Full text of Banking and Currency : Report of the Committee of Conference of the Two Houses of Congress on the Bill (H.R. 7837) to Provide for the Establishment of Federal Reserve Banks, to Furnish an Elastic Currency, to Afford Means of Rediscounting Commercial Paper, to Establish a More Effective Supervision of Banking in the United States, Sixty-Third Congress, Second Session

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BANKING AND CURRENCY
REPORT OF THE

COMMITTEE OF CONFERENCE
OF THE
TWO HOUSES OF CONGRESS
ON THE BILL ( a R. 7837) TO PROVIDE FOR THE ES.
TABLISHMENT OF FEDERAL RESERVE BANKS, TO
FURNISH AN ELASTIC CURRENCY. TO AFFORD MEANS
OF REDISCOUNTINC COMMERCIAL PAPER, TO ESTAB­
LISH A MORE EFFECTIVE SUPERVISION OF BANKINC
IN THE UNITED STATES. AND FOR OTHER PURPOSES

Sixty-third Congress, Second Session

S E C O N D E D IT IO N

PRINTED FOR THE USE OF THE COMMITTEE ON BANKING AND CURRENCY

WASHINGTON
GOVERNMENT PRINTING OFFICE
1913

2036(i 0 — 58------ 20




BANKING AND CURRENCY BILL.

CONFERENCE R E P O R T ON THE B IL L (H. R . 7837) TO P R O V ID E F O R
THE E STABLISH M EN T OF F E D E R A L R E S E R V E B A N K S , TO F U R ­
N ISH A N E LA STIC CU RR E N C Y, TO A FF O R D M E AN S OF R E D IS ­
COUNTING COMM ERCIAL P A P E R , TO E S T A B L IS H A M ORE E F ­
FECTIVE SU P E R V ISIO N OF B A N K IN G IN THE UN ITED STA TE S.
A N D FOR OTHER PU R PO SES.

T he com m ittee o f conference on the disagreeing votes o f the tw o
H ouses on the amendment o f the Senate to the bill (H . R. 7837) to
p rovid e fo r the establishment o f Federal reserve banks, to furnish an
elastic curren cy, to afford means o f rediscounting com m ercial paper,
to establish a m ore effective supervision o f banking in the u n ited
S tates,an d fo r other purposes, having met, after full and free co n fe r­
ence have agreed to recommend and do recom m end to th§ir respective
H ouses as follow s:
That the H ouse recede from its disagreem ent to the amendment o f
the Senate and agree to the same withmn amendment as follow s:
In lieu o f the amendment proposed b y the Senate insert the fo llo w -

ing:
Be it enacted by the Senate and House o f Representatives o f the United
States o f America in Conqress assembled, That the short title of this
Act shall be the “ Federal Reserve Act.”
W h erever the w ord “ b a n k ” is used in this A ct, the w ord shall be
held to include State bank, banking association, and trust com pa n y,
e x ce p t where national banks or Federal reserve banks are specifically
referred to.
The terms “ national b a n k ” and “ national banking a ssociation ”
used in this A ct shall be held to be syn on ym ou s and interchangeable.
The term “ m em ber b a n k ” shall be held to m ean any national bank,
State bank, or bank or trust com pa n y w hich has becom e a m em ber
o f one o f the reserve banks createa b y this A ct. Th e term “ b o a r d ”
shall be held to m ean Federal R eserve B oa rd ; the term “ d is trict”
shall be held to mean Federal reserve d istrict; the term “ reserve
b a n k ” shall be held to mean Federal reserve bank.
FEDERAL RESERVE DISTRICTS.

S e c . 2. As soon as practicable, the Secretary of the Treasury, the
Secretary of Agriculture and the Comptroller of the Currency, act­
ing as “ The Reserve Bank Organization Committee,” shall designate
not less than eight nor more than twelve cities to be known as Federal
reserve cities, and shall divide the continental United States, ex­
cluding Alaska, into districts, each district to contain only one of such
Federal reserve cities. The determination of said organization
committee shall not be subject to review except by the Federal




3

4

BANKING AND CUBBENCY.

R eserve B oard when organized: Provided, T h at the districts shall be
apportion ed w ith due regard to the convenien ce and cu stom ary cou tte
o l Dusiness and shall n ot necessarily be coterm inous w ith any State
o r States. Th e districts thus created m ay be readjusted and new
districts m a y from tim e to time be created b y the Federal R eserve
B oard, n ot to exceed tw elve in all. Such districts shall be kn ow n as
Federal reserve districts and m ay be designated b y num ber. A m a­
jo r ity o f the organization com m ittee shall constitu te a quoru m w ith
a u th ority to act.
Said organization com m ittee shall be authorized to em p loy counsel
and expert aid, to take testim ony, to send for persons and papers, to
adm inister oaths, and to m ake such investigation as m a y be deem ed
necessary b y the said com m ittee in determ ining the reserve districts
and in designating the cities within such districts where such Federal
reserve banks shall be severally located. The said com m ittee shall
supervise the organization in each o f . the cities designated o f a
Federal reserve bank, which shall include in its title th e nam e o f the
c ity in w hich it is situated, as “ Federal Reserve B an k o f C h icago.”
U nder regulations to be prescribed b y the organization com m ittee,
every national banking association in the U nited States is hereby
required, and every eligible bank in the U n ited States and every
trust com pan y w ithin the D istrict o f C olum bia, is hereby authorized
to signify in writing, within six ty days after the passage o f this A ct,
its acceptance o f the terms and provisions h ereof. W h en the organi­
zation com m ittee shall have designated the cities in w hich Federal
reserve banks are to be organized, and fixed the geograph ical lim its
o f the Federal reserve districts, every national banking association
w ithin that district shall be required within th irty days after n otice
from the organization com m ittee, to subscribe to the capital sto ck
o f such Federal reserve bank in a sum equal to six per centum
o f the paid-up capital s tock and surplus o f such bank, on e-sixth o f
the subscription to be payable on call o f the organization com m ittee
o r o f the Vedcral Reserve B oard, one-sixth within three m onths and
one-sixth within six m onths thereafter, and the rem ainder o f the su b’ 1 be su bject to call when deem ed
B oard, said paym ents to bo in
T he shareholders o f every Federal reserve bank shall be held indi­
vidu ally responsible, equally and ratably, and n ot one fo r another,
fo r all contracts, debts, and engagem ents o f such bank to the exten t
o f the am ount o f their subscriptions to such sto ck at the par value
thereof in addition to the am ount subscribed, w hether such subscrip­
tions have been paid up in whole or in part, under the provisions o f
this A ct.
A n y national bank failing to signify its acceptan ce o f the term s o f
this A ct within the six ty days aforesaid, shall cease to act as a reserve
agent, upon th irty days' notice, to be given within the discretion o f the
said organization com m ittee or o f the Federal R eserve B oard.
Should any national banking association in the U nited States now
organized fail within one year after the passage o f this A ct to becom e
a m em ber bank or fail to co m p ly w ith any o f the provisions o f this
A c t applicable thereto, all o f the rights, privileges, and franchises o f
such association granted to it under the nation al-ban k A ct, or under
the provisions o f this A ct, shall bo thereby forfeited. A n y n on com ­




BANKING AND CURRENCY.

5

pliance with or violation of this A ct shall, however, be determined
and adjudged by any court of tho United States of competent juris­
diction in a suit brought for that purpose in the District or Territory
in which such bank is located, under direction of the Federal Reserve
Board, by the Comptroller of the Currency in his own name before
the association shall be declared dissolved. In cases of such noncomlianco or violation, other than tho failure to become a member
ank under the provisions of this Act, every director who partici­
pated in or assented to the same shall be held liable in his personal
or individual capacity for all damages which said bank, its share­
holders, or any other person shall have sustained in consequence of
such violation.
Such dissolution shall not take away or impair any remedy against
such corporation, its stockholders or officers, for any liability or
penalty which shall have been previously incurred.

E

Should the subscriptions by banks to the stocK of said Federal
reserve banks or any one or more of them be, in the judgment of the
organization committee, insufficient to provide the amount of capital
required therefor, then and in that event the said organization com­
mittee may, under conditions and regulations to be prescribed by it,
offer to public subscription at par such an amount of stock in said
Federal reserve banks, or any one or more of them, as said committee
shall determine, subject to the same conditions as to payment and
st^ck liability as provided for member banks.

