Th C 1)e vAriate in de.,110-f.,:to,, ant ca,)::::v v101-0017 tierof the Clin-0120y. ot Vro brh of the !Nodora4-770,0erve he offlete witLin tb.c diotrict i whiah v;act deponitinc bcric or treat eortparz. hop ite off iw In ;Int t)4J py ir or 4,,ericned Ube of t:Ie ext=inetione 3fierein provided ahall horp powor tookaa. tnother quorerr. of tA di:rootore; of to *Vito ender oftth of moll 'wee: 7.ao.o,r1, by thy the di:Arlots whore oliarsotcr nd eiromatanceeof ij aso(it or trut comptimr. shell be 0pr:tinted inotitation beir*: ozalined, wtio raw "41,e roviro0. oi;3ye AL thcir ,IA4,5ALEAnt10 NA. ubjeot to the nvproVel of the 7Werril aot;erve Comittoo or th rea:..ective branoho 1.,Aoh, lovinO4ms ke-o lootited. May rival for earvioe within fixed acilarlea, .S1,11131,' the mount rtae:r-:.of a`.44..1i t relortea Oenovitut. INA b threllera 1011trve tazierwe ISotird anti. wanuially tho ocialinationN bazvitt proitifled for Own be ativertiodb t1,4 7:zzent Ivo Committeo won the iikroltinc bka3*1S , ifC' 00-c tut tow and trutt aorkontoo of V-3e. resmottre dixtriate, thprtql..)rtifyn to Vto atweto or rer=oimee heldb7 thinrtitutiom won tle datnv o-ft; tearlitrlione. Via IVA tient:loot of 6m 414tplvitintr, bad:, btavim, wont 16t iOn ertrilit 0,0t4Ealis &t II c2i1tt( tnirk? Uri:mil of the 'Pedeirt4 reverve turanc.xt for orocial p.' rt.04tO11:1 ammineittone of de-,:oettinG barko and tAir,t eentianion within its dt..trtot., tZlie oast rald ezperves of men extriinetion to be borno zuah (ta16,10iting or trust OeviNtny.. ..An examination., *tether taw reettlerly provbiod othUnutloriso+4, oCatal, be 04 G,3riitto4e1 413 to infom the :.,ederal reterw. Volk guld itc tos7-.eotivo livenohos of ti: notues1 oondition or tv: 'hank or traet oirtrogantned, lime of oredlt WAN: artendod b:maoh bazire end trust emoentep, and ans oUlityr infbrgektoin eatkential voeh bank or trust oopt,erri, IntrnotIty of the oonditiorl riek7 be required by the TAaeutive7. amittee of the .1vetivv.-0 brzialaltio or by to 7edera1 rIfirertow Board. Irdlor In4114114or.,,q1:347u1 iliAtone of tho Iloand; Site roderal riosorve Board ehali, at leant onoo er.t0h yoar , order an ilination of 0441 brar/S1o to Ilederca r000rve tfteroof, ale! rrsipvit GM./an tuttititation ,V6f1 of oath otilb-branah be mato tAJr,,pliox.iste., one new thoroof 11144 in tal4 offine of the bran& era ow) txtm tit thc: offtoo of the T.Pederal '1)iitxrvry Pfaard --44411Arcton, eo eorgiUttft4 colit rgAio ea to dia.elatle and ttneh extrilivztton and revert ahall be ;r,A3 tiata eXi Altiln of tZlii itikirte and bilittee of .4154-*1 brtmohos, mil, the arzeunt v,nd t.z4arciotorof itIN r000rvo, of the trroa4,, etr.;raoter etna rtetority of :%.11 of lite tzvo nt rnddi.;-,00nnted pev.;-er. 17+3 aeporitinc bunk, barking f0,0 fra I at ion or trwt oerrmz..7, mcrly officer, dirietor or mrloyee tuATiof. eNt1.1 :Itke Yp oan or matt 3flt exAtutty FIFir.7 DRAMs to Lint extiatrar ov mat; berit boa offloor, tnrt eort/rwirq. 41.tro43trir ThiPOIV- :',OfirtOr, torlorio vtaalltale tax IlsrArtotor Okfill be deenlit tpillbr of VilnaW, dollars, arta irarther eats oqual. t mom aria 0.4741 b mt,tloll/led or sratalty. etvort. kiti extzdnor nooel-Ainc: a lostt or 110 terio/r4 uo itity frOti MY heat extParod b7, ;tin, ar.t.11 arie4 chAllb irpl.d not or thm rivo t. tho /nonoy tto loworlo guilty of a. mtvderrralor, 0.01,1.trz rzikz farther me% exjzal ittty Oxon. kArl /41.t.11 Ayrovor thareaft/o. ti nation4, Iva*: extb4rier.i:10 =minor shez:11 orcloe lextr ohal big Ei-fivr, any otbkr Soniclo for,prrempt ton %Idle boldine disoalfied fcn Y.cith, effiee ()-7--ShitiVet,tibt, be to- offt/x.r N4c dir-f,;,-ator of .f,-zr: htaik. 3TA.57 BAriC5 At; K,, alty, ,n4q4G-0-k.af sec. 10. That froa and after t or bankin6 sasociation or t t,opppeny incorporated by special 1ms of CR 71i,p6firtar any 3tate, or organized unde r the ceneral laws of aRy Btate, Ney maize erP A application to the 4/04140,ik-ztAirmsgrore Flosrd 1 11016%0C au16' Ato beeolls a depositor In t4eerilirrnriterervir-ftrft branoh,organised ,or to be ijr, oad(kok 6-6C,Ce district whete the applioant is lo- organised within the- A at -5ZraFeriiiiiriFirtuiriiaireirarffer.rdttorat-fte-it---151r 02 itevAn --sittrit-mmtt- 4;&rt- 41/t171,14zri' A * d. T.,,ach-liesir-sprieng--6040411Wren, deposi tor, to have 1/1114 -460,reeervOt-libd"WIWati-provis, flrovigt10110 -relotire,te , ...patAro.wpowital. tsotr cVz, efAvvo,,, CIA< stesiss-as folltinuAtantkiest_to JAI* enclimstios, istolts Irths _Vaasa, &mall .413so ts sad- -0, .:aattexyla,;;,uxixs.L. as. 4,-(44-Sosz.4-tauritorrirt dir,nr'"4 ':henever the Federal Reserve iloard shall permit ouch as_applyi* bank to bcowe a dermitor In the branch of the Federal---Reserve 'i3shit of the di- tit in which the applyInu Unk Is located* such p2viu bank shall becalm) -" entitled, osolorlhe rules and reLlulations in thio Aot provided, to enjoy a44,r-ttw,,tSskttva-Atirfntnoirittf' tatiattrrtrallts. a depoaitor .704 &NM evAN 7o sarrend,pr its rights or withdraw ada;dtted Its obli&ations as such until after thotiSspirattos of one year fr9f1 the gtving by it to the /gadawal-4.wsrvis,lanWof written notice of Its tention so to do, nor unless and until it ohal nave pain, or &i-crgo iz '1 all indobtednos ane ob- 1/cations of øvr3 kind sw*Ail It t3 the 4AP006,x14.orers7 ale the United LJtatess (Otate Banks aa gerabers) g-- artbettb1ivh pro's'', s 1 ens of this s ection,ir the gone ra 1 6ev - It shall 'be %be dutq,arytio Federal Reserve IS ,-- ,,-- by- 1 gtv, e 0 one° mut Iv I-th ..- ,libi =de by so.id state banks ernstent of its Oetaditot in astine uponapplioat ot oztd bazidpe rowoolstiono and tmst*.'$03a-4los to beeorze depositors in the Fedex:n.1 Reserve Bank. at any time it shallfiallpear to the ii:64eral-tellerv.e. Board that 0.Pkttervq\A-, kito ftet,4 tfeetyr,t, et,.,rocier ,..-Aia--barlic-rir-b7olcitw.-aasoniatior-ar.1xne4o-sr , ved-enter-tlie Irts failed or ceased to eon!) .1ewe-ef.- with the provisions of this section or the regulations of the 3oart1, it shall be within the power or .the said awd to require ,-Laliiian_or,.,txo,,g.Lo4wyaai.,e to surrender it such eeLb rights as a depositor .1s---44*.-41 againb-11.414a-inteasa,,e-dapclai,tor, and to pay et, ate diseharto any eon all of it oblications to .the 44-4erra--iiemerre, :lank efr,cr) ,er-loe-arr-ef-14r-tfremairee,-ew to the United 'States. Sec. . :27 That the Federal Reserve Bank shall from time to time purchase from the national banking associations,at prices not over par and accrued interest, the two per cent. bonds of the United Statesjhaving the circulation privilege,up to an mount not exceeding their par value, one-half of the amount of circulation of the national banking associations from which purchased, and thereupon shall assume responsibility for the redemption and retirement of the notes of each such national banking association, to the amount of the bonds so purchased from it, which assumption and responsibility shall constitute pwment to such national banking associations for such bonds. Immediately after purchasing any such bonds the Bank shall exchange them with the Treasury of the United States for an equal amount at par value of three per cent. notes of the United States, payable within one year of the dates of their issue, at various periods, at as determined by the Secretary of the Treasury, xXikadit the Bank of any of its branches. All such notes to be issued under regulations to be nre- scribed by the Secretary of the Treasury as to the form ard tenor thereof, are hereby authorized. Upon the maturity of any such notes, the Bank shall, for a period of twenty years from the organization of the Bank, at the option of the Secretary of the Treasury, accept and nay for to the United States new notes of like aggregate amounts and similar form and tenor. The Bank shall pay to the United States out of its earnings and before re- imbursement to the United States for the advance of seven million dollars, herein provided for, a tax of one and arixrka± one-half per cent. ner annum on the amount of its circulating notes equal at par to the amount of such Treasury 0 three per cent. notes from time to time outstanding. The Federal Reserve bank, ineluei 4eremreilmererms1-beole fT .-ceeen, shall be the fiscal gents andOeposi ()rye of the government, extieelsetttiletete 'ettu viti,Treesury eAtit- may designatl c ept that for temeleelofte.y purposes eeecretary at' of the other Government depouitories. es The Federal A eerve Bank shall be require( to maintain in behalf of the/National Banking sociations which have Notes es' es in circulation the five/ter cent redemption f d now held in the General Fun( of the United Stat,ee Treasury and any deficijmcy of the said fund shall be forthwith pater/by the Federal Reserve Bank to the Treasurer of the United ,e States upen demand being made by him, arf the said bank shall be forthwith reip6ursed by the rational Banking Asso iation in whose behalf such payment !ection is Made. , atilt afil-,-Ehe Federal Reserve Bank 4ft-efttilartzed-tmli-empalrerady-la-the-441-e. cx.Qt4o41-1!ffi:4ieltreral-Reserve-r4oarg, from time to time to purchase at a price not to exceed par and interest two per cent Bonds of the United States deposited to secure circulating rational Banking Association Notes, but not to exceed pal amount equal to one-half the total amount of such Bonds deposit/ with the Treasurer of the United Statee as security for the circulation of such rational Bank Notes. It shall pay for the purchase of these Bonds by assuming the responsibility forthe redemption and retirement of the Eational Bank Notes secured thereby. IlmnediaLely upon the purchase of such Bonds, th( Federal Reserve Bank shall exchange the bonds so purchased with the Treasurel of the United States who shall deliver and exchange therefor an equal amount at par of One Year Notes of the United States bearing three per cent interess which Notes may be renewed, at the option of the United States to be exercis( by the Secretary of the Treasury, each year at maturity for twenty years. Such Notes shall be made to mature at various periods during a calendar year, the dates of maturity thereof to be determined by the Secretary of the Treasury. During the existence of such eotes, or Renewal Notes, before payment or cancellation, the Federal Reserve Bank shall pay to the United states out of it earnings and before any dividends are paid upon its stock a tax of one and one-half (34) per cent per annum on an amount of circulating IOtes equal to the amount of such Treasury three per cent Notes outstanding. Pl2 DARK' (Reserves) 2. Of cold or lawful money other than nationol tank notes and 'Federal Reserve lemk notes. The losifhl anounkor the :Animus reserve of coon oueh bank, from and after five year from the Milne of said certificate of orcanisation, or from the date of the Lsounnoe the last each notice, nnall be twelve per oettuw of the arePate amount of the deposits of each such bank other than the savinge deposits hereinafter authorized, or whlea resorve at least one-half shall be deposited rith `;:he :Federal Reserve 3unk and the remainder hall be and continue in the vaults of Fueh bank and not elsev:here. The Pederal Reserve Bank i1l t all times :maintain a reserve not loss than fifty per oentun or its demand liabilities, inoludinG any note issue by it then outetandinc; ouch reserve shall consist of gold. or :Lawful MDUR:1, other than national bank notes and Veders1 Reserve 3ank rotas, and shall be kept in the vaults of the Poderal nesorve 3ark at its headquarters or at any of its brandhes in oue4 proportions as the 7oderal Reseive !Ward may from time to time establioh, and not elsewhere. The Federal Reoerve aoard nay If in the judement of a majority of its nember,pas exTremsed by resolution at h duly assealbled meetin6, an emorgenoy exists, susper0 all the fon/col:4; reserve requiremonts for a per- of tArty days and by like resolution for additioned periods not exceedin e fifteen days each. FWT DRAM. From and after the date of the Mire hereunder of the certificate of organisation of the Vederal Penerve Unit, the Pederel Reserve .Boerd shall have per to, and shnll bring about no rally se it may deem wise under commercial conditions from time to time existinn, trio channe of the minim= reserve renuiroannts of national benkinn assooiations (including etate banks which shall nationalise themselves hereunder) until the reserve of each such association or bank shell be maintained at not less than the lawful Trani:taxa hereinafter ordained. Such ehnnne shall be nocomplished in a period not shorter then thirty months nor longer than five years from the filinn of said certificate of ornaninntion. Frala time to time, at Interval of not lees than three months, the Pederal 'deserve lionrd shall issue to all each assoointions an4 brinks notioee settinn forth that f,49.6h of them mey, not later than one month from the issuance of each notice, cause the reductIon'of its reserve by an amount, on the oncasion of each such notice, (a) in the cane of all country banks, as intended by existing law, not treater than/1O of one per cent., nornless than 3A.X of one per cent. of the amount of the de- posits of such bank, as hereinafter defined, nt the data of the Orst of each notices; and, (b) in the case of all reserve city banks and central reserve city barke,as intended by oxisting lawnnot &roater than 1 7,40 per cent. nor lees than Gb/100 of one per cent, of the amaant of the depooits of sueh bank, as hereinafter defined, at the date of tho first of such notiess. Upon the issuance of such notice, each such bank shall forthwith make the necessary transfers and withdrnwale thereby indicated and shall also, to such extent no may be opeoified in such notice, transfer to the Pederal Enserve nank a .ortion of its lawful reserve, nuch reserve, whether in its con vaults or In the austody of the rederal Bessrve sank, shall consist only r77 Section vamkflpitmf ./:)..., 44-11"P""Wortr""W"I' be entitled to kliscoutt rixl reserve b#,inke totes, drafts, bills of oacharce or woeptancee, rith the In encase of the amoant of the =lapsing otpitEl et.1 sur:aus of each depozit- int batik.or true. compaty. tor Shell too azreeete of eodh rote, drafts, bins of *41414mne, and acceptances, bearina the cieratere or etdorsemtent of ar;y one yervon, orkaparv, firm or corporation, rediecoutted for :Ay one depositite bank or trwt oompa4y. 41 any time aisse4 ten per cent= of trio unimpaired oapital warplue of riuch dopotatIrc baLk or traot oompany; but thic re- striction eaall tot apply t;" the alaccent of bille of ez,_:aravo Nyable cuteiao of the continental ltlitetitate. ram it good raith ausinet existin4 vtlass. Seotion UO2 of the Revised Btatutes of the United :Antes la horeby *mended eo aS to read as folles-edolto aseceistion shall at tiny time be Indebted' Or in anyway to w x4ount exocedine the =cunt of its °apnea stock at suoh tie actus14 raid in an6 rerIalain uudimitiened by losses or otleri,ine, ese_tott on acoount of delando of She nature folimiug: Firlit. Notes of circulation. Beocud. ' S.cmyye depoSitod with or oollooted by tile association. Third. Mils of exciisite or drafts dravn acsiuot credits due the etation. or =my actually on deijmit to taco credit of the aesoolation, or due tneroto. Pcurth. Liabilities to the stockholders the association for 0N1-donde and reserve profits. 