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MISCELLANY

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“V

98 PER CENT.

4

S^NB
A BILL
To incorporate the National Reserve Association of the
United States#^ / y , & Cw^y i L < jL ^

%

Sec. i. Charter. Capital, and Location.
Sec. a. M
embership, amount of capital to be subscribed by each bank,
and am
outot required to be paid in.
Sec. 3. Organizationcommittee.
Sec. 4. Location of branches and the division of country into districts.
Sec. 5. Organization ef local anociations.
Sec. 6. Election of AMetan by local associations.
Sec. 7. Election of directors by branch amociations.
Sec. 8. Directors of the National Reserve Association.
Sec. 9. Appointment of officers of the National Reserve Amociation.
Sec. 10. Organization papers of the National Reserve Association.
Sec. 11. Articles of association of the National Reserve Amociation.
Sec. ia. Organization certificate of the National Reserve Amociation.
. . Sec. 13. Ownership ef stock in the National Reserve Amociation: Increase
and redumioa of capital.
Sec. 14, ExempaaontomnJaaalmKl Stoletaxation.
Sec. 15. Executive committee of the National Reserve Association.
Sec. 16. Auditing committee.
Sec. 17. Executive officers of branches.
Sec. 18. Executive officers of local associations.
Sec. 19. List of shareholders.

•

tr ,f r * £ r
C H A R T ER , CAPITA L, AND LOCATION.

Be it enacted by the Senate and House of Representatives
of the United States of America in Congress assembled, That
the National Reserve Association of the United States be,
and W is hereby, created /and established for a term of
ty years from the date of the execution of its organi­
zation certificate with an authorized capital equal in
amount to twenty per centum of, the p aid -^ and unim­
paired capital of all banks eligible for membership in said
National Reserve Association. Before the said associa­
tion shall be authorized to,, commence business two hun­
dred million dollars of the capital stock shall be sub­
scribed and one hundred million dollars of the capital
stock shall be, paid in cash. The capital stock of said
association shall be divided into shares of one hundred
dollars each. The capital stock may be increased from
time to time as subscribing h$f}ks increase th^ir capital
or as additional banks become subscribers or 'may be
decreased as siijbucribing banks reduce their capital or
leave the association by liquidation. The head office of
the National Reserve Association shall be located in
Washington, in the District gf Columbia/

H U AM
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, MEMBERSHIP.

*
tUel tU l
S e c . 2. A lkpatifn ai :bankj^ and all ban ks^r trust com­
panies chartered by the laws of any State of the United
States or of the District of Columbia, complyinj^wiih the
requirements for membership in'the said National Reserve
„ Association, hereinafter set forth, may subscribe to its
^-capital to an amount ^equal to twenty per centum of the
* paid-in and unimpaired capital of the subscribing bank,
and not more nor less; and each of such subscribing banks
shall become a member of a local association as hereinafter
provided. F ifty per centum of the subscriptions to the
capital of the National Reserve Association shall be fully
paid in; the balance of the subscriptions will remain a
liability of the subscribers, subject to call and payment
> thereof whenever necessary to meet .the obligations of the
*




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requirements for membership in* the said National Reserve
^ Association, hereinafter set forth, may subscribe to its
^capital to an amount ^equal to twenty per centum of the
/.r paid-in and unimpaired capital of the subscribing bank,
and not more nor less; and each of such subscribing banks
shall become a member of a local association as hereinafter
provided. F ifty per centum of the subscriptions to the
capital of the National Reserve Association shall be fully
paid in; the balance of the subscriptions will remain a
liability of the subscribers, subject to call and payment
> thereof whenever necessary to meet, t^e obligations of the
? National Reserve Association under such terms-and in
accordance with such regulations as the board of directors
of the ^
National Reserve Association may prescribe.
A bank or trust company which is incorporated under
**• the laws of any State n ^ y become a^nember of q local
.
association and have all the rights and privileges therein;
provided:
First. That (a) if a bank, it shall have a paid-in and
unimpaired capital of not less than that required for a
national bank in the same place; and that (6) if a trust
> company, it shall have an unimpaired surplus of not less
than twenty per centum of its capital, and if located in
.
a place having a population of
thousand inhabitants
.
or less shall have a paid-in and unimpaired capital of not
fess than owe hundred thousand dollars; if located *n a c ity
having a population of more than £Uy thousand inhabitants
and not more than two Phfotjfed thousand inhabitants,
shall h^ve a paid-in and unimpaired capital of not less
than .two hundred thousand d o lla r* if located in a city
having a population of more than
hundred thousand
inhabitants and not more than ti»ee hundred thousand
inhabitants shall have a paid-in and unimpaired capital
of not less than thrkifr hundred thousand dollargfif located
in a city having a population of more than three hundred
thousand inhabitants
-mqr^ thgq jFnnr hundred
thousand hlliaT5Ranfs~sl!9lt,'tiaye a paid in and unimpaired
capital of not less than ity r hundred thousand dollars;if located in a city having a population of *nore than
four hui\dred\housan« inhabitants^ shalA havA a p^d-m
and unimpaired cap ita of not less; than five lm m lrcJ
thousand dollars.

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f

20 PER CENT.

3 N B SECTION
MONOTYPE
Second. That it shall have and agree to maintain
against its demand deposits a reserve of like character
apd proportion to that required by law of a national bank
in the same location: Provided, however, That deposits
which it may have with any subscribing national bank.
State bank, or trust company in a city designated in 'the
national banking laws as a reserve city or a central reserve
city shall c ount as reserve in like manner and to the same
extent as similar deposits of a national bank with national
banks in such cities.
A
“
"
Third. That it shall have and agree to maintain against
all other classes of deposits the percentages of reserve
required by this act.
Fourth. That it shall agree to submit to such examina­
tions and to make such reports as are required by law anil
to comply with the requirements and conditions imposed
by this act and regulations made in conformity therewith.
The words “ subscribing banks” when used hereafter
in this act shall be understood to refer to such national
banks, and banks or trust companies chartered by the
laws of any State of the United States or of the district of
Columbia, as shall comply with the requirements* tor
membership hereinbefore defined.

ORGANIZATION COM ITTED _
_________
M

^
x
S ec . 3. The Secretary^)! tfce'Treasury, the Secretary of^
Commerce and Labor^in d the Comptroller of the Cur­
rency are Ijereby designated a committee to effect the
preliminary organization'^ the National Reserve Asso
ciation, and the necessary expenses of said committee
shall be pnid out of nn^money in the Treasury not-othee*
wise lyppiprintnfl -^
Hpnin vouchers approved by the
members of said committee, and the , Treasury shall be
reimbursed by the National Reserve Assoeiatioyi to the full
amount paid out therefor,
^ ,v ;
Within sixty davs after the passage of this act said com­
mittee shall provide for the ajpeping of bpoks for subscrip­
tions to the capital stock of said National Reserve Associatioiuii
Before the subscription of any bank to the capital stock of
the National Reserve Associatityi shall be accepted, said
bank shall file with the organization committee or'wft]
the National Reserve Association a certified copy of a res­
olution adopted by the board of directors of said bank
accepting all the provisions and liabilities imposed by this
act and authorizing the president or cashier of said banlp
to subscribe for said stock.
*

LOCATION O BRANCHES AND DIVISION O THE CO
F
F
UNTRY
INTO DISTRICTS.

3ec. 4.

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

______
'*7

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select fifteen cities in the United States for the location of
the branches of said National Reserve Association: P ro­
vided, That one branch shall be located in the New England
States, including the States of Maine, New Hampshire,
Vermont, Massachusetts, Rhode Island, and Connecticut;
two branches in the Eastern States, including the States of
New York, New Jersey, Pennsylvania, and Delaware; four
branches in the Southern States, including the States of
Maryland, Virginia, West Virginia, North Carolina, South
Carolina, Georgia, Florida, Alabama, Mississippi, Louis­
iana, Texas, Arkansas, Kentucky, Tennessee, and also
the District of Columbia; four branches in the Middle
Western States, including the States of Ohio, Indiana,
Illinois, Michigan, Wisconsin, Minnesota, IowS, and
Missouri; four branches in the Western and Pacific
States, including the States of North Dakota, South
^ a k o ta , Nebraska, Kansas, Montana, Wyoming, Colorado,
New Mexico, Oklahoma, Washington, Oregon, California,
Idaho, Utah, Nevada, and Arizona.
1
VWhen the cities in which the branches are to be located
have been selected the organization committee shall forth­
with divide the entire country into fifteen districts, with
one branch of the National Reserve Association in each^
district.
t A'/Ka
The districts may be readjusted M m -time to^im e, and
new districts and new branches f.may be created* b y the
directors of the National Reserve Association.

ORGANIZATION OP LO
CAL ASSOCIATIONS.
SBCj l 5. All subscribing banks within a district shall,
u group'themsehnes, sHhjont tn thn approvn|
ization committee or the National Reserve Association,
; into local associations of not less than ten banks, with an
aggregate capital and surplus of at least five millions of
dollars, for the purposes hereinafter prescribed: Provided,
TbaUnotrinorc Hum one such association -shah-be formed
in, 4W*y~-city> and that the territory comprised in each
associatie»«hall becontiguous: Provided farther^ That the
_ territory included in the local associations comprising *a
district shall be so apportioned that every bank in said
district shall be located within the boundaries of some
local association: And provided further, That every sub­
scribing bank shall become a member only of the local
association of the territory in which it is situated.
The local associations in each district may be readjusted
from time to time and new associations may be created
by the directors outlie bmilMl uf said ilisliiil wliin t ie
of tfie National Reserve " Association.




J O PER CENT.
S

4 N B SECTION
MONOTYPE
The members of tlju* local association^»hall join in
articles of associa^olfT iiaving b ce v jjj^ r^ u th ^ ^ e ^ M frdo
so by\resolutjpriof the board of/lirectors o f each of tne
membWjasfnks. These articles/ shall provide that trie
board oTdirectors of the local a/sociation shall be autliprized to eiiscount or rediscou/t paper/ for any member
thereof aiki to offer such pa£er for rediscount willy the
branch of\ the National Reserve Association for/th at
district, thd gain or profit accruing to the local association
from said transactions to /be distributed from t time to
time, after ttje payment of ill expenses, among tl(e several
banks of the\ local association in proportion t</ the ratio
aggregate
capital and surplus of the intm'iers of the local association.
In the event that the expenses shall exceed the earnings
or that any losses shall fcccur upon any A>f the paper so
rediscounted, the several banks composing the local asso­
ciation shall beaf 3&id expenses and losses in proportion
to the ratio to which t teir capital alid surplus bears to
the aggregate capital at d surplus of* the members of the
local association, in d the directors/of the local associa­
tions shall be authorized by the articles of association to
levy an assessment jor these purposes. T lie total amount
of rediscounts by/si local association with the National
Reserve Associat^ori shhll not atj any time exceed the
aggregate capital an\l surplus of .the banks fordiing such:-,
local association. T^esfe articles; which must be approved
by the/lboard of directors of the National Reserve Asso­
ciation, shall be executed in triplicate, and one copy,
together with7the certified coyfy of the resolutions of the '
boards of directory authorizing the subscribing banks
to sign th^m, shall e filed with the Nationa/1 Reserve
(all/be filed with the branch assoAssociation, one cop
ciation, and otie c (y \sliall be retained by the local
association.
Upon thirty day notice in writing to each member
bank the articles o association of the local association
__ ___________
may be amended b a Vote of three-fourths of the mem­
ber banks by and with W approval of the National
Reserve Association and in like manner as to vote and
approval the local /a ste o cia/id n may assume and exercise
such of the powers and/unctions of a clearing house as
are not inconsistent wjth the purposes of this act. The
National Reserve Association may require any local asso­
ciation to perform Such services \n facilitating the domes­
tic exchanges of/Ane National Reserve Association as the
public interests/may require.
A local association may,
a vo\e oL^wo-thirds of the
members, suspend a bairi/trom theVnvilege ©^member­
ship for a failure for thirty days u/maintain i/fe reserves,
or to make the reports requirejr by this act* or for mis­
representation in jmy report/or examination as to its
condition, or as to the cha/acter or extant of its assets
or liabilities, oj for failure or for refusa/ror thirty days
to cdmply with any o f the provision/ of \this act. A
suspension from a lafal association dnall operate as a
si^pensioq/from \X iyfprivileges of the National Reserve
ssociation.

ELECTION O DIRECTORS BY LO AL ASSOCIATIONS.
F
C
SRC. 6, Each local association shall have a board of
directors, the number to be determined by the by-laws
of the local association. Three-fifths of that number
shall be elected by ballot cast by the representatives of.
the banks that are members of the lf>cal association, each
bank having one representative and each representative
one vote for each of the positions to be filled without




of the National Reserve
L

ELECTION OF DIRECTORS BY LO AL ASSOCIATIONS.
C
S ec . 6, Each local association shall have a board of
directors, the number to be determined by the by-laws
of the local association. Three-fifths o! that number
shall be elected by ballot cast by the representatives of.
the banks that are members of the K>cal association, each
bank having one representative and each representative
one vote for each of the positions to be filled without
reference to the number of shares which the bank holds
in the National Reserve Association. Two-fifths of the
whole number of directors of the local association shall be
elected by these same representatives of the several banks
that are members of the association, but in voting for,
these additional directors each representative shalt be
entitled to as many votes as the bank which he represents
holds shares in the National Reserve Association. In
neither case shall voting by proxies be allowed. The
authorized representatives of a bank, as herein provided,
must be either the president, vice president, or cashier of
the bank he represents.
Each director when appointed or elected shall take an;
oath that he will, so far as the duty devolves upon him*
diligently and honestly administer the affairs of such
association and will not knowingly violate or willingly
permit to be violated any of the provisions of this act.
The directors originally elected shall hold office until
the second Tuesday in February immediately following
their election, and thereafter the directors shall be elected
annually on that date and shall hold office for the term of
one year.
The board of directors of the local association shall have
authority to make by-laws, not inconsistent with law,
subject to the approval of the directors of the National
Reserve Association.

ELECTION OF DIRECTORS BY BRANCH ASSOCIATIONS.
S e c . 7. Each of the branches of the National Reserve
Association shall have a board of directors, the number, not
less than twelve, to be fixed by the by-laws of the branch.
These directors shall be elected in the following manner:
The board^ of each local association shall elect by ballot
a voting representative or proxy holder. One-half of the
directors of the branch shall be elected by the vote of such
representatives, each representative having one vote for
each of the positions to be filled, without reference to the
number of shares which the bank composing the associa­
tion which lie represents holds hi the National Reserve




20 PER CENT.

5 NB'

MONO. SEC.

Association. One-third of the directors shall be elected by
the same voting representatives or proxy holders, but each
voting representative at this election shall have a number
of votes equal to the number of shares in the National
Reserve Association held by all the banks composing the
local association which he represents. The remaining onesixth of the directors shall be chosen by the directors
already elected and shall fairly represent the industrial,
commercial, agricultural, and other interests of the dis­
trict and shall not be officers or, while serving, directors of
banks, trust companies, insurance companies, or other
financial institutions. The manager of the branch shall be
ex-officio a member of the board of directors of the branch
dna shall be chairman of the board.
Each director when appointed o r elected shaft, take an
oath that he will, so far as the duty devolves upon him,
diligently and honestly administer the affairs of such asso­
ciation and will not knowingly violate or willingly permit
to be violated any of the provisions of this act.
All the members of the board of directors of the branch
except the ex officio member shall at the first meeting of
the board be divided into three classes. One-third of the
directors shall hold office until the first Tuesday in March
immediately following the election; one-third of the direc­
tors shall hold office for an additional period of one year*
after the first Tuesday in March immediately following
the election; the remaining one-third of the directors shall
hold office for an additional period of two years after the
first Tuesday in March immediately following the election.
All elections shall be held on the first Tuesday in March,
of each year, and after the first election all directors shall
be elected for a term of three years.
The board of directors of the branch shall have author- _
ity to make by-laws, not inconsistent with law, subject to,
the approval of the National Reserve Association.

DIRECTORS

O b'

THE NATIONAL RESERVE ASSOCIATION.