No individual, copartnership, or corporation other than a member
bank of its district shall be permitted to subscribe for or to hold at
any time more than $25,000 par value of stock in any Federal reserve
bank. Such stock shall be known as public stock and may be trans­
ferred on the books of the Federal reserve .bank by the chairman of
the board of directors of such bank.
Should the total subscriptions by banks and the public to the stock
of said Federal reserve banks, or any one or more of them, be, m the
judgment of the organization committee, insufficient to provide the
amount of'capital required therefor, then and in that event the said
organization committee shall allot to the United States such an
amount of said stock as said committee shall determine. Said United
States stock shall be paid for at par out of any money in the Treas­
ury not otherwise appropriated, and shall be held by the Secietary
of the Treasury and disposed of for the benefit of the Ignited States
in such manner, at such times, and at such price, not less than par,
as the Secretary of the Treasury shall determine.
Stock not held by member banks shall not be entitled to voting
power.
The Federal Reserve Board is hereby empowered to adopt and
promulgate rules and regulations governing the transfers of said
stock.
No Federal reserve bank shall commence business with a sub­
scribed capital less than $4,000,000. The organization of reserve
districts and Federal reserve cities shall not be construed as chang­
ing the present status of reserve cities and central reserve cities,
except in so far as this A ct changes the amount of reserves that
may be carried with approved reserve agents located therein. The
organization committee shall have power to appoint such assistants
and incur such expenses in carrying out the provisions of this Act as




6

b a k s ih o a n d c u b b in c y .

it shall deem necessary, and such expenses shall be p a ya b le b y the
Treasurer o f th e U n ited States u pon v ou ch er a p p rov ed dv the Secre­
ta ry o f the Treasury, and the sum o f $100,000, or so m u ch th ereof as
m a y b e necessary, is h ereb y appropriated, ou t o f a ny m on eys in the
Treasu ry n o t otherw ise appropriated, for the p a ym en t o f such
expenses.
BRANCH OFFICES.

Sec. 3. E a ch Federal reserve bank shall establish branch banks
w ith in the Federal reserve d istrict in w hich it is loca ted and m a y d o
so in the d istrict o f a ny Federal reserve bank w hich m a y have been
suspended. Such branches shall be operated b y a board o f directors
un der rules and regulations app roved Dy the Federal R eserve B oard.
D irectors o f brancn banks snail possess the same Qualifications as
directors o f the Federal reserve banks. F ou r o f saia directors shall
be selected b y the reserve bank and three b y the Federal R eserve
B oard , and th ey shall hold office during the pleasure, resp ectively,
o f the parent ban k and the Federal R eserve B oard. T h e reserve
b an k shall designate one o f the directors as m anager.
FEDERAL RESERVE BANKS.

Sec. 4. W h en the organization com m ittee shall h ave established
Federal reserve districts as p rovid ed in section tw o o f this A c t; a
certificate shall be filed w ith the C om ptroller o f the C urrency show ing
the geograph ical lim its o f such districts and the Federal reserve city
designated in each o f such districts. T h e C om ptroller o f the Cur­
ren cy shall thereupon cause to be forw arded to each nation al bank
loca ted in each district, and to such oth er banks declared to be eli­
gible b y the organization com m ittee w hich m a y a p p ly therefor, an
application blank in form to be app roved b y the organization co m ­
m ittee, w hich blank shall con tain a resolution to be adop ted b y the
board o f directors o f each bank execu tin g such app lication , author­
izin g a subscription to the capital s tock o f the Federal reserve bank
organizing in that d istrict in a ccordance w ith the provision s o f this
A c t.
W h en the m inim um am ount o f ca p ita l s to ck prescribed b y this
A c t fo r the organ ization o f any Federal reserve ban k shall h ave been
su bscribed ana a llotted, the organization com m ittee shall designate
a n y five banks o f those w hose applications have been received, to
execu te a certificate o f organization, and thereupon the banks so
designated shall, under their seals, m ake an organization certificate
w h icn shall specifically state the nam e o f such Federal reserve ban k,
th e territorial exten t o f the district ov er w hich the operation s o f su ch
Federal reserve ban k are to be carried on, the c ity and State in w h ich
said ban k is to be loca ted , the am ount o f capital s to ck and the num ­
ber o f shares in to w hich the sam e is divid ed, the nam e and place o f
d oin g business o f each ban k execu tin g such certificate, ana o f all
banks w hich h ave subscribed to the capital s to ck o f such Federal
reserve b an k and the nu m ber o f shares su bscribed b y each, and the
fa c t th at the certificate is m ade to enable those banks execu tin g
sam e, and all banks w hich h ave subscribed or m a y thereaf ter subscribe
to the ca p ita l s to ck o f su ch Federal reserve bank, to avail them selves
o f the advantages o f this A ct.




BANKING AND OUBBENOY.

7

T h e said organization certificate shall be acknow ledged b efore a
ju d g e o f som e cou rt o f record or n ota ry p u b lic; and shall be, together
w ith the acknow ledgm ent thereof, authenticated b y the seal o f euch
cou rt, o r n otary, transm itted to the C om ptroller o f the C urrency,
w ho shall file, record and carefully preserve the sam e in his office.
U pon the filing o f such certificate w ith the C om ptroller o f the
C urrency as aforesaid, the said Federal reserve bank shall b ecom e a
b o d y corporate and as such, and in the nam e designated in such
organization certificate, shall have pow er—
First. T o a dop t and use a corp orate seal.
S econd. T o have succession fo r a period o f tw en ty years from ita
organization unless it is soon er dissolved b y an A c t o f Congress, o r
unless its franchise becom es forfeited b y som e viola tion o f law.
T h ird. T o m ake con tracts.
F ou rth . T o sue and be sued, com plain and defend, in any cou rt o f
law or equity.
F ifth . T o appoint b y its board o f directors, such officers and em ­
p loyees as are n ot otherw ise p rovid ed fo r in this A c t, to define their
duties, require bonds o f them and fix the p en a lty thereof, and to dis­
miss at pleasure such officers or em ployees.
Sixth . T o prescribe b y ita board o f directors, b y-law s n o t inconsist­
ent with law, regulating the m anner in w hich its general business
m ay be con d u cted , and the privileges granted to it b y law m ay be
exercised and en joyed .
Seventh. T o exercise b y its board o f directors, or duly authorized
officers or agents, all powers specifically granted b y the provisions o f
this A ct and such incidental powers as shall be necessary to carry on
the business of banking within the lim itations prescribed b y this A ct.
E ighth. U pon deposit with the Treasurer o f the U nited States o f
any bonds of the U nited States in the m anner provided b y existing
law relating to national banks, to receive from tne C om ptroller o f the
Currency circulating notes in blank, registered and countersigned as
provided b y law, equal in am ount to tne par value o f the bonds so
deposited, such notes to be issued under the same con dition s and pro­
visions* of law as relate to the issue of circulating notes o f national
banks secured b y bonds of the U nited States bearing the circulating
privilege, e x cep t that the issue o f such notes shall n ot be lim ited to the
capital stock of such Federal reserve bank.
B u t no Federal reserve bank shall transact any business ex ce p t such
as is incidental and necessarily prelim inary to its organization until it
has been authorized b y the C om ptroller o f the C urrency to com m en ce
business under the provisions of this A ct.
E v e ry Federal reserve bank shall be con d u cted under the super­
vision and con trol of a board of directors.
T h e board of directors shall perform the duties usually appertaining
to the office of directors of banking associations and all such duties as
are prescribed b y law.
Said board shall adm inister the affairs of said bank fairly and im par­
tially and w ithout discrim ination in fa v or o f or against any m em ber
bank or banks and shall, su b ject to the provisions o f law and the orders
o f the Federal R eserve B oard, extend to each m em ber bank such dis­
counts, advancem ents and a ccom m odations as m ay be safelv and
reasonably m ade with due regard for the claim s and dem ands 01 oth er
m em ber banks.




8

BANKING AND CUBBBNOY.

Such board of directors shall be selected as hereinafter specified and
shall consist of nine members, holding office for three years, and
divided into three classes, designated as classes A, B, and C.
Class A shall consist of three members, who shall be chosen by and
be representative of the stock-holding banks.
Class B shall consist of three members, who at the time of their
election shall be actively engaged in their district in commerce, agri<culture or some other industrial pursuit^.
Class C shall consist oi three members who shall be designated by
the Federal Reserve Board. When the necessary subscriptions to the
capital stock have been obtained for the organization of any Federal
reserve bank, the Federal Reserve Board shall appoint the class C
directors and shall designate one of such directors as chairman of the
board to be selected, rending the designation of such chairman, the
organization committee shall exercise the powers and duties apper­
taining to the office of chairman in the organization of such Federal
reserve bank.
No Senator or Representative in Congress shall be a member of the
Federal Reserve Board or an officer or a director of a Federal re­
serve bank.
No director of class B shall be an officer, director, or employee of
any bank.
No director of class C shall be an officer, director, employee, or
stockholder of any bank.
Directors of class A and class B shall be chosen in the following
manner:
The chairman of the board of directors of the Federal reserve bank
of the district in which the bank is situated or, pending the.appoint­
ment of such chairman, the organization committee shall classify the
member banks of the district into three general groups or divisions.
Each group shall contain as nearly as may be one-third of the aggre­
gate number of the member banks of the district and shall consist, as
nearly as may be, of banks of similar capitalization. Tho groups shall
be designated by number by the chairman.
At a regularly called meeting of the board of directors of each
member bank in the district it snail elect by ballot a district reserve
elector and shall certify his name to the chairman of the board of
directors of the Federal reserve bank of the district. The chairman
shall make lists of the district reserve electors thus named by banks
in each of the aforesaid three groups and shall transmit one list to each
elector in each group.
Each member bank shall be permitted to nominate to the chair­
man one candidate for director of class A and one candidate for
director of class B. The candidates so nominated shall be listed by
the chairman, indicating by whom nominated, and a copy of said list
shall, within fifteen days after its completion, be furnished by the
chairman to each elector.
Every elector shall, within fifteen days after the receipt of the said
list, certify to the chairman his first, second, and other choices of a
director oi class A and class B, respectively, upon a preferential bal­
lot, on a form furnished by the chairman of the board of directors of
the Federal reserve bank of the district. Each elector shall make a
cross opposite the name of the first, second, and other choices for a




BANKING AND CURRENCY.