71M. Liabilities incurred under to provisions of section IZMcp., 0564KNOW fourteon of the Fedora]. notarve sixth. Liebalty alo endorser on notes or bills of sx(4puffe ariOng ltotk_frealk. 0-1/4 :1Fskibtf 0.ae/444,1 out of *ammo:vial transeetions, edefirod in user Ult.. jet to 3eseut4, Liability as enceqtor of_draftsAr bills of 9tette, Alb!Of--/*M. ... 6E' t "kip 16 /'''''lft-f Wf.etkAr kklikWIF at N.,,,1 t:w limitation* . '-:, n. c AN Any national bwelLaki at its discretion accept drafts or bills of eloharVI drarn upea it having not nor* than. six Aonthe nit to ran and frog*. inL out of commercial transactions as described in thls section, and a* defined by the Yederal Betervo Board, but ao bank ahall accept such drafts or bills of exchange to nu &wont at at' time exceoA.ft* in tho oGgro6ste ono-half of its aid-up an0 uniqoalrod oacitel and sar)lus. ..the Thethirahl tI* iieserve eint6C, (f.1/112. hay() z flret caul paramount Ilea upor, to(e. Cvory national bank, and, eatoort r onfliot with Cm- existinii; r,state, ltoe, upon the attsetts of every Stuto bank, banking at:80°1ot Ion true t oork.zow 11en for all do tote ond 1 lab 1 1 it lea of such ber*ze , banking associations and tmet oomrani6e due to t P Fe4eral r rerSITVO /vatic. 4 Section (blanIc). The 1,Wlerg.I feorv brarichoe and sab-branohes rthall r000ivo ot%er obligationo of the nal°. 131.snk raau branches. The l'Attfri ON e wctut. each of ito par all elatileks, arafte or soh of its bramhes or sub.67yrnv-rirs.t. *GYN.& C;017471ittoe of (molt brazoth iettir ohallAsubjeot to pet4(745/., cy,art ep A - .' t'...o oporovp1 of the Federal 7.:ecerve Board elcacm ra ad Coal. eri 44; aSna tt 0 > to tic 0 rit it.(42( Cl le ()the /WA t,v- rl1-f all cheolce, drafts and ot:(v)r *-4,434;t4t.lasai of banks /k trust (la:T=1os, other vlan those hereit4beforo., mentioned, reaeived in I 7a.rocreph. (c), V ection a)oordance *.c,th ,1---... ttiPtlft/)%0. flt. .) of ttie ,,ot., ;lob. -f charges 516107- not to be in Pxoess of the,t-ctucl cost of collection of such cheeks, 4trepw., ' drafts ard other 4-1-tre4kerttr. Econl Marl% (Functions of the Federal Reserve Bank) 2. comeany to discount notes, drafts or bills of exchange which are based upon the exportation or importation of goofs, -;ares, merchandise met or agricultural eroducts, as determined and defined by the Federal Reserve Board, and whio1 mature Watt within not exceeding six months from the date of discount; ( to purchase from manber banks and to sell with or with- out its endorsement, bills of exchange arising out of commercial transac- tions as determined and defined by the Federal Reserve -30ard and payable in foreign countries, but such bills of exchaege must mature in not exceeding ninety days from the date of the purchase and must bear the signa- ture, endorsement or acceptance of two or more responsible parties, of which at least one shall be that of a depositing bank or trust company ) 1 under rules and regulations prescribed by the Federal eserve 3oard, to purchase and sell in the open market, either from Or to depositing banks and trust companies, or through its foreign agencies from or to foreign banks, firms, corporations or individuals/, notes,drafts and bills of exchange of the kinds and maturities by this Act made eligible for discount and mxpakim cable transfers. SECOND DRAFT SECTICK ?Unctions of the Federal Reserve 3ank. The Federal Reserve Ilatkiahall have power (a) to invest in the bonds and other obligations of the United States and-tIrTriThitaltr-poseese20,A1% (b) to deal In gold coin and billion; to ma ks loans thereon, and to contract for loans of gold coin and bullion, giving security taerefOr when NItta necessary, includatothe bonds and other obligations of the United States vtafitee4k.44e.eimealarAgR441Aime owned by the Bank; (c) to receiv u?,46.4e from any depositing bank or trust cOmpany deposits of current funds in lawful money, national bank notes, notes of the Federal Reserve Bank, xsact or Cheeks or drafts upon solvent banks payable upon presentation; (d) with the acceptance or endorsement of any depositing bank or trust company, to discount notes, drafts, and bills of exohange arising out of commercial transactions, such notes,drafts and bills to be of a character to be determined and defined by the Federal Reserve Board. Such definition shall include notes, /N drafts and bills of exchange issued or drawn or the proceeds of which shall be used for agricultural, industrial or commercial purposes, or which shall represent a bona fide sale of agricultural products or other goods, wares or merchandise, or which phall have been issued for the purchase or sale of the bonds or other obligations of the United States ce-Tef6.44meetenettimm.-10T- '~e1Teees Such definition shall not, however, include notes, drafts or bills of exchange issued or drawn for the purpose of carrying agricultural products or other goods, wares or merchandise, or for carrying or trading in stocks, bonds or investment securities, other than the bonds and obligations of the United States-ar&-lef-tt,-iewsdiCigggraljelom. Notes, drafts and bills of exchange admitted to rediscount, as so defined under this paragraph, must mature within not exceeding ninety days from the date of discount. (g)nth the acceptance or endorsement of any depositing bank or trust c!!)4411 A Tars': Dr-TT. PPIVTMG, Sec. DErluintTilm witli OF TPX CIPCILATING rIms or TRN BAIT. In order to furnidh suitable notes for the Bank, the Comp- troller of the Currency shall, under the direction of the Secretary of the Treasury, cause plates and dies to be engraved, in the best manner to guard against counterfeiting and fraudulent alterations, and shall have printed therefrom, and numbered, such quantity of notes, in blank, of the denomi rations of five dollars, ton dollars, twenty dollars, fifty dollars, one hundred dollars, five hundred dollars, one teusand dollars, ard ton thousand dollars, as may be required to supply the absociations entitled to receive the owe. Such notes shall upon their face be certified by the written or engraved signatures of the Treasurer imprint of the seal of the Treasury. ;Ind register and by the They shall also express upon their face the promise of the Bank to pay on demnd, attested by the signature of the Governor or Deputy Governor and Cashier. The Comptroller of the Currency, acting under the direction of the Secretary of the Treasury, shall as soon as practicable cause notes to be prepared and printed,upon the distinctive or special paper which hns heretofore or nay hereafter lawfully adopted by him for printing United states notes, to an amount equal to the requirements of the Bank. be TZD mArT deo. The Bank may lovue Its circulating notes, which ehnll be receivable nt per in all pnrts of the Jnited atatee in pAyrent of All taxes and =tees and all other duos to the United Staten except duties an imports and also for all salaries and other dotts and dornrds cring the United States to individuals, corporations and associations rithin the flited. Dtates except Interest on the pane det.. Such not shall be a first lien on 111 of the nesets of tho Dank and payablo in ran fros) such nscots before any other obligations of tho nank nnd shnll be rot amable on demand at any office of the Bank in lawful money of the United. States. AD long as Any such notes are outstanding the Tunk shall seg- regmte in its own vaults and carry in a elTolel reserve account on its books lawful money of the Onited states to the extent of the pr vAlue of the notes from time to time so outstanding or, at its option, shall ao segregate such lawful mons:r to the extent of DOI of such pmr value, und oollatorle, convicting of promissory notes end bills Accepted for reAsoeunt under the provieions of Sec. of this Act, or one year exotequor notes of the United I'matoc hcreitafter provided for, OT both --- such collet:orals nnd ono ,ear exchequer notes equal at par to 100,7, of ouch par value of the notes from time to time so outstanding. Such reservo shall be wed for the rodonmtion of suoh notes as And. rhen presented for payment and my be exch ,ged from time to time for other lawful money or collatorels or ore ;iota' exchoquer notes within tho limitations aforesaid and of aqua/ per value. ( The Board of the .'v suspend ell reserve, requiromets for ZO days Ind. ma7 continuo ouch sus- 4 ft\ pension for periods of 16 dnye. r- Ilk may, in au smorgen07, er* ,O said Committee at a period within six months from the date of allotment, provided that the date upon which such subscriptions shall become payable may be extended by the Board of Directors of the Federal Reserve Bank, with the approval of the President of the United States. tv a STOCK ISSUE Section That the Capital Stock of the Federal Reserve Bank shall be 00 $1,000,000. divided into shares of $100. each; A such stock shall be free of all Federal, State, Municipal or other taxes, except that the holders thereof shall be subject toItieFederal Income Tax with respect to the income derived therefrom. The holders of such stock shall be entitled to dividends thereon at the rate of five per centum per annum and no more, which dividends shall be cumulative. 4;19144A Such stock shall be offered fOr subscription -tee--bite--pTttrleke at A par by item the-eTs.ni-ratran Committee under regulations to be prescribed by In case the amount of Capital Stock is over-subscribed, the Com- mittee shall allot the shares of stock to the smallest subscriber tr. In case the full amount of the Capital Stock is not subscribed for, the Committee shall allot the portion unsubscribed for to the several National Banks in existence at the date of their allotment in proportion to their respective amounts of capital, and such allotment shall fix a liability upon each of the said National Banks to subscribe for and take the number of shares so allotted, such liability to accrue on the date of allotment by the Committee. Any subscriber N.Q.4.140.tiss to pay for the shares allotted to him at the time required by the Committee shall forfeit his right thereto Ateefti...ficte allotted to by the Com,. and such shares may thereupon be otherAp...exzewile mittee. Every subscriber shall accompany his subscription with a cer- tified check for five per cent of the total the subscription amount' g, such five per cent of to be forfeited upon failure of the subscriber to pay his subscription for the amount allotted to him in full, as above provided. The trg7Trie,t1 Committee shall callfor such subscriptions and make such allotment within six months of the date of passage of this Act, and the balance of the subscription shall be paid by each subscriber upon the http://fraser.stlouisfed.org/ amount to him by the Committee, upon a date to be fixed by the Federal Reserve Bank of St.allotted Louis ',old stock in any bank or banking institution and, before entering upon his du ef,4 as a member of such Committee, he shall certify under oath that he has compliA vcith this requirement. Vacancies shall be filled by the Federal Aeserve Board and any peroon appointed to fill such vacancy shall hold office for the unexpired term of the member to whose place he is appointed. .k,embnrs of such _&xecutive Committees may be removed for cause by the ii'ederal Reserve Board after .:ue hearing. ,ach such laxecutive Committee shall annually make a report of the operations of the Branch Reserve :Jank to the Yederal Reserve ,3oard to be by them transmitted with their annual report to the Speaker of the house of lepresentativeo. Such report of the , xecutive Committee shall contain reports from each "id Branch Bank established in the district. e -)ers of the Board shall devote all their time to their official duties, and shall automatically retire at the age of seventy (70) years. The Governor, or in his absence the Deputy Governor, shall act as Chairman of the The salary of the Governor shall be $17,500. per annum, and of the Board. The Board shall make a other members of the Board, ;45,000. per annum. report of the operations of the Federal Reserve Bank to the Speaker of the Houee of'Representatives who shall cuse the same to be printed for the information of Congress. The Federal Reserve Board shall cause the Country BRAHCE RE2ERVE BALKS. to be divided into teelve (12) districts for the purpose of establishing eithin each of such districts a Branch Reserve Bank to be known as , provided that the number of such Branch Banks and of such distriets may be reduced by the saidBoard when, in its judgment, the interests of trade and commerce so require; and in the like manner the number of such Branch Banks and districts may be increased by the said Board after two years from the time of the organization of the original number of Branch Banks and districts. The government of such Branch Banks shall be vested 1n: Board of five (5) Directors to be appointed for terms of years by the Federal Reserve Board which shall also fix the compensation to be paid to such eovernors. Such a Board of Governors of the 3ranch Reserve :Banks shall be celled the xecutive Committee and shall be presided over by the Chairman, or, in his absence, the Vice-Chairman, both oe whom shall be appointed by the Federal Reserve :Board. The ..ixecutive Committee of such 1 ' Branch Reserve eanks shall have authority to establish and diecontinue eald Ana Branch Banks within their respective districts, subject to the approval of the Federal Reserve lioard. The Chairman and Vice-Chairman, subject to the supervision oi the executive Committee, shall be the active executive officere of the eranch Reeerve Banks. ho member of such Executive Committee shall be an officer or a director of any bank or banking institution, or The government of the Federal Reserve Bank shall be vested Section 4. in a Board of seven (7) Directors to be known as the Federal Reserve Board (hereinafter called the Board) whoee powers shell be the same as those conferred upon Boards of Directors of National banking associations uneer existing law not inconsistent with the provisions of this Act. Such Directors shall be appointed by the President of the United States with the advice and coneent of the Senate, to be selected from men qualified by experience and training for the proper discharge of the duties imposed upon them by this Act, and at least three (3) of the members shall be persons of tested bank2uch/4 selection shall be made from residents of difirw, experience. ferent sections ofthe Country, due weight being given to the various commercial interests of such sections. The term of office of each member o; th9 Board shall be fourteen (14) years, except that the terms of office of/\:theT-persons first appointed to the Board by the President shall expire at the end of two (2), four (4), six (6), eight (8), ten (10), twelve (12) and fourteen-(14) years, respectively, The President shall have power to remove any member of the Board or cause after due hearing, such removal and his reasons therefor to be President