S ec . 8. The National Reserve Association shall have a
board of directors, to be chosen in the following manner:
First. Fifteen directors shall be elected, one by the,
board of directors of each branch of the National Reserve.
Association. In case the number of districts shall bev
increased hereafter, each additional district shall be enti­
tled to elect an additional director.
Second. Fifteen directors shall be elected, one bv the
board of directors of each branch of the National Reserve
Association, who shall fairly represent the industrial, com­
mercial, agricultural, and other interests of the country,
and who shall not be officers of banks nor, while serving,
directors of banks, trust companies, insurance companies,
or other financial institutions. In case the number of dis­
tricts shall be increased hereafter, each additional district
shall be entitled to elect an additional director of this class.
Third. Nine directors shall be elected by voting repre­
sentatives of the various districts, each of whom shall cast
a number of votes equal to the number of shares in the
National Reserve Association held by the banks in the
district which he represents. Not more than one of these
directors shall be chosen from one district.
Fourth. There shall be seven ex officio members of the
board, namely: The governor of the National Reserve
Association, who shall be chairman of the board, two
deputy governors of the National Reserve Association, the
Seorptarv o f tEp TV«o C1 1 r tVio C

A




.»»««««*. ««u«v

auMii uc n c v tc u uv vu n u g repre­

sentatives of the various districts, each of whom shall cast
a number of votes equal to the number of shares in the
National Reserve Association held by the banks in the
district which he represents. Not more than one of these
directors shall be chosen from one district.
Fourth. There shall be seven ex officio members of the
board, namely: The governor of the National Reserve
Association, who shall be chairman of the board, two
deputy governors of the National Reserve Association, the
Secretary of the Treasury, the Secretary of Agriculture,
the Secretary of Commerce and Labor, and the Comp­
troller of the Currency.
All the members of the board, except the ex officio
members, shall at the first meeting of the board be divided
into three classes. One-third of the directors shall hold
office until the first Tuesday in April immediately follow^
ing the election; one-third of the directors shall hold office
for an additional period of one year after the first Tuesday
in April immediately following the election; the remaining
one-third of the directors shall hold office for an additional
period of two years after the first Tuesday in April imme­
diately following the election. All elections shall be held
on the first Tuesday in April of each year, and after the
first election all directors shall be elected for a term of
three years.
Each director shall take an oath that he will, so far as
the duty devolves upon him, diligently and honestly
administer the affairs of such association and will not
knowingly violate or willingly permit to be violated any
of the provisions of this act.
The board of directors of the National Reserve Asso­
ciation shall have authority to make by-laws, not incon­
sistent with law, which shall prescribe the manner in
which the business shall be conducted and the privileges
granted to it by law exercised and enjoyed.

APPOINTM
ENT O OFFICERS O THE NATIONAL RESERVE
F
F
ASSOCIATION.
SBC. 9. The governor of the National Reserve Associa­
tion shall be selected by the President of the United
States from a list of not less than three submitted to him
by the board of directors of said association. The person
so selected shall thereupon be appointed by the said
board as governor of the National Reserve Association
for a term of ten years, subject to removal for cause
by a two-thirds vote of the board. There shall be two
deputy governors, to be elected by the board, for a term
of seven years, subject to removal for cause by a majority
vote of the board. The two deputies first elected shall
serve for terms of four years and seven years, respectively.
In the absence of the governor or his inability to act the
deputy who is senior in point of service shall act as
governor. The board of directors shall have authority to
appoint such other officers as may be provided for by the
articles of association or the by-laws.




28 1’F.K CENT.
:*

6

N

B

MONOTYPE SECTION

.

<

n r t h P N \TIONAL, RESERVE ASSO?
ORGANIZATION PAPERS OP THE NATIONAL
CIATION.

« Ec .o When the board of directors of the National
Reserve \ssociation is duly organized it shall call upon
the subscribing banks for a payment of fifty per centum .
cuTthe amount of their subscriptions to the capital^s ock
of the association. When one hundred millions of dollars |
“ S s u c h T p it a l have b e e n ^ in
shall at once proceed to execike and file with the Lomp
troller of the Currency articles of association an , .
organization certificate as hereinafter provided.
.
ART,CUES OF

ASSOCIATION
'

OF THE

; ASSOCIATION.

NATIONAL

RESERVE ■/

X

S ec i i The articles of association shall specify in gen
eral terms'the ob\ect for which the National Reserve Asso^
ciation is formed and shall contain such other Prov' s' ° nS'
^ c o n s i s t e n t with law. as the association may - ^
to adopt for the regulation of its business and the conduct
of its affairs These articles shall be signed in dupl cate
t, "
o. .»« I ! * * «< * * / * “ “ '
Reserve Association, one copy being re ai
N a S I a l Reserve Association and the other filed with
fhe Comptroller of the Currency. These articles may be
.» y
by th . v o .. o. • X L 7 £ S m
b.
board of directors, a copy of the amendment to be hied
with the Comptroller of the Currency.
ORGANIZATION CERTIFICATE OF THE NATIONAL RESERVE
X^SOCIATION.

S ec 1 2 The organization certificate shall be executed
by the directors of the National Reserve Association and
shall specifically state :
ijirct The title of said
Second. That its head
injrton in the District of
Third. The amount of

association.
office shall be located at V. ashColumbia.
capital stock and the number of
shares into which the same is to be divided.
Fourth The title and location of each bank bolding
s t^ k n J d association and the number of shares held
by each a"d the amount paid thereon, which must in no
case be less than fifty per centum of the amount of th
ranital stock subscribed for by said bank.
*
Fifth The fact that the certificate is made to ena
i

aCtThe organization certificate shall be signed by at least
W f o ^ h s of the directors of the National Reserve
Association and acknowledged before a judge of a court
of ^ o r d or a notarv public, and shall be so executed and
acknowledged in duplicate, authenticated by the se? l o
S h court or notary, one copy to be retained for the
files of the association and one copy forwarded to the
Comptroller of the Currency.
OWNERSHIP OF STOCK IN THE NATIONAL REBBRVE ASSOCIA*
TION, INCREASE AND REDUCTION OF CAPITAL.

SEC. , 3 . Shares of the c a p i t a t e National Reserve
Association -shall not be transferable, and under n
cumstances shall they be owned otherwise than by 4
subscribing banks, nor may they be owned by any bank
other than in the proportion herein provided. In case
^subscribing bank increases its capital it shall thereupon
subscribe for an additional amount of the capital of the
' • National Reserve Association ^ t w e n t y ^ c e ^ n




ow “

0F CAPITA"
c w es of the c a p ita fo tth e National Reserve

C

5

Association ,s^ajJ
Z
cumstances shall they
owned by any bank
subscribing banks, nor may they be owneQ >
>
suDscnm s
proportion herein provided. In case
other than in the P P
a, shall thereupon
a subscribing bank me
capital of the
.u tecrib . lor U .ddit.oi.al
“ % •
National Reserve Associa 10 q
therefor its then
of the bank s increase ° f ^
,a l’t pubhshed statement of
book value as shown
^ e last p ^ menibership in
said association. A bank pp y S
f its
the National Reserve Association a t any t^ ^
,
formation must subscribe or a”
centum of the
of said association equal to t w e n t y P « ^
its then
capital of said " ^ " ^ ' " ^ ^ " a s t published statement of
book value as shown by the * * ^
^
Nationa,

5

said association.
R e m A c tio n h » * “
,h , i n c e »f

.

*

ib ^ h ip

" on
association, tne L ^ d
ood.ru
n c C i d C c showing » d
P f
acknowledged before a j
° ° T P^ b C, “ c n ,“
y
troller of the Curre y.
reduce, tt. e.p.t.l .<
“7 T

.

^

b .n k

* pit her on account

» “ ^
oi .

g
°

d! «dd

■>
j “ty,e amount
' . “ li bo
o. record or .
of the Comp-

* . f i r i n g b .« t
■
a proportionate
of !aid
ion.

.o l.n t .r y li<,uid.tlon it sh.U

.h » ' J * holdings o,

£ £ .!.» receive in p . y » « t r h e to r *
their then book value as shown by the last published
^

r ^

r T

t f L

i o

n

a l

Reserve A s ^ ia tio n

shall become insolvent and a
stock held by it in the association s h a ll^ ^

and
inso,vent

the balance, after paying a
being hereby declared
bank to the association (such debt.
S . i t th receiver
to be a first lien upon the stock), shall be paid to the receiv er
of the insolvent bank.
National Reserve
Whenever the capital stock oi
reduction
Association is reduced, either on acc° “ ^ the liquidation
in capital of members of tbe associat
d, J } ors shal|

of the Comptroller of the Currency.

^




EXEM PTIO N FROM LOCAL AND STATE TAXATIO N.

S e c . 15. The National Reserve Association and its
branches and the local associations shall be exempt from
local and State taxation except in respect to taxes upon
real estate.
E X E C U T IV E COMMITTEE OF THE NATIONAL R E S E R V E
ASSOCIATION.

S ec . 15. The directors of the National Reserve Associa­
tion shall annually elect from their number an executive
committee and such other committees as the by-laws of
the National Reserve Association may provide. The exec­
utive committee shall consist of nine members, of which
the governor of the National Reserve Association shall be
ex officio chairman and the two deputies and the Comp­
troller of the Currency ex officio members, but not more
than one of the elected members shall be chosen from any
one district.
T he executive committee shall have all the authority
which is vested in the board of directors, except such as
may be specifically delegated by the board to other com­
mittees or to the executive officers, or such as may be
specifically reserved or retained by the board.
AUDITING COMMITTEE.

S e c . 16. There shall be an- auditing committee elected
annually by the board of directors from among their num­
ber, excluding the members of the executive committee,
of which the Secretary of the Treasury shall bp ex c^fficio
chairman. It shall be the duty of this cofnmittee to
audit the books of the National Reserve Association and
of the branches and to make a public -repor^ of the result
of such-audit at least once a year.

9

E X E C U T IV E O FFIC ER S OF BRANCHES.

S e c . 17. Each branch shall have a manager and a dep­
uty manager appointed from the district by the governor
of the National Reserve Association with the approval of
the executive committee and subject to removal at any
time by the same authority. The powers and duties and*
length of service of the manager and deputy manager and
of the various committees of the branches shall be pre­
scribed by the by-laws of the National Reserve Association.
E X E C U T IV E O FFIC ERS OF LOCAL ASSOCIATIONS.

S e c . 18. The directors of each local association shall
annually elect from their number a president, a vice presi­
dent, and an executive committee, whose powers and
duties a n d term s o f office sh a ll be d eterm in ed b y th e b y ­

laws of the local association, subject, however, to the
provisions of this act.
LIST S OF SH AREH O LD ERS.

S e c . 19. The National Reserve Association shall cause
to be kept at all times, at the head office of the associa­
tion, a full and correct list of the names of the banks
owning stock in the association and the number of shares
held by each. Such list shall be subject to the inspection
of all the shareholders and creditors of the association, and
a copy thereof on the first Monday of Ju ly of each year,
verified by the oath of the governor or deputy governor,
shall be transmitted to the Comptroller of the Currency.




8 NB

..
.
.

MONO. SEC.
EVRNTNGS AND DIVIDENDS.

S ec . 20. The earnings of the National Reserve Associa*
tion shall be distributed in the following manner:
After the payment of all expenses and taxes the share­
holders shall be entitled to receive annually four per
centum on the paid-in capital, which minimum dividend
shall be cumulative. Further net earnings shall be
divided, one-half to go to the surplus fund of the National
Reserve Association until said fund shall amount^to
twenty per centum of the paid-in capital, one-fourtli to-go
to the United States, and one-fourth to the shareholders,
but when the shareholders’ dividends shall amount to five
per centum per annum on paid-in capital they shall re­
ceive no additional dividends. After the shareholders re­
ceive five per centum on the paid-in capital the net earnings
shall then be divided, one-half to be added to the surplus
fund of the National Reserve Association and one-lialf to
go to the United States. After the shareholders receive five per centum per annum on paid-in capital and
the surplus fund of the National Reserve Association
amounts to twenty per centum of the paid in capital,^
one-half of the net earnings shall go to the bnited States
and one-half to the contingent fund, which fund shall be
maintained at an amount equal to one per centum of the
paid-in capital, but not to exceed in any event two mil­
lion dollars, and shall be used to meet losses, and such
^und shall upon the filial dissolution of the National
Reserve Association go to the United States, and shall
not under any circumstances be included in the book
value of the stock, or go to the shareholders. Whenever
and so long as the contingent fund shall remain unim­
paired all excess earnings shall go to the United States.
CORPORATE

POW ERS

OF

THE

NATIONAL

RESERV E

/

.
jv A ^
j /-

^
[ [W
(va ’
\_H ^

L

S e c . 21. Upon duly making and f i l i n g o f - f t f t *
sociatioa -and a » organization certificate^ the National
l Reserve Associatioa.shall become as from the date of the
' exga*H !l O its organisation certificate a body corporate
.iU f
and as such and by that name shall have power
First. To adopt and use a corporate seal.
Second. To have succession for a period of fifty years
from the date of its organization.
Third. To make contracts.
Fourth. To sue and be sued, complain and defend, in
any court of law and equity, as fully as natural persons.
Fifth. To elect or appoint directors and officers in the
manner hereinbefore provided, define their duties, re­
quire bonds of them, and fix the penalty thereof.
.
Sixth. To prescribe by its board of directors by-laws
not inconsistent with this.act, regulating the manner in
which its^roperty shall be trensferred, its general busi­
ness conducted, and the privileges granted to it by law
exercised ancl enjoyed.
Seventh. To exercise by its board of directors or duly
authorized officers or agents, subject to law, all powers
and privileges conferred by this act.
G U A R A N T IE S OF LOCAL ASSOCIATION.

'

A^gEC. 22. Any member of a local association may apply
V
as*
such association for a guaranty of the commercial
-L t
........... ............................
.....................................
'

,

4

^^

'

1

ASSOCIATION.

f

• r

ii fair) 4
t\

.

;

H"

IV a.
M u

.

v

h a t'd

**




exercised and enjoyedr
Seventh. To exercise by its board of directors or duly
authorized officers or agents, subject to law, all powers
and privileges conferred by this act.

!

guaranties of local association.

S e c . 22. Any member of a local association may apply
to such association for a guaranty of the commercial
paper which it desires to rediscount at the branch of the
National Reserve Association in its district. Any such
bank receiving a guaranty from a local association shall
pay a commission to the local association, to be fixed in
each case by its board of directors. The guaranty of the
local association, in the event of loss, shall be met by the
members of the local association in proportion to the ratio
which their capital and surplus bears to the aggregate
capital and surplus of the members of the local associa­
tion, and the commission received for such guaranty,
after the payment of expenses and possible losses, shall
be distributed among the several banks of the local asso­
ciation in the same proportion. A local association shall
have authority to require security from any bank offering
paper for guaranty, or it may decline to grant the appli­
cation. The total amount of guaranties by a local asso­
ciation to the National Reserve Association shall not at
any time exceed the aggregate capital and surplus of the
banks forming the guaranteeing association.

CLEARING HOUSE.
S e c . 23. Any local association may by a vote of threefourths of its members and with the approval of the
National Reserve Association, assume and exercise such
of the powers and functions of a clearing house as are not
inconsistent with the purposes of this act. The National
Reserve Association may require any local association to
perform such services in facilitating the domestic ex­
changes of the Reserve Association as the public interests
may require.

SUSPENSION.
Sec. 24. A local association may by a vote of two-thirds
of its members suspend a bank from the privileges of mem­
bership for a failure for thirty days to maintain its reserves,
or to make the reports required by this act, or for mis­
representation in any report or examination as to its
condition or as to the character or extent of its assets or
liabilities.

PRIVILEGES O SUBSCRIBING BANKS.
F
SEC. 25. All of the privileges and advantages of the
National Reserve Association shall be equitably extended
to every bank of any of the classes herein defined which
shall subscribe to its proportion of the capital of the
National Reserve Association and shall otherwise conform
to the requirements of this act.




9'NB

MONO. SEC.

GOVERNM
ENT O THE UNITED STATES AND BANKS OW
F
NING
STO TO BE SOLE DEPOSITORS.
CK
.
vSEC. 26. The Government of the United States and
banks owning stock in the National Reserve Association
shall be the only depositors in said association. All
domestic transactions of the National Reserve Association
shall be confined to the Government and the subscribing
banks, with the exception of the purchase or sale of G ov­
ernment or State securities or securities of foreign govern­
ments or of gold coin or bullion.

NATIONAL RESERVE ASSOCIATION FISCAL AGENT OF THE
GOVERNM
ENT.
S ec . 27. The Government of the United States shall
deposit its general funds with the National Reserve Asso­
ciation, and thereafter all receipts of the Government
shall be deposited with the National Reserve Association.
All disbursements by the Government shall be made
through the National Reserve Association.

INTEREST O DEPOSITS.
N
S e c . 28. The National Reserve Association shall pay no1
interest on deposits.