9

director of class A and for a director of class B, but shall not vote
more than one choice for any one candidate.
Any candidate having a majority of all votes cast in the column
of first choice shall be declared elected. If no candidate have a
majority of all the votes in the first column, then there shall be added
together the votes cast by the electors for such candidates in the
second column and the votes cast for the several candidates in the first
column. If any candidate then have a majority of the electors vot­
ing, by adding together the first and second choices, he shall be de­
clared elected. Ii no candidate have a majority of electors voting
when the first and second choices shall have been added, then the
votes cast in the third column for other choices shall be added to­
gether in like manner, and the candidate then having the highest
number of votes shall be declared elected. An immediate report of
election shall be declared.
Class C directors shall be appointed by the Federal Reserve Board.
They shall have been for at least two years residents of the district
for which they are appointed, one of whom shall be designated by
said board as chairman of the board of directors of the Federal
reserve bank and as “ Federal reserve agent.” He shall be a person of
tested banking experience; and in addition to his duties as chairman
of the board of directors of the Federal reserve bank he shall be
required to maintain under regulations to be established by the
Federal Reserve Board a local office of said board on the
premises of the Federal reserve bank. He shall make regular
reports to the Federal Reserve Board, and shall act as its official
representative for the performance of the functions conferred
upon it by this Act He shall receive an annual compensation
to be fixed by the Federal Reserve Board and paid monthly by
the Federal reserve bank to which he #is designated One of
the directors of class C, who shall be a person of tested banking
experience, shall be appointed by the Federal Reserve Board as
di^uty chairman and deputy Federal reserve agent to exercise the
powers of the chairman of the board and Federal reserve agent in
case of absence or disability of hiis principal.
Directors of Federal reserve banks shall receive, in addition to any
compensation otherwise provided, a reasonable allow ance for neces­
sary expenses in attending meetings of their respective boards, which
amount shall be paid by the respective Federal reserve banks Any
compensation that may be provided by boards of directors of Federal
reserve banks for directors, officers or employees shall be subject to
the approval of the Federal Reserve Board.
The Reserve Bank Organization Committee may, in organizing
Federal reserve banks, call such meetings of bank directors in the sev­
eral districts as may be necessary to carry out the purposes of this
Act, and may exercise the functions herein conferred upon the chair­
man of the board of directors of each Federal reserve bank pending
the complete organization of such bank.
At the first meeting of the full board of directors of each Federal
reserve bank.it shall oe the duty of the directors of classes A, B and
C, respectively, to designate one of the members of each class whose
term of office shall expire in one year from the first of January
nearest to date of such meeting, on*' whose term of office shall expire




10

BANKING AND CURRENCY.

at the end of two years from said date, and one whose term of office
shall expire at the end of three years from said date. Thereafter
every director of a Federal reserve bank chosen as hereinbefore pro­
vided shall hold office for a term of three years. Vacancies that
may occur in the several classes of directors of Federal reserve banks
may be filled in the manner provided for the original selection of
such directors, such appointees to ljold office for the unexpired terms
of their predecessors.
stock

i s s u e s ; in c r e a s e

and

decrease

of

c a p it a l .

Sec. 5. The capital stock of each Federal reserve bank shall be
divided into shares of $100 each. The outstanding capital stock
shall be increased from time to time as member banks increase their
capital stock and surplus or as additional banks become members,
and may be decreased as member banks reduce their capital stock or
surplus or cease to be members. Shares of the. capital stock of
Federal reserve banks owned by member banks shall not be trans­
ferred or hypothecated. When a member bank increases its capi­
tal stock or surplus, it shall thereupon subscribe for an additional
amount of capital stock of the Federal reserve bank of its district
equal to six per centum of the said increase, one-half of said sub­
scription to be paid in the manner hereinbefore provided for original
subscription, and one-half subject to call of tne Federal Reserve
Board. A bank applying for stock in a Federal reserve bank at any
time after the organization thereof must subscribe for an amount of
the capital stock of the Federal reserve bank equal to six per centum
of the paid-up capital stock and surplus of said applican t Dank, pay­
ing therefor its par value plus one-naif of one per centum a month
from the period of the last dividend. When the capital stock of any
Federal reserve bank sh&ll have been increased eitner on account of
the increase of capital stock of member banks or on account of the
increase in the number of member banks, the board of directors shall
cause to be executed a certificate to the Comptroller of the Currency
showing the increase in capital stock, the amount paid in, and by
whom paid. When a memoer bank reduces its capital stock it shall
surrender a proportionate amount of its holdings in the capital of
said Federal reserve bank, and when a member bank voluntarily
liquidates jt shall surrender all of its holdings of the capital
stock of said Federal reserve bank and be released from its stock
subscription not previously called. In either case the shares sur­
rendered shall be canceled and the member bank shall receive in
payment therefor, under regulations to be prescribed by the Federal
Reserve Board, a sum equal to its cash-paid subscriptions on the
shares surrendered and one-half of one per centum a month from the
period of the last dividend, not to exceed the book value thereof, less
any liability of such member bank to the Federal reserve bank.
S ec. 6. I f a n yi m em ber bank shall be declared in solven t and a
receiver appoin ted therefor, the stock held b y it in said Federal
reserve banlc shall be canceled, w ith ou t im pairm ent o f its lia bility,
and all cash-paid subscriptions on said stock, with on e-h alf o f one per
cen tu m per m on th from the period o f last dividend, n o t to exceed
the b o o k value thereof, shall be first applied to all debts o f the insol­
ven t m em ber bank to the Federal reserve bank, and the balance, if




BANKING AND OUBBENOY.

11

any, shall be paid to tjie receiver of the insolvent bank. Whenever
the capital stock of a Federal reserve bank is reduced, either on
account of a reduction in capital stock of any member bank or of the
liquidation or insolvency of such bank, the board of directors shall
cause to be executed a certificate to the Comptroller of the Currency
showing such reduction of capital stock ana the amount repaid to
such bank.
DIVISION OF EARNINGS.

Sec. 7. After all necessary expenses of a Federal reserve bank
have been paid or provided for, tne stockholders shall be entitled to
receive an annual dividend of six per centum on the paid-in capital
stock, which dividend shall be cumulative. After the aforesaid
dividend claims have been fully met, all the net earnings shall be
paid to the United States as a franchise tax, except that one-half of
such net earnings shall be paid into a surplus fund until it shall
amount to forty per centum of the paid-in capital stock of such
bank.
The net earnings derived by the United States from Federal reserve
banks shall, in the discretion of the Secretary, be used to supplement
the gold reserve held against outstanding United States notes, or shall
be applied to the reduction of the outstanding bonded indebtedness of
the United States under regulations to be prescribed by the Secre­
tary of the Treasuiy. Should a Federal reserve bank be dissolved
or go into liquidation, any surplus remaining, after the payment of all
debts, dividend requirements as hereinbefore provided, and the par
value of the stock, shall be paid to and become the property of the
United States and shall be similarly applied. *
Federal reserve banks, including the capital stock and surplus
therein, and the income derived therefrom shall be exempt from
Federal, State, and local taxation, except taxes upon real estate.
Sec. 8. Section fifty-one hundred and fifty-four, United States
Jtevised Statutes, is hereby amended to read as follows:
Any bank incorporated by special law of any State or of the
United States or organized under the general laws of any State or of
the United States and having an unimpaired capital sufficient to
entitle it to become a national banking association under the pro­
visions of the existing laws may, by the vote of the shareholders
owning not less than fifty-one per centum of the capital stock of
such bank or banking association, with the approval of the Comp­
troller of the Currency be converted into a national banking associ­
ation, with any name approved by the Comptroller of the Currency:
Provided, however, That said conversion shall not be in contravention
of the State law. In such case the articles of association and organi­
zation certificate may be executed by a majority of the directors of
the bank or banking institution, and the certificate shall declare that
the owners of fifty-one per centum of the capital stock have author­
ized the directors to make such certificate and to change or convert
the bank or banking institution into a national association. A ma­
jority of the directors,* after executing the articles of association and
the organization certificate, shall have power to execute all other
papers and to do whatever may be required to make its organization
perfect and complete as a national association. The shares of any
such bank may continue to be for the same amount each as they




12

BANKING AND CUBBBNOY.

were before the conversion, and the directors may continue to be
directors of the association until others are elected or appointed in
accordance with the provisions of the statutes of the United States.
When the comptroller has given to such bank or banking association
a certificate that the provisions of this Act have been complied with,
such bank or banking association, and all its stockholders, officers,
and employees, shall have the same powers and privileges, and shall
be subject to tho same duties, liabilities, and regulations, in all re­
spects, as shall have been proscribed by the Federal Roservo Act and
by the national banking Act for associations originally organized as
national banking associations.
STATE BANKS AS MEMBERS.