shall designate from among the members of the Board one person as Governor and one as Deputy Governor, communicated by him to the Senate. The who shall, subject to the supervision of the Board, be the active executive officers of the Federal Reserve Bank. No member of the -ioard shall be an officer or director of any bank or banking institution, or hold stock in any hank or banking institution, End before enterilv on his duties as a member of the Board he shall certify under oath that he has complied with this requirement. Vacancies shall be filled by the Presiett with the advice and consent of the Senate and persons appointed to fill such vacancies shall hold office for the unexpired term of the member to whose place he is appointed. ("Division of F,arniare) 2. by the 3ecretary of the Treasury, not less than three months after the receipt thereof, to the redemption of such outstanding bonds by advertisement published in each of the Federal reserve districts at least once a week in the four succesrive weeks immediately preceding, the date fixed for such redemption, which advertisement shall call for the tender of bonds by the owners thereof at prices to be fixed tivirlm4- by them in such tenders, and the cacretary of the Treasury shall thereupon purchase from the bone so tendered those offered at the lowest prices up tp the amount of such funds in his hands at sach redemption date. DIVISION OF tARFINGS. Sec. That, after the payment of all necessary expenses and taxes of the Federal reserve bank, its net earnings shall be applied to 7. the payment of a dividend of five per centum per annum, which dividend shall be cumelatIve. thy overplus of such net earnings in excess of divi- dend reeuiremsnts in any year shall be devoted to the upbuilding of a sur lus of twenty ear cent= upon the paid-in capital. After such surplus shall have attained to an amount equal to such twenty per centam, subse- quent net earnings shall be distributed, subject to the peyment of said cumulative five per centum dividend under the conditions herein prescribed, to the United States and the remaining one-half thereof to the accumulation of a farther surplus until the total surplus of the Federal Reserve Beek shall'attain to an amount equal to fifty eer cent um upon the paid-in cap- ital. en said surplun shall have attained to such fifty per centum, all net earnings beyond the anaant necessary to pay said five per cent. dividend shall be paid to the United States. The payment of said dividends upon the stock may at any time or from time to time be deferred for such period as may be necessary to restore any impairment of surplus below the amount thereof which the same shall have theretofore attained, to the end that each surplus shall never be diminished and that after vaoh surplus shall have eeuelled fifty per cent= upon the naid-in capital the same shall thereafter be continuously maintained at that auount. The earnings distributed to tee United States under the foregoing provisions shall be applied to the retirement of its outstanding bonded debtedness. All funds so received by the United States shall be applied 0 -b- besides their necessary traveling an annual salary of J and other expenses connected with the performance of their duties and the governor of the Bank shall receive an additional salary and the deputy governor shall receive an additional of The compensation of the members of the salary of executive committees of the several branches shall be fixed and determined by the Doard of the Bank and need not be the same for each branch. The compensation of the president, vice-president and other officers of each branch shall be fixed by the executive committee thereof. Sec. 9. The net earnings of the bank after deducting taxes and expenses, including proper reserves against the acquisition of permanent property, shall be devoted, first, to paying a 6% cumulative dividend upon the stock, and, secind, to an accumulation of a surplus equal to 20% of the capital, and one-half of such earnings above such dividends and surplus shall be paid to the Government and the other one-half devoted to the accumulation of a further surplus until the total surplus reaches 50 of the capital, and thereafter all earnings beyond the dividend requirements shall be paid to the Government. See. 10. The Bank shall conduct business solely with the Government and the qualified member banks, which shall include all national banks and such state banks and trust companies as may from time to time be admitted by the Board of the Bank under such rules and regulations as the Board may prescribe for the government of all member banks. (4) -4The form of stock certificate adopted by the committee and the methods of the transfer thereof and such other facts in connection with the organization as the committee may determine. such certificate shall be executed under the name of the committee by the President and 3ecretary thereof and attested with its seal and shall be forthwith transmitted to the Comptroller of the Currency, who shall fi/e, record and carefully preserve the same in his office. Sec. G. The 7;oard of the Bank shall appoint for each branch an executive committee of seven members, the members of each of which executive committees shall be selected as to qualifications, territorial distribution and banking and financial experience with the some regard as hereinbefore provided in respect of the selection of the members of the Board of the Bank. The terms of office of the members of the executive committees shall be seven years, but in the case of the first members of each executive committee appointed, they shall be classified no that one member of each executive committee shall retire each year. The Board of the Bank shall designate one member of each executive committee as a ehairwan and one as a vice-chairman and the chairman or, in his absence, the vice-chairman, shall act as chairman of that executive committee. sec. 7. All actions of the executive committees shall be subject to the approval of the Board of the Bank. Each executive committee shall select a president and other executive officers to conduct the business of the branch, the men filling such offices to have no offcja. or financial relation with any other financial institution. 3ee. 8. members of the Board of the Dank shall each receive -3- Governor, shall act ae chairman or the board and be the chief executive officer of the Bank. Directors shall retire at the age of seventy and a vacancy thereby created. Sec. 4. such board of directors and their successors and the stockholders as they may from time to time exist are hereby created a body corporate to be known as "The Federal reserve Bank of the United ltateen, to have a term of existence of fifty years from the date of the filing of the organization certificate, to have the power to sue and be sued, to acquire, own and hold such real and personal property aemny be necessary for its business, to buy, sell and deal in gold and silver bullion, promissory notes and other evidences of indebtedneus and warehouse certificates and bills of lading, and to discount bills, to have a capital stock of One hundred million dollars, divided into one million shares with a par value of one hundred dollars each,which stock Shall have no voting power, to have its principal place of business in the City of 7ashington, D. C., r1,1d to have twelve branches located in cities selected by the organization committee and sue branches wherever designated by its board of directors and to have such further power, privileges and functions as are hereinafter specified in this act. Sec. 5. After the entire capital of the Bank shall have been subscribed for, the organization committee shall make an organization certificate specifying The names of the several subscribers to the stock; The territorial extent of the several commercial diei;ricte as determined by the committee and the designated cities in each district as the seats of the several branches; A description of the seal of the Bank; 1i. -2- process of organization thereof, be the seal of the Committee, and adopt seals for the several branches, which shall correspond OFdtua,Rti,*:..tes to the seal of the Bank with the name of the branch added; aarti ars1 04\ .1.1114 .1102e' 'Mat- ,s3,0d.grlat. of t1T nvite public subscriptions to the capital stock of the Bank under such terms as the Committee may determine and re- ceive from all national banks in the United States their subscriptions for their pro rata proportions to any of such stock not taken by the public, all of such national banks being hereby required, under the direction of said Committee, to subscribe for such pro rata .proportions. INOORPOTATION AND ORGANIZATION OF TEE FEDERAL RESERVE BANK OF THE UNITED STATES. Sec. 3. The president shall appoint, with the advice and consent of the Senate, seven directors of the Bank, which directors shall be selected from among men resident in different sections of the country so as to give due weight to the commercial districts and from among men who are qualified by experience and training for the proper discharge of the duties imposed upon them. At least times three members of the board shall at allAte men who have had wide financial and banking experience. The terms of office of such directors shall be fourteen years, but the board. first appointed shall be classified so that the term of one director shall expire every two years. The president also, with the advice and consent of the Senate, shall designate one director as Governor and another as Deputy Governor, and shall fill all vacancies on said board for the unexpired terms. The Governor, or, in his absence, the neputy tgk ci.. a to, ,17;tx., Perrrei- AN ACT .rm,(vnortmisti.4e.., ,.tz44....4Are incorporat42A tif t - Second Draft. gEDERAL RESERVF. BANK OF THE UNITED STATES .a.g4--loawriaalleeet-he.reoci4, .Zir. establish 4;114 ii&114 tc.t* ktian elastic currency, districtb too;f4stemirest A itre AO afford AO means ge yeti more effective supervision of banking 4,(4--4440,--ett--eis and for other purposes. Be it enacted by the senate and House of Representatives of the United States of America in Congress assembled: Xec, The short title of this Mt shall be The :Federal rediscounting commercial paper 401- establish iitimme. reserve Act." ORGANI Z AT l0! COM' T TEE . sec. 2. aids soon as practicable after the passage of this Act the president shall appoint a committee of five, to_be t.twAttif t er vit nated lor 0'7he Yederal Reserve Lank organization CommitteeAV 4\ oi _21 791 organize3he Federal eserve Lank ktAcl of the United. States i.hereinafter calledlheABankl and Wow branches 92'16r416.E.A1 thereof,andAshall receive% ip full compensation for k services, committee shall liwite--1Foemie*-4e the sum of 0 100 . ' ,z,.., ot.,,n-vrt inn. 4110m, 4000. shall, -4-444444444.4' ,1..y-it.'gev-.4-tre-a)r.--- -paiotment., -ty-triett A) 7041ect a Chairman and Oecretary and such other officers as it may 414Q444 from its own members and ii.o.. appoint assistant A officers, clerks and other necessary employes, (. and 14.4. incur such ex, penses in carrying out the provisions of this Act as it shall deem necessary, which expenses shall be payable by the Treasurer of the United States upon voucherSapproved by the Committee, and the 311M of ;250.000 or so much thereof as may be necessary is hereby appro- priated out of any moneys in the Treasury not otherwise appropriated for the payment of such expenses; Gal:A A 44 adopt a seal for thejank, which shall, during the 3 COMPLIMENTS OF DOW, JONES & CO. 63n1s.OME-SS H. R. 7837. PU BLISHERS THE WALL STREET JOURNAL FINANCIAL NEWS BULLETINS ELECTRIC PAGE NEWS TICKER IN THE SENATE OF THE -UNITED STATES. Read twice and referred to the Committee on Banking and Currency. SEPTEMBER 18, 1913. AN ACT To provide for the establishment of Federal reserve banks, to furnish an elastic currency, to afford means of rediscounting commercial paper, to establish a more effective supervision of banking in the United States, and for other purposes, 1 Be it enacted by the Senate and House of Representa- 2 tives of the United States of America in Congress assembled, 3 That the short title of this Act shall be the "Federal Reserve 4 Act." 5 FEDERAL RESERVE DISTRICTS. 6 SEC. 2. That within ninety days after the passage of 7 this Act, or as soon thereafter as practicable, the Sec- 8 retary of the Treasury, the Secretary of Agriculture, and 9 the Comptroller of the Currency, acting as "The Reserve goU .Jl4 10 Bank Organization Committee," shall designate from among 11 the reserve and central reserve cities now authorized by 12 law a number of such cities to be known as Federal 13 reserve cities, and shall divide the continental -United 14 States into districts, each district to contain one of such 15 Federal reserve cities : Provided, That the districts shall 16 be apportioned with due regard to the convenience and 5"2-C-Li 44) 6". rt A tJet441' 2 (Too (1uN fl,) ft' A4v1,4 '4 si,,,zastrow-ccov,:, 1 customary course of business of the community and shall not 2 necessarily coincide with the area of such State or States as 3 may be wholly or in part included in any given district. 4 districts thus created may be readjuste4and new districts 5 may) from time to time(3e createdy the Federal Reserve 6 Board hereinafter established(acting upon a joint application 7 made by not less than ten member banks desiring to be organ- 8 ized into a new district) The districts thus `constituted shall 9 10 The be known as Federal reserve districts and shall be designated by number according to the pleasure of the organization committee, and no Federal reserve district shall be abolished, NA .m1;1'4611 4,vecopic 12 4 go rc"t' nor the location of a Federal reserve bank changed, except Las s 13 upon the application of /1.1.r.e.0-4*444s-of the member banks of 10;,, , ifs) 14 15 The organization committee shall, in accordance with 16 regulations to be established by itself, proceed to organize in 17 each of the reserve cities designated as hereinbefore specified 18 a Federal reserve bank. Each such Federal reserve bank 19 shall include in its title the name of the city in which it is 20 situated, as "Federal Reserve Bank of Chicago," and so 21 forth. aiwir: 22 po.c.ta to gaLgir (iiidkX442. such district. The total numbet of reserve cities designg by the flu 4444* /thee WA organization committee shall be not gess)than(twelve) and 23 the organization committee shall be authorized to employ 24 counsel and expert aid, to take testimony, to send for persons 25 and papers, to administer oaths, and to make such investiga- 26 tions as may be deemed necessary by the said committee for the 3 ak.