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[ P U B L I C — N o . 4 4 — 7 2 D CONGRESS]
[H. R . 9203]
A N ACT
To imjfrbve the facilities of the Federal reserve system for the service ef. commerce, industry, and agriculture, to provide means for meeting the needs of
member banks in exceptional circumstances, and for other purposes.

Be it enacted by the Senate and Home of Representatives of the
United States of America t m Congress assembled, T h a t the Federal
Reserve Act, as amended, is further amended by inserting, between
sections 10 and 11 thereof a new section reading as follows:
" SEC. 10. (a) Upon receiving the consent of not less than five members of the Federal Reserve Board, any Federal reserve bank may
make advances, i n such amount as the board of directors of such
Federal reserve bank may determine, to groups of five or more member banks w i t h i n its district, a majority of them independently owned
and controlled, upon their time or demand promissory notes, provided the bank or banks which receive the proceeds of such advances
as herein provided have no adequate amounts of eligible and acceptable assets available to enable such bank or banks to obtain sufficient
credit accommodations f r o m the Federal reserve bank through
rediscounts or advances other than as provided i n section, 10 ( b ) .
The l i a b i l i t y of the individual banks i n each group must be limited to
such proportion of the total amount advanced to such group as the
deposit l i a b i l i t y of the respective banks bears to the aggregate deposit
l i a b i l i t y of all banks i n such group, but such advances may be made
to a lesser number of such member banks i f the aggregate amount
of their deposit l i a b i l i t y constitutes at least 10 per centum of the
entire deposit l i a b i l i t y of the member banks w i t h i n such district.
Such banks shall be authorized to distribute the proceeds of such
loans to such of their number and i n such amount as they may agree
upon, but before so doing they shall require such recipient banks to
deposit w i t h a suitable trustee, representing the entire group, their
individual notes made i n favor of the group protected by sucli- collateral security as may be agreed upon. A n y Federal reserve bank
making such advance shall charge interest or discount thereon at a
rate not less than 1 per centum above its discount.rate i n effect at
the time of making such advance. No such note upon which
advances are made by a Federal reserve bank under this section
shall be eligible under section 16 of this A c t as collateral security
f o r Federal reserve notes.
" N o obligations of any foreign government, individual, partnership, association, or corporation organized under the laws thereof
shall be eligible as collateral security for advances under this
section.
" Member banks are authorized to obligate themselves i n accordance w i t h the provisions of this section."
SEC. 2. The Federal Reserve Act, as amended, is further amended
by adding, immediately after such new section 10 ( a ) , an additional
new section reading as follows:



[PUB. 44.]

2

" SEC. 10. (b) U n t i l March 3, 1933, and i n exceptional and exigent
circumstances, and when any member bank, having a capital of not
exceeding $ 5 , 0 0 0 , 0 0 0 , has no further eligible and acceptable assets
available to enable i t to obtain adequate credit accommodations
through Tediscounting at the Federal reserve bank or any other
method provided by this Act other than that provided by section 10
(a), any Federal reserve bank, subject i n each case to affirmative
action by not less than five members of the Federal Reserve Board,
may make advances to such member bank oti its. time or demand
promissory notes secured to the satisfaction of such Federal" reserve
bank: Provided, That (1) each such note shall bear interest at a
rate not less than 1 per centum per annum higher than the highest
discount rate i n effect at such Federal reserve bank on the date ofsuch note; (2) the Federal Reserve Board may by regulation l i m i t
and define the classes of assets which may be accepted as security
for advances made under authority of this section; and (3) no note
accepted for any such advance shall be eligible as collateral security
for Federal reserve notes.
" N o obligations of any foreign government, individual, partnership, association, or corporation organized under the laws thereof
shall be eligible as collateral security for advances under this section."
SEC. 3. The second paragraph of section 16 of the Federal Reserve
Act, as amended, is amended to read as follows:
" A n y Federal reserve bank may make application to the local
Federal reserve agent for such amount ^of the Federal reserve notes
hereinbefore provided for as i t may require. Such application shall
be accompanied w i t h a tender to the local Federal reserve agent of
collateral i n amount equal to the sum of the Federal reserve notes
thus applied for and issued pursuant to such application. The collateral security thus offered shall be notes, drafts, bills of exchange,
or acceptances acquired under the provisions of section 13 of this
A c t , or bills of exchange indorsed by a member bank of any Federal
reserve district and purchased under the provisions of section 14
of this Act, or bankers' acceptances purchased under the provisions
of said section 14, or gold or gold certificates: Provided, however,
That u n t i l March 3, 1933, should the Federal Reserve Board deem
i t i n the public interest, i t may, upon the affirmative vote of not less
than a majority of its members, authorize the Federal reserve banks
to offer, and the Federal reserve agents to accept, as such collateral
security, direct obligations of the United States. On March 3,1933,
or sooner should the Federal Reserve Board so decide, such authorization shall terminate and such obligations of the United States be
retired as security for Federal reserve notes. I n no event shall such
collateral security be less than the amount of Federal reserve notes
applied for. The Federal reserve agent shall each day n o t i f y the
Federal Reserve Board of all issues and withdrawals, of Federal
reserve notes to and by the Federal reserve bank to which he is
accredited. The said f e d e r a l Reserve Board may at any time call
upon a Federal reserve bank for additional security to protect the
Federal reserve notes issued to i t . "
Approved, February 27, 1932.




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