REDISCOUNTS O BILLS O EXCHANGE ARISING OUT O
F
F
F
CO M
M ERCIAL TRANSACTIONS FO SUBSCRIBING BANKS.
R
S e c . 29. 1 he National Reserve Association may redis­
count for and with the indorsement of any bank having
a deposit with it, notes and bills of exchange arising out
of commercial transactions; that is, only notes and bills
of exchange issued or drawn for agricultural, industrial,
or commercial purposes, and not including notes or bills
issued or drawn for the purpose of carrying stocks, bonds,
or other investment securities.
Such notes and bills must have a maturity of not more
than twenty-eight days, and must have been made at
least thirty days prior to the date of rediscount. The
amount so rediscounted shall in no case exceed the capi­
tal of the bank applying for the rediscount. The aggre­
gate of such notes and bills bearing the signature or in­
dorsement of any one person, company, firm, or corpora­
tion, rediscounted for any one bank, shall at no time
exceed ten per centum of the unimpaired capital and
surplus of said bank.

REDISCOUNTS FO SUBSCRIBING BANKS O NOTES AND
R
F
BILLS O EXCHANGE GUARANTEED BY THE LO A
F
CL
ASSOCIATION.
S ec . 30. The National Reserve Association may also*
rediscount, for and with the indorsement of any bank
having a deposit with it, notes and bills of exchange
arising out of commercial transactions as hereinbefore
defined, having more than twenty-eight days, but not
exceeding four months, to run, but in such cases the'paper
must be guaranteed by the local association of which the
bank asking for the rediscount is a member.

DISCOUNT O DIRECT OBLIGATION OF DEPOSITING BANK
F
INDORSED BY LO AL ASSOCIATION.
C
S e c . 3 1. Whenever, in the opinion of the governor of




transactions as hereinbefore
defined, having more than twenty-eight days, but not
exceeding four months, to run, but in such cases the'paper
must be guaranteed bv the local association of which the
bank asking for the rediscount is a member.
w n s iu g

out

01

c o n ju i c r c m i

DISCOUNT O DIRECT OBLIGATION OF DEPOSITING BANK
K
INDORSED BV LO AL ASSOCIATION.
C
S e c . 3 1. Whenever, in the opinion of the governor o£
the National Reserve Association, the public interests so
require, such opinion to be concurred in by the executive
committee of the National Reserve Association and to
have the definite approval of the Secretary of the Treas­
ury, the National Reserve Association may discount the
direct obligation of a depositing bank, indorsed by its
local association, provided that the indorsement of the
local association shall be fully secured by the pledge and
deposit with it of satisfactory securities, which shall be
held by the local association for account of the National
Reserve Association; but in no such case shall the amount
loaned by the National Reserve Association exceed threefourths of the actual value of the securities so pledged.

RATES O DISCOUNT.
F
$EC. 32. The National Reserve Association shall have
authority to fix the rates of discount from time to time,
which when so fixed shall be published, and shall be uni­
form throughout the United States.

PURCHASE O ACCEPTANCES BY THE NATIONAL RESERVE
F
ASSOCIATION.
S e c . 33. The National Reserve Association may, when­
ever its own condition and the general financial conditions
warrant such investment, purchase from a subscribing
bank acceptances of banks or acceptors of unquestioned
financial responsibility. Such acceptances must have
arisen out of commercial transactions, must have not
exceeding ninety days to run, and must be of a character
generally known in the market as prime bills. Such
acceptances shall bear the indorsement of the subscribing
bank selling the same, which indorsement must be other
than that of the acceptor.
•

INVESTMENT IN GOVERNM
ENT AND STATE BONDS.
S e c . 34. The National Reserve Association may invest
in United States bonds, also in short-term obligations
having not more than one year to run of the United
States or its dependencies, or of any State, or of foreign
governments.

POW TO DEAL IN G LD COIN O BULLION.
ER
O
R
S e c . 35. The National Reserve Association shall have
power, both at home and abroad, to deal in gold coin or
bullion, to make loans thereon, and to contract for loans
of gold coin or bullion, giving therefor, when necessary,
acceptable security, including the hypothecation of an v '
of its holdings of United States bonds.




10MONO.B
N SEC.
POW TO DEAL IN FOREIGN EXCHANGE.
ER
SEC. 36. The National Reserve Association shall have
power to purchase from its subscribing banks and to sell
m v th l^
^ w 5 mdorsement- checks or bills of exchange
p yable in such foreign countries as the board of the Na­
tional Reserve Association may determine. These bills of
exchange must have arisen out of commercial transactions
must have not exceeding ninety days to run, and must
bear the signatures of two or more responsible parties of
which the last one shall be that of a subscribingbank.

POW TO M
ER
AINTAIN BANK ACCOUNTS AND TO ESTABLISH
AGENCIES IN FOREIGN COUNTRIES.
S e c . 37. The National Reserve Association shall have
power to open and maintain banking accounts in foreign
countries and to establish agencies in foreign countries for
the purpose of purchasing and selling and collecting for­
eign bills of exchange, and it shall have authority to buy
and sell, with or without its indorsement, through such
correspondents or agencies, checks or prime foreign bills
of exchange which have arisen out of commercial trans­
actions, which have not exceeding ninety days to run,
and which bear the signatures of two or more responsible
part ie3.
*

DO ESTIC EXCHANGES.
M
S ec . 38. It shall be the duty of the National Reserve
Association or any of its branches, upon request, to transer any part of the deposit balance of any bank having an
account with it to the credit of any other bank having an
account with the National Reserve Association. If a de­
posit balance is transfeired from the books of one branch
to the books of another branch, it may be done, under
regulations to be prescribed by the National Reserve As­
sociation by mail, telegraph, or otherwise, at rates to be
fixed at the time by the directors of the branch at which
the transaction originates, or an executive committee
thereof.

RESERVES OF SUBSCRIBING BANKS.
S ec . 39. All subscribing banks must conform to the
following requirements as to reserves to be held against
deposits of various classes, but the deposit balance of any
subscribing bank in the National Reserve Association and
any notes of the National Reserve Association which it
holds may be counted as a part of its required reserve:
irst. On demand deposits: National banks in differ­
ent localities shall maintain the same percentages of
reserve against demand deposits as is now required by
aw, and the same percentages of reserve against demarid
deposits shall be required of all other subscribing banks
in the same localities: P ro v id e d , however, That all or any'
part of the legal reserve of all subscribing banks may be
kept on deposit with the National Reserve Association
or its branches.
Second. On time deposits: All time deposits and
moneys held in trust payable or maturing within thirty
days shall be subject to the same reserve requirements
as demand deposits in the same locality. All time
deposits and moneys held in trust payable or maturing
more than thirty days from date shall be subject to the
same reserve requirements as demand deposits for the




kept on deposit with the National Reserve Association
or its branches.
Second. On time deposits: All time deposits and
moneys held in trust payable or maturing within thirty
days shall be subject to the same reserve requirements
as demand deposits in the same locality. All time
deposits and moneys held in trust payable or maturing
more than thirty days from date shall be subject to the
same reserve requirements as demand deposits for the
thirty days preceding their maturity, but no reserves
sh$ill be required. therefor except for this period. Such
time deposits and moneys held in trust must be fepresented bv certificates or instruments in writing and be
payable only at a stated time not less than thirty days
from date of deposit, and must not be allowed to be with­
drawn before the time specified without thirty days’
notice.
"
Third. On savings deposits: Savings deposits, as deCU f
fined in this act, shall be subject to notice of withdrawal J
of not less than thirty days and shall be covered by a ^
reserve amounting to forty per centum of that required
against demand deposits in the same locality.

•

V

RESERVE O THE NATIONAL RESERVE ASSOCIATION.
F
S e c . 40. All demand liabilities, including deposits and
circulating notes, of the National Reserve Asso6iatipn
shall be covered to the extent of fifty per centum by a
reserve of gold (including foreign gold coin and gold bullion) or other money of the United States which the
national banks are now authorized to hold as a part of
their legal reserve: Provided, however, That whenever and
so long as such reserve shall fall and remain below fifty
per centum the National Reserve Association shall pay a
special tax upon the deficiency of reserve at a rate increas­
ing in proportion to such deficiency as follows: For each
two and one-half per centum or fraction thereof that the
reserve falls below fifty per centum a tax shall be levied
at the rate of one and one-half per centum per annum.
All note issues of the National Reserve Association
must be covered to the extent of at least one-third by
gold or other lawful money, and the remaining portion by
bankable commercial paper as herein defined or obliga­
tions of the United States, but no notes Shall bfe issued
whenever the lawful money so held shall fall below onethird of the notes outstanding.
In computing the demand liabilities of the assodtition
a sum equal to one-half of the amount of the United
States bonds held by the association which have been
purchased from the national banks,- and Which had pre­
viously been deposited by those banks-to secure their
circulating notes, shall be deducted.

REPORTS O CONDITION O THE NATIONAL RESERVE
F
F
ASSOCIATION.
S e c . 41. The National Reserve Association shall make
a report, showing the principal items of its balance sheet,
to the Comptroller of the Currency once a week. These
reports shall be made public. In addition, full reports
shall be made to the Comptroller of the Currency coinci­
dent with the five reports called for each year from the
national banks.

1

.




11 N B

MONO. SEC.

rK
ports of subscribing hanks to

Tim national

KESERVE ASSOCIATION.
S e c . 42. All subscribing banks shall, under regulations
to be prescribed by the National Reserve Association,
make a report monthly, or oftener if required, to said
association showing the principal items of their balance
sheets.
examinations.

S e c . 43. T h e N a t io n a l R e s e r v e A s s o c ia tio n m a y fo r a ll
s u b s c r ib in g b a n k s a c c e p t c o p ie s o f th e r e p o r ts o f th e
n a t io n a l- b a n k e x a m in e r s fo r n a tio n a l

b a n k s a n d c o p ie s

o f t h e r e p o r ts o f S t a t e - b a n k e x a m in e r s fo r S t a t e b a n k s
a n d t r u s t c o m p a n ie s , w h e re th e fu r n is h in g o f su c h in fo r ­
m a t io n is n o t c o n t r a r y to la w :
th e sta n d a rd

Provided, however, T h a t

o f su c h e x a m in a t io n s , b o th N a t io n a l a n d

S t a t e , m e e ts t h e r e q u ir e m e n ts o f th e N a t io n a l R e s e r v e
A s s o c ia tio n .

T h e N a t io n a l R e s e r v e A s s o c ia tio n s h a ll h a v e

th e r ig h t a t a n y tim e to e x a m in e o r c a u s e to b e e x a m in e d
b y it s o w n r e p r e s e n t a t iv e s a n y s u b s c r ib in g b a n k .

The

N a t io n a l a n d S t a t e e x a m in e r s sh a ll b e a lfe flg fr su c h a d d i­
tio n a l c o m p e n sa tio n )!© b e p a id b v th e N a t io n a l R e s e r v e
A s s o c ia t i o n , fo r m a k in g re p o rts to it a s th e d ir e c to r s
t h e r e o f m a y c o n s id e r ju s t a n d e q u ita b le .

FURTHER NOTE ISSUES BY NATIONAL BANKS PROHIBITED.
S e c . 44. Ihere shall be no further issue of circulating
notes by any national bank beyond the amount now out­
standing. National banks may, if they choose, maintain
their present note issue, but whenever a bank retires the
whole or any part of its existing issue it shall permanently
surrender its right to reissue the notes so retired.

PURCHASE O TW PERCENTUM BONDS BY NATIONAL
F O
RESERVE ASSOCIATION.
S e c . 45. Ihe National Reserve Association must, for a
period of one year, offer to purchase at a price not less
than par and accrued interest the two per centum bonds
held by subscribing national banks and deposited to secure
their circulating notes. 1 lie National Reserve Association
shall take over these bonds and assume responsibility for
the redemption upon presentation of outstanding notes
secured thereby. The National Reserve Association shall
issue, on the terms herein provided, its own notes as fast
as the outstanding notes secured by such bonds so held
shall be presented for redemption and may issue further
notes from time to time to meet business requirements.

PROVISIONS REQUIRING DEPOSIT O BONDS BY NATIONAL
F
BANKS REPEALED.
S e c . 46. All provisions of law requiring national banks
to hold or to transfer and deliver to the Treasurer of the
United States United States bonds other than those re­
quired to secure outstanding circulating notes and G o v ­
ernment deposits are hereby repealed.

TAX O NOTES OK NATIONAL
N

K K S H K V fi A S S O C IA T IO N .

S ec . 47. Any notes of the National Reserve Associa­
tion in circulation at any time in excess of nine hundred
million dollars which are not covered by an equal amount
of lawful money held by said association shall pay a spe­
cial tax at the rate of one and one-half per centum per
annum, and any notes in excess of one billion two
hundred million dollars not so covered shall pay a spe-




v^4- *m iiuiM AU R E S E R V E ASSOCIATION.

S ec . 47. Any notes of the National Reserve Associa­
tion in circulation at any time in excess of nine hundred
million dollars which are not covered by an equal amount
of lawful money held by said association shall pay a spe­
cial tax at the rate of one and one-half per centum per
annum, and any notes in excess of one billion two
hundred million dollars not so covered shall pay a spe­
cial tax at the rate of five per centum per annum.
CIRCULATING NO^TES FIR ST L IE N ON A SSETS.

SEC. 48. The circulating notes of the National Re­
serve Association shall constitute a first lien upon all its
assets and shall be redeemable in lawful money on pres­
entation at the head office of said association or any
of its branches.
FOR

WHAT CIRCULATING

NOTES

OF

NATIONAL

RESERV E

ASSOCIATION A R E R E C E IV A B L E .
f

S e c . 49. The circulating notes of the National Reserve
Association shall be received at par in payment of all
taxes, excises, and other dues to the United States, and
for all salaries and other debts and demands owing by
the United Slates to individuals, firms, corporations, or
associations, except obligations of the Government which
are by their terms specifically payable in gold, and for all
debts due from or by one bank to another, and for all
obligations due to a bank.
CIRCULATING NOTES FORWARDED ON APPLICATION.

S e c . 50. I he National Reserve Association and its
branches shall at once, upon application and without
charge for transportation, forward its circulating notes
to any depositing bank against its credit balance.
EXCH AN GE OF 2 PER CENT FOR 3 PER CENT BONDS.

S ec . 51. Upon application of the National Reserve As­
sociation the Secretary of the Treasury shall exchange
the two per centum bonds bearing the circulation priv­
ilege purchased from the banks for three per centum bonds
without the circulation privilege, payable after fifty years
from the date of issue.

FRANCHISE TAX..
S e c . 52. The National Reserve Association shall pay tothe Government a special franchise tax of one and one-half
per centum annually during the period of its charter upon
an amount equal to the par value of such bonds transferred
to it bv the subscribing banks.

SALE O REDEM
R
PTION O BONDS..
F
S e c . 53. The Reserve Association shall agree to hold
the three per centum bonds so issued during the period
its corporate existence: Provided, That after five years
the Secretary of the Treasury may at his option permit
the Reserve Association to sell not more than fifty mill­
ions of such bonds annually: And provided further, That
the United States reserves the right at any time to pay
any of such bonds before maturity, or to purchase any of
them at par for the trustees of the postal savings, or
otherwise.




1MONO. B
N SEC.

aA ^

A B IL L
To incorporate the National Reserve Association of the
United States, and for other purposes.
---- 1
-------CH ARTER, CAPITAL, AND LOCATION.
t

Be it enacted by the Senate and House of Representatives
of the United States of America in Congress assembled, That
the National Reserve Association of the United States be,
and it is hereby, created and established for a term of fifty
years from the date of the filing with the Comptroller of
the Currency &
certificate* hereinafter provided»wi# ian authorized capital equal in amount to twenty per
centum of the paid-in and unimpaired capital of all
banks eligible for membership in said National R e­
serve Association. Before the said association shall be
authorized to commence business two hundred million
dollars of the capital stock shall be subscribed and
one hundred million dollars of—
the -capital -stock shall
be paid in cash. The capital stock of said association
shall be divided into shares of one hundred dollars each.
The outstanding capital stock may be increased from
time to time as subscribing banks increase their capital
or as additional banks become subscribers or may be
decreased as subscribing banks reduce their capital or
leave the association by liquidation. The head office of
'the National Reserve Association shall be located in
’Washington, in the District of Columbia.
CORPORATE

POWERS

OF

TH E

NATIONAL

RESERV E

ASSOCIATION.