-1 etwireteZ. purpose of determining the reserve cities to be designated ad Gro.iD 2 and organiziAg-t14-r4s4r-v-e-distrietis hereinbefore provided. Every national bank located within a given district 3 4 shall be 4equirect to subscribe to the capital stock of the ttagerrp 5 Federal reserve bank of that district a sum equal to twenty 6 per 7 bank fully paid in and unimpaired, one-fourth of such 8 subscription centum of the capital to be paid in stock of such national cash and one-fourth within 9 ly days after said subscription is made. The remain- 10 der of the subscriptionA(or any part thereof)shall become 11 a liability of the member bank, subject to call and pay- ,Pititgo 12 ment thereof whenever necessary to meet the obligations 13 of the Federal reserve bank under such terms and in ac- 14 cordance with such regulations as the board of directors 15 of said Federal reserve bank may prescribe : Provided, 16 That no Federal reserve bank shall commence business with 17 18 a paid-up and unimpaired capital less in amount than $5,000,- to 6 6 Ott t) S 7tOrerft 000. The organization committee shall have power to appoint 1. re (./P. 19 such assistants and incur such expenses in carrying out the pro- jriAkIlr 20 visions of this Act as it shall deem necessary, and such ex- 21 penses shall be payable by the Treasurer of the -United States 22 upon voucher approved by the Secretary of the Treasury, and 23 the sum of $100,000,_ or so much thereof as may be necessary, tuesetiltext,A 24 is hereby appropriated, out of any moneys in the Treasury not 25 otherwise appropriated, for the payment of such expenses. dtaCMC:6fAig Wig, Few- 'let cite, a fa Mufwv4.1\ pen-Let, 1.14 .5si5 >Is al, 4 STOCK ISSUES. 1 SEC. 3. That the capital stock of each Federal reserve 2 ftelA4 3 bank shall be divided into shares of $100 each. 4 standing capital stock shall be increased from time to time as 5 member banks increase their capital stock or as additional 6 banks become members, and shall be decreased as member 7 banks reduce their capital stock or cease to be members. 8 Each Federal reserve bank may establish branch offices under 9 regulations of the Federal Reserve Board at points within 10 the Federal reserve district in which it is located : Provided, The out- That the total number of such branches shall not exceed one ,;(v;)'I o gete"%41 11 _Pr:rovt..0-11 if, 12 13 for each $500,000 of the capital stock of said Federal reserve bank. owl-. 14 FEDERAL RESERVE BANKS. 1 5fg 15 SEC. 4. The national banks in each Federal reserve 16 district uniting to form the Federal reserve bank therein, 17 hereinbefore provided for, shall under their seals, make an 18 organization certificate, which shall specifically state the name 19 of such Federal reserve bank so organized, the territorial ex- 20 tent of the district over which the operations of said Federal 21 reserve bank are to be carried on, the city and State in which 22 said bank is to be located, the amount of capital stock and the 23 number of shares into which the same is divided, the names 24 and places of doing business of each of the makers of said cer- 25 tificate and the number of share(held)by each of them, and the 9 r5ohoot4441 5 oJ 1 fact that the certificate is made to enable such banks to avail 2 themselves of the advantages of this Act. The said organiza- 3 tion certificate shall be acknowledged before a judge of some 4 court of record or notary public; and shall be, together with 5 the acknowledgment thereof, authenticated by the seal of 6 such court, or notary, transmitted to the Comptroller of the 7 Currency,who shall file, record, and carefully preserve the same 8 in his office. 9 Comptroller of the Currency as aforesaid, the said Federal 10 reserve bank so formed shall become a body corporate, and as ta A 11 such, and in the name designated in such organization certifi- 4- li/t 12 cate, shall have power to perform all those acts and to enjoy 13 all those privileges and to exercise all those powers described ep.742/,..L0 14 in section fifty-one hundred and thirty-six, Revised Statutes, Upon the filing of such certificate with the iats ketk11;-. 58_8 1?,2 of6 (I, PA, it),, 16 save in so far as the same shall be limited by the provisions f4 '1u441 ,Ict 2' .:17.1v, (4 flotee of this Act. The Federal reserve bank so incorporated shall 17 have succession for a period of twenty years from its organiza- 18 tion, unless sooner dissolved by Act of Congress. 15 wrizok.11,0":1 floydmAl)' Every Federal reserve bank shall be conducted under "11- 19 #(0 rtx 21 the oversight and control of a board of directors, whose guikef-TI, powers shall be the same as those conferred upon the out" /6tin 6,Ltplr 22 boards of directors of national banking associations under Of4.0" 23 existing law, not inconsistent with the provisions of this etwoviee-l' 24 Act. 25 as as hereinafter specified and shall consist of nine members 00.7-fr,c,ttat 20 tivelv't ftniltd-e" Such board of directors shall be constituted and elected Air,01 iht9. Kea" IN04,41& frj.)14.4.4) ecktat. .e // 4m( etin-p° S:soe,eoa. Ow; .1%4-6 ((16(4. 6reutefi 6eutio:4f 402,,,, 4,,,' Pfau x,,,t,t, 4:3 lor- 691.64,9 5 1 fact that the certificate is made to enable such banks to avail 2 themselves of the advantages of this Act. The said organiza- 3 tion certificate shall be acknowledged before a judge of some 4 court of record or notary public ; and shall be, together with 5 the acknowledgment thereof, authenticated by the seal of 6 such court, or notary, transmitted to the Comptroller of the 7 Currency,who shall file, record, and carefully preserve the same 8 in his office. 9 Comptroller of the Currency as aforesaid, the said Federal 10 reserve bank so formed shall become a body corporate, and as 11 such, and in the name designated in such organization certifi- 12 cate, shall have power to perform all those acts and to enjoy 13 all those privileges and to exercise all those powers described eifivatt.ca 14 in section fifty-one hundred and thirty-six, Revised Statutes, 15 save in so far as the same shall be limited by the provisions 16 of this Act. 17 have succession for a period of twenty years from its organiza- 18 tion, unless sooner dissolved by Act of Congress. 21 etirtit -; Efftil.",) ptcJ t:i47.1;49f _qAmious-,17 The Federal reserve bank so incorporated shall Ore'Vrc. 0)9""4 ahl , Every Federal reserve bank shall be conducted under 'Ma- 19 20 Upon the filing of such certificate with the ago; ,(0171,1 the oversight and control of a board of directors, whose Ptiftewe, powers shall be the same as those conferred upon the (au" "run ttu.024\ trowitg 23 boards of directors of national banking associations under tr it't k14,0 Pitf4" existing law, not inconsistent with the provisions of this eltrAYWF 24 Act. 25 as hereinafter specifi3d and shall consist of nine members, 00.4'Itatatklt juagatteit Int 0411(4. &Lab, iahtet,o eopttiCe 22 Such board of directors shall be constituted and elected km goww) kvjal",i kfi,g40,4( z, 4421444- Itt _.00IOIe Am; 1WS Lf a (. CC r &mike-A6fewtft 6cutitc4f aL1407-44:3 luit--ernixt;9 ti4.4.1-ArrTK 4t,' plata. 6 1 holding office for three years, and divided into three classes, 2 designated as classes A, B, and C. 3 Class A shall consist of three members, who shall be 4 chosen by and be representative of the stock-holding banks. 5 Class B shall consist of three members, who shall be repre- 6 sentative of the general public interests of the reserve district. 7 Class C shall consist of three members, who shall be designated by the Federal Reserve Board. Directors of class A shall be chosen in the following 9 10 manner : 11 It shall be the duty of the chairman of the board of 1 12 directors of the Federal reserve bank of the district in which 1 13 each such bank is situated to classify the member banks of the 1 ef0C CILTRANut ettfifill erCAVA ifitte fi3 :1" Saito nel 61\ 0,1 'vet g"-- 14 j1 said district into three general groups or divisions. A Each 15 such group shall contain as nearly as may be one-third of MIS 16 C1(474D,10' eta( I Gt; OtIe the aggregate number of said member banks of the said dis- woo 0.06.,,H ! 17 trict and shall consist, as nearly as may be, of banks of simi- 44, lar capitalization. cow, 0.1.1 "Aktt:v .-t'irC° 18 The said groups shall be designated by number at the pleasure of the chairman of the board of di- 10 rectors of the Federal reserve bank. "4-1- 1414411". 7"-efrn'' 20 21 At a regularly called directors' meeting of each member 21 22 bank in the Federal reserve district aforesaid, the board of 22 23 directors of such member bank shall elect by ballot one of its 23 24 own members as a district reserve elector and shall certify his 24 25 name to the chairman of the board of directors of the Federal 25 4019 too 1-4 (C't VteA'le°'.20 er.46.0,(1 Settc,t 7 1 reserve bank of the district. 2 establish lists of the district reserve electors, class A, 3 thus named by banks in each of the aforesaid three groups and 4 shall transmit one list to each such elector in each 5 group. 6 of the said list, select and certify to the said chairman from 7 among the names on the list pertaining to his group, trans- 8 mitted to him by the chairman, one name, not his own, as rep- 9 resenting his choice for Federal reserve director, class A. The said chairman shall Every elector shall, within fifteen days of the receipt The 10 name receiving the greatest number of votes, not less than a 11 majority, shall be designated by said chairman as Federal re- 12 serve director for the group to which he belongs. 13 candidate shall receive a majority of all votes cast in any 14 group, the chairman aforesaid shall establish an eligible list, 15 consisting of the three names receiving the greatest number 16 of votes on the first ballot, and shall transmit said list to the 17 electors in each of the groups of banks established by him. 18 Each elector shall at once select and certify to the said chair- 19 man from among the three persons submitted to him his choice 20 for Federal reserve director, class A, and the name receiving 21 the greatest number of such votes shall be declared by the 22 chairman as Federal eserve director, class A 'wu6 In case no n case of a a5$42.4 23 tie votzthe balloting shall continue in the manner hereinbe- 24 fore prescribed until one candidate receives more votes than 25 either of the others. 2ustet,44., t 441f*, ikx54Y°1 8 Directors of class B shall be chosen by the electors 2 of the respective groups at the same time and in the same 3 manner prescribed for directors of class A, except that they 4 must be selected from a list of names furnished, one by each 5 member bank, and such names shall in no case be those of offi- 6 cers or directors of any bank or banking association. 7 shall not accept office as such during the term of their service 8 as directors of the Federal reserve bank. 9 representative of the commercial, agricultural, or industrial They They shall be fairly The Federal Reserve 10 interests of their respective districts. 11 Board shall have power at its discretion to remove ally di- 12 rector of class B in any Federal reserve bank, if it should ap- 13 pear at any time that such director does not fairly represent 14 the commercial, agricultural, or industrial interests of his 15 district? _tr-4,9E4Pzt-5--ds4a-lt' -tztt-r 16 Three directors belonging to class C shall be chosen 17 directly by the Federal Reserve Board, and shall be residents 18 of the district for which they are selected, one of whom shall be 19 designated by said board as chairman of the board of directors 20 of the Federal reserve bank of the district to which he is 21 appointed and shall be designated as" Federal reserve agent." 22 He shall be a person of tested banking experience and in 23 addition to his duties as chairman of the board of directors of 24 the Federal reserve bank of the district to which he is 25 appointed, he shall be required to maintain under regulations 26 to be established by the Federal Reserve Board a local office 9 1 of said board, which shall be situated on the premises 2 of the Federal reserve bank of the district. 3 regular 'reports to the Federal Reserve Board, and shall 4 He shall make f, 4 act as its official representative for the performance of the :functions conferred upon it by this Act. He shall receive an 6 annual compensation to be fixed by the Federal Reserve 7 Board and paid monthly by the Federal reserve bank to which 8 he is designated. 9 Directors of Federal reserve banks shall receive, in 10 addition to any compensation otherwise provided, a reason- 11 able allowance for necessary expenses in attending meetings 12 of their respective boards, which amount shall be paid by 13 the respective Federal reserve banks. Any compensation 14 that may be provided by boards of directors of Federal 15 reserve banks for members of such boards shall be subject 16 to review by the Federal Reserve Board. 17 The Reserve Bank Organization Committee may, in or- 18 gttnizing Federal reserve banks for the first time, call such meet- 19 ings of bank (Erectors in the several districts as may be neces,5-e4A-10M4, 20 sary to carry out the purposes of this Act and may exercise the 21 functions herein conferred upon the chairman of the board of 22 directors of each Federal reserve bank pending the complete 23 organization of such bank. 24 At the first meeting of the full board of directors of each 25 Federal reserve bank after organization it shall be the duty of H. R. 7837 10 1 the directors of classes A and B and C, respectively, to desig- 2 nate one of the members of each class whose term of office 3 shall expire in one year from the first of January nearest to 4 date of such meeting, one whose term of office shall expire 5 at the end of two years from said date, and one whose term 6 of office shall expire at the end of three years from said date. ntrU Ct"cullt44v2 tti"" CO/6")"` Thereafter every director of a Federal reserve bank chosen as hereinbefore provided shall hold office for a term of three r1/18 9 years ; but the chairman of the board of directors of 10 each Federal reserve bank designated by the Federal Reserve 11 Board, as hereinbefore described, shall be removable at 12 the pleasure of the said board without notice, and his 13 successor shall hold office during the unexpired term of the 14 director in whose place he-was appointed. 15 may occur in the several classes of directors of Federal reserve 16 banks may be filled in the manner provided for the original 17 selection of such directors, such appointees to hold office for 18 the unexpired terms of their predecessors. Vacancies that INCREASE AND DECREASE OF CAPITAL. 19 20 SEC. 5. That shares of the capital stock of Federal reserve 21 banks shall not be transferable, nor be hypothecated. 22 In case a member bank increases its capital, it shall there- 23 upon subscribe for an additional amount of capital stock of 24 the Federal reserve bank of its district equal to twenty per 25 centum of the bank's e-1.4wa increase of capital, one-half of h-unti-ew 11 1 2 said subscription to be paid in cash in__the manner_leresin- 6i-in-,- ',AAA ifedtf before provided for original subscription, and one-half to _ 3 become a liability of the member bank according to the 4 terms of the original subscription. 