S e c . 9. Any bank incorporated by special law of any State, or
organized under the general laws of any State or of the United
States, may make application to the reservo bank organization
committee, pending organization, and thoreafter to the Federal
Reserve Board for the right to subscribe to the stock of the Federal
reservo bank organized or to be organized within tho Federal reserve
district whore the applicant is located. The organization committee
or the Federal Reserve Board, under such rules and regulations as
it may prescribe, subject to the provisions of this section, may
permit tne applying bank to become a stockholder in the Federal
reserve bank of the district in which the applying bank is located.
Whenever the organization committee or the Federal Reserve Board
shall permit the applying bank to become a stockholder in the Federal
reserve bank of tiie district, stock shall be issued and paid for under
the rules and regulations in this Act provided for national banks
which become stockholders in Federal reserve banks.
The organization committee or the Federal Reserve Board shall
establish by-laws for the general government of its conduct in acting
upon applications made by the State banks and banking associations
and trust companies lor stock ownership in Federal reserve banks.
Such by-laws shall require applying banks not organized under
Federal law to comply with the reserve and capital requirements
and to submit to tho examination and regulations prescribed by the
organization committee or by the Federal Reserve Board. No ap­
plying bank shall be admitted to membership in a Federal reserve
bank unless it possesses a paid-up unimpaired capital sufficient to
entitle it to become a national banking association in the place where
it is situated, under the provisions of the national banking Act.
Any bank becoming a membor of a Federal reserve bank under the
provisions of this section shall, in addition to the regulations and
restrictions hereinbefore provided, be required to conform to the
provisions of law imposed on the national banks respecting the
limitation of liability which may be incurred by any person, firm, or
corporation to such banks, the prohibition against making purchase
of or loans on stock of such banks, and the withdrawal or impairment
of capital, or the payment of unearned dividends, and to such rules
and regulations as the Federal Reserve Board may, in pursuance
thereof, prescribe.
Such banks, and the officers, agents, and employees thereof, shall
also be subject to the provisions of and to the penalties prescribed
by sections fifty-one hundred and ninety-eight, fifty-two hundred,




BANKING AND CUBBENCY.

18

fifty-two hundred and one, and fifty-two hundred and eight, and
fifty-two hundred and nine of the Revised Statutes. The member
banks shall also be required to make reports of the conditions and
of the payments of dividends to the comptroller, as provided in
sections fifty-two hundred and eleven and fifty-two hundred and
twelve of the Revised Statutes, and shall be subject to the penalties
prescribed by section fifty-two hundred and thirteen for the failure
to make such report.
If at any time it shall appear to the Federal Reserve Board that a
member bank has failed to comply with the provisions of this section
or the regulations of the Federal Reserve Board, it shall be within the
power of the said board, after hearing, to require such bank to sur­
render its stock in the Federal reserve bank; upon such surrender the
Federal reserve bank shall pay the cash-paid subscriptions to the said
stock with interest at the rate of one-half of one per centum per
month, computed from the last dividend, if earned, not to exceed
the book value thereof, less any liability to said Federal reserve bank,
except the subscription liability not previously called, which shall be
canceled, and said Federal reserve bank shall, upon notice from the
Federal Reserve Board, bo required to suspend said bank from further
privileges of membership, and shall within thirty days of such notice
cancel and retire its stock and make payrqpnt therefor in the manner
herein provided.
The Federal Reserve Board may restore membership upon due
proof of compliance with the conditions imposed by this section.
FEDERAL RESERVE BOARD.

Sec. 10. A Federal Reserve Board is hereby created which shall
consist of seven members, including the Secretary of the Treasury
and the Comptroller of the Currency, who shall be members ex
officio, and five members appointed by the President of the United
States, by and with the advice and consent of the Senate. In
selecting the five appointive members of the Federal Reserve
Board, not more than one of whom shall be selected from any
one Federal reserve district, the President shall have due regard to
a fair representation of the different commercial, industrial and
eogranhical divisions of the country. The five members of the
’ederal Reserve Board appointed by the President and confirmed
as aforesaid shall devote tlieir entire time to the business of the
Federal Reserve Board and shall each receive an annual salary of
$12,000, payable monthly together with actual necessary traveling
expenses, and the Comptroller of the Currency, as ex officio member
of the Federal Reserve Board, shall, in addition to the salary now
paid him as Comptroller of the Currency, receive the sum of $7,000
annually for his services as a member of said Board.
The members of said board, the Secretary of the Treasury, the
Assistant Secretaries of the Treasury, and the Comptroller of the Cur­
rency shall be ineligible during the time they are in office and for two
years thereafter to hold any office, position, or employment in any
member bank. Of the five members thus appointed oy the President
at least two shall be persons experienced in banking or finance. One
shall be designated by the President to serve for two, one for four, one
for six, one for eight, and^me for ten years, and thereafter each
member so appointed shalr serve for a term of ten years unless

f




14

BANKING AND CURRENCY.

sooner removed for cause by the President. Of the five persons thus
appointed, one shall be designated by the President as governor and
one as vice governor of the Federal Reserve Board. The governor of
the Federal Reserve Board, subject to its supervision, shall be the
active executive officer. The Secretary of the Treasury may assign
offices in the Department of the Treasury for the use of the Federal
Reserve Board. Each member of the Federal Reserve Board shall
within fifteen days after notice of appointment make and subscribe
to the oath of office.
The Federal Reserve Board shall have power to levy semiannually
upon the Federal reserve banks, in proportion to their capital stock
and surplus, an assessment sufficient to pay its estimated expenses and
the salaries of its members and employees for the half year succeed­
ing the levying of such assessment, together with any deficit carried
forward from the preceding half year.
The first meeting of the Federal Reserve Board shall be held in
Washington, District of Columbia, as soon as may be after the passage
of this Act, at a date to be fixed by* the Reserve Bank Organization
Committee. The Secretary of the Treasury shall be ex officio chair­
man of the Federal Reserve Board. - No member of the Federal
Reserve Board shall be an officer or director of any bank, banking
institution, trust company, or Federal reserve bank nor hold stock
in any bank, banking institution, or trust company; and before
entering upon his duties as a member of the Federal Reserve Board
he shall certify under oath to the Secretary of the Treasury that he
has complied with this requirement. Whenever a vacancy shall
occur, otner than by expiration of term, among the five members of
the Federal Reserve Board appointed by the President, as above
provided, a successor shall be appointed by the President,*with the
advice and consent of the Senate, to fill such vacancy, and when
appointed he shall hold office for the unexpired term of the member
whose place he is selected to fill.
The President shall have power to fill all vacancies that may hap­
pen on the Federal Reserve Board during the recess of the Senate, by
granting commissions which shall expire thirty dkys after the next
session of the Senate convenes.
Nothing in this Act contained shall be construed as taking away
any powers heretofore* vested by law in the Secretary of the Treasury
whicn relate to the supervision, management, and control of the
Treasury Department and bureaus under such department, and wher­
ever any power vested by this Act in the Federal Reserve Board or
the Federal reserve agent appears to conflict with the powers of the
Secretary of the Treasury, such powers shall be exercised subject
to the supervision and control of tne Secretary.
The Federal Reserve Board shall annually make a full report of
its operations to the Speaker of the House of Representatives, who
shall cause the same to be printed for the information of the Congress.
Section three hundred and twenty-four of the Revised Statutes of
the United States shall be amended so as to read as follows: There
shall be in the Department of the Treasury a bureau charged with
the execution of all laws passed by Congress relating to the issue and
regulation of national currency secured by United States bonds and.
under the general supervision of the Federal Reserve Board, of all




BANKING

AND

CUR'RENCY.

15

Federal reserve notes, the chief officer of which bureau shall be called
the Comptroller of the Currency and shall perform his duties under
the general directions of the Secretary of the Treasury.
Sec. 11. The Federal Reserve Board shall be authorized and em­
powered:
(a) To examine at its discretion the accounts, books and affairs
of each Federal reserve bank and of each member bank and to require
such statements and reports as it may deem necessary. The said
board shall publish once each week a statement showing the condi­
tion of each Federal reserve bank and a consolidated statement for all
Federal reserve banks. Such statements shall show in detail the
assets and liabilities of the Federal reserve banks, single and com­
bined, and shall furnish full information regarding the character of the
money held as reserve and the amount, nature and maturities of the
paper and other investments owned or held by Federal reserve
(b) To permit, or, on the affirmative vote of at least five members
of the Reserve Board, to require Federal reserve banks to rediscount
the discounted paper of other Federal reserve banks at rates of in­
terest to be fixed bv the Federal Reserve Board.
(c) To suspend lor a period not exceeding thirty days, and from
time to time to renew such suspension for periods not exceeding
fifteen days, any reserve requirement specified in this Act: Provided,
That it shall establish a graduated tax upon the amounts by which
the reserve requirements of this Act may be permitted to fall below
the level hereinafter specified: And provided further, That when the
gold reserve held against Federal reserve notes falls below forty per
centum, the Federal Reserve Board shall establish a graduated tax of
not more than one per centum per annum upon such deficiency until
the reserves fall to thirty-two and one-hall per centum, ana when
said reserve falls below thirty-two and one-half per centum per annum,
a tax at the rate increasingly of not less than one and one-half per
centum per annum upon each two and one-half per centum or
fraction thereof that such reserve falls below thirty-two and onehalf per centum. The tax shall be paid by the reserve bank, but
the reserve bank shall add an amount equal to said tax to the rates
of interest and discount fixed by the Federal Reserve Board.
(d) To supervise and regulate through the bureau under the charge
of the Comptroller of the Currency the issue and retirement of Federal
reserve notes, and to prescribe rules and regulations under which such
notes may be delivered by the comptroller to the Federal reserve
agents applying therefor.
(e) To add to the number of cities classified as reserve and central
reserve cities under existing law in which national banking associa­
tions are subject to the reserve requirements set forth in section
twenty of this Act; or to reclassify existing reserve and central
reserve cities or to terminate their designation as such.
( f ) To suspend or remove any officer or director of any Federal
reserve bank, the cause of such removal to be forthwith communi­
cated in writing by the Federal Reserve Board to the removed officer
or director and to said bank.
(g) To require the writing off of doubtful or worthless assets upon
the books and balance sheets of Federal reserve banks.