S e c . 2. Upon duly making and filing with the Comp­
troller of the Currency the certificate hereinafter required
the National Reserve Association shall become a body
corporate and as such and by that name shall have power—
First. To adopt and use a corporate seal.
Second. To have succession for a period of fifty years
from the date of said certificate.
Third. To make all contracts necessary and proper to
'carry out the purposes of this act.
Fourth. To sue and be sued, complain and defend, in
any court of law or equity, as fully as natural persons.
Fifth. To elect or appoint directors and officers in the
manner hereinafter provided and define their duties.
Sixth. To prescribe by its board of directors by-laws
not inconsistent with this act, regulating the manner in
which its property shall be transferred, its general busi­
ness conducted, and the privileges granted to it by law
exercised and enjoyed.
Seventh. To purchase, acquire, hold, and convey real
Estate as hereinafter provided.
Eighth. To exercise by its board of directors or duly
Authorized committees, officers, or agents, subject to law,
all powers and privileges conferred upon the National
feeserve Association by this act.
.
■
m
-

MEMBERSHIP.
SEC. 3. All national banks, and all banks or trust com­
panies chartered by the laws of any State of the United
States or of the District of Columbia, complying with the
requirements for membership in the said National Reserve
Association, hereinafter set forth, may subscribe to its
capital *6 an amount equal to twenty per centum of the
paid-in and unimpaired capital of the subscribing bank,
and not more nor less; and each of such subscribing banks
shall become a member of a local association as hereinafter
Al_ _

- ____• . •
1

. . .

O




m e m b e r s h ip

.

SEC. 3. All national banks, and all banks or trust com­
panies chartered by the laws of any State of the United
States or of the District of Columbia, complying with the
requirements for membership in the said National Reserve
Association, hereinafter set forth, may subscribe to its
capital *6 an amount equal to twenty per centum of the
paid-in and unimpaired capital of the subscribing bank,
and not more nor less; and each of such subscribing banks
shall become a member of a local association as hereinafter
provided. Fifty per centum of the subscriptions to the
capital stock of the National Reserve Association shall be
fully paid in ; the remainder of the subscriptions or any
part thereof shall remain a liability of the subscribers,
subject to call and payment thereof whenever necessary
to meet the obligations of the National Reserve AssOciation'under such terms and in accordance with such regu­
lations as the board of directors of the National Reserve
Association may prescribe.
The subscriptions of a bank or trust company incor­
porated under the laws of any State or of the District of
Columbia to the capital stock of the National Reserve
Association] shall be made subject to the following
conditions:
First. That (a) if a bank, it shall have a paid-in and
unimpaired capital of not less than that required for a
national bank in the same place; and that (6) if a trust
company, it shall have an unimpaired surplus of not less
than twenty per centum of its capital, and if located in
a place having a population of six thousand inhabitants
or less shall have a paid-in and unimpaired capital of not
less than fifty thousand dollars; if located in a city having
a population of more than six thousand inhabitants and
not more than fifty thousand inhabitants, shall have a
paid-in and unimpaired capital of not less than one hun­
dred thousand dollars; if located in a city having a popu­
lation of more than fifty thousand inhabitants and not
more than two hundred thousand inhabitants shall have
a paid-in and 'unimpaired capital of not less than two
hundred thousand dollars; if located in a city having a
population of more than two hundred thousand inhabit­
ants and not more than three hundred thousand inhab­
itants shall have a paid-in and unimpaired capital of not
less than three hundred thousand dollars; if located in
a city having a population of more than three hundred
thousand inhabitants and not more than four hundred
thousand inhabitants shall have a paid-in and unim­
paired capital of not less than four hundred thousand
dollars, and if located in a city having a population of
more than four hundred thousand inhabitants shall have
a paid-in and umimpaired capital of not less than five
hundred t housand dollars.

*




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

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

LO
CATIO O BRANCHES AND DIVISION O THE CO
N F
F
UNTRY
INTO DISTRICTS.
S e c . 5. When the subscriptions to the capital stock of
the National Reserve Association shall amount to the sum
of two hundred million dollars the organization com­
mittee hereinbefore provided shall forthwith proceed to
select fifteen cities in the United States for the location of
the branches of said National Reserve Association: Pro­
vided, That one branch shall be located in the,New England
States, including the States of Maine, New Hampshire,
Vermont, Massachusetts, Rhode Island, and Connecticut;
two b r a n c h e s i n the Eastern S ta te s, in ^ l u d i n w ^ the S ta te s o f
New York, New; Jersey, Pennsylvania, and Delaware; four
branches in the Southern States, including the States of
Maryland, Virginia, West Virginia, North Carolina, South
Carolina, Georgia, Florida, Alabama, Mississippi, Louis­
iana, Texas, Arkansas, Kentucky, Tennessee, and also
the District of Columbia; four branches in the Middle
Western States, including the States of Ohio, Indiana,
Illinois, Michigan, Wisconsin, Minnesota, Iowa, and
Missouri; four branches in the Western and Pacific
States, including the States of North Dakota, South
Dakota, Nebraska, Kansas, Montana, Wyoming, Colorado,
New' M e x i c o . Oklahoma. Washington, Oregon. California,




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

O
RGANIZATION O L C L ASSOCIATIONS.
F OA,
S ec . 6. All subscribing banks within a district shall
be grouped by the organization committee or after organi­
zation, by the National Reserve Association, into local
associations of not less than ten banks, with an aggre­
gate capital and surplus of at least five million dollars,
for the purposes hereinafter prescribed: Provided, That
the territory campy i^eri
each association shall be con­
tiguous and that in apportioning the territory due regard
shall be had for the customary course of business and for
the convenience of the banks forming the association:
Provided further, That fh?-*orriTnry jpoluH ^
?H
1r>~ ]
Tmnnii firms comprising q district ohall be-so apportioned
that, every bank and all the territory within said district
shall be located within the boundaries of some local asso­
ciation: And provided further, That every subscribing
bank shall become a member only of the local association
of tiie territory in which it is situated.
, The banks uniting to form m a t association shall, by /*•
their presidents or vice presidents, under authority from
the board of directors, execute a certificate in triplicate
setting forth the name of the association, the names of
the banks composing it, its principal place of business,
its. territorial limits, and the purposes for which it is
organized. One copy of this certificate shall be filed
with the Comptroller of the Currency, one copy shall be
filed with the National Reserve Association, and one
copy shall be filed with the branch of the National
Reserve Association of the district in which the local
association is included. Upon the filing of such certifi­
cates the local association therein named shall become a
body corporate and bv the name so designated may sue
and be sued and exercise the powers of a body corporate
for the purposes mentioned in this act, and not otherwise.
The local associations in each district may be readjusted
from time to time and new associations may be authorized
by the directors of the National Reserve Association.

1

l ;
' *

^ »>'[
/C ^

-ft tu * * JL.

♦ • .♦ / 'I

V ta
'fe
S ec . 7. Each local association shall ha°ve a board o f
directors, the number to be determined bv the by-laws
of the local association. Three-fifths of that number
shall be elected by ballot cast by the representatives o f
the banks that are members of the local association, each
bank having one representative and each representative
one vote for each of the positions to be filled without
reference to the number of shares which the bank holds
iin the National Reserve Association. Two-fifths of the
whole number of directors of the local association shall be
elected by these same representatives of the several banks
that are members of the association, but in voting for
these additional directors each representative shall be
entitled to as many votes as the bank which; he represents
holds shares in the National Reserve Association. In
neither case shall voting by proxy be allowed. The
authorized representative of a bank, as herein provided*
shall be its president, vice president, or cashier.
Each director when elected shall take an oath that
he will, so far as the duty devolves upon him, diligently
and honestly administer the affairs of such association
and will not knowingly violate or willingly permit to be
violated any of the provisions of this act.
The directors originally elected shall hold office until
the second Tuesday in February immediately following
their election, and thereafter the directors shall be elected
annually on that date and shall hold office for the term o f
one year.
The board of directors of the local association shall have
authority to make by-laws, not inconsistent with lawr
subject to the approval of the directors of the National
Reserve Association.

yELE'CTlO O DIRECTORS BY BRANCH ASSOCIATIONS.
N F

•

•

S e c . 8. Each of the branches of the National Reserve
Association shall have a board of directors, the number, not
less than twelve, to be fixed by the by-laws of the branch.
These directors shall be elected in the following manner:
The board of directors of each local association shall elect
by ballot a voting representative or proxy holder. One-half
of the directors of the branch shall be elected by the vote of
such representatives, each representative having one vote
for each of the positions to be filled, without reference to the
number of shares which the banks composing the associa­
tion which he represents holds in the National Reserve
Association. One-third of the directors shall be elected by
the same voting representatives or proxy holders, but each
voting representative at this election shall have a number
„of votes equal to the number of shares in the National
Reserve Association held by all the banks composing the
local association which he represents. The remaining onesixth of the directors shall be chosen by the directors
already elected and shall fairly represent the agricultural,
commercial, industrial, and other interests of the dis­
trict; and shall not be officers nor, while serving, directors of
banks, trust companies, insurance companies, or other
financial institutions. The manager of the branch shall be
ex-officio a member of the board of directors of the branch
and shall be chairman of the board.
Each director when elected shall take an oath that he
will, so far as the duty devolves upon him, diligently and
honestly administer the affairs of such association and will
not knowingly violate or willingly permit to be violated
any of the provisions of this act.
All the members of the board of directors of the branch
except the ex officio member shall at the first meeting of
the board be divided into three classes. One-third of the
directors shall hold office until the first Tuesday in March
immediately following the election; one-third of the direc­
tors shall hold office for an additional period of one year
after the first Tuesday in March immediately following

MONOTYPE SECTION




.

ELECTION O DIRECTORS BY LO A ASSOCIATIONS.
F
CL




w

•

.

t --------- *

All the members of the board of directors of the branch
except the ex officio member shall at the first meeting of
the board be divided into three classes. One-third of the
directors shall hold office until the first Tuesday in March
imtnediately following the election; one-third of the direc­
tors shall hold office for an additional period of one year
after the first Tuesday in March immediately following
the election; the remaining one-third of the directors shall
hold office for an additional period of two years after the
first Tuesday in March immediately following the election.
All elections shall be held on the first Tuesday in March
of each year, and after the first election all directors shall
be elected for a term of three years. Provided, That all
directors shall serve until their successors have qualified;
and provided further, That the by-laws of the National
Reserve Association shall provide for the manner of filling
any vacancies which may occur in the board of directors
of the branches.
The board of directors of the branch shall have author­
ity to make by-laws, not inconsistent with law, subject to
the approval of the National Reserve Association.

DIRECTORS O THE NATIO
F
NAL, RESERVE ASSOCIATION.

Q

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

s

* VI.




20 PER CENT.
4

N

B

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

APPOINTM
ENT O OFFICERS O THE NATIONAL RESERVE
F
F
ASSOCIATION.
S e c . io . The executive officers of the National Reserve
Association shall consist of a governor, two deputy gov­
ernors, a secretary, and such subordinate officers as m ay
be provided by the by-laws. The governor of the National
Reserve Association shall be selected by the President of
the United States from a list of not less than three sub­
mitted to him by the board of directors of said association.
The person so selected shall thereupon be appointed by the
said board as governor of the National Reserve Association
for a term of ten years, subject to removal for cause
by a two-thirds vote of the board. There shall be two
deputy governors, to be elected by the board, for a term
of seven years, subject to removal for cause by a majority
vote of the board. The two deputy governors first elected
shall serve for terms of four years and seven years, respec­
tively. In the absence of the governor or his inability to
act the deputy who is senior in point of service shall act as
governor. The board of directors shall have authority to
appoint such other officers as may be provided for by the
by-laws.

O
RGANIZATION PAPERS O THE NATIONAL RESERVE ASSO­
F
CIATION.
S e c . i i . When the board of directors of the National
Reserve Association is duly organized it shall call upon
the subscribing banks for a payment of fifty per centum
on the amount of their subscriptions to the capital stock
of said association. When one hundred million dollars
of such capital have been paid in the board of directors
shall at once proceed to execute and file with the Secre­
tary of State a certificate showing the payment of one
hundred million dollars on capital stock, and they shall
further file with the Comptroller of the Currency a certifi­
cate showing the title and location of each bank which has
subscribed to the capital stock of the National Reserve
Association, the number of shares subscribed by each, and
the amount paid thereon.




or sucn capital have been paid in the board of directors
shall at once proceed to execute and file with the Secre­
tary of State a certificate showing the payment of one
hundred million dollars on capital stock, and they shall
further file with the Comptroller of the Currency a certifi­
cate showing the title and location of each bank which has
subscribed to the capital stock of the National Reserve
Association, the number of shares subscribed by each, and
the amount paid thereon.

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




20 PER CENT.

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

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

S e c . 14. The directors of the National Reserve Associa­
tion shall annually elect from their number an executive
committee and such other committees as the by-laws of
the National Reserve Association may provide. The exec­
utive committee shall consist of nine members, of which
the governor of the National Reserve Association shall be
ex officio chairman and the two deputy governors and the
Comptroller of the Currency ex officio members, but n o t, ,
more than one of the elected members shall be chosen from
any one district.
The executive committee shall have all the authority
which is vested in the board of directors, except the power .
of nomination, appointment, and removal of the governor
and deputy governors and except such as may be specifi­
cally delegated by the board to other committees or to
the executive officers, or such as may be specifically
reserved or retained by the board.
BOARD OF EXAM INATIO N.

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

EXECUTIVE OFFICERS O BRANCHES.
F
S ec . 16. Each branch shall have a manager^and a dep­
uty manager appointed from the district by the governor
of the National Reserve Association with the approval of
the executive committee and subject to removal at any
- time by the governor with the approval of the executive
committee of the National Reserve Association. The
powers and duties of the manager and deputy manager
and of the various committees of the branches shall be pre­
scribed by the by-laws of the National Reserve Association.

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

LISTS O SHAREHOLDERS.
F
S e c . 18. The National Reserve Association shall cause
to be kept at all times, at the head"offcce of the^association, a full and correct list of the names of the banks
owning stock in the association and the number of shares
held by each. Such list shall be subject to the inspection
of all the shareholders of the association, and a copy thereof
on the first Mondav of Ttdv of # o
» r*v»
u , ------




U ST-S OP SH AREH O LD ERS.

SEC. 18. The National Reserve Association shall cause
to be kept at all times, at the heacToftce of the*association, a full and correct list of the names of the banks
owning stock in the association and the number of shares
held by each. Such list shall be subject to the inspection
of all the shareholders of the association, and a copy thereof
on the first Monday of Ju ly of each year shall be trans­
mitted to the Comptroller of the Currency.
S e c . 19. The earnings of the National Reserve Asso­
ciation shall be disposed of in the following manner:
After the payment of all expenses and taxes the share­
holders shall be entitled to receive annually a dividend
of four per centum on the paid-in capital, which dividend
shall be cumulative. Further net earnings shall be dis­
posed of as follows: First, a contingent fund shall be
created, which shall be maintained at an amount equal
to one per centum on the paid-in capital, and shall not
exceed in any event two million dollars and shall be used
to meet any possible losses. Such fund shall, upon the final
dissolution of the National Reserve Association, be paid
to the United States and shall not under any circumstances
be included in the book value of the stock or be paid to the
shareholders. Second, one-half of additional net earnings
shall be paid into the surplus fund of the National Reserve
Association until said fund shall amount to twenty per
centum of the paid-in capital, one-fourth shall be paid
to the United States as a franchise tax, and one-fourth
shall be paid to the shareholders, until the shareholders*
dividend shall amount to five per centum per annum on
the paid-in capital, provided no dividends, except the
cumulative dividends above provided for, shall at any
time be paid in excess of five per centum in any one year;
one-half of the additional earnings shall be added to the*
surplus fund, and one-half shall be paid to the United
States as a franchise tax. Whenever and so long as the
surplus fund of the National Reserve Association amounts
to twenty per centum of the paid-in capital and the share­
holders shall have received dividends not exceeding five
per centum, all excess earnings shall be paid to the United
States as a franchise tax.

t




6 N B SECTION
MONOTYPE
GUARANTIES O LO
F CAL ASSOCIATION.
S e c . 20. Any member of a local association may apply
to such association for a guaranty of the commercial
paper which it desires to rediscount at the branch of the
National Reserve Association in its district. Any such
bank receiving a guaranty from a local association shall
pay a commission to the local association, to be fixed in
each case by its board of directors. Expenses and losses
in excess of commissions shall be met by an assessment
of the members of the local association in proportion to
the ratio which their capital and surplus bears to the
a&£regate capital and surplus of the members of the local
association, which assessment shall be made by its board
of directors, and the commission received for such guar­
anty, after the payment of expenses and possible losses,
shall be distributed among the several banks of the local
association in the same proportion. A local association
shall have authority to require security from any bank
offering paper for guaranty, or it may decline to grant the
application. The total amount of guaranties by a local
association to the National Reserve Association shall not
at any time exceed the aggregate capital and surplus of
the banks forming the guaranteeing association.
clearing house.