5 in a Federal reserve bank at any time after the formation of 6 the latter must subscribe for an amount of the capital of said 7 Federal reserve bank equal to twenty per centum of the 8 capital stock of said subscribing bank, paying therefor its par 9 10 value in accordance with the terms prescribed by section two cpt tiu,ropa jeg Fut( k -Pala/4 It& wiz: of this Act When the capital stock of any Federal reserve 11 bank has been increased either on account of the increase of 12 capital stock of member banks or on account of the increase 13 in:the number of member banks, the board of directors shall 14 make and execute a certificate to the Comptroller of the Cur- 15 rency showing said increase in capital, the amount paid in, 16 and by whom paid. 17 capital stock it shall surrender a proportionate amount of its 18 holdings in the capital of said Federal reserve bank, and in 19 case a member bank goes into voluntary liquidation it shall 20 surrender all of its holdings of the capital stock of said Federal 21 reserve bank. 22 be canceled and such member bank shall recei-v e in payment 23 therefor, under regulations to be prescribed by the Federal 24 Reserve Board, a sum equal to its cash paid subscriptions on 25 the shares surrendered). C1A4i 6444:4 a ow A bank applying for stock In case a member bank reduces its In either case the shares surrendered shall $*424Ylvytiktzeot' tv That if any member ,bank -shall become SEC. 6. 1 2 insolvent and a receiver be appointed, the stock held .3 by it in said 4 and, the balance, after deducting from the amount of its 5 cash paid subscriptions all debts due by such insolvent 6 bank to said Federal reserve bank, shall be paid to the 7 receiver of the insolvent bank. 8 of a Federal reserve bank is reduced, either on account of a 9 reduction in capital stock of any member bank or of the liquida- 10 tion or insolvency of any such member bank, the board of 11 directors shall make and execute a certificate to the Comp- 12 troller of the Currency showing such reduction of capital 13 stock and the amount repaid to such bank. - FedoTa,1 reserve bank shall be canceled Whenever-the capital stock DIVISION OF EARNINGS. 14 15 SEC. 7. That after the payment of all necessary expenses 16 and taxes of a Federal reserve bank, the member banks 17 shall be entitled to receive an annual dividend of five per 18 centum on the paid-in capital stock, which dividend shall 19 be cumulative. 20 said dividend claims have been fully met, shall be paid into 21 a surplus fund until such fund shall amount to twenty per 22 centum of the paid-in capital stock of such bank, 23 and pf the remainiiik, 24 be paid 25 to the member banks in the ratio of their average bal- to One-half of the net earnings, after the afore- per centum )shall the United States (and forty per centum 13 1 ances with the Federal reserve bank for the preceding year.) 2 Whenever and so long as the surplus fund of a Federal 3 reserve bank amounts to twenty per centum of the 4 paid-in capital 5 have received the dividends at the rate of 6 eentum 7 per centum of all excess earnings shall be paid to the 8 United States end forty per centum to the member banks in 9 proportion to their annual average balances with such Federal 10 reserve bank all earnings derived by the United States from 11 Federal reserve banks shall constitute a sinking fund to be 12 held for the reduction of the outstanding bonded indebtedness 13 of the -United States, said reduction to be accomplished under 14 regulations to be prescribed by the Secretary of the _Treasury. 15 Should a Federal reserve bank be dissolved or go into liquida- 16 tion, the surplus fund of said bank, after the payment of all 17 debts and dividend requirements as hereinbefore provided 18 for, shah be paid to and become the property of the -United 19 States. per stock annum and the hereinbefore member banks shall five per provided for, sixty -7-- Rot& e'l4,014e ! t r. ieY 20 Every Federal reserve bank incorporated under the f2t-14420C' 21 terms of this Act and the capital stock therein held by mem- 22 ber banks shall be exempt from Federal, State, and local 23 taxation, except in respect to taxes upon real estate. 24 25 SEC. 8. That any national banking association heretofore organized may upon application at any time 14 1 within one year after the passage of this Act, and 2 with the approval of the Comptroller of the Currency, 3 be granted, as herein provided, all the rights, and be sub- 4 ject to all the liabilities, of national banking associations 5 organized subsequent to the passage of this Act : Provided, 6 That such application on the part of such associations shall 7 be authorized by the consent in writing of stockholders owning not less than a majority of the capital stock of the association. Any national banking association now organ- ized which shall not, within one year after the passage of this Act, become a national banking association under the pro12 visions hereinbefore stated, or which shall fail to comply 13 with any of the provisions of this Act applicable thereto, 14 shall be dissolved ; but such dissolution shall not take away 15 or impair any remedy against such corporation, its stockholders 16 or officers, for any liability or penalty which shall have pre- 17 viously been incurred. 18 SEC. 9. That any bank or banking association moor- 19 porated by special law of any State or of the -United States, 20 or organized under the general laws of any State or the 21 United States, and having an unimpaired capital sufficient 22 to entitle it to become a national banking association under 23 the provisions of existing laws, may, by the consent in writ- 24 ing of the shareholders owning not less than fifty-one per 25 centum of the capital stock of such bank or banking associa- 15 1 tion, and with the approval of the Comptroller of the Currency, 2 become a national banking association under its former name 3 or)by any name approved by the comptroller. 4 thereof may continue to be the directors of the association so 5 organized until others are elected or appointed in accordance %44nir dilvv. 6 with the provisions of the law. 7 given to such bank or banking association a certificate that ' The directors When the comptroller has 44fettlxvrtv 8 the provisions of this Act have been complied -with, such 9 bank or banking association, and all its stockholders, officers, 10 and employees, shall have the same powers and privileges, 11 and shall be subject to the same duties, liabilities, and regu- 12 lations, in all respects, as shall have been prescribed by 13 this Act or by the national banking Act for associations 14 originally organized as national banking associations. 15 STATE BANKS AS MEMBERS. 16 SEC. 10. That from and after the passage of this Act 17 any bank or banking association or trust company incor- 18 porated ' by special law of any State, or organized under 19 the general laws of any State 20 make application to the Federal Reserve Board hereinafter 21 created for the right to subscribe to the stock of the Federal 22 reserve bank organized or to be organized within the Federal 23 reserve district where the applicant is located. The Federal 24 Reserve Board, under such rules and regulations as it may 25 prescribe, subject to the provisions of this section, shall tz, gt .<4 he -United States, may 7 , 16 445 1 permit such applying bank to become a stockholder in the 2 Fediaal reserve bank of the district in which such apply61 ,to ing bankAis located. Whenever the Federal Reserve Board 4 shall permit such applying bankA to become a stockholder 3 5 in the Federal reserve bank of the district in which the ap- 6 plying bank is located, stock shall be issued and paid for under 7 the rules and regulations in this Act provided for national 8 banks which become stockholders in Federal reserve banks. 9 It shall be the duty of the Federal Reserve Board to 10 establish by-laws for the general government of its conduct 11 in acting upon applications made by the State banks 12 and banking associations and trust companies hereinbefore 13 referred to for stock ownership in Federal reserve banks. 14 Such by-laws shall require applying 15 ized under 16 requirements and submit to the inspection (and regula- 1V°' 17 tion) provided for in this and other laws relating to 18 national banks. No such applying bank shall be admitted 19 to membership in a Federal reserve bank unless it pos- 20 sesses a paid-up unimpaired capital sufficient to entitle it to 21 become a national banking association in the place where it is 22 situated, under the provisions of the national banking Act, 23 and conforms to the provisions herein prescribed for national 24 banking associations of similar capitalization and to the regu- 25 lations of the Federal Reserve Board. r' 4-, fk,l())4/646' Federal law to comply e a v 2. C.I71 not organ- banks/1 with the reserve 17 1 If at any time it shall appear to the Federal Reserve 2 Board that a banking association or trust company organized htd h CO- 3 under the laws of any State or of the United States has failed 4 to comply with the provisions of this section or the regu- 5 lations of the Federal Reserve Board, it shall be within 6 the power of the said board to require such banking associa- 7 tion or trust company to surrender its stock in the Federal Vliarar-itAndC 8 reserve bank in which it bolds stock upon receiving from efhAeseyhum,? 9 such Federal reserve bank the cash-paid subscriptions to 10 the said stock interment funds) and said Federal reserve 11 bank shall upon notice from the Federal Reserve Board 12 be required to suspend said banking association or trust 13 company from further privileges of membership, and shall 14 within thirty days of such notice cancel and retire its 15 stock and make payment therefor in the manner herein 16 provided. FEDERAL RESERVE BOARD. 17 18 okfti-z-A. SEC. 11. That there shall be created a Federal Reserve 19 Board, which shall consist of seven members, including the 20 Secretary of the Treasury, the 21 the Comptroller .of the Currency, who shall be tielEtibeFg- ex 22 officioand-feat members appointed by the President of the 23 United States, by and with the advice and consent of the 24 Senate. 25 Federal Reserve Board, ,EtJatBaeFet-harr--ofteei----whom - A ricniturand !141., A In selecting the four appointive members of the H. R. 7837-3 a), 16e).- afar AZi461<, 18 1 -be selectedfron---reserve district, 2 the President shall have due regard to a fair represen- 3 tation of different geographicaldivisions of the country. 4 The four members of the Federal Reserve Board appointed 5 by the President and confirmed as aforesaid shall 6 vote their entire time to the business of the Federal Re- de- 7 Aserve Board and shall each receive an annual salary of 'sr 1 70-0.4-.0 8 $-10,0007together with an allowance for actual necessary 9 traveling expenses, .and_11443-Getttptruiterortreeurrency; era eserve Board,- shall, 10 ex -officio 11 In_addition to the salary now paidhim as coinptrOneT;"' 12 receive the sum of $5,000 annually -forETTOVices as a mem---- 13 ber en-7 bOrAr -.- Of the four members thus appointed by the 14 President not more than two shall be of the same political 15 party, and at least one of whom shall be a person experienced 16 in banking. " I1 One shall be designated by the President to vix 17 serve for two, one for four, one for six, and one for 18 eight years, respectively, and thereafter each member so 19 appointed shall serve for a term of eight years unless sooner 20 removed for cause by the President. Of the four persons thus 21 V 22 appointed, one shall be designated by the President as manager Vieatertarit and one as vice manager of the Federal Reserve Board. The 23 manager of the Federal Reserve Board, subject to the super- 24 vision of(he Secretary of the Treasury and)Federal Reserve 25 Board, shall be the active executive officer of the Federal (11 6 cf C2Art.- c; MCI 1,-e-of 7 n...er 26 Reserve Board. 19 1 The Federal Reserve Board shall have power to levy 2 semiannually upon the Federal reserve banks, in proportion to 3 their capital stock, an assessment sufficient to pay its esti- 4 mated expenses for the half year succeeding the levying of 5 such assessment, together with any deficit carried forward 6 from the preceding half year. 7 The first meeting of the Federal Reserve Board shall 8 be held in Washington, District of Columbia, as soon as may 9 be after the passage of this Act, at a date to be fixed by the 10 serve-Bank- Organization Committee. The Secretary of the 11 -Treasury shall be ex officio 4lainnan of the Federal Reserve 12 Board.- No member of the Federal Reserve Board shall 13 be an officer or director of any bank or banking institution 14 or Federal reserve bank nor hold stock in any bank or bank- 15 ing institution; and before entering upon his duties as a 16 member of the Federal Reserve Board he shall certify under 17 oath-te-4e-Sreletaly of thr-4reastgy that he has complied 18 with this requirement. Whenever a vacancy shall occur, 19 other than by expiration of term, among the four members of 20 the Federal Reserve Board appointed by the President, as 21 above provided, a successor shall be appointed by the Presi- 22 dent, with the advice and consent of the Senate, to fill such 23 vacancy, and when appointed shall hold office for the 24 unexpired term of the member whose place he is selected 25 to fill. L. 20 1 The Federal Reserve Board shall annually make a report 2 of its fiscal operations to the Speaker of the House of Repre- 3 sentatives, who shall cause the same to be printed for the 4 information of the Congress. 5 Section three hundred and twenty-four of the Revised 6 Statutes of the United States shall be amended so as to 7 read as follows : "There shall be in the Department of the 8 Treasury a bureau charged, except as in this Act otherwise 9 provided, with the execution of all laws passed by Congress 10 relating to the issue and regulation of currency issued by 11 or through banking associations, the chief officer of which 12 bureau slid be called the Comptroller of the Currency, and 13 shall pertorm his duties under the general direction of the 14 Secretary of the Treasury,(acting as the chairman of the 15 Moral Reserve Board 16 herein contained shall be construed to affect any power now 17 vested by law in the Comptroller of the Currency or the 18 Secretary of the Treasury. SEC. 12. That the Federal Reserve Board hereinbefore 19 20 Provided, however, That nothing established shall be authorized and empowered : (a) To examine at its discretion the accounts, books, and 21 pet.4 22 affairs of each Federal reserve bank and to require such A 23 statements and reports as it may deem necessary. The said 24 board shall publish once each week a statement showing the 25 condition of each Federal reserve bank and a consolidated 21 Such statements 1 statement for all Federal reserve banks. 2 shall 3 such Federal reserve banks, single and combined, and show in detail the assets and liabilities of 4 shall furnish full information regarding the character 5 of the(lawful money)held as reserve and the amount, na- 6 ture, and maturities of the paper owned by Federal reserve 7 banks 64,444,ti c0)_-611, L,we 8 (b) To permitr requirerin time of emergencyAFederal 9 reserve banks to rediscount the discounted prime paper of 10 other Federal reserve banks, a4-14444-fw-e-raemilers of the 11 Federal Reserve Board being present when,Och) action is 12 taken and all iresent consenting to the requirement. The 13 exercise of this compulsory rediscount power by the Federal 14 Reserve Board shall be subject to an interest charge to the uttleitt eit,,lterrA y 15 accommodated bank of not less than one nor greater than 16 three per centura above the higher of the rates prevailing 17 in the districts immediately affected. 