The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
[ 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.
@FedFRASER