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

PRIVILEGES O SUBSCRIBING BANKS.
F
S e c . 22. All of the privileges and advantages of the
National Reserve Association shall be equitably extended
to every bank of any of the classes herein defined which
shall subscribe to its proportion of the capital stock
of the National Reserve Association and shall otherwise
conform to the requirements of this act, provided:

SUSPENSION.
That the National Reserve Association may suspend
a bank from the privileges of membership for a failure
for thirty days to maintain its reserves, or to make
the reports required by this act, or for misrepresentation
in any report or examination as to its condition or as
to the character or extent of its assets or liabilities.

GOVERNM
ENT O THE UNITED STATES AND BANKS OW
F
NIGN
STO TO BE THE ONLY DEPOSITORS.
CK
vec.
S

23. The Government of the United States and

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

NATIONAL RESERVE ASSOCIATION FISCAL AGENT O THE
F
GOVERNM
ENT.
S e c . 24. The National Reserve Association shall be the




ernment or State securities or securities of foreign govern­
ments or of gold coin or bullion.

NATIONAL RESERVE ASSOCIATION FISCAL AGENT OF THE
GOVERNM
ENT.
S e c . 24. The National Reserve Association shall be the
principal fiscal agent of the United States. The Govern­
ment of the United States shall upon the organization of
the National Reserve Association deposit its general funds
with said association and its branches, and thereafter
all receipts of the Government shall be deposited with
said Association and its branches, and all disbursements
by the Government shall be made through said associa­
tion and its branches.

INTEREST ON DEPOSITSS e c . 25. The National Reserve Association shall pay no
interest on deposits.

REDISCOUNT O BILLS O EXCHANGE ARISING OUT OF
F
F
CO M
M ERCIAL TRANSACTIONS FO SUBSCRIBING BANKS.
R
S e c . 26. The National Reserve Association through its
branches may rediscount for and with the indorsement of
any bank having a deposit with it, notes and bills of ex­
change arising out of commercial transactions; that is,
notes and bills of exchange issued or drawn for agri­
cultural, industrial, or commercial purposes, and not
including notes or bills issued or^drawn for the purpose
of carrying stocks, bonds, or other investment securities.
Such notes and bills must have a maturity of not more
than twenty-eight days, and must have been made at
least thirty days prior to the date of rediscount. The
amount so rediscounted shall at no time exceed the capi­
tal of the bank for whom the rediscounts are made. The
a§&regate of such notes and bills bearing the signature or
indorsement of any one person, company, firm, or corpo­
ration, rediscounted for any one bank, shall at no time
exceed ten per centum of the unimpaired capital and
surplus of said bank.

;

»




20 PER CENT.

'

•£

7 N B SEC.
MONO.
REDISCOUNTS FO SUBSCRIBING BANNS O NOTES AND
R
F
BILES O EXCHANGE GUARANTEED BY THE LO A
F
CL
ASSOCIATION.
S e c . 27. The National Reserve Association through its
branches may also rediscount, for and with the indorse­
ment of any bank having a deposit with it, notes and
bills of exchange arising out of commercial transactions as
hereinbefore defined, having more than twenty-eight days,
but not exceeding four months, to run, but in such eases
the paper must be guaranteed by the local association of
which the bank asking for the rediscount is a member.

DISCOUNT O DIRECT OBLIGATION O DEPOSITING BANK
F
F
INDORSED BY LO AL ASSOCIATION.
C
S e c . 28. Whenever, in the opinion of the governor of
the National Reserve Association, the public interests so
require, such opinion to be concurred in by the executive
committee of the National Reserve Association and to
have the definite approval of the Secretary of the Treas­
ury, the National Reserve Association through its branches
may discount the direct obligation of a depositing bank,
indorsed by its local association, provided that the in­
dorsement of the local association shall be fully secured
by the pledge and deposit with it of satisfactory securi­
ties, which shall be held by the local association for
account of the National Reserve Association; but in no
such case shall the amount loaned by the National R e­
serve Association exceed three-fourths of the actual value
of the securities so pledged.
S e c . 29. The power of rediscount and discount granted
to the National Reserve Association by sections twentysix, twenty-seven, and twenty-eight of this act shall in
each case be exercised through the branch in the district
in which the bank making the application is located.

RATES OF DISCOUNT.
S ec . 30. The National Reserve Association shall have
authority to fix its rates of discount from time to time,
which when so fixed shall be published, and shall be uni­
form throughout the United States.

ACCEPTANCES.
S e c . 3 1. National banks shall be authorized to accept
commercial paper drawn upon them, having not more
than four months to run, properly secured, and arising
out of commercial transactions. The amount of such ac­
ceptances outstanding shall not exceed one-half the capi­
tal and surplus of the accepting bank, and shall be subject
to the restrictions of section 5200 of the Revised Statutes.

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

INVESTMENT IN GOVERNM
ENT AND STATE BONDS.
S e c . 33. The National Reserve Association may invest
in United States bonds; also in short-term obligations




arisen out of commercial transactions, must have not
exceeding ninety days to run, and must be of a character
generally known in the market as prime bills. Such
acceptances shall bear the indorsement of the subscribing
bank selling the same, which indorsement must be other
than that of the acceptor.

INVESTMENT IN GOVERNM
ENT AND STATE BONDS.
S e c . 33. The National Reserve Association may invest
in United States bonds; also in short-term obligations
of the United States or its dependencies, or of any State,
or of foreign governments having not more than one year
to run.

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

POW TO DEAL IN FOREIGN EXCHANGE.
ER
S e c . 35. The National Reserve Association shall have
power to purchase from its subscribing banks and to sell,
with or without its indorsement, checks or bills of exchange
payable in such foreign countries as the board of directors
of the National Reserve Association may determine. These
bills of exchange must arise out of commercial transactions,
must have not exceeding ninety days to run, and must
bear the signatures of two or more responsible parties, of
which the last one shall be that of a subscribing bank.
i>
;
•

•

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

DO ESTIC EXCHANGES.
M
' t•
S e c . 37. It shall be the duty of the National Reserve
Association or any of its branches, upon request, to trans­
fer any part of the deposit balance of any bank having an
account with it to the credit of any other bank having an
account with the National Reserve Association. If a de­
posit balance is transfeired from the books of one branch
to the books of another branch, it may be done, under
regulations to be prescribed by the National Reserve As­
sociation, by mail, telegraph, or otherwise, at rates to be
fixed at the time by the manager of the branch at which
the transaction originates.

i)
4




4

20 PER CENT.

8 NB

MONO. SEC.

...

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

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

REAL ESTATE LOANS.
S e c . 40. National banks may loan not more than thirty
per centum of their time deposits, as herein defined, upon
improved and unencumbered real estate, such loans not to
exceed fifty per centum of the actual value of the property,
which property shall be situated in the vicinity or in the
territory directly tributary to the bank: Provided. That
this privilege shall not be ^extended to ^ th e^banks acting
as reserve agents/
, . / fc*
~~
reserve of the national reserve association.

S e c . 41. All demand liabilities, including deposits and
circulating notes, of the National Reserve Association
shall be covered to the extent of fifty per centum by a
reserve of gold (including foreign gold coin and gold bul­
lion) or other money of the United States which the
national banks are now authorized to hold as a part of
their legal reserve: Provided, That whenever and so long
as such reserve shall fall and remain below fifty per
centum the National Reserve Association shall pay a
special tax upon the deficiency of reserve at a rate increas­
ing in r»rr»r»r»rtir*n + cn^t.
r»
qc fr»11r*wc* For oor»V
i




U i u u t u i y

CV # tiAV

___4
______o
nded to mhewbanks acti
as reserve a g e n t s / ^ c^kt^n
,
reserve of the national reserve association.

S e c . 41. All demand liabilities, including deposits and
circulating notes, of the National Reserve Association
shall be covered to the extent of fifty per centum by a
reserve of gold (including foreign gold coin and gold bul­
lion) or other money of the United States which the
national banks are now authorized to hold as a part of
their legal reserve: Provided, That whenever and so long
as such reserve shall fall and remain below fifty per
centum the National Reserve Association shall pay a
special tax upon the deficiency of reserve at a rate increas­
ing in proportion to such deficiency as follows: For each
two and one-half per centum or fraction thereof that the
reserve falls below fifty per centum a tax shall be levied
at the rate of one and one-half per centum per annum:
Provided further, That no additional circulating notes
shall be issued whenever and so long as the amount of
such reserve falls below thirty-three and one-third per
centum of the outstanding notes.
S e c . 42. All note issues of the National Reserve Asso­
ciation must be covered by the legal reserves required by
se c tio n j^ o f this act and by bankable commercial paper
as herein defined or'obligations of the United States.
SEC. 43. In computing the demand liabilities of the
National Reserve Association a sum equal to one-half of
the amount of the United States bonds held by the as­
sociation which have been purchased from the national
banks, and which had previously been deposited by those
banks to secure their circulating notes, shall be deducted.

REPORTS OF CONDITION O THE NATIONAL RESERVE
F
ASSOCIATION.
S e c . 44. The National Reserve Association shall make
a report, showing the principal items of its balance sheet,
to the Comptroller of the Currency once a week. These
reports shall be made public. In addition, full reports
shall be made to the Comptroller of the Currency by said
association coincident with the five reports called for each
year from the national banks.




20 PER CENT.

1

9'NB
MONO. SEC.
REPORTS O SUBSCRIBING BANKS TO THE NATIONAL
F
RESERVE ASSO
CIATIO
N.
S e c . 45. All subscribing banks shall, under regulations
to be prescribed by the National Reserve Association,
make a report monthly, or oftener if required, to said
association showing the principal items of their balance
sheets.

EXAM
INATIONS.
S e c . 46. All reports of national-bank examiners in re­
gard to the condition of banks shall hereafter be made in
duplicate, and one copy shall be filed with the National
Reserve Association for the confidential use of its execu­
tive officers and branch managers.
S ec , 47. The National Reserve Association may for all
subscribing banks accept copies of the reports of the
national-bank examiners for national banks and copies
of the reports of State-bank examiners for State banks
and trust companies, where the furnishing of such infor­
mation is not contrary to law : Provided .however, That the
standard of such examinations, both National and State,
meets the requirements prescribed by the National Reserve
Association. The National Reserve Association shall have
the right at any time to examine or cause to be examined
by its own representatives any subscribing bank. The
National Reserve Association may make such payments
to national and State examiners for any services re­
quired of them as the directors may consider just and
equitable.

FURTHER NOTE ISSUES BY NATIONAL BANKS PROHIBITED.

a
*
-*
'
SEC. 48. There shall be no further issue of circulating
notes by any national bank beyond the amount now out­
standing. National banks may maintain their present
note issue, but whenever a bank retires the whole or any
part of its existing issue its right to reissue the notes so
retired shall thereupon cease.

PURCHASE O TW PER CENTUM BONDS BY NATIONAL
F O
RESERVE ASSOCIATION.
S ec . 49. The National Reserve Association shall, for a
period of one year from the date of its organization,
offer to purchase at a price not less than par and
accrued interest the two per centum bonds held by sub­
scribing national banks and deposited to secure their
circulating notes. The National Reserve Association shall
take over the bonds so purchased and assume responsibility
for the redemption upon presentation of outstanding
notes secured thereby. The National Reserve Association
shall issue, on the terms herein provided, its own notes
as the outstanding notes secured by such bonds so held
shall be presented for redemption and may issue further
notes from time to time to meet business requirements.

PROVISIONS REQUIRING DEPOSIT O BONDS BY NATIONAL
F
BANKS REPEALED.
S ec . 50. All provisions of law requiring national banks
to hold or to transfer and deliver to the Treasurer of the
United States bonds of the United States other than those
required to secure outstanding circulating notes and Gov­
ernment deposits arc hereby repealed.

TAX O NOTES O NATIONAL RESERVE ASSOCIATION.
N
F
S ec . 51. Any notes of the National Reserve Associa­
tion in circulation at any time in excess of nine hundred
million dollars which are not covered by an equal amount
of lawful money, gold bullion, or foreign gold cojn held
by said association, shall pay a special tax at the rate




1AA UN

NU1US

OK NATIONAL* R E S E R V E A SSO C IA T IO N .

S ec . 51. Any notes of the National Reserve Associa­
tion in circulation at any time in excess of nine hundred
million dollars which are not covered by an equal amount
of lawful money, gold bullion, or foreign gold coin held
by said association, shall pay a special tax at the rate
of one and one-half per centum per annum, and any notes
in excess of one billion two hundred million dollars not
so covered shall pay a special tax at the rate of/five per
centum per annum.

CIRCULATING NOTES FIRST LIEN ON ASSETS,
SEC. 52. The circulating notes of the National Re­
serve Association shall constitute a first lien upon all its
assets and shall be redeemable in lawful money on pres­
entation at the head office of said association or any
of its branches. It shgll be the duty of the National
Reserve Association to maintain at all times a parity of
value of its circulating notes with the standard estab­
lished by the first section of the act of March fourteenth,
nineteen hundred, entitled “ An act to define and fix the
standard of value, to maintain the parity of all forms of
money issued or coined by the United States, to refund the
public debt, and for other purposes.”

FO W
R IIAT CIRCULATING NOTES O NATIONAL RESERVE
F
ASSOCIATION ARE RECEIVABLE.
S e c . 53. The circulating notes of the National Reserve
Association shall be received at par in payment of all
taxes, excises, and other dues to the United States, and
for all salaries and other debts and demands owing by
the United States to individuals, firms, corporations, or
associations, except obligations of the Government which
are by their terms specifically payable in gold, and for all
debts due from or by one bank to another, and for all
obligations due to a bank.
CIRCULATING NOTES FORWARDED ON APPLICATION.

S ec . 54. The National Reserve Association and its
branches shall at once, upon application and without
charge for transportation, forward its circulating notes
to any depositing bank against its credit balance.

EXCHANGE O 2 PER CENT FO 3 PER CENT BONDS.
F
R
S e c . 55. Upon application of the National Reserve As­
sociation the Secretary of the Treasury shall exchange
the two per centum bonds bearing the circulation priv­
ilege purchased from the banks for three per centum bonds
without the circulation privilege, payable after fifty years
from the date of issue.
FR AN CH ISE T A X .

S e c . 56. The National Reserve Association shall pay to
the Government a special franchise tax of one and one-half
per centum annually during the period of its charter upon
an amount equal to the par value of
bond''
to ;t 1W ! ; V •' ! } ng ; ). M i
l

%




i

f

10 N B

MONO. SEC.
SA LE OR REDEMPTION OF BONDS.

S ec . 57. The National Reserve Association shall agree
to hold the three per centum bonds so issued during the
period of its corporate existence: Provided, That after
five years from the date of its organization the Secretary
of the Treasury may at his option permit the National
Reserve Association to sell not more than fifty million
dollars of such bonds annually: And provided further, That
the United States reserves the right at any time to pay
any of such bonds before maturity, or to purchase any of
them at par for the trustees of the postal savings, or
otherwise.