18 (c) To suspend for a period not exceeding thirty days 19 (and to renew such suspension for periods not to exceed 20 fifteen days) any and every reserve requirement specified in 21 this Act : Provided, That it shall establish a graduated tax \ 22 upon the amounts by which the reserve requirements of 23 this Act may be permitted to fall below the level hereinafter 24 specified, such tax to_be uniform in its application to all banks 12044,0 7141-14-k,. 644_ 14.4.vh eAfri 22 1 but said board shall not suspend the reserve requirements 2 with reference to Federal reserve notes. 3 (d) To supervise and regulate the issue and retirement 4 of Federal reserve notes and to prescribe the form and tenor 5 of such notes. .-- 67 X). 44,A;k, arka ktmifriatAr (e) To add to the number of cities classified as reserve and central reserve cities under existing law in which national 8 banking associations are subject to the reserve requirements 9 set forth in section twenty of this Act ; or to reclassify 10 existing reserve and Central reserve cities and to desig- 11 nate the bank' therein situated as country banks at its 12 discretion. ta (f) To suspend the officials of Federal reserve banks 14 and, for cause stated in writing with opportunity of hearing, 15 require the removal of said officials for incompetency, derelic- 16 tion of duty, fraud, or deceit, such removal to be subject to 17 approval by the President of the -United States. 18 (g) To require the writing off of doubtful or worthless 19 assets upon the books and balance sheets of Federal reserve 20 banks. 21 (h) To suspend, for cause relating to violation of any of 22 the provisions of this Act, the operations of any Federal 23 reserve bank and appoint a receiver therefor. 24 25 (i) To perform the duties, functions, or services specified (or impliqin this Act. 23 1 FEDERAL ADVISORY COUNCIL. 2 SEC. 13. There is hereby created a Federal Advisory 3 Council, which shall consist of as many members as there are 4 Federal reserve districts. 5 board of directors shall annually select from its own Fed- 6 eral reserve district one member of said council, who shall 7 receive _no compensation for his services, but may be re- 8 imbursed for actual necessary expenses. Each Federal reserve bank by its The meetings ---- - 9 of said advisory council shall be held at Washington, 10 District of Columbia, at least four times each year, and 11 oftener if called by the Federal Reserve Board. 12 may select its own officers and adopt its own methods of pro- 13 cedure, and a majority of its members shall constitute a quo- 14 rum for the transaction of business./ Vacancies in the council 15 shall be filled by the respective reserve banks, and members 16 selected to fill vacancies shall serve for the unexpired term. 17 The Federal Advisory Council shall have power (1) to 18 meet and confer directly with the Federal Reserve Board on 19 general business conditions; (2) to make oral or written rep- 20 resentations concerning matters within the jurisdiction of 21 said board ; (3) to call for complete information and to make 22 recommendations in regard to discount rates, rediscount 23 business, note issues, reserve conditions in the various districts, 24 the purchase and sale of gold or securities by reserve banks, 25 open-market operations by said banks, and the general affairs 26 of the reserve banking system. , The council tt741 )fr-t- 24 REDISCOUNTS. 1 2 SEC. 14. That any Federal reserve bank may receive 3 from any member bank deposits of current funds in lawful 4 money, national bank notes, Federal reserve notes, 5 checks and drafts upon solvent banks, payable upon presenta- 6 tion ; or, solely for exchange purposes, may receive from other 7 Federal reserve banks deposits of current funds in lawful 8 money, national bank notes, or checks and drafts upon 9 solvent banks, payable upon presentation. or 10 Upon the indorsement of any member bank any Federal 11 reserve bank may discount notes and bills of exchange aris- 12 ing out of commercial transactions ; that is, notes and bills 13 of exchange issued or drawn for agricultural, industrial, or 14 commercial purposes, or the proceeds of which have been used, 15 (1.1. +earl" etmeti, for such purposes, the Federal Reserve Board to etia 16 (have the right to)determine ytc define the character of the - 17 paper thus eligible for discount, within the meaning of this 18 Act; nothing herein contained shall be construed to prohibit 19 (such no eg) and bills of exchange, secured by staple agri- ,4 fex;i4e.014.1\1.) ek ,tict,(4 20 cultural products, or other goods, wares, or merchandise 21 -being eligible for such discount but such definition shall not (22 3 include notes or bills issued or drawn for the purpose of carry A ing or trading in stocks, bonds, or other investment securities. 24 Notes and bills admitted to discount under the terms of 25 this paragraph must have a maturity of not more than 26 ninety days. A la/ r 25 1 -Upon the indorsement of any member bank any Federal 2 reserve bank may discount the paper of the classes herein- 3 before described having a maturity of more than ninety 4 and not more than one hundred and twenty days, when its 5 own cash reserve exceeds thirty-three and one-third per cent 6 of its total outstanding demand liabilities exclusive of its (r.kod.ka, 7 outstanding Federal reserve notes by an amount to be fixed 8 by the Federal Reserve Board but not more than(fifty)per 9 cent of the total paper so discounted for any member bank 10 shall have a maturity of more than ninety days. -Upon the indorsement of any member bank any 11 12 Federal 13 such 14 reserve bank may discount acceptances of banks which are based on the exportation importation (14se of tt goods .t4.-17 trt."71:71frrfrrr ' and which or -Orritite-9)1/4.' mature in itt not 15 A more than six months and bear the signature of at 16 least one member bank in addition to that of the acceptor. 17 The amount so discounted shall at no time exceed one-half the 18 capital stock of the bank for which the rediscounts are made. 19 The aggregate of such notes and bills bearing the signa- 20 ture or indorsement of any one person, company, firm,, or, la.44-Mtrot- 21 corporation rediscounted for any one bank shall at no time e6044:(41:' 22 exceed ten per centum of the unimpaired capital and surpliA 23 of said bank but this restriction shall not apply to the 24 discount of bills of exchange drawn in good faith against 25 actually existing values. H. R. 7837 4 26 Any national bank may, at its discretion, accept 1 or bills of exchange drawn upon it having 2 drafts 3 not more than six months sight to run and growing out 4 of transactions involving th( importation or exportation) 5 of goods ; 6 to an amount equal at any time in the aggregate to more 7 thanrone-half) the face value of its paid-up and unim- 8 paired capital. 014..4 att but no bank shall accept such bills 9 Section fifty-two hundred and two of the Revised Statutes 10 of the 'United States is hereby amended so as to read as follows : 11 No association shall at any time be indebted, or in any way 12 liable, to an amount exceeding the amount of its capital stock 13 at such time actually paid in and remaining undiminished by 14 losses or otherwise, except on account of demands of the 15 nature following : 16 First. Notes of circulation. 17 Second.%Moneys deposited with or collected by the 18 association. enael,(XAA.t. PL., el._ 0-40 19 Third. Bills of exchange of:drafts drawn againsmoney 20 actually on deposit to the credit of the association, or due 21 thereto. A 7710 Fourth. Liabilities to the stockholders of the associa- 22 23 tion for dividends and reserve profits. 24 25 tit Fifth. Liabilities incurred under the provisions of sections two, five, and fourteen of the Federal reserve Act. t attkia,-,:fA lE 1,LAI4enrVbtC-3 61%, PetiolAA- efrid 27 OPEN-MARKET OPERATIONS. 1 2 SEC. 15. That any Federal reserve bank may, under 3 rules and regulations prescribed by the Federal Reserve Board, 4 purchase and. sell in the open market, either from or to tinvt.,444,q0.1 5 (domestic) orvforeign banks, firms, corporations, or individ6 tyle. / limiturik 44, irre<414,6ftwA-, uals, prime bankers' bills, and bills of exchange of the kinds 7 and maturities by this Act made eligible for rediscount, and 56 8 cable transfers. euttk c AA. Att t.o1)6",e4A-k 44"A' Ate4ARA I7v Every Federal reserve bank shall have power (a) to deal °Ay' II:re4M 9 dkuto. 10 in gold coin and bullion both at home and abroad, to make 11 loans thereon, and to contract for loans of gold coin or bullion, 12 giving therefor, when necessary., acceptable security, includ- 13 ing the hypothecation of -United States bonds i (b) to invest aLa hu.d. i d/k a.4,4;, Arnt44 4.- d..4464.4%444.4404.4,0 14 in United States bonds'A andbetttisiesueki by ttyfitate, AI kit :#I I * a. ; (C) to purchase from mem-te15 A 16 ber bankkand to sell) with or without its indorsement, bills 17 of exchange arising out of commercial transactions, as herein- 18 before defined, payable in foreign countries; but such bills 19 of exchange must have not exceeding ninety days to run 20 and must bear the signature of two or more responsible parties, 21 of which the last shall be that of a member bank; (d) to 22 establish each week, or as mub oftener as required, subject 23 to review and determination 24 a rate of discount to be charged by such bank for each 25 class of paper, which shall be fixed with a view of accom/ - 6 41' 2-/3, the Federal Reserve Board, modating the commerce of the country; and (e) with the 28 1 consent of the Federal Reserve Board, to open and maintain 2 banking accounts in foreign countries and establish agencies 3 in such countries wheresoever it may deem best for the pur- 4 pose of purchasing, selling, and collecting foreign bills of 5 exchange, and to buy and sell with or without its indorsement, 6 through such correspondents or agencies, prime foreign bills 7 of exchange arising out of commercial transactions which 8 have not exceeding ninety days to run and which bear the 9 signature of two or more responsible parties. 10 GOVERNMENT DEPOSITS. 11 SEC. 16. That all moneys now held in the general fund 12 of the Treasury except the five per centum fund for the 13 redemption of outstanding national - bank notesVshall, b., hid ,/,), )10; a.-s 5te $ ; 14 upon the direction of the Secretary of the Treasury, 15 within twelve months after the passage 16 be deposited in Federal reserve banks, which banks shall 17 act as fiscal agents of the United States and thereafter the 18 revenues of the Government shall be regularly deposited in 19 such banks, and disbursements shall be made by checks 20 drawn against such deposits. of this Act, 21 The Secretary of the Treasury shall, subject to the 22 approval of the Federal Reserve Board, from time to time, 23 apportion the funds of the Government among the said 24 Federal reserve banks, distributing them, as far as practi- 25 cable, equitably between different sections, and may, at 26 their joint discretion, charge interest thereon and fix, from I 29 1 month to month, a rate which shall be regularly paid by the 2 banks holding such deposits : Provided, That no Federal 3 reserve bank shall pay interest upon any deposits except "irlij those of the -United States7 °te No Federal reserve bank shall receive or credit deposits 5 4 6 except from the Government of the -United States, its own 7 member banks, and, to the extent permitted by this Act, 8 from other Federal reserve banks. 9 of the Federal reserve banks involving loans made by such 10 banks, rediscount operations or the creation of deposit ac- 11 counts shall be confined to the Government and the deposit- 12 ing and Federal reserve banks, with the exception of the 13 purchase or sale of Government okState)securities tx of gold 14 coin or bullion. All domestic transactions IkaltdetA 15 NOTE ISSUES. 16 SEC. 17. That Federal reserve notes, to be issued at 17 the discretion of the Federal Reserve Board for the purpose 18 of making advances to Federal reserve banks as hereinafter 19 set forth and for no other purpose, are hereby authorized. 20 The said notes shall be obligations of the Tuited States) 21 and shall be receivable for all taxes, customs, and other 22 public dues. 23 money)on demand at(the Treasury Department of the -United 24 States, in the city of Washington, District of Columbia, or 25 at)any Federal reserve bank. Pt...70AL kw/144_ 6411,4444,0 They shall be redeemed in gold (or lawful 30 1 Any Federal reserve bank may, upon vote of its direc- 2 tors, make application to the local Federal reserve agent 3 for such amount of the Federal reserve notes hereinbefore 4 provided for as it may deem best. 5 accompanied with a tender to the local Federal reserve agent 6 of collateral in amount equal to the sum of the Federal reserve 7 notes thus applied for and issued pursuant to such applica- 8 tion. 9 bills accepted for rediscount under the provisions of sec- 10 tion 14 of this Act, and the Federal reserve agent shall 11 each day notify the Federal Reserve Board of issues and 12 withdrawals of notes to and by the Federal reserve bank to 13 which he is accredited. The said Federal Reserve Board 14 shall be authorized at any time to call upon a Federal reserve 15 bank for additional security to protect the Federal reserve 16 notes issued to it. Such application shall be The collateral security thus offered shall be notes and 17 Whenever any Federal reserve bank shall pay out or 18 disburse Federal reserve notes issued to it as hereinbefgre pro- 19 vided, it shall segregate in its own vaults and shall carry to 20 a special reserve account on its books gold& lawful money) jp/4/44/ 21 equal in amount to t_hirty-three and one-third) per centum 22 of the reserve notes so paid out by it, such reserve to be 23 used for the redemption of said reserve notes as presented ; 24 but any Federal reserve bank so using any part of such re- 25 serve to redeem notes shall immediately carry to said 31 wow, 1 reserve account an amount of gol or lawful mone3)sufficient 2 to make said reserve equal t<thirty-three and one-third) per 3 centum of its outstanding Federal reserve notes. 4 paid out shall bear upon their faces a distinctive letter and 5 serial number, which shall be assigned by the Federal Reserve 6 Board to each Federal reserve bank. Whenever Federal 7 reserve notes issued through one Federal reserve bank shall 8 be received by another Federal reserve bank they shall be 9 returne(for redemption)to the Federal reserve bank through 10 which they were originally issued4or shall be charged off 11 against Government deposit9andAreturned to the (Treasury 12 of the United States, or shall be presented to the said Treas- 13 ury)for redemption. 