16

BANKING AND GU BU NCY.

(h) To suspend, for the violation of any of the provisions of this
Act, the operations of any Federal reserve bank, to take possession
thereof, administer the same during the period of suspension, and,
when deemed advisable, to liquidate or reorganize such bank.
(i) To require bonds of Federal reserve agents, to make regulations
for the safeguarding of all collateral, bonds, Federal reserve notes,
money or property of any kind deposited in the hands of such
agents, and said board shall perform the duties, functions, or services
specified in this Act, and make all rules ancl regulations necessary
to enable said board effectively to perform the same.
(l) To exercise general supervision over said Federal reserve banks.
(k) To grant by special permit to national banks applying therefor,
when not m contravention of State or local law, the right to act as
trustee, executor, administrator, or registrar of stocks and bonds
under such rules and regulations as the said board may prescribe.
(1) To employ such attorneys, experts, assistants, clerks, or other
employees as may be deemed necessary to conduct the business of
the board. All salaries and fees shall t>o fixed in advance by said
board and shall be paid in the same manner as the salaries 6f the
members of said board. All such attorneys, experts, assistants,
clerks, and other employees shall be appointed without regard to the
provisions of the Act of January sixteenth, eighteen hundred and
eighty-three (volume twenty-two, United States Statutes at Large,
page four hundred and three), and amendments thereto, or any ride
or regulation made in pursuance thereof.: Provided, That nothing herein
shall prevent the President from placing said employes in the classi­
fied service.
FEDERAL ADVISORY COUNCIL.
S e c . 12 . There is hereby created a Federal Advisory Council,
which shall consist of as many members as there are Federal reserve
districts. Each Federal reserve bank by its board of directors shall
annually select from its own Federal reserve district one member of
said council, who shall receive such compensation and allowances as
may be fixed by his board of directors subject to the approval of the
Federal Reserve Board. The meetings of said advisory council shall
be held at Washington, District of Columbia, at least four times each
year, and oftener if called by the Federal Reserve Board. The
council may in addition to the meetings above provided for hold such
other meetings in Washington, District of Columbia, or elsewhere, as
it may deem necessary, may select its own officers and adopt its own
methods of procedure, and a majority of its members shall constitute
a quorum for the transaction of business. Vacancies in the council
shall be filled by the respective reserve banks, and member® selected
to fill vacancies, shall serve for the unexpired term.
The Federal Advisory Council shall have power j by itself or tiirougn
its officers, (1) to confer directly with the Federal keserve Board on
general business conditions; (2) to make oral or written representa­
tions concerning matters within the jurisdiction of said board: (o) to
call for information and to make recommendations in regard to
discount rates, rediscount business, note issues, reserve conditions m
the various districts, the purchase and sale of gold or securities by
reserve banks, open-market operations by said banks, and the general
affairs of the reserve banking system.




BANKING AND CURRENCY.

17

POWERS OF FEDERAL RESERYE BAN K*.

Sfcc. 13. Any Federal reserve bank may receive from an}' of its
member banks, and from the United States, deposits of current, funds
in lawful money, national-bank notes, Federal reserve notes, or
chceks and drafts upon solvent member banks, payable upon presen­
tation; or, solely for exchange purposes, may receive from other
Federal reserve banks deposits of current funds in lawful money,
national-bank notes, or cnecks and drafts upon solvent member or
other Federal reserve banks, payable upon presentation.
Upon the indorsement of any of its member banks, with a waiver of
demand, notice and protest by such bank, any Federal reserve bank
may discount notes, drafts, and bills of exchange arising out of actual
commercial transactions; that is, notes, drafts, and bills of exchange
issued or drawn for agricultural, industrial, or commercial purposes,
or the proceeds of which have been used, or are to be used, for such
purposes, the Federal Reserve Board to have the right to determine
or define the character of the paper thus eligible for discount, within
the meaning of this Act. Nothing in this Act contained shall be
construed to prohibit such notes, drafts, and bills of exchange, secured
by staple agricultural products, or other goods, wares, or merchandise
from being eligible for such discount; but such definition shall not
include notes, drafts, or bills covering merely investments or issued
or drawn for the purpose of carrying or traaing in stocks, bonds, or
other investment securities, except bonds and notes of the Govern­
ment of the United States. Notes, drafts, and bills admitted to dis­
count under the terms of this paragraph must have a maturity at
the time of discount of not more than ninety days: Provided, That
notes, drafts, and bills drawn or issued for agricultural purposes or
based on live stock and having a maturity not exceeding six months
may bo discounted in an amount to be limited to a percentage of the
capital of the Federal reserve bank, to be ascertained and fixed by the
Federal Reserve Board.
Any Federal rcteerve bank may discount acceptances which are
basea on the importation or exportation of goods and which
have a maturity at time of discount of not more than three
months, and indorsed by at least one member bank. The amount
of acceptances so discounted shall at no time exceed one-half the
paid-up capital stock and surplus of tho bank for which the redis­
counts are made.
The a g g r e g a te o f s u c h n o te s a n d b ills b e a rin g th e sig n a tu r e o r in ­
d o r s e m e n t o f a n y o n e p e r s o n , c o m p a n y , fir m , o r c o r p o r a tio n red is­
c o u n te d fo r a n y o n e b an K s h a ll a t n o tim e e x c e e d ten p e r c e n t u m o f th e
u n im p a ir e d c a p ita l a n d su r p lu s o f sa id b a n k ; b u t th is r e str ic tio n sh a ll
n o t a p p ly to me d is c o u n t o f b ills o f e x c h a n g e d r a w n in g o o d fa ith
a g a in s t a c t u a lly e x is tin g v a lu e s .

Any member bank may accept drafts or bills of exchange drawn
upon it and growing out of transactions involving the importation
or exportation of goods having not more than six months sight to
run; but no bank shall accept such bills to an amount equal at any
time in the aggregate to more than one-half its paid-up capital stock
and surplus.
Section fifty-two hundred and two of the Revised Statutes of the
United States is hereby amended so as to read as follows: No national
20366 O— 58------ 21




18

1IANKIKQ AND OUKKENOY.

banking association shall at any time bo indebted, or in any way
liable, to an amount exceeding the amount of its capital stock at sucn
time actually paid in and remaining undiminished W losses or other­
wise, except on account of demands of the nature following:
F irst. N otes o f circu lation.
Second . M oneys deposited w ith or collected b y the association.

Third. Bills of exchange or drafts drawn against money actually
on deposit to the credit of the association, or due thereto.
Fourth. Liabilities to the stockholders of the association for
dividends and reserve profits.
Fifth. Liabilities incurred under the provisions of the Federal
Reserve Act.
The rediscount by any Federal reserve bank of any bills receivable
and of domestic and foreign bills of exchange, ana of acceptances
authorized by this Act, shall be subject to such restrictions, limita­
tions, and regulations as may be imposed by the Federal Reserve
Board.
OPEN-MARKET OPERATIONS.

# Sec. 14. Any Federal reserve bank may, under rules and regula­
tions prescribed by the Federal Reserve Board, purchase and sell in
the open market, at home or abroad, either from or to domestic or
foreign banks, firms, corporations, or individuals, cable transfers and
bankers’ acceptances ana bills of exchange of the kinds and maturities
by this Act made eligible for rediscount, with or without the indorse­
ment of a member bank.
Every Federal reserve bank shall have power:
(a) To deal in gold coin and bullion at home or abroad, to make
loans thereon, exchange Federal reserve notes for gold, gold coin, or
|pld certificates, and to contract for loans of gold coin or bullion, giv­
ing therefor, when necessary, acceptable security, including the nypothecation of United States bonds or other securities which Federal
reserve banks are authorized to hold;
(b) To buy and sell, at home or abroad, bonds and notes of the
United States, and bills, notes, revenue bonds; and warrants with a
maturity from date of purchase of not exceeding six months, issued
in anticipation of the collection of taxes or in anticipation of the
receipt of assured revenues by any State, county, district, political
subdivision, or municipality in the continental United States, includ­
ing irrigation, drainage and reclamation districts, such purchases to
be made in accordance with rules and regulations proscribed by the
Federal Reserve Board;
(c) To purchase from member banks and to sell, with or without its
indorsement, bills of exchange arising out of commercial transactions,
as hereinbefore defined;
(d) To establish from time to time, subject to review and determi­
nation of the Federal Reserve Board, rates of discount to bo charged
by the Federal reserve bank for each class of paper, which shall be fixed
with a view of accommodating commerce and business;
(e) To establish accounts with other Federal reserve banks for
exchange purposes and, with the consent of the Federal Reserve
Board, to open and maintain banking accounts in foreign countries,
appoint correspondents, and establish agencies in such countries
wheresoever it may deem best for the purpose of purchasing, selling,
and collecting bills of exchange, and to Duy and sell with or without its



BANKING AND GUBBBNOY.