FOREIGN BANKS.
S e c . 58. That banking corporations for carrying on the
business of banking in foreign countries and in aid of the
commerce of the United States with foreign countries and
to act when required as fiscal agents of the United States
in such countries may be formed by any number of per­
sons, not less in any case than five, who shall enter into
articles of association which shall specify in general terms
the object for which the banking corporation is formed
and may contain any other provisions not inconsistent
with the provisions of this section which the banking cor­
poration may see fit to adopt for the regulation and con­
duct of its business and affairs, which said regulations shall
be signed, in duplicate, by the persons uniting to form
the banking corporation and one copy thereof shall be
forwarded to the Comptroller of the Currency and the
other to the Secretary of State, to be filed and preserved
in their offices.
'J'hat the persons uniting to form such banking corpora­
tion shall under their hands make an organization certi­
ficate which shall specify, first, the name assumed by
such banking corporation, which name shall be subject to
approval by the comptroller; second, the foreign country
or countries or the dependencies or colonies of foreign
countries or the dependencies of the United States where
its banking operations are to be carried on; third, the place
in the United States where its home office shall be located;
fourth, the amount of its capital stock and the number of
shares into which the same shall be divided, fifth, the
names and places of residence of the shareholders and the
number of shares held by each of them; and, sixth, a
declaration that said certificate is made to enable such
persons to avail themselves of the advantages of this
section.
.
That no banking corporation shall be organized under
this section with a less capital than two million dollars,
which shall be fully paid in before the banking corpora­
tion shall be authorized to commence business.
That every banking corporation formed pursuant to
the provisions of this section shall for a period of twenty
years from the date of the execution of its organization
certificate be a body corporate, but shall not be author­
ized to receive deposits in the United States nor compete
with banks in the United States organized either under
national or State laws for domestic business not necessarily
related to the business being done in foreign countries or
in the dependencies of the United States. Such banking
corporations shall have authority to make acceptances,
buy and sell bills of exchange, or other commercial paper
relating to foreign business, and to purchase and sell
securities, including securities of the United States or
of any State in the Union. Each banking corporatiofa
organized under the provisions of this section shall have
power to establish and maintain for the transaction of
its business a branch or branches in foreign countries,
their dependencies, or the dependencies of the United
States at such places and under such regulations as its
board of directors may deem expedient.




corporations shall nave auxnoruy to um«.e
buy and sell bills of exchange, or other commercial paper
relating to foreign business, and to purchase and sell
securities, including securities of the United States qr
of any State in the Union. Each banking corporatioh
organized under the provisions of this section shall have
power to establish and maintain for the transaction of
its business a branch or branches in foreign countries,
their dependencies, or the dependencies of the United
States at such places and under such regulations as its
board of directors may deem expedient.
A majority of the shares of the capital stock of such bank­
ing corporation shall be held and owned by citizens of the
United States or corporations chartered under the laws
of the United States or of any State of the Union, and a
majority of the members of the board of directors of
such banking corporations shall be citizens of the United
States. Each director shall own in his own right at least
one hundred shares of the capital stock of the banking
corporation of which he is a director.
^
• The annual meeting of every such banking corpora­
tion shall be held at its home office in the United States,
and every such banking corporation shall keep at its
home office books containing the names of all stock­
holders of such banking corporation and members of its
board of directors, together with copies of the reports fur­
nished by it to the Comptroller of the Currency exhibiting
in detail and under appropriate heads the resources and
liabilities of the banking corporation. Every such bank­
ing corporation shall make reports to the Comptroller of
the Currency at such times as he may require, and shall
be subject to examinations when deemed necessary by
the Comptroller of the Currency through examiners appointed by him.
,
Any bank doing business in the Uilited States and being
the owner of stock in the National Reserve Association
may subscribe to the stock of any banking corpora­
tion organized under the provisions of this section, bu
the aggregate of such stock held by any one bank shall
not exceed ten per centum of the capital stock of the
subscribing bank.
A
S e c . 59. Congress reserves the right to alter or amend
the provisions of this act at the end of decennial periods.
S e c . 60. All acts or parts of acts inconsistent wit
e
provisions of this act are hereby repealed.

•A,

)

PER CENT.

\

1MONO. B
N SEC.
a

/I l L

'x ' fft
.O u x u




A B IL L
To incorporate the National Reserve Association of the
United States, and for other purposes.

CHARTER, CAPITAL, AND LO
CATIO
N.
Be it enacted by the Senate and House of Representatives
of the United States of America in Congress assembled, That
the National Reserve Association of the United States be,
and it is hereby, created and established for a term of fifty
years from the date of the filing with the Comptroller of
the Currency of the certificate hereinafter provided, with
an authorized capital equal in amount to twenty per
centum of the paid-in and unimpaired capital of all
banks eligible for membership in said National R e­
serve Association. Before
said association shall be
authorized to commence business two hundred million
dollars of the capital stock shall be subscribed and
one hundred million dollars of-^ h ^cap ital stack -^fiall
be paid in cash. The capital stock of said associate
shall be divided into shares of one hundred dollars each.
The outstanding capital stock may be increased from
time to time as subscribing banks increase their capital
or as additional banks become subscribers or may be
decreased as subscribing banks reduce their capital or
leave the association by liquidation. The head office of
the National Reserve Association shall be located in
Washington, in the District of Columbia.

CO RATE POW
RPO
ERS O THE NATIONAL RESERVE
P
ASSOCIATION.
S ec . 2. Upon duly making and filing with the Comp­
troller of the Currency the certificate hereinafter required
the National Reserve Association shall become a body
corporate and as such and by that name shall have power—
First. To adopt and use a corporate seal.
Second. To have succession for a period of fifty years
from the date of said certificate.
Third. To make all contracts necessary and proper to
carry out the purposes of this act.
Fourth. To sue and be sued, complain and defend, in
any court of law or equity, as fully as natural persons.
Fifth. To elect or appoint directors and officers in the
manner hereinafter provided and define their duties.
Sixth. To\prooeribo- by its board of directors by-laws
not inconsistent with this act, regulating the manner in
which its property shall be transferred, its general busi­
ness conducted, and the privileges granted to it by law
exercised and enjoyed.
Seventh. To purchase, acquire, hold, and convey real
estate as hereinafter provided.
Eighth. To exercise by its board of directors or duly
authorized committees, officers, or agents, subject to law,
afi^ powers and privileges conferred upon the National

M BERSHIP.
EM
S e c . 3. All national banks, and all banks or trust com­
panies chartered by the laws of any State of the United
States or of the District of Columbia, complying with the
requirements for membership in the said National Reserve
Association, hereinafter set forth, may subscribe to its
capital to an amount equal to twenty per centum of the
paid-in and unimpaired capital of the subscribing bank,
and not more nor less; and each of such subscribing banks
shall become a member of « local association as hereinafter




>m e m b e r s h ip

.

SEC. 3. All national banks, and all banks or trust com­
panies chartered by the laws of any State of the United
States or of the District of Columbia, complying with the
requirements for membership in the said National Reserve
Association, hereinafter set forth, may subscribe to its
capital to an amount equal to twenty per centum of the
paid-in and unimpaired capital of the subscribing ba ,
and not more nor less; and each of such subscribing ban s
shall become a member of a local association as hereinafter
provided. Fifty per centum of the subscriptions to the
capital stock of the National Reserve Association shall be
fully paid in ; the remainder of the subscriptions or any
part thereof shall remain a liability of the subscribers,
subject to call and payment thereof whenever necessary
to meet the obligations of the National Reserve Associa­
tion under such terms and in accordance with such regu­
lations as the board of directors of the National Reserve
Association may prescribe.
.
The subscriptions of a bank or trust company incor­
porated under the laws of any State or of the District of
Columbia to the capital stock of the National Reserve
Association] shall be made subject to the following
conditions:
.
.
A
Fjr?t. That (a) if a bank, it shall have a paid-in and
unimpaired capital of not less than that required for a
national bank in the samer f W * ; anJ that (5J if a trus
company, it shall have an unimpaired surplus of not less
than twenty per centum of its capital, and if located in
a place having a population of six thousand inhabitants
or less shall have a paid-in and unimpaired capital of not
less than fifty thousand dollars; if located in a city having
a population of more than six thousand inhabitants and
not more than fifty thousand inhabitants, shall have a
paid-in and unimpaired capital of not less than one hun­
dred thousand dollars; if located in a city having a popu­
lation of more than fifty thousand inhabitants and no
more than two hundred thousand inhabitants shall have
a paid-in and unimpaired capital of not less than two
hundred thousand dollars; if located in a city a^’n^ . a
population of more than two hundred thousand inhabit­
ants and not more than three hundred thousand inha itants shall have a paid-in and unimpaired capital of not
less than three hundred thousand dollars; if located in
a city having a population of more than three hundred
thousand inhabitants and not more than four hundred
thousand inhabitants shall have a paid-in and unim­
paired capital of not less than four hundred thousand
dollars, and if located in a city having a population o
more than four hundred thousand inhabitants shall have
a paid-in and umimpaired capital of not less than ve
hundred thousand dollars.

V




2 N B SECTION
MONOTYPE
•Second. That it shall have and agree to maintain
against its demand deposits a reserve of like character
and proportion to that required by law of a national bank
in the same locality: P ro vid ed , however, That deposits
which it may have with any subscribing national bank,
State bank, or trust company in a city designated in the
national banking laws as a reserve city or a central reserve
city shall count as reserve in like manner 'and to the same
extent as similar deposits of a national bank with national
banks in such cities.
Third. That it shall have and agree to maintain against
other classes of deposits the percentages of res&ve
required by this act.
Fourth. That it shall agree to submit to such examina­
tions and to make such reports as are required by law%nd
to comply with the requirements and conditions imposed
by this act and regulations made in conformity therewith.
The words “ subscribing banks” when used hereafter
in this act shall be understood to refer to such natibnal
; banks, and banks or trust companies chartered by the
4
*laws of any W ate of the United States or of the District of
^Columbia, as shall coniply with \he requirements for
fnembership herein defined.

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

LO
CATIO O BRANCHES AND DIVISION O THE CO
N F
F
UNTRY
•
INTO DISTRICTS.
S e c . 5. Wtyen the subscriptions to the capital stock of
the National Reserve Association shall amount to the sum
of two hundred million dollars the organization com­
mittee hereinbefore provided shall forthwith proceed to
select fifteen cities in the United States for the location of
ichea of said National Reserve Association; P f *
llW WWTUn 1 11 ikslH
M
«
a fS
A

Ah.

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A

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Vermont^ Massachusetts, Rhode Island, and Connecticut j
two branches In the Eastern States, including the States df
New York, New Jersey, Pennsylvania, and Delaware; four
branches in the Southern States, including the States of
Maryland, Virginia, West Virginia, North Carolina, South
Carolina, Georgia, Florida, Alabama, Mississippi, Louis­
iana, Texas, Arkansas, Kentucky, Tennessee, and also
the District of Columbia; four branches in the Middle




States, including tne States O X & H S *»»;»» ** •“ i— »
X V MM,
— ;--Vermont' Massachusetts, Rhode Island, and Connecticut;
two branches in the Eastern States, including the Stales df
New York, New Jersey, Pennsylvania, and Delaware; four
branches in the Southern States, including the States of
Maryland, Virginia, West Virginia, North Carolina, South
Carolina, Georgia, Florida, Alabama, Mississippi, Louis­
iana, Texas, Arkansas, Kentucky, Tennessee, and also
the District of Columbia; four branches in the Middle
Western States, including the States of Ohio, Indiana,
Illinois, Michigan, Wisconsin, Minnesota, Iowa, and
Missouri; four branches in the Western and Pacific
States, including the States of North Dakota, South
Dakota, Nebraska, Kansas, Montana, Wyoming, Colorado,
New Mexico, Oklahoma, Washington, Oregon, California,
Idaho, Utah, Nevada, and Arizona.
When the cities in which the branches are to be located
have been selected the organization committee shall forth­
with divide the entire country into fifteen districts, with
one branch of the. National Reserve Association in each
districtI/^roWded/Jjjfiat' the districts shall be apportioned
witlMjaLTc^ariTTn thr convenient and customary course
^tjfm isiness and not necessarily along State lines.
The'districts may be readjusted, and new "districts and
new branches may from time to time be created by the
directors of the National l Reserve Association whenever,
in their opinion, the business of the country

ORGANIZATION O LO AL ASSOCIATIONS.
F C
S ec . 6. All subscribing banks within a district shall
be grouped by the organization committee or after organi­
zation, by the National Reserve Association, into local
associations of not less than ten banks, with an aggre­
gate capital and surplik'of at least [five million dollars,
for the purposes hereinafter prescribed: Provided, That
the territory comprised in each association shall be con­
tiguous and that |in apportioning the territory due regard
shall be had for the customary course of business and for
the convenience of the banks forming the association:
Provided further, That the territory included in the local
associations comprising a district shall be so apportioned
that every bank and all the territory within said district
shall be located within the boundaries of some local asso­
ciation: And provided further, That every subscribing
bank shall become a member only of the local association
of the territory in which it is situated.
The banks uniting to form such association shall, by
their presidents or vice presidents, under authority from
the board of directors, execute a certificate in triplicate
setting forth the name of the association, the names of
the banks composing it, its principal place of business,
its territorial limits, and the purposes for which it is
organized. One copy of this certificate shall be file
with the Comptroller of the Currency, one copy shall be
filed with the National Reserve Association, and one
copy shall be filed with the branch of the National
Reserve Association of the district in which the local
association is included. Upon the filing of such certifi­
cates the local association therein named shall become a
body corporate and by the name so designated may sue
and be sued and exercise the powers of a body corporate
for the purposes mentioned in this act, and not otherwise.
Tlie local associations in each district may be readjusted
from time to time and new associations may be authorized
by the directors of the National Reserve Association.

m n e

BISEC N O D EC R BY L C C ASSOCIATION^.
TIO F ER TO S
OA

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S ec . 7. Each local association shall have ai board o f
directors, the number to be determined by the by-laws
of the local association. Three-fifths of that number
shall be elected by ballot cast by the representatives, of
the banks that are members of the local association, each
Bank having one representative and each representative
one vote for each of the positions to be filled without
reference to the number, of shares which the bank holds
in the National Reserve Association. Two-fifths of the
W
hole number of directors of the local association shall be
elected by^fchese same representatives of the several banks
that are members of the association, but in voting for
these additional directors each representative - shall be*
e&titled to as many votes as the bank which he represents
Is shares im the National Reserve Association. In
case shall voting by proxy be allowed. Ther
authorized representative of a bank, as herein provided^,
shall be its president, vice president, or cashier.
Each director when elected shall take an oath ttyat
he will, so far as the duty devolves upon him, diligently
and honestly administer the affairs of such association
and will not knowingly violate or willingly permit tp be
violated any of the provisions of this act.
The directors originally; elected styall hold; o ffi^ until
the second Tuesday in February impiediatt^y following
their election, and thereafter the directors sbajl be elected
annually on that date and shall hold office for the term ofc
one year.
,
The board of directors of the local association shall have
authority to make Ifey-laws, not inconsistent with law,
to the approval of the directors of the National
Reserve Association.

ELECTION O DIRECTORS BY BRANCH ASSO
F
CIATIO
NS^

J
.4 s




S ec . 8. Each of the branches of the National Reserve
Association shall have a board of directors, the number, not
less than twelve, to be fixed by the by-laws of the branch.
These directors shall be elected in the following manner;
The board of directors of each local association shaUelcct
by ballot a voting representative** proxy hcaldeF^iDne-half
of the directors of the branch shall be elected by the vote of
such representatives, each representative having one vote
for each of the positions to be filled, without reference to the
number of shares which the banks composing the associa?
tion which he represents holds in the National Reserve
Association. One-third of the directors shall be elected b y
the same voting representatives
pirrry holdcr^TSuteach
voting representative^ * -thw e lection«shall have a number
of votes equal to the number of shares in the National
Reserve Association held by all the banks composing the
local association which he represents. The remaining onesixth of the directors shall be chosen by the directors
already elected and shall fairly represent the agricultural,
commercial, industrial, and other interests of the dis­
trict and shall not be officers nor, while serving, directors of
banks, trust companies, insurance companies, or other
financial institutions. The manager of the branch shall be
ex-officio, a meiflber ofy
thc-board of directors of the branch
and shaU he^narm an of the board.
Each director
shall take an oath that he
will, so far as the duty devolves upon him, diligently and
honestly administer the affairs of such association and wif!
not knowingly violate or willingly permit to be violated
any of the provisions of this act.

$L_

n
y

an of the board.
Each director
shall take an oath that he
will, so far as the duty devolves upon him, diligently and
honestly administer the affairs of such association and will
not knowingly violate or willingly permit to be violated
any of the provisions of this act.
All the members of the board of directors of the branch
except the ex officio member shall at the first meeting of
the board be divided into three classes. One-third of the
directors shall hold office until the first Tuesday in March
immediately following the election; one-third of the direc­
tors shall hold office for an additional period of one year
after the first Tuesday in March immediately following
the election; the remaining one-third of the directors shall
hold office for an additional period of two years after the
first Tuesday in March immediately following the election.
All elections shall be held on the first Tuesday in March
of each year, and after the first electionjill directors shall
be elected for a term of three yearsj ^Provided, That all
directors shall serve until their successors have qualified
------and provided further; That the by-laws of the National
Reserve Association shall provide for the manner of filling
any vacancies which may occur in the board of directors
of the branches.
The board of directors of the branch shall have author­
ity to make by-laws, not inconsistent with law, subject to
the approval of the National Reserve Association.

DIRECTORS O THE NATIONAL RESERVE ASSOCIATION.
F

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U '4 ^
\.




S e c . 9. The National Reserve Association shall have a
board of directors, to be chosen in the following manner:
- X
First. Fifteen directors shall be elected,-one uliu siiiactT
— «be-ft lusidm l erf" the titSlliLl by the board of directors of
each branch of the National Reserve Association. In case
the number of districts shall be increased hereafter, each
additional district shall be entitled to elect an additional
director.
Second. Fifteen additional directors shall be elected,
shall be " r r itsidLiit uf Uil T h sliia , one bv the
board of directors of each branch of the National Reserve
Association, who shall fairly represent the agricultural,
commercial, industrial, and other interests of the
and who shall not be officers nor, while serving, di­
rectors of banks, trust companies, insurance companies,
or other financial institutions. In case the number of dis­
tricts shall be increased hereafter, each additional district
shall be entitled to elect an additional director of this class.
Third. Nine additional directors shall be elected by
voting representatives chosen by the boards of directors
of the various districts, each of whom shall cast a
number of votes equal to the number of shares in the
National Reserve Association held by the banks in the
district which he represents. Not more than'one of 4h08C
*r
"•nipc director^ shall be chosen from one district/
1
VJJ 1 Fourtfl. There shall be seven ex officioAnembers of the 1 •
>oard4 namely: The governor of the National Reserve
W ' Association, who shall be chairman of the board, two
deputy governors of the National Reserve Association, the
Secretary of the Treasury, the Secretary of Agriculture,
the Secretary of Commerce and Labor, and the Comp­
..A*'
troller o f the Currency.
No member of any national or State legislative body
shall be a director of the National Reserve Association,
nor df any of its branches, nor of any local association.