14 notes issued through another under penalty of a tax of ten 15 per centum upon the face value of notes so paid out. Notes bff Notes so 5?1.44,-4-k444t afc,,,v. No Federal reserve bank shall pay out Paid Prvg 16 (presented for redemption at)the Treasury of the United States 17 shall be(paid and) returned to the Federal reserve banks 18 through which they were originally issued, ankFederal re- 19 serve notes received by the Treasury otherwise than for 20 redemption shall be exchanged for lawful money out of the 21 five per centum redemption fund hereinafter provided and 22 returned as hereinbefore provided to the reserve bank through 23 which they were originally issued. 24 The Federal Reserve Board shall have power, in its dis- 25 cretion, to require Federal reserve banks to maintain on de- IIPAryrk 32 01Av -1,0A- 6.611 14,414-bur 1 posit in the Treasury of the United States a sum in 2 gold equal to five per centum of such amount of Fed- 3 eral 4 the provisions of this Act ; but such five per centum 5 shall be counted and included as part of the thirty-three 6 and one-third per centum reserve hereinbefore required. 7 The 8 to grant 9 the application of any Federal reserve bank for Federal reserve notes as may be said board shall issued to have also in whole or in part or to them under the s right reject entirely but to the extent and in the amount 10 reserve notes ; 11 that such application may be granted the Federal Reserve 12 Board shall, through its locallatAaFedercallrt gesiertrve agent, deposit 13 Federal reserve notes with the bank so applying, and A 14 such bank shall be charged with the amount of such notes 15 and shall pay such rate of interest on said amount as may be 16 established by the Federal Reserve Board, which rate shall 17 not be less than one-half of one per centum per annum, and 18 the amount of such Federal reserve notes so issued to any 19 such bank shall, upon delivery, become a first and para- 20 mount lien on all the assets of such bank. 21 Any Federal reserve bank may at any time reduce its 22 liability for outstanding Federal reserve notes by the 23 deposit of Federal reserve notes, (whether issued to such 24 bank or to some other reserve bankgor_lawfulmmreF 25 of the 1i-ted States.) or gold bullion, with 41) 1 Federal reserve agent or with the Treasurer of the -United A 2 States, and such reduction shall be accompanied by a 3 corresponding reduction in the required reserve fund of 4 lawful money set apart for the redemption of said notes and 5 by the release of a corresponding amount of the collateral 6 secuf3);rdeposited with the local Federal reserve agenti skg-OAAP6,7 at 4.4441-6, if rp ry 7 Any Federal reserve bank may at its discretion withdraw 8 collateral deposited with the local Federal reserve agent for 9 the protection of Federal reserve notes deposited with 10 it and shall at the same time substitute other collateral 11 of equal value approved by the Federal reserve agent under 6014 71; - 12 regulations to be prescribed by the Federal Reserve Board. 13 It shall be the duty of every Federal reserve bank to 14 receive on 15 for exchange or collection, checks and drafts drawn upon 16 any of its depositors or by ..adly of its depositors upon 17 any other depositor andAchecks and drafts drawn by any 18 depositor in any other Federal reserve bank upon funds to the 19 credit of said depositor in said reserve bank last mentioned, 20 nothing herein contained to be construed as prohibiting mem- 21 ber banks from making reasonable charges to cover actual ex- 22 penses incurred in collecting and remitting funds for their 23 patrons. 24 mulgate from time to time regulations governing the transfer 25 of funds at par among Federal reserve banks, and may at its deposit, 461 at par and without 4-eies4furve CuA4 5 PAZ-. 'If )."'""7" charge The Federal Reserve Board shall make and pro- H. R. 7837 C41,44 u-Wrz44,4cott 34 1 discretion exercise the functions of a clearing house for such 2 Federal reserve banks, or may designate a Federal reserve 1 3 bank to exercise such functions, and may also require each 4 such 5 member banks bankA to exercise the functions of a clearing house for its ait SEC. 18. That so much of the provisions of section frinvouh, ,64 'AAA fri 7 fifty-one hundred and fifty-nine of the Revised Statutes 8 of the United States, and section four of. the Act of 9 June twentieth, eighteen hundred and seventy-four, and 10 section eight of the Act of July twelfth, eighteen hundred 11 and eighty-two, and of any other Provisions of existing stat- 12 utes, as require that before any national banking association 13 shall be authorized to commence banking business it shall 14 transfer and deliver to the Treasurer of the United States 15 a stated amount of United States registered bonds be, arid floctizet 4'1., 16 17/ a. aer f) the same is hereby, repealed. REFUNDING BONDS. 17 th.1 18 SEC. 19. That upon application the Secretary of the 19 Treasury shall exchange the two per centum bonds of the et 4.4),43 Y. I- fi ivxa United States bearing the circulation privilege deposited by 21 any national banking association with the Treasurer of the 6-6tii a I en, .4,- 22 -United States as security for circulating notes for three per 23 centum bonds of the -United States without the circulation ''444(41 fet)'' 24 privilege, payable after twenty years from date of issue, and . -4`-eir"(4- 40; / Ve--0 tar, P.A441). ik 4444A. 4, 25 exempt from Federal, State, and municipal taxation both as to 35 1 income and principal. '2 year, present two per centum bonds for exchange in the manner 3 hereinbefore provided to an amount exceeding five per centum 4 of the total amount of bonds on deposit with the Treasurer by 5 said bank for circulation purposes. 6 fail in any one year to so exchange its full quota of two per cen- 7 turn bonds under the terms of this Act, the Secretary of the 8 Treasury may permit any other national bank or banks to ex- 9 change bonds in excess of the five per centum aforesaid in an 10 amount equal to the deficiency caused by the failure of any one 11 or more banks to make exchange in any one year, allotment to be 12 made to applying banks in proportion to their holdings of bonds. 13 At the expiration of twenty years from the passage of this Act 14 every holder of United States two per centum bonds then out- 15 standing shall receive payment at par and accrued interest. 16 After twenty years from the date of the passage of this Act 17 national-bank notes still remaining outstanding shall be re- 18 called arid redeemed by the national banking associations 19 issuing the same within a period and under regulations to be 20 prescribed by the Federal Reserve Board, and notes still 21 remaining in circulation at the end of such period shall be 22 secured by an equal amount of lawful money to be deposited 23 in the Treasury of the United States by the banking associa- 24 tions originally issuing such notes. 25 tional bank may continue to apply for and receive circulating No national bank shall, in any one Should any national bank Meanwhile every na- 36 1 notes from the Comptroller of the Currency based upon the 2 deposit of two per centum bonds or of any other bonds bearing 3 the circulation privilege; but no national bank shall be per- 4 mated to issue other circulating notes except such as are 5 secured as in this section provided or to issue or to make 6 use of any substitute for such circulating notes in the form of 7 clearing-house loan certificates, cashier's checks, or other 8 obligation. 9 BANK RESERVES. 10 SEC. 20. That from and after the date when the Sec- 11 retary of the Treasury shall have officially announced, in 12 such manner as he may elect, the fact that a Federal reserve 13 bank has been established in any designated district, every 14 banking association within said district which shall have 15 subscribed for stock in such Federal reserve bank shall be 16 required to establish and maintain reserves as follows : 17 (a) If a country bank as defined by existing law, it 18 shall hold and maintain a reserve equal to twelve per centum 19 of the aggregate amount of its deposits, not including savings 20 deposits hereinafter provided for. Five-twelfths of such 21 reserve shall consist of money which national banks may 22 under existing law count as legal reserve, held actually in the 23 bank's own vaults; and for a period of fourteen months from 24 the date aforesaid at least three-twelfths and thereafter at 25 least five-twelfths of such reserve shall consist of a credit 37 1 balance with the Federal reserve bank of its district. 2 remainder of the twelve per centum reserve hereinbefore 3 required may, for a perig 4 5 after the date fixed by thepecretary of the Treasury's here- )14(41 `Irt inbefore provided, consist of balances due from national 4114-4. 6 banks in reserve or central reserve cities as now defined by 7 law. 8 to the date fixed by th Secretary of the Treasur as herein- 9 before provided the said remainder of the twelve per centum 10 reserve required of each country bank shall consist either in 11 whole or in part of reserve money in the bank's own vaults or 12 of credit balance with the Federal reserve bank of its district. 13 (b) If a reserve city bank as defined by existing law, 14 it shall hold and maintain, for a period of sixty days from the 15 date fixed by the&ecretaryof the Treasury as hereinbefore 16 provided, a reserve equal to twenty per centum of the 17 aggregate amount of its deposits, not including savings 18 deposits hereinafter provided for, and permanently thereafter 19 eighteen per centum. At least one-half of such reserve shall 20 consist of money which national banks may under existing 21 law count as legal reserve, held actually in the bank's own 22 vaults. 23 period of one year, at least three-eighteenths and perm- 24 nently thereafter at least five-eighteenths of such reserve shall 25 consist of a credit balance with the Federal reserve bank of The thirty-six months from and fjC/'elet.t ClitAVA-1- f%r From and after a date thirty-six months subsequent 2,4(0' Liu Wirt/q Attu,/ After sixty days from the date aforesaid, and for a Plc vaittk 38 1 its district. The remainder of the reserve in this paragraph 2 required may, for a period of thirt -six months from and after 3 the date fixed by the(Secretary o t e 4 before provided, consist of balances due from national banks 5 in central reserve cities as now defined by law. From and 6 after a date thirty-six months subsequent the date 9-atw reasury)as herein- to °)-c 7 fixed by theMecretary of the Treasury') 8 vided, the said remainder of the eighteen per centum reserve 9 required of each reserve city bank shall consist either in 10 whole or in part of reserve money in the bank's own vaults 11 or of credit balance with the Federal reserve bank of its 12 district. hereinbefore pro- 13 (c) If a central reserve city bank as defined by exist- 14 ing law, it shall hold and maintain for a period of sixty days 15 from the date fixed by the (Secretary of t eTreasury) as akku) ejoitvti 16 hereinbefore provided a reserve equal to twenty per centum 17 of the aggregate amount of its deposits, not including savings 18 deposits hereinafter provided for, and permanently there- 19 after eighteen per centum. 20 shall consist of money which national banks may under 21 existing law count as legal reserve, held actually in the 22 bank's own vaults. 23 said, and thereafter for a period of one year, at least three- 24 eighteenths and permanently thereafter at least five-eight- 25 eenths of stitch reserve shall consist of a credit balance with the 26 Federal reserve bank of its district. At least one-half of such reserve After sixty days from the date afore- The remainder of the . o1 2 city bank shall consist either in whole or in part of reserve 3 money actually held in its own vaults or of credit balance with 4 the Federal reserve bank of its district. , -. 39 eighteen per centum reserve required of each central reserve 5 SEC. 21. That so much of sections two and three of the 6 Act of June twentieth, eighteen hundred and seventy-four, 7 entitled "An Act fixing the amount of -United States notes, 8 providing for a redistribution of the national bank currency, 9 and for other purposes," as provides that the fund deposited 10 by any national banking association with the Treasurer of 11 the -United States for the redemption of its notes shall be 12 counted as a part of its lawful reserve as provided in the Act 13 aforesaid, be, and the same is hereby, repealed. 14 and after the passage of this Act such fund of five per centum 15 shall in no case be counted by any national banking associa- 16 tion as a part of its lawful reserve. And from 17 SEC. 22. That every Federal reserve bank shall at 1.8 all times have on hand in its own vaults, in gold or lawful 19 money, a suni equal to not less than thirty-three and one-third 20 per cent= of its outstanding demand liabilities. 21 The Federal Reserve Board may notify any Federal re- 22 serve bank whose lawful reserve shall be below the amount 23 required to be kept on hand, to make good such reserve ; and 24 if such bank shall fail for thirty days thereafter so to make 25 good its lawful reserve, the Federal Reserve Board may 26 appoint a receiver to wind up the business of said bank. 40 BAN K EXAMINATIONS. SEC. 23. That the examination of the affairs of every 2 associationerethorized-137 existing --I'm) 3 4 shall take place at least twice in each calendar year and as 5 much oftener as the Federal Reserve Board shall con- 044_1; te.4.4_ 6 sider necessary in order to furnish a full and complete know1- 0 (Mtaftittv. tifht4AA44 fru) 4;^ 11jP.' 7 edge of its condition. 8 however, at any time direct the holding of a special examina- 9 tion. The _Secretary of, the Treasury may, The person assigned to the making of such examina- 10 tion of the affairs of any national banking association shall 11 have power to call together a quorum of the directors of such 12 association, who shall, under oath, state to such examiner the 13 character and circumstances of such of its loans or discounts 14 as he may designate ; and from and after the passage of this 15 Act all bank examiners shall receive fixed salaries, the amount 16 whereof shall be determined by the Federal Reserve Board 17 and annually reported to Congress. 18 of the examinations herein provided for shall be assessed by 19 the Federal Reserve Board upon the associations exam- 20 ined in proportion to assets or resources held by such asso- 21 ciations upon a date during the year in which such examina- 22 tions are held to be established by the Federal Reserve 23 Board. 24 the duties of national-ban 25 examinations of any associati n shall be made by the same 26 examiner. But the expense The Comptrolleç of the Currency shall so arrange examiners that no two successive 41 1 In addition to the examinations made and conducted by 2 the Comptroller of the Currency, every Federal reserve bank 3 may, with the approval of the Federal Reserv Board arrange 4 for special or periodical examination of the member banks 5 within its district. 