19

indorsement^ through such correspondents or agencies, bills of
exchange arising out of actual commercial transactions which havd
not more than mnety days to run and which bear the signature of two
or more responsible parties.
GOVERNMENT DEPOSITS.
S e c . 15. The moneys held in the general fund of the Treasury,
except the five per centum fund for the redemption of outstanding
national-bank notes and the funds provided in this Act for the redemp­
tion of Federal reserve notes may, upon the direction of the Secretary
of the Treasury, be deposited in Federal reserve banks, which banks,
when required Dy the Secretary of the Treasury, shall act as fiscal
agents of the United States; and the revenues of the Government or
any part thereof may be deposited in such banks, and disbursements
may be made by checks drawn against such deposits.
No public funds of the Philippine Islands, or of the postal savings,
or any Government funds, shall f>e deposited in the continental Unitea
States in any bank not belonging U) the system established by this Act:
Provided, however, That nothing in this Act shall be construed to deny
the right of the Secretary of the Treasury to use member banks as
depositories.
NOTE

is s u e s .

Sec. 16. Federal reserve notes, to be issued at the discretion of the
Federal Reserve Board for the purpose of making advances to Federal
reserve banks through the Federal reserve agents as hereinafter set
forth and for no other purpose, are hereby authorized. The said notes
shall be obligations of the United States and shall be receivable by all
national and member banks and Federal reserve banks and for all
taxes, customs, and other public dues. They shall be redeemed in
gold on demand at the Treasury Department of the United States, in
the city of Washington, District of Columbia, or in gold or lawful
money at any Federal reserve bank.
Any Federal reserve bank may make application to the local
Federal reserve*agent for such amount of the Federal reserve notes
hereinbefore provided for as it may require/ Such application shall
be accompanied with a tender to the local Federal reserve agent of
collateral in 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 and bills, accepted for rediscount
under the provisions of section thirteen of this Act, and the Federal
reserve agent shall each day notify 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 Federal Reserve
Board may at any time call upon a Federal reserve bank for addi­
tional security to protect the Federal reserve notes issued to it.
Every Fedoral reserve bank shall maintain reserves in gold or
lawful money of not -less than thirty-five per centum against its
deposits and reserves in gold of not less than forty per centum
against its Federal reserve notes in actual circulation, and not
onset by gold or lawful money deposited with the Federal
reserve agent. Notes so paid out shall bear upon their faces a
distinctive letter and serial number, which snail be assigned




20

BANKING AND CUBBENCY.

by the Federal Reserve Board to each Federal reserve bank. When­
ever Federal reserve notes issued tlirough one Federal reserve bank
shall be received bv another Federal reserve bank they shall be
promptly returned for credit or redemption to the Federal reserve
bank through wliich they were originally issued. No Federal reserve
bank shall pay out notes issued through another under penalty of a
tax of ten per centum upon the face value of notes so paid out. Notes
resented for redemption at the Treasury of the United States shall
e paid out of the redemption fund and returned to the Federal
reserve banks through which they were originally issued, and there­
upon such Federal reserve bank shall, upon demand of the Secretary
of the Treasury, reimburse such^ redemption fund in lawful money
or, if such Fedoral reserve notes have been redeemed by the Treasurer
in gold or gold certificates, then such funds shall be reimbursed to
the extent aeemed necessary bv the Secretary of the Treasury in gold
or gold certificates, and such Federal reserve bank shall, so long as
any of its Federal reserve notes remain outstanding, maintain with
the Treasurer in gold an amount sufficient in the judgment of the
Secretary to provide for all redemptions to be made by tne Treasurer.
Federal reserve notes received by the Treasury, otherwise than for
redemption, may be exchanged for gold out of the redemption fund
hereinafter provided and returned to the reserve bank through which
they were originally issued, or they may be returned to such bank
for tho credit of the United States. Federal reserve notes unfit for
circulation shall be returned by the Federal reserve agents to the
Comptroller of the Currency for cancellation and destruction.
The Federal Reserve Board shall require each Federal reserve bank
to maintain on deposit in the Treasury of the United States a sum in
gold sufficient in the judgment of the Secretary of the Treasury for
the redemption of the Federal reserve notes issued to such
bank, but in no event less than five per centum: but such de­
posit of gold shall be counted and included as part of the forty per
centum reserve hereinbefore required. The board shall have the
right, acting through the Federal reserve agent, to grant in whole
or in part or to reject entirely the application of any Federal
reserve bank for Federal reserve notes; but to the extent that such
application may be granted the Federal Reserve Board shall, through
its local Federal reserve agent, supplv Federal leserve notes to tne
bank so applying, and such bank shall be charged with the amount
of such notes and shall pay such rate of interest on said amount as
may be established by the Federal Reserve Board, and the amount oi
such Federal reserve notes so issued to any such bank shall, upon
delivery, together with such notes of such Federal reserve bank as
may be issued under section eighteen of this Act upon security of
United States two per centum Government bonds, become a first and
paramount lien on all the assets of such bank.
Any Federal reserve bank may at any time reduce its liability for
outstanding Federal reserve notes by depositing, with the Federal
reserve agent, its Federal reserve notes, gold, gold certificates, or
lawful money of the United States. Federal reserve notes so depos­
ited shall not be reissued, except upon compliance with the conditions
of an original issue.
The Federal reserve agent shall hold such gold, gold certificates, or
lawful money available exclusively for exchange for the outstanding

E




BANKING AND CUBBENCY.

ftl

Federal reserve notes when offered by the reserve bank of which he iB
a director. Upon the reauest of the Secretary of the Treasury the
Federal Reserve Board snail require the Federal reserve agent to
transmit so much of said gold to the Treasury of the United States as
may be required for the exclusive purpose of the redemption of such
notes.
Any Federal reserve bank may at its discretion withdraw collateral
deposited with the local Federal reserve agent for the protection of
its Federal reserve notes deposited with it and shall at the same time
substitute therefor other like collateral of equal amount with the
approval of the Federal reserve agent under regulations to be pre­
scribed by the Federal Reserve Board.
In order to furnish suitable notes for circulation as Federal reserve
notes, the Comptroller of the Currency shall, under the direction of
the Secretary of the Treasury, cause plates and dies to be engraved
in the best manner to guard against counterfeits and fraudulent
alterations, and shall have printed therefrom and numbered such
quantities of such notes of the denominations of $5, $10, $20,
$50. $100, as may be required to supply the Federal reserve banks.
Such notes shall be in form and tenor as directed by the Secretary of
the Treasury under the provisions of this Act and shall bear the
distinctive numbers of the several Federal reserve banks through
which they are issued.
When such notes have been prepared, they shall be deposited in
the Treasury, or in -the subtreasury or mint of the United States
nearest the place of business of eacli Federal reserve bank and shall
be held for the use of such bank subject to the order of the Comp­
troller of the Currency for their delivery, as provided by this Act.
The plates and dies to be procured by the Comptroller of the Cur­
rency lor the printing of such circulating notes shall remain under
his control and direction, and the expenses necessarily incurred in
executing the laws relating to the procuring of such notes, and all
other expenses ii\cidental to their issue and retirement, shall be paid
by the Federal reserve banks, and the Federal Reserve Board shall
include in its estimate of expenses levied against the Feieral reserve
banks a sufficient amount to cover the expenses herein provided for.
The examination of plates, dies, bed pieces, and so forth, and
regulations relating to such examination of plates, dies, and so forth,
of national-bank notes provided for in section fifty-one hundred and
seventy-four Revised Statutes, is herbey extended to include notes
herein provided for.
Any appropriation heretofore made out of the general funds of
the Treasury for engraving plates and dies, the purchase of distinc­
tive paper, or to cover any other expense in connection with the
printing of national-bank notes or notes provided for by the Act of
May thirtieth, nineteen hundred and eight, and any distinctive paper
that may be on hapd at the time of the passage of this Act may be
used in the discretion of the Secretary for the purposes of this Act,
and should the appropriations heretofore made be insufficient to
meet the requirements of this Act in addition to circulating notes
provided for by existing law, the Secretary is hereby authorized to
use so much of any funds in the Treasury not otherwise appropriated
for the purpose of furnishing the notes aforesaid: Provided, howeverf
That nothing in this section contained shall be construed as exempt-




22

HANKING AND OURRENOY.