It A.
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tO PER CENT.

"7 •’ ’

4SEC. B .
N
MONO.
All the members of the board, except the ex officio
members, shall at the first meeting of the board be divided
into three classes. One-third of the directors shall hold
office until the first Tuesday in April immediately follow­
ing the election; one-third of the directors shall hold office
for an additional period of one year after the first Tuesday
in April immediately following the election; the remaining
one-third of the directors shall hold office for an additional
period of two years after the first Tuesday in April imme­
diately following the election. All elections shall be held
on the first Tuesday in April of each year, and aftet the
first election all directors shall be elected for a term of
three year*V provided, That all directors shall serve until
their successors have qualified^ And provided further,
That the by-laws of the National Reserve Association
shall provide for the manner of filling any vacancies which
m ay occur in the board of directors of the National R e­
serve Association.
Each director shall take an oath that he will, so far as
the duty devolves upon him, diligently and honestly
administer the affairs of such association and will not
knowingly violate or willingly permit to be violated any
of the provisions of this act.
The board of directors of the National Reserve Asso­
ciation shall have authority to make by-laws, not incon­
sistent with law, which shall prescribe the manner in
which the business) shall be conducted and the privileges
granted to it by l^w exercised and enjoyed.

APPOINTM
ENT O OFFICERS O THE NATIONAL RESERVE
F
F
ASSOCIATION.
S ec . io . The executive officers of the National Reserve
Association shall consist of a governor, two deputy gov­
ernors, a secretary, and such subordinate officers as may
be provided by the by-laws. The governor of the National
Reserve Association shall be selected by the President of
the United States from a list of not less than three sub­
mitted to him by the board of directors of said association.
The person so selected shall thereupon be appointed by the
said board as governor of the National Reserve Association
fbf a term of ten years, subject to removal for cause
by a two-thirds vote of the board. There shall be two
deputy governors, to be elected by the board, for a term
of seven years, subject to removal for cause by a majority
vote of the board. The two deputy governors first elected
shall serve for terms of four years and seven years, respec­
tively. In the absence of the governor or his inability to
act the deputy who is senior in point of service shall act as
governor. The board of directors shall have authority to
appoint such other officers as may be provided for by the
f.by-laws.

ORGANIZATION PAPERS O THE NATIONAL RESERVE ASSO­
F
CIATION.
S ec . i i . When the board of directors of the National
Reserve Association is duly organized it shall call upon
the subscribing banks for a payment of fifty per centum
on the amount of their subscriptions to the capital 'Stook
__of said association. When one hundred million dollars
of^BM capital have been paid in the board of directors
eh
" shall at once proceed to execute and file with the Secre­
tary of State a certifiede showing the payment of one
hundred million dollars on capital stock, and they shall
further file with the Comptroller of the Currency a certifi­
cate showing the title and location of each bank which has
AJ'




fj

on the amount of their subscriptions to the capital ^took
__ of said association. When one hundred million dollars
capital have been paid in the board of directors
' shall at once proceed to execute and file with the Secre­
tary of State a certificate showing the payment of one
hundred million dollars on capital stock, and they shall
further file with the Comptroller of the Currency a certifi­
cate showing the title and location of each bank which has
subscribed to the capital stock of the National Reserve
Association, the number of shares subscribed by each, and
the amount paid thereon.
OWNERSHIP OF STOCK IN THE NATIONAL RESERVE ASSOCIA­
TION,

in c r e a s e a n d r e d u c t io n o f c a p it a l .

S e c . 12. Shares of the capital stock of the National
Reserve Association shall not be transferable, and under
no circumstances sh alljth ey be hypothecate^ nor shall
they be owned otherwise than by^lw^s^scribing^banks,
norN w tythey be owned by any/6ank other than in the
proportion herein provided. In case a subscribing bank
increases its capital it shall thereupon subscribe for an
additional amount of the capital of the National Reserve
Association equal to twenty per centum of the bank s
increase of capital, paying therefor its then book value
as shown by the last published statement of said asso­
ciation. A bank applying for membership in the
National Reserve Association at anyjtim e after its for­
mation must subscribe for an amount of the capital
of said association equal to twenty per centum of the
capital of said subscribing bank, paying therefor its then
book value as shown by the last published statement of
said association. When the capital of the National
Reserve Association has been increased either on account
of the increase of capital of the banks in said association
or on account of the increase in the membership of said
association, the board of directors shall make and execute
a certificate showing said increase in capital, the amount
paid in and by whom paid. This certificate shall be
filed in the office of the Comptroller of the Currency.
In case a subscribing bank reduces its capital it shall
surrender a proportionate amount of its holdings in the
capital of said association, and if a bank goes into vol­
untary liquidation it shall surrender all of its holdings of
the capital of said association. In either case the shares
surrendered shall be canceled and the bank shall receive
in payment therefor a sum equal to their then book value
as shown by the last published statement of said associa­
tion.
If any member of the National Reserve Association
shall become insolvent and a receiver be appointed, the
stock held by it in said association shall be canceled and
the balance, after paying all debts due by such insolvent
bank to said association (such debts being hereby declared
.
j • to be a first lien upon the paid-in capital stock), shall be
paid to the receiver of the'insolvent bank.
>i'(
Whenever the capital stock of the National Reserve
Association is reduced, either on account of the reduction
in capital of members of said association or the liquidation
or insolvency of any member, the board of directors shall
make and execute a certificate showing such reduction of
capital stock and the amount repaid to each bank. This
certificate shall be filed in the office of the Comptroller of
the Currency.

20 PER CENT;

t*

i

5 NB
MONO. SEC.
EXEM
PTION FR M LO A AND STATE TAXATION.
O
CL

{




- S ec . 13. The National Reserve Association and its
branches and the local associations shall be exempt from
local and State taxation except in respect to taxes upon
real estate.

EXECUTIVE CO M
M ITTEE OF THE NATIONAL RESERVE
ASSOCIATION.
S e c . 14. The directors of the National Reserve Associa­
tion shall annually elect from their number an executive
committee and such other committees as the by-laws of
the National Reserve Association may provide. The exec­
utive committee shall consist of nine members, of which
the governor of the National Reserve Association shall be
ex officio chairman and the two deputy governors and the
Comptroller of the Currency ex officio members, but not
more than one of the elected members shall be chosen from
any one district.
The executive committee shall have all the authority
which is vested in the board of directors, except the power
of nomination, appointment, and removal of the governor
and deputy governors and except such as may be specifi­
cally delegated by the board to other committees or to
the executive officers, or such as may be specifically
reserved or retained by the board.

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

EXECUTIVE OFFICERS O BRANCHES.
F

P

S ec . 16. Each branch shall have a manager and a dep­
uty manager appointed from the district by the governor
of the National Reserve Association with the approval of
executive committee^and subject to removal at any
time by the governor witn the approval of the executive
committee of the National Reserve Association. The
powers and duties of the manager and deputy manager
and of the various committees of the branches shall be pre­
scribed by the by-laws of the National Reserve Association.

EXECUTIVE OFFICERS O LO A ASSOCIATIONS.
F CL
S ec . 17. The directors of each local association shall
annually elect from their number a president, a vice presi­
dent, and an executive committee, whose powers and
duties shall be determined by the by-laws of the local
association, subject, however, to the/ffroviuiqnstif this aet. ■
A
">

'

LISTS OF SHAREHOLDERS.

»

, .
■ ■ ■ ■*0
.
•'
SEC. 18. The National Reserve Association shall cause
to be kept at all times, at the head office of the associa­
tion, a full and correct list of the names of the banks
owning stock in the association and the number of shares
held by each. Such list shall be subject to the inspection
of all the shareholders of the association, and a copy thereof
on the first Monday of July of each year shall be transm i+ to rJ

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SBC. 1 8. The National Reserve Association shall cause
to be kept at all times, at the head office of the associa­
tion, a full and correct list of the names of the banks
owning stock in the association and the number of shares
held by each. Such list shall be subject to the inspection
of all the shareholders of the association, and a copy thereof
on the first Monday of Ju ly of each year shall be trans­
mitted to the Comptroller of the Currency.
S e c . 19. The earnings of the National Reserve Asso­
ciation shall be disposed of in the following manner:
After the payment of all expenses and taxes the share-,
holders shall be entitled to receive
^dividend
of four per centum on the paid-in capital, which dividend
/t'VVvvVv * 1
shall be cumulative. Furtherfhet earnings shall be dis­
posed of as follows: First, a contingent fund shall be
created, which shall be maintained at an amount equal
to one per centum on the paid-in capital, and shall not
exceed in any event two million dollars and shall be used
to meet any possible losses. Such fund shall, upon the final
dissolution of the National Reserve Association, be paid
to the United States and shall not under any circumstances
.
be included in the book value of the stock or be paid to the
shareholders. Second, one-half of additional net earnings
shall be paid into the surplus fund of the National Reserve
Association until said fund shall amount to twenty per
centum of the paid-in capital, one-fourth shall be paid
to the United States as a franchise tax, and one-fourth
shall be paid to the shareholders, until the shareholders’
dividend shall amount to five per centum per annum_flP___- ^ .i^ C 1
paid-in c a p ita ^ y e v ided n o Iv id e n d s , except the
cumulative dividends above provided for, shall at any
/
time be paid in excess of five per centum in any one y e a r • / { I m>>,/ \.\.C / ^
one-half of the additional earnings shall be added to the
/
./
surplus fund, and one-half shall be paid to the United / {fW v
States as a franchise tax. Whenever and so long as the . j ; 0
q
>
/
surplus fund of the National Reserve Association amounts A vvy) t v U
to twenty per centum of the paid-in capital and the share/
/
A / J
holders shall have received dividends not exceeding five
^> /
v
* ( ' / 'V
per centum, all excess earnings shall be paid to the United
“7*/
A
States as a franchise tax.
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0516




0 N B SECTION .
MONOTYPE

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V

GUARANTIES O LO
F CAL ASSOCIATION.
SEC. 20. Any member of a local association may apply
to such association for a guaranty of the commercial
paper which it desires to rediscount at the branch of the
National Reserve Association in its district. Any such
bank receiving a guaranty from a local association shall
pay a commission to the local association, to be fixed in
each case by its board of directors. Ivxpenses and losses
in excess of commissions shall be met by an assessment
of the members of the local association in proportion to
the ratio which their capital and surplus bears to the
aggregate capital and surplus of the members of the local
association, which assessment shall be made by its board
of directors, and the commission received for such guar­
anty, after the payment of expenses and possible losses,
shall be distributed among the several banks of the local
association in the same proportion. A local association
shall have authority to require security from any bank
offering paper for guaranty, or it may decline to grant the
application. The total amount of guaranties by a local
association to the National Reserve Association shall not
at any time exceed the aggregate capital and surplus of
the banks forming the guaranteeing association.
•. t
)
>
CLEARING HOUSE.

i '
,
S ec . 21. Any local association may by a vote of threefourths of its members and with the approval of ih e
National Reserve Association, assume and exercise such
of the powers and functions of a clearing house as are not
inconsistent with the purposes of this act. 1 he National
Reserve Association may require any local association to
1 perform such services in facilitating the domestic ex­
changes of the National Reserve Association as the public
interests may require.
*’
>
P R IV IL E G E S OF SU BSCRIBIN G BA N KS.

S ec . 22. All of the privileges and advantages of the
National Reserve Association shall be equitably extended
to every bank of any of the classes herein defined which
shall subscribe to its proportion of the capital stock
of the National Reserve Association and shall otherwise
conform to the requirements of this act^frovided

..That the National Reserve Association may suspend
a bank from the privileges of membcrshi]Yfor a failure
for thirty days to maintain its reserves, or to make
the reports required by this act, or for misrepresentation
in any report or examination as to its condition or as
' to the character^* extent of its assets or liabilities.

Vv

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GOVERNM
ENT O THE UNITED STATES AND BANKS OW
F
NIGN
* ' STO TO BE THE ONLY DEPOSITORS.
CK

%
S E c T ^ rT h e Government of the United States and
banks owning Stock in the National Reserve Association
’ shall be the only depositors in said association. *AU
domestic transactions.of the National Reserve Association
shall be confined to the Government and the subscribing
banks, with the exception of the purchase or sale of Gov­
ernment or State securities or securities of foreign govemments or of gold coin or bullh

NATIONAL RESERVE ASSOCIATION FISCAL AGENT O THE
F
GOVERNM
ENT.
S e c .<*3* The National Reserve Association shall be the
nrinninnl Acnql acrpnt of thp United States.

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The GoJVem-

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7




shall be confined to the Government and the subscribing
banks, with the exception of the purchase or sale of Gov­
ernment or State securities or securities of foreign govern­
ments or of gold coin or bullic

NATIO
NAL, RESERVE ASSOCIATION FISCAL AGENT O THE
F
government.
4
The National Reserve Association shall be the
principal fiscal agent of the United States. The Govern­
ment of the United States shall upon the organization of
the National Reserve Association deposit its general funds
with said association and its branches, and thereafter
*' all receipts of the Government shall be deposited with
said Association and its branches, and all disbursements
by the Government shall be made through said associa­
tion and its branches._____________ 4 __________ ... —

INTEREST ON DEPOSITS.
S e c . 25. The National Reserve Association shall pay no
interest on deposits.
1

REDISCOUNT O BILLS O EXCHANGE ARISING OUT O
F
F
F
CO M
M ERCIAL TRANSACTIONS FO SUBSCRIBING BANKS.
R
.SEG,~atLThe National Reserve Association through itsbranches ina}fr rediscount for and with the indorsement of
£nv bank having a deposit with it, notes and bills of ex­
change arising out of commercial transactions; that is,
notes and bills of exchange issued or drawn for agri­
cultural, industrial, or commercial purposes, and not
including notes or bills issued or drawn for the purpose
of carrying stocks, bonds, or other investment securities.
Such notes and bills must have a maturity of not more
than twenty-eight days, and must have been made at
least thirty days prior to the date of rediscount. The
amount so rediscounted shall at no time exceed the cagital of the bank for #>
4i^>iT^he rediscounts are made. The
aggregate of st^ch notes and bills bearing the signature or
indorsement of any one person, company, firm, or corpo­
ration, rediscounted for any one bank, shall at no time
exceed ten per centum of the unimpaired capital and
surplus of said bank..

20 PER CENT.

m»

7 N B SEC.
MONO.

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REDISCOUNTS FOR SUBSCRIBING BANKS OF NOTES AND
BIKES OF EXCHANGE GUARANTEED BY TlIE KOCAK
ASSOCIATION.
-

_
National Reserve Association ^hfough ita
fcw iwhes-m am lso rediscount, for and with the indorseanv hank
ment of anv'hank having a deposit with it, notes and
bills of exchange arising out of commercial transactions as
hereinbefore defined, having more than twenty-eight days,
but not exceeding four months, to run, but in such cases
the paper must be guaranteed by the local association of
which the bank asking for the rediscount i« a member.
>
DISCOUNT OF DIRECT OBLIGATION OF DEPOSITING BANK
INDORSED BY LOCAL ASSOCIATION.

.

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S ec . 28. Whenever, in the opinion of the governor of
the National Reserve Association, the public interests so
require, such opinion to be concurred in by the executive
committee of the National Reserve Association and to
have the definite approval of the Secretary of the Treas_ur^, the National Reserve AggnrMntiVm
hrnnrhor
"^discount the direct obligation of a depositing bank,
----- ^sed by its local association, provided that the in­
dorsement of the local association shall be fully secured
b.y tllC pledge and deposit with it of satisfactory securi**es» wbich shall be held by the local association for
account of the National Reserve Association; but in no
such case shall the amount loaned by the National R e­
serve Association exceed three-fourths of the actual value
of the securities so pledged.
S ec . 29. The power of rediscount and discount granted
to the National Reserve Association by sections twentysix, twenty-seven, and twenty-eight of this act shall in
each case be exercised through the branch in the district
in which the bank making the application is located.

x

RATES OF DISCOUNT.