6 as to inform the Federal reserve bank under whose auspices 7 it is carried on of the condition of its member banks and of 8 the lines of credit which are being extended by them. 9 Every Federal reserve bank shall at all times furnish to 10 the Federal Reserve Board such information as may be de- 11 manded by the latter concerning the condition of any national 12 banking association located within th& district of the said 13 Federal reserve bank. A Such examination shall be so conducted 14 The Federal Reserve Board shall as often as it deems best, 15 and in any case not less frequently than four times each year, 16 order an examination of national banking associations in 17 reserve cities. 18 total amo'unt of loans made by each bank on demand, on 19 time, and the different classes of collateral held to protect 20 the various loans, and the lines of credit which are being ex- 21 tended by them. 22 once each year, order an examination of each Federal re- 23 serve bank, and upon joint application of ten member banks 24 the Federal Reserve Board shall order a special examination 25 and report of the condition of any Federal reserve bank. H. R. 7837 Such examinations shall show in detail the The Federal Reserve Board shall, at least 6 2A-4.;j_c 42 dA1414C---Co? 1114-I IAAAt. 1 SEC. 24. That no national bank shall hereafter make 2 any loan of grant any gratuity to any examiner of such bank. 3 Any 4 guilty of a misdemeanor and shall be fined not more than 5 $5,000, and a further sum equal to the money so loaned or 6 gratuity given ; and the officer or officers of a bank making 7 such loan or granting such gratuity shall be likewise deemed 8 guilty of a misdemeanor and each shall be fined not to exceed 9 $5,000. r), bankA offending against this provision shall be deemed Any examiner accepting a loan or gratuity from any 10 bank examined by him shall be deemed guilty of a misde- 11 meanor and shall be fined not more than $5,000, and a further 12 sum equal to the money so loaned or gratuity given; and shall 13 forever thereafter be disqualified from holding office as a 14 national-bank examiner. No national-bank examiner shall 15 perform any other service for compensation while holding 16 such office) hin 14.4.1 4 Ire at., efiveStioY etititik; 14...ut, 17 No officer or director of a national bank shall receive or 18 be beneficiary, either directly or indirectly, of any fee (other 19 than a legitimate fee paid an attorney at law for legal serv- 20 ices), commission, gift, or other consideration for or on account 21 of any loan, purchase, sale, payment, exchange, or transac- 22 tion with respect to stocks, bonds, or other investment 23 securities or notes, bills of exchange, acceptances, bankers' 24 bills, cable transfers or mortgages made by or on behalf of a 43 1 national bank of which he is such officer or director. Any 2 person violating any provision of this section shall be punished 3 by a fink of not exceeding $5,000 or by imprisonment not 4 exceeding five years, or both such fine and imprisonment, in 5 the discretion of the court having jurisdiction. 6 Except so far as already provided in existing laws this 7 provision shall not take effect until six months after the pas- 8 sage of this Act. 9 SEC. 25. That from and after the passage of this Act the 10 stockholders of every national banking association shall be 11 held individually responsible for all contracts, debts, and 12 engagements of such association, each to the amount of his 13 stock therein, at the par value thereof in addition to the 14 amount invested in such stock. The stockholders in any 15 national banking association who shall have transferred their 16 shares or registered the transfer thereof within sixty days 17 next before the date of the failure of such association to meet 18 its obligations shall be liable to the same extent as if they had 19 made no such transfer; but this provision shall not be con- 20 strued to affect in any way any recourse which such share- 21 holders might otherwise have against those in whose names 22 such shares are registered at the time of such failure. 23 tion fifty-one hundred and fifty-one, Revised Statutes of the 24 'United States, is hereby reenacted except in so far as modi- 25 fled by this section. Sec- 44 LOANS ON FARM LANDS. 1 2 SEC. 26. That any national banking association not 3 situated in a reserve city or central reserve city may make 4 loans secured by improved and unencumbered farm land, ' inger" IAAJ44"Pl'h WA?' 5 but no such loan shall be made for a longer time than twelve 6 months, nor for an amount exceeding fifty per centum of the 7 actual value of the property offered as security, and such 8 property shall be situated within the Federal reserve district 9 in which the bank is located. Any such bank may make 10 such loans in an aggregate sum equal to twenty-five per 11 centum of its capital and surplus. ..// 12 tAn4J1' The Federal Reserve Board shall have power from 13 time to time to add to the list of cities in which national 14 banks shall not be permitted to make loans secured upon real 15 estate in the manner described in this section. 16 SAVINGS DEPARTMENT. 17 SEC. 27. That any national banking association may, 18 subsequent to a date one year after the organization of 19 the Federal Reserve Board, make application to the Comp- 20 troller of the Currency for permission to open a savings 21 department. 22 directors of said national bank have by a majority vote appor- 23 tioned a specified percentage of their paid-in capital and sur- 24 plus to said savings department and to that end have segre- Such application shall set forth that the 45 1 gated specified assets for the uses of said department, or that 2 cash capital for the said savings department has been obtained 3 by subscription to additional issues of the capital stock of 4 said national bank : Provided, That the capital thus set 5 apart for the uses of the proposed savings department 64 6 aforesaid shall in no case be less than $15,000, or than 7 a sum equal to twenty per centum of the paid-up capital and a/2, IA./4k 8 surplus of the said national bank. 9 In making the application aforesaid any national bank- 10 ing association may further apply for power to act as trustee; 11 for mortgage loans subject to the conditions and limitationsi 12 herein prescribed or to be established as hereinafter provided.i 13 Whenever the Comptroller of the Currency shall have 14 approved any such application as hereinbefore provided, he 15 shall so inform the applying bank, and thereafter it shall be 16 authorized to receive savings deposits as so defined, and the 17 organization and business conducted or possessed by said 18 bank at -the time of making said application, except such as 19 has been specifically segregated for the savings department, 20 and subsequent expansions thereof shall be known as the 21 COMTI orcial department of the said bank. 22 ments shall, to all intents and purposes, be separate and 23 distinct institutions save and except as hereinafter expressly 24 provided. The said depart- The capital, surplus, deposits, securities, invest- 46 1 ments, and other property, effects, and assets of each of said 2 departments shall, in no event, be mingled with those of 3 the other department, or used, either in whole or in part, 4 to pay any of the deposits of the other department until all 5 of the deposits of its own department have been fully 6 paid and satisfied. 7 diminish their capital stock in the manner now provided 8 by law, but whenever such general increase- or reduction of 9 the capital stock of any national bank operating upon the 10 provisions of this section shall be made such increase or reduc- 11 tion shall be apportioned between the commercial and say- 12 ings departments of the said bank as its board of directors 13 shall prescribe, notice of such increase or reduction, and of the 14 apportionment thereof, being forthwith given to the Comp- 15 troller of the Currency; and any such national bank may 16 increase or diminish the capital already apportioned to either 17 its savings or commercial department to an extent not incon- 18 sistent with the provisions of this section, notifying the 19 Comptroller of the Currency as hereinbefore provided. 20 savings department for which authority has been solicited 21 and granted shall have control of the cash or assets appor- National banks may increase or The tioned to it as hereinbefore provided, and shall be organized 23 under rules and regulations to be prescribed by the Comp- 24 troller of the Currency. 47 1 Both the savings and commercial departments so ore- 2 ated shall, however, be under the control and direction of a 3 single board of directors and of the general officers of said 4 bank. 5 All business transacted by the commercial department 6 of any such national bank shall be in every respect subject 7 to the limitations and requirements provided in the national 8 banking Act as modified by this Act, and such business 9 shall henceforward be known as commercial business. 10 The savings department of each such national bank 11 shall be authorized to accumulate and loan the funds of 12 its 13 to purchase securities authorized by the Federal Reserve 14 Board, to loan any funds in its possession upon real 15 estate or other authorized security, and to collect the same 16 with interest, and to declare and pay dividends or in- 17 terest upon its deposits. The Federal Reserve Board is 18 hereby authorized to exempt the savings departments of 19 national banking associations from any and every restriction 20 upon classes or kinds of business laid down in the national 21 banking Act, and it shall be the duty of the said board within 22 one year after its organization to prepare and publish rules 23 and regulations for the conduct of business by such savings 24 departments. depositors, to receive deposits of current funds, The said regulations shall require every na- Zont, 48 1 tional bank which shall conduct a savings department and a 2 commercial department to segregate in its own vaults the cash 3 and assets belonging to such departments respectively and 4 shall prescribe the general forms of separate books of account 5 to be used by each such department for its exclusive and 6 individual use. 7 specify the period of notice for the withdrawal of deposits 8 made in the said savings department and shall forbid the 9 acceptance of deposits by one department of such national The regulations aforesaid shall further 10 bank from the other department of such bank. 11 Reserve Board shall make and publish at its discretion lists of 12 securities, paper, bonds, and other forms of investment, which 13 the savings departments of national banks shall be authorized 14 to buy or loan upon; and said lists need not be uniform 15 throughout the -United States, but shall be adapted to the 16 conditions of business in different sections of the country. The Federal It shall be the duty of every national bank to main- 17 with respect to liabilities its 18 tam, 19 savings department, a reserve in money which may 20 under existing 21 to not less than five per centum of the total deposit 22 liabilities of such department, and every national bank 23 authorized to maintain a savings department is hereby 24 exempted from the reserve requirements of the national law all be deposit counted as reserve, of equal 49 1 banking Act and of this Act in respect to the said deposit 2 liabilities of its savings department, except as in this section 3 provided. 4 section shall be duly published and also posted in every 5 member bank having a savings department. Every regulation made in pursuance of this 6 Every officer, director, or employee of any member 7 bank who shall knowingly or willfully violate any of the 8 provisions of this section, or any of the regulations of the 9 Federal Reserve Board, or of the Comptroller of the Cur- 10 rency, made under and by virtue of the provisions of this 11 section shall be guilty of a felony, and on conviction thereof 12 shall be punished by a fine not exceeding $5,000 or by 13 imprisonment not exceeding two years, or both, in the dis- 14 cretion of the court. FOREIGN BRANCHES. 15 16 SEC. 28. That any national banking association possess- 17 ing a capital of $1,000,000 or more may file application with 18 the Federal Reserve Board, upon such conditions and under 19 such circumstances as may be prescribed by the said board, 20 for the purpose of securing authority to establish branches 21 in foreign countries for the furtherance of the foreign corn- 22 merce of the -United States and to act, if required to do so, 23 as fiscal agents of the United States. 24 specify, in addition to the name and capital of the banking H. R. 7837 Such application shall 50 itr 1 association filing it, the foreign country or countries or the 2 dependencies of the United States where the banking opera- 3 tions proposed are to be carried on and the amount of capital 4 set aside by the said banking association filing such applica- 5 tion for the conduct of its foreign business at the branches 6 proposed by it to be established in foreign countries. 7 Federal Reserve Board shall have power to approve or to 8 reject such application if, in its judgment; the amount of 9 capital proposed to be set aside for the conduct of foreign 10 business is inadequate or if for other reasons the granting 11 of such application is deemed inexpedient. The Every national banking association which shall receive 12 13 authority to 14 shall be required at all times to furnish information con- 15 cerning the condition of such branches to the Comptroller 16 of the Currency upon demand, and the Federal Reserve 17 Board may order special examinations of the said for- 18 eign branches at such time or times as it may deem 19 best. Every such 20 conduct the accounts of each foreign branch independently 21 of the accounts of other foreign branches established by it 22 and of its home office, and shall at the end of each fiscal period 23 transfer to its general ledger the profit or loss accruing at 24 each such branch as a separate item. establish branches LU?47 '44 in 1C44 )14-). foreign countries a4( national banking association shall 0 t 51 1 SEC. 29. That all provisions of law inconsistent with or 2 superseded by any of the provisions of this Act be, and the 3 same are hereby, repealed : Provided, That nothing in this 4 Act contained shall be construed to repeal the parity pro- 5 vision or provisions contained in an Act approved March 6 fourteenth, nineteen hundred, entitled "An. Act to define 7 and fix the standard of value, to maintain the parity of all 8 forms of money issued or coined by the United States, to 9 refund the public debt, and for other purposes." 10 11 SEC. 30. That the right to amend, alter, or repeal this Act is hereby expressly reserved. Passed the House of Representatives September 18,1913. Attest: SOUTH TRIMBLE, Clerk. 63n CONGRESS, 1ry kl 1ST SESSION. .1 o R. 7837. 40 AN ACT To provide for the establishment of Federal reserve banks, for furnishing an elastic cur- rency, affording means of rediscounting commercial paper, and to establish a more effective supervision of banking in the nited States, and for other purposes. SEPTEmunu 18, 1913.Read twice and referred to the Committee on Banking and Currency.