ing national banks or Federal reserve banks from their liability to
reimburse the United States for any expenses incurred in printing
and issuing circulating notes.
Every Federal reserve bank shall receive on deposit at par from mem­
ber banks or from Federal reserve banks checks and drafts drawn upon
any of its depositors, and when remitted by a Federal reserve bank,
checks and drafts drawn by any depositor in any other Federal
reserve bank or member bank upon funds to the credit of said deposi­
tor in said reserve bank or member bank. Nothing herein contained
shall be construed as prohibiting a member bank from charging its
actual expense incurred in collecting and remitting funds, or for
exchange sold to its patrons. The Federal Reserve B oard shall, by
rule, fix the charges to be collected by the member banks from its
patrons whose checks are cleared through the Federal reserve bank
and the charge which may be imposed ior the service of clearing or
collection rendered by the Federal reserve bank.
The Federal Reserve Board shall make and promulgate from time
to time regulations governing the transfer of funds and charges
therefor among Federal reserve banks and their branches, and may
at its discretion exercise the functions of a clearing house for sucn
Federal reserve banks., or may designate a Federal reserve bank to
exercise such functions, and may also require each such bank to
exercise the functions of a clearing house for its member banks.
Sec. 17. So much of the provisions of section fifty-one hundred
and fifty-nine of the Revised Statutes of the United States, and
section four of the Act of June twentieth, eighteen hundred and
seventy-four, and section eight of the Act of July twelfth, eighteen
hundred and eighty-two, and of any other provisions of existing
statutes as require that before any national banking association
shall be authorized to commence banking business it shall transfer
and deliver to the Treasurer of the United States a stated amount of
United States registered bonds is hereby repealed.
REFUNDING BONDS.

S e c . 18. A fter tw o years from the passage o f this A ct, and at any
tim e during a period o f tw en ty years thereafter, any m em ber bank
desiring to retire the w hole or any part o f its circulating notes, m a y
file w ith the Treasurer o f the U nited States an application to sell fo r
its account, at par and accrued interest, U nited States b ond s secur­
in g circulation to be retired.
T he Treasurer shall, at the end o f each quarterly period, furnish
the Federal R eserve B oard w ith a list o f such applications, and the
Federal R eserve B oard m ay, in its discretion, require the Federal
reserve banks to purchase such bonds from the banks w hose appli­
cations have been filed w ith the Treasurer at least ten days b efore
the end o f any quarterly period at w hich the Federal R eserve B oard
m ay direct the purchase to be m ade: Provided, T h a t Federal reserve
banks shall n ot be perm itted to purchase an am ou nt to exceed
$25,000,000 o f such bonds in any one year, and w hich am ount shall
include bonds acquired under section fou r o f this A c t b y the Federal
reserve bank. Providedfurther, T hat the Federal R eserve B oard shall
allot to each Federal reserve bank such p rop ortion o f such bonds as the




BANKING AND OUBBBNO*.

28

capital and surplus of such bank shall bear to the aggregate capital
and surplus of all the Federal reserve banks.
Upon notice from the Treasurer of the amount of bonds so sold for
its account, each member bank shall duly assign and transfer, in
writing, such bonds to the Federal reserve bank purchasing the
same, and such Federal reserve bank shall, thereupon, deposit lawful
money with the Treasurer of the United States for the purchase price
of such bonds, and the Treasurer shall pay to the member bank selling
such bonds any balance due aftei deducting a sufficient sum to
redeem its outstanding notes secured by such bonds, which notes
shall be canceled and permanently retired when redeemed.
The Federal reserve banks purchasing such bonds shall be per­
mitted to take out an amount of circulating notes equal to the par
value of such bonds.
Upon the deposit with the Treasurer of the United States of bonds
so purchased, or any bonds with the circulating privilege acquired
under section four of this Act, any Federal reserve bank making
such deposit in the manner provided by existing law, shall be entitled
to receive from the Comptroller of the Currency circulating notes
in blank, registered and countersigned as provided by law, equal in
amount to the par value of thelwmds so deposited. Such notes
shall be the obligations of the Federal reserve bank procuring the
same, and shall be in form prescribed by the Secretary of the Treas­
ury, and to the same tenor and effect as national-bank notes now
provided by law. They shall be issued and redeemed under the
same terms and conditions as national-bank notes except that they
shall not be limited to the amount of the capital stock of the Federal
reserve bank issuing them.
Upon application of any Federal reserve bank, approved by the
Federal Reserve Board, the Secretary of tho Treasury may issue, in
exchange for United States two per centum gold bonds bearing the cir­
culation privilege, but against which no circulation is outstanding,
one-year gold notes of the United States without the circulation
privilege, to an amount not to exceed one half of the two per centum
D onds so tendered for exchange, and thirty-year three per centum
gold bonds without the circulation privilege for the remamdor of the
two per centum bonds so tendered: Provided, That at tho time of such
exchange the Federal reserve bank obtaining such one-year gold
notes shall enter into an obligation with the Secretary of tho Treas­
ury binding itself to purchase from the United States for gold at the
maturity 01 such one-year notes, an amount equal to those delivered
in exchange for such bonds, if so requested by, the Secretary, and at
each maturity of one-year notes so purchased by such Federal reserve
bank, to purchase from tho United States such an amount of one year
notes as the Secretary may tender to such bank, not to exceod' the
amount issued to such bank in the first instance, in exchange for the
two per centum Unitod States gold bonds; said obligation to pur­
chase at maturity such notes shall continuo in forco for a period not
to exceed thirty years.
For the purpose of making the exchange herein provided for, the
Secretary of the Treasury is authorized to issue at par Treasury notes
in coupon or registered form as he may prescribe in denominations
of one hundred dollars, or any multiple thereof, bearing interest at
the rate of three per centum per annum, payable quarterly, such




24

BANKING AND CURRENCY.

Treasury notes to be payable not more than one year from the date of
their issue in gold coin of the present standard value, and to be exempt
as to principal and interest from the payment of all taxes and duties
of the United States except as provided by this Act, as well as from
taxes in any form by or under State, municipal, or local authorities.
And for the same purpose, the Secretary is authorized and empowered
to issue United States gold bonds at par, bearing three per centum
interest payable thirty years from date of issue, such bonds to be of
the same general tenor and effect and to be issued under the same
general terms and conditions as the United States three per centum
bonds without the circulation privilege now issued and outstanding.
Upon application of any Federal reserve bank, approved by the
Federal Reserve Board, the Secretary may issue at par such "three
per centum bonds ip exchange for the one-year gold notes herein
provided for.
BANK RESERVES.

Sec. 19. Demand deposits within tho moaning of this Act shall
compriso all deposits payable within thirty days, and timo deposits
shall comprise all deposits payable after thirty days, and ail savings
accounts and certificates of deposit which are subject to not loss than
thirty days’ notice boforo payment.
When tho Secretary of tho Treasury shall have officially announced,
in such manner as ho may elect, tho establishment of a Fodoral reserve
bank in any district, every subscribing member bank shall establish
and maintain reserves as follows:
(a) A bank not in a reservo or control reserve city os now or here­
after defined, shall hold and maintain reserves equal to twelve per
centum of tho aggregate amount of its demand deposits and five per
centum of its time deposits, as follows:
In its vaults for a period of thirty-six months after said date
five-twelfths thereof and permanently thereafter four-twelfths.
In the Federal reserve hank of its district, for a period of twelve
months after said date, two-twelfths, and for each succeeding six
months an additional one-twelfth, until five-twelfths have been so
deposited, which shall be the amount permanently required.
For a period of thirty-six months after said date tho balance of
the reserves may be held in its own vaults, or in the Federal reserve
bank, or in national banks in reserve or central reserve cities as now
defined by law.
After said thirty-six months’ period said reserves, other than
those hereinbefore required to ho held in the vaults of the member
bank and in the Federal reserve bank, shall be held in tho vaults of
the member bank or in the Federal reserve bank, or in both, at the
option of the member bank.
(b) A bank in a reserve city, as now or hereafter defined, shall hold
and maintain reserves equal to fifteen per centum of the aggregate
amount of its demand deposits and five per centum of its time
deposits, as follows:
# In its vaults for a period of thirty-six months after said date
six-fifteenths thereof, and permanently thereafter five-fifteenths.
In tho Federal reserve bank of its district for a period of twelve
months after the date aforesaid at least three-fifteenths, and for each
succeeding six months an additional one-fifteenth, until six-fifteenths




BANKING AND CUBBENCY.