S ec . 30. The National Reserve Association shall have
authority to fix its rates of discount from time to time,
which when so fixed shall be published, and shall be uni­
form throughout the United States.
ACCEPTANCES.
7

S ec . 3 1. National batiks shall bPy|ciuthorized to accept
leommeru&l pap^i drawn upon them, having not more
than four months to run, properly secured, and arising
out of commercial transactions^ The amount of such ac­
ceptances outstanding shall not exceed one-half the capi­
tal and surplus of the accepting4^aiik*_and shall be subject
to the restrictions of section^2oo(of th^R7wTsed“Statutes-.PURCHASE OF a c c e p t a n c e s b y th e NATIONAL RESERVE
ASSOCIATION.

V'X/

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* Aj S e c . 32. Ihe National Reserve Association may, when^ yw * w
v ',v**/ ever *ts ow^ condition and the general financial conditions
warrant such, investment, purchase from a subscribing
/ bank acceptances of hanks or acceptors of unquestioned
financial responsibility Such acceptances imint havrr
iflcn opt of e^uimercii^. tm«naction»r must have not
'
A_ a _ _
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e x u d in g ninety days to run, and must be of a character
generally known in the market as prime bills. Such
acceptances shall bear the indorsement of the subscribing
bank selling the same, which indorsement must be other
than that of the acceptor.

INVESTM
ENT IN GOVERNMENT AND STATE BOND*
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ex<te£ding ninety days to run, and must be of a character
generally known in the market as prime bills. Such
acceptances shall bear the indorsement of the subscribing
bank selling the same, which indorsement must be other
than that of the acceptor.

INVESTM
ENT
in
of
or
to

IN GOVERNM ENT AND STATE BONDS.

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

POW
ER

TO DEAL IN GO'LD COIN OR BULLIO N.

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

POW
ER

TO D EAL IN FO REIGN EXCHANGE.

S e c . 35. The National Reserve Association shall have
power to purchase from its subscribing banks and ,to sell,
with or without its indorsement, checks or bills of exchange
payable in such foreign countries as the board of directors
of the National Reserve Association may determine. These
bills of exchange masfrarise out of cs wmewial transactions;
must have not exceeding ninety days to run, and must
bear the signatures of two or more responsible parties, of
X which the last one shall be that of a subscribing bank.

POW TO MAINTAIN
ER
1

BAN K ACCOUNTS AND TO ESTA BLISH

A G EN CIES IN FO REIGN COUNTRIES.

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

SEC. 37. It shall be the duty of the National Reserve
Association or any of its branches, upon request, to trans­
fer any part of the deposit balance of any bank having an
account with it to the credit of any other bank having an
account with the National Reserve Association. If a de­
posit balance is transferred from the books of one branch
to the books of another branch, it may be done, under
regulations to be prescribed by the National Reserve As­
sociation, by mail, telegraph, or otherwise, at rates to be
fixed at the time by the manager of the branch at which
the transaction originates.
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20 PER CENT.
* ‘2 0 5 1 6




8 NB

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MONO. SEC.
REAL ESTATE.
S ec . 38. Ihe National Reserve Association may pur­
chase, acquire, hold, aodj^onyey real estate for the follow­
ing purposes and for no o th eif:
F ir s t . S u c h a s sh a ll be n ^ e s s a r y

fo r th e im m e d ia te

a cc o m m o d a tio n in th e tr a n s a c tio n o f th e b u sin e ss e ith e r

of th e h ead office o r o f th e b ra n c h e s.
S e co n d . S u c h a s sh a ll b e m o r tg a g e d to it in g o o d fa it h

by w a y of s e c u r ity fo r d e b ts p r e v io u s ly c o n tra c te d .
T h ird . S u c h a s sh a ll b e c o n v e y e d to it in s a tis fa c tio n <of
d e b ts p re v io u s ly c o n tra c te d in th e co u rse o f its d e a lin g s.

Fourth. Such as it shall purchase at sales under judg­
ments, decrees, or mortgages held by said association, or
shall purchase to secure debts due to it.
But the National Reserve Association shall not hold
the possession of any real estate under mortgage or the
title and possession of any real estate purchased to secure
any debts due to it for a longer period than five years.

RESERVES O SUBSCRIBING BANKS.
F

»

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

REAL ESTATE LOANS.
S e c . 40. National banks may loan not more than thirty
per centum of their time deposits, as herein defined, upon
improved and unencumbered real estate, such loans not to
exceed fifty per centum of the actual value of the property,
which property shall be situated in the vicinity or in the
territory directly tributary to the bank: Provided, That
this privilege shall not be extended to athw*flanks acting
as reserve agents}

RESERVE O THE NATIONAL RESERVE ASSOCIATION.
F
S e c . 41. All dgmand liabilities, including deposits and
circulating notes, of the National Reserve Association
shall be covered to the extent of fifty per centum by a
reserve of gold (including foreign gold coin and gold bul­
lion) or other money of the United States which the
national banks are now authorized to hold as a part of
their legal reserve: Provided, That whenever and so long
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as reserve agents^

RESERVE OF THE NATIONAL RESERVE ASSOCIATION.
S e c . 41. All demand liabilities, including deposits and
circulating notes, of the National Reserve Association
shall be covered to the extent of fifty per centum by a
reserve of gold (including foreign gold coin and gold bul­
lion) or other money of the United States which the
national banks are now authorized to hold as a part of
their legal reserve: Provided, That whenever and so long
as such reserve shall fall and remain below fifty per
centum the National Reserve Association shall pay a
special tax upon the deficiency of reserve at a rate increas­
ing in proportion to such deficiency as follows: For each
two and one-half per centum or fraction thereof that the
reserve falls below fifty per centum a tax shall be levied
at the rate of one and one-half per centum per annum:
Provided further, That no additional circulating notes
shall be issued whenever and so long as the amount of
such reserve falls below thirty-three and one-third per
^entum of ^ ^ o u tsta n d in g notes.
All note issues of the National Reserve Asso­
ciation mustrbe covered by the jcgal reserves/required by
section
01' this act a n d b y . bankable LUilinrurrlUl pape
defin0 ^r^T5
bTig^itiohs of the United States.
SEC. * 0 rT n computing the demand liabilities of the
National Reserve Association a sum equal to one-half of
the ^mount of the United States bonds held by the as­
sociation which have been purchased from 4he<aational
banks, and which had previously been deposited by
ianks to secure their circulating notes, shall be de

so.
—

C
x

REPORTS O CONDITION O THE NATIONAL RESERVE
F
F
ASSOCIATION.
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S ec . 44^ The National Reserve Association shall make
a report, showing the principal items of its balance sheet,
to the Comptroller of the Currency once a week. These
reports shall be made public. In addition, full reports
/
shall be made to the Comptroller of the Currency by said
association coincident with the five reports called for each
year from the national banks.

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^ PER CENT.

9*NB

MONO. SEC.

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REPORTS OF SUBSCRIBING BANKS TO THE NATIONAL
RESERVE ASSOCIATION.

205’




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SEC. 4*- All subscribing banks shall, under regulations
to be prescribed by the National Reserve Association,
make a report monthly, or oftener if required, to said
association showing the principal items of their balance
sheets.
Ex a m in a t io n s .

S ec T J * All reports of national-bank examiners in re­
gard to the condition of banks shall hereafter be made in
duplicate, and one copy shall be filed with the National
Reserve Association for the confidential use of its execu^tive officers and branch managers.
S^CrsrTTThe National Reserve Association may for all
subscribing banks accept copies of the reports of the
national-bank examiners for national banks a n d f ^ i i r
? L ± h e reP0rls_fil.State-bank examiners for State banks
and trust companies^where the furnishing of such infor­
mation is not contrary to law: Provided, however, That the
standard of such examinations, both National and State,
meets the requirements prescribed by the National Reserve
Association. The National Reserve Association shall have
the right at any time to examine or cause to be examined
by its own representatives any subscribing bank.. The
National Reserve Association m ayjn ake such payments
to national and State examiners for
/services re­
quired of them as the directors may consider just and
equitable.
| F U r THER

note

is s u e s

by

n a t io n a l

banks

p r o h ib it e d

C

.

S e c . 48. There shall be no further issue of circulating
notes by any national bank beyond the amount now out­
standing. National banks may maintain their present
note issue, but whenever a bank retires the whole or any
part of its existing issue its right to reissue the notes so
retired shall thereupon cease.

PURCHASE O TW PER CENTUM BONDS BY NATIONAL
F O
RESERVE ASSOCIATION.
S e c . 49. The National Reserve Association shall, for a
period of one year, from the date of its organization,
offer to purchase at a price not less than par and
accrued interest the two per centum bonds held by sub­
scribing national banks and deposited to secure their
circulating notes. The National Reserve Association shall
take over the bonds so purchased and assume responsibility
for the redemption upon presentation of outstanding
notes secured thereby. The National Reserve Association
shall issue, on the terms hcreih provided, its own notes
as the outstanding notes secured by such bonds so held .
shall be presented for redemption and may issue further/
notes from time to time to meet business requirement^/

PROVISIONS REQUIRING DEPOSIT O BONDS BY NATIONAL
F
BANKS REPEALED.
Sec.
All provisions of law requiring national banks
to hold or to transfer and deliver to the Treasurer of the
United States bonds of the United States other than those
required to secure outstanding circulating notes and G ov­
ernment deposits are hereby repealed.

TAX O NOTES O NATIONAL REbERVfc ASSOCIATION.
N
F
S ecl 51. Any notes of the National Reserve Associa­
tion in circulation at any time in excess of nine hundred
million dollars which are not covered by an equal amount
of lawful money, gold bullion, or foreign gold coin held
eai/4 Ann/>A«nf<n«* nUnll r>n«. r
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icvjuwcu to secure outsianuing circulating notes and uovernment deposits are hereby repealed.
;4 .'*.' ■

TAX ON NOTES O NATIONAL RESERVfe ASSOCIATION.
F

S ec . 51. Any notes of the National Reserve Associa­
tio n in circulation at any time in excess of nine hundred
million dollars which are not covered by an equal amount
of lawful money, gold bullion, or foreign gold coin held
by said association, shall pay a special tax at the rate
of one and one-half per centum per annum, and any notes
in excess of one billion two hundred million dollars not
so covered shall pay a special tax at the rate of_ five per
centum per annurn^

CIRCULATING NOTES FIRST LIEN O ASSETS.
N

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S e c . 52. The circulating notes of the National R e­
serve Association shall constitute a first lien upon all its . y?wti y/\Mw^xtfC y * * Jh ^ "
assets and shall be redeemable in lawful money on pres­
c lJ A ^ r iL * * ? * £ » & '
entation at the head office of said association or any
of its branches. It shall be the duty of the National piM r^CC ( J f l'w H y*A U *>r+/j
Reserve Association to maintain at all times a parity of
A v ^ Vi- ^ -*
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value of its circulating notes with the standard estab­
J
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A* '
lished by the first section of the act of March fourteenth, /X7 a
nineteen hundred, entitled “ An act to define and fix the
liu c h A ? >
standard of value, to maintain the parity of all forms of
money issued or coined by the United States, to refund the
public debt, and for other purposes.”

72

FO W
R HAT CIRCULATING NOTES O NATIONAL RESERVE
F
ASSOCIATION ARE RECEIVABLE.
S e c . 53. The circulating notes of the National Reserve
Association shall be received at par in payment of all
taxes, excises, and other dues to the United States, and
for all salaries and other debts and demands owing by
the United States to individuals, firms, corporations, or
associations, except obligations of the Government which
are by their terms specifically payable in gold, and for all
debts due from or bv one bank to another, and for all
obligations due toj#rbank--------* —

^

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CIRCULATING NOTES FORW
ARDED O APPLICATION.
N
S ec . 54. The National Reserve Association and its
branches shall at once, upon application and without
charge for transportation, forward its circulating notes
to any depositing bank against its credit balance.

V

EXCHANGE O 2 PER CENT FO 3 PER CENT BONDS.
F
R
S e c . 55. Upon application of the National Reserve As­
sociation the Secretary of the Treasury shall exchange
the two per centum bond^bearing the circulation priv­
ilege purchased from^U^banks for three per centum bonds^
without the circulation privilege, payable after fifty years
from the date of iss
franchise tax.

S e c . 56. The National Reserve Association shall pay to
the Government a special franchise tax of one and one-half
per centum annually during the period of its charter upon,
an amount equal to the par value of such bonds transferred
to it by the subscribing banks.

7

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10 N B

MONO. SEC.
wm v rm

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The National Reserve Association shall
hold the three per centum bonds so issued during the
period of its corporate existence: Provided, That after
five years from the date of its organization the Secretary
of the Treasury may at his option permit the National
Reserve Association to sell not more than fifty million
dollars of such bonds annually: And provided further, That
the United States reserves the right at any time to pay
any of such bonds before maturity, or to purchase any of
them at par for the trustees of the postal savings, or
otherwise.

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foreign banks.

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That banking corporations for carrying on the
business of banking in foreign countries and in aid of the
commerce of the United States with foreign countries and
to act when required as fiscal agents of the United States
in such countries may be formed by any number of per­
sons, not less in any case than five, who shall enter into
articles of association which shall specify in general terms
the object for which the banking corporation is formed
and may contain any other provisions not inconsistent
with the provisions of this section which the banking cor­
poration may see fit to adopt for the regulation and con­
duct of its business and affairs, which said regulations shall
be signed, in duplicate, by the persons uniting to form
the banking corporation and one copy thereof shall be
forwarded to the Comptroller of the Currency and the
other to the Secretary of State, to be filed and preserved
in their offices.
That the persons uniting to form such banking corpora­
tion shall under their hands make an organization certi­
ficate which shall specify, first, the name assumed by
such banking corporation, which name shall be subject to
approval by the comptroller; second, the foreign country
or countries or the dependencies or colonies of foreign
countries or the dependencies of the United States where
its banking operations are to be carried on ; third, the place
in the United States where its home office shall be located;
fourth, the amount of its capital stock and the number of
shares into which the same shall be divided; fifth, the
names and places of residence of the*shareholders and the
number of shares held by each of them; and, sixth, a
declaration that said certificate is made to enable such
persons to avail themselves of the advantages of this
section.
That no banking corporation shall be organized under
^ this section with a less capital than two million dollars
which shall be fully paid in before the banking corpora­
tion shall be authorized to commence business^
That every banking corporation formed pursuant to
'
the provisions of this section shall for a period of twenty
years from the date of the execution of its organization
certificate be a body corporate, but shall not be author­
ized to receive deposits in the United States nor
with buulru Iff The TTflfiM Stmt's uiganm c & T ithu 1
national w fH ate lrnvj fui domestic business not necessarily
related to the business being done in foreign countries or

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i« th e (l«p4iid an ctc« of the United S t a t m .

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S u c h b a n k in g

corporations shall have authority to make acceptances,
^uy anc^ se^
of exchange, or other commercial paper
re,atinS to foreign business, and to purchase and sell
securities, including securities of the United States or
of any State in the Union. Each banking corporation
organized under the provisions of this section shall have
power to establish and maintain for the transaction of

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in the dependencies of the United states, sueu wmx«nfe
corporations shall have authority to make acceptances,
buy and sell bills of exchange, or other commercial paper
relating to foreign business, and to purchase and sell
securities, including securities of the United States or
of any State in the Union. Each banking corporation
organized under the provisions of this section shall have
power to establish' and maintain for the transaction of
its business a branch or branches in foreign countries,
their dependencies, or the dependencies of the United
States at such places and under such regulations as its
board of directors may deem expedient.
A majority of the shares of the capital stock of such bank­
ing corporation shall be held and owned by citizens of the
United States or corporations chartered under the laws
of the United States or of any State of the Union, and a
m ajority of the members of the board of directors of
such banking corporations shall be citizens of the United
States. Each director shall own in his own right at least
one hundred shares of the capital stock of the banking
corporation of which he is a director.
The annual meeting of every such banking corpora­
tion shall be held at its home office in the United States,
and every such banking corporation shall keep at its
home office books containing the names of all stock­
holders of such banking corporation and members of its
board of directors, together with copies of the reports fur­
nished by it to the Comptroller of the Currency exhibiting
in detail and under appropriate heads the resources and
liabilities of the banking corporation. Every such bank­
ing corporation shall make reports to the Comptroller of
the Currency at such times as he may require, and shall
be subject to examinations when deemed necessary by
the Comptroller of the Currency through examiners ap­
pointed by him.
Any bank doing business in the United States and being
the owner of stock in the National Reserve Association
may subscribe to the stock of any banking corpora­
tion organized under the provisions of this section, but
the aggregate of such stock held by any one bank shall
not exceed ten per centum of the capital stock of the
subscribing bank.
Congress reserves the right to alter or ament
provisions of this aetratlTie end oLdecennial period^
S e c . W All acts or parts of acts inconsistent with the
provisions of this act are hereby repealed.

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Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102