25

have been so deposited, which shall be the amount permanently
reauired.
For a period of thirty-six months after said date the balance of
the reserves may be held in its own vaults, or in the Federal reserve
bank, or in national banks in reserve or central reserve cities as now
defined by law.
After said thirty-six months’ period all of said reserves, except
those hereinbefore reauired to be held permanently in the vaults of
the member bank ana in the Federal reserve bank, shall be held in
its vaults or in the Federal reserve bank, or in both, at the option
of the member bank.
(c)
A bank in a central reserve city, as now or hereafter defined,
shall hold and maintain a reserve equal to eighteen per centum of
the aggregate amount of its demand deposits and five per centum of
its time deposits, as follows:
In its vaults six-eighteenths thereof.
In the Federal reserve bank seven-eighteenths.
The balance of said reserves shall be held in its own vaults or in
the Federal reserve bank, at its option.
Any Federal reserve bank may receive from the member banks as
reserves, not exceeding one-half of each installment, eligible paper as
described in section fourteen properly indorsed and acceptable to
the said reserve bank.
If a State bank or trust company is required by the law of its State
to keep its reserves either in its own vaults or with another State bank
or trust company, such reserve deposits so kept in such State bank
or trust company shall be construed, within the meaning of this sec­
tion, as if they were reserve deposits in a national bank in a reserve
ob central reserve citv for a period of three years after the Secretary
of the Treasury shall have officially announced the establishment of a
Federal reserve bank in the district in which such State bank or
trust company is situate. Except as thus provided, no member
bank shall keep on deposit with any nonmember bank a sum in
excess of ten per centum of its own paid-up capital and surplus.
No member bank shall act as the medium or agent of a nonmcmber
bank in applying for or receiving discounts from a Federal reserve
bank under tne provisions of this Act except by permission of the
Federal Reserve Board.
The reserve carried by a member bank with a Federal reserve bank
may, under the regulations and subject to such penalties as may be
prescribed by the Federal Reserve Board, be checked against and
withdrawn by such member bank for tlie purpose of meeting existing
liabilities: Provided, however, That no bank shall at any time make new
loans or shall pay any dividends unless and until the total reserve
reauired by law is fully restored.
In estimating the reserves required by this Act, the net balance of
amounts due to and from other banks shall be taken as the basis for
ascertaining the deposits against which reserves shall be determined.
Balances in reserve banks due to member banks shall, to the extent
herein provided, bo counted as reserves.
National banks located in Alaska or outside the continental United
States may remain nonmember banks, and shall in that event
maintain reserves and comply with all the conditions now provided
by law regulating them; or said banks, except in the Philippine




8ft

b a n k in g a n d o u b b s n o t .

Inlands, may, with the consent of the Reserve Board, become member
banks of any one of the reserve districts, and shall, in that event, take
stock, maintain reserves, and be subject to all the other provisions
of this Act.
S b o . 20. So much of sections two and three of the Act of June
twentieth, eighteen hundred and seventy-four, entitled “ An Act
fixing the amount of United States notes, providing for a redistribu­
tion of the national-bank currency, and for other purposes,” as pro­
vides that the fund deposited by any national banking association
with the Treasurer of the United States for the redemption of its notes
shall be counted as a part of its lawful reserve as provided in the Act
aforesaid is hereby repealed. And from and after the pasfea&e of this
Act such fund of five per centum shall in no case be counted by any
national banking association as a part of its lawful reserve.
BANK EXAMINATIONS.
S e c . 21. Section fifty-two hundred and forty, United States Re­
vised Statutes, is amended to read as follows:
The Comptroller of the Currency, with the approval of the Secre­
tary of the Treasury, shall appoint examiners who shall examine
every member bank at least twice in each calendar year and oftener
if considered necessary :: Provided, however. That the Federal Reserve
Board may authorize examination by the State authorities to be
accepted in the case of State banks and trust companies and may at
any time direct the holding of a special examination of State banks
or trust companies that are stockholders in any Federal reserve
bank. The examiner making the examination of any national bank,
or of any other member banK, shall have power to make a thorough
examination of all the affairs of the bank and in doing so he shall
have power to administer oaths and to examine any ot the officers
and agents thereof under oath and shall make.a full and detailed
report of the condition of said bank to the Comptroller of the Cur­
rency.
The Federal Reserve Board, upon the recommendation of the
Comptroller of the Currency, shall fix the salaries of all bank exam­
iners and make report thereof to Congress. The expense of the
examinations herein provided for shall be assessed by the Comptroller
of the Currency upon the banks examined in proportion to assets or
resources held by the banks upon the dates of examination of the
various banks.
In addition to the examinations made and conducted by the
Comptroller of the Currency, every Federal reserve bank may. with
the approval of the Federal reserve agent or the Federal Reserve Board,
provide for special examination of member banks within its district.
The expense of such examinations shall be borne by the bank exam­
ined. Such examinations shall be so conducted as to inform the
Federal reserve bank of the condition of its member banks and of the
lines of credit which are being extended by them. Every Federal
reserve bank shall at all times furnish to the Federal Reserve Boaid
such information as may be demanded concerning the condition of
any member bank within the district of the said Federal reserve bank.
No bank shall be subject to any visitatorial powers other than such
as are authorized by law, or vested in the courts of justice or such as
shall be or shall have been exercised or directed by Congress, or by




BANKING AND CUBBENCY.

27

either House thereof or by any committee of Congress or of either
House dulv authorized.
The Federal Reserve Board shall, at least once each year, order an
examination of each Federal reserve bank, and upon joint applica­
tion of ten member banks the Federal Reserve Board shall order a
special examination and report of the condition of any Federal
reserve bank.
S e c . 22. No member bank or any officer, director, or employee
thereof shall hereafter make any loan or grant any gratuity to any
bank examiner. Any bank officer, director, or employee violat­
ing this provision shall be deemed guilty of a misdemeanor and shall
be imprisoned not exceeding one year or fined not more than $5,000,
or botn; and may be fined a further sum equal to the money so loaned
or gratuity given. Any examiner accepting a loan or gratuity from any
bank examined by him or from an officer, director, or employee thereof
shall be deemed guilty of a misdemeanor and shall be imprisoned not
exceeding one year or fined not more than $5,000, or both; and may be
fined a further sum equal to the money so loaned or gratuity given;
and shall forever thereafter be disqualified from holding office as a
national-bank examiner. No national-bank examiner shall perform
any other service for compensation while holding such office for any
bank or officer, director, or employee thereof.
Other than the usual salary or director’s fee paid to any officer,
director, or employee of a member bank and other than a reasonable
fee paid by said bank to such officer, director, or employee for services
rendered to such bank, no officer, director, employee, or attorney of a
member bank shall be a beneficiary of or receive, directly or indirectly,
any fee, commission, gift, or other consideration for or in connection
with any transaction or business of the bank. No examiner, public
or private, shall disclose the names of borrowers or the collateral for
loans of a member bank to other than the proper officers of such
bank without first having obtained the express permission in writing
from the Comptroller of the Currency, or from tne board of directors
of such bank, except when ordered to do so by a court of competent
jurisdiction, or by direction of the Congress of the United States, or
of either House thereof, or any committee of Congress or of either
House duly authorized. Any person violating any provision of this
section shall be punished by a fine of not exceeding $5,000 or by
imprisonment not exceeding one year, or both.
Except as provided in existing laws, this provision shall not take
effect until sixty days after the passage of this Act.
S e c . 23. The stockholders of every national banking association
shall be held individually responsible for all contracts, debts, and
engagements of such association, each to the amount of his stock
therein, at the par value thereof in addition to the amount invested
in such stock. The stockholders in any national banking association
who shall have transferred their shares or registered the transfer
thereof within sixty days next before the date of the failure of such
association to meet its obligations, or with knowledge of such im­
pending failure, shall be liable to the same extent as if they had made
no such transfer, to the extent that the subsequent transferee fails to
meet such liability; but this provision shall not be construed to
affect in any way any recourse which such shareholders might other­
wise have against those in whose names such shares are registered at
the time of such failure.




#8

aunuxa
LOANS

and cubjrsncy.

on

farm

lands.

Sec. 24. Any national banking association not situated in a
central reserve city may make loans secured by improved and unen­
cumbered farm land, situated within its Federal reserve district,
but no such loan shall be made for a longer time than five years, nor
for an amount exceeding fifty per centum of the actual value of the
property offered as security. Any such bank may make such loans
in an aggregate sum equal to twenty-five per centum of its capital
and surplus or to one-tnird of its time deposits and such banks may
continue hereafter as heretofore to receive time deposits and to pay
interest on the same.
The Federal Reserve Board shall have power from time to time to
«dd to the list of cities In which national banks shall not be permitted
tomake loans secured upon real estate in the manner described in
this section,
f o r e ig n

branch es.

Sec. 25. Any national banking association possessing a capital and
surplus of $1,000,000 or more may file application with the Federal
Reserve Board; upon such conditions and under such regulations as
may be prescribed by the said board, for the purpose of securing
•autnoritv to establish branches in foreign countries or dependencies
of the United States for the furtherance of the foreign commerce of
the United States, and to act, if required to do so, as fiscal agents of
the United States. Such application shall specify, in addition to the
name and capital of the banking association filing it, the place or
places where the banking operations proposed are to be carried on,
ami the amount of capital set aside for the conduct of its foreign
business. The Federal Reserve Board shall have power to approve
or to reject such application if, in its judgment, the amount of cap­
ital proposed to be set aside for the conduct of foreign business is
inadequate, or if for other reasons the granting of such application
is deemed inexpedient*.
Every national banking association which shall receive authority
to establish foreign branches shall be required at all times to furnish
information concerning tho condition of such branches to the Comp­
troller of tho Currency upon domand, and the Federal Reserve Board
may order spocial exammations of tho said foreign branches at such
time or times as it may deem best. Every such national banking as­
sociation shall conduct the accounts of each foreign branch inde­
pendently of the accounts of other foreign branches established
by it andf of its home office, and shall at the end of each fiscal period
transfer to its general ledger the profit or loss accruing at each branch
as a separate item.
S e c . 26. All provisions of law inconsistent with or superseded by any
of the provisions of this Act are to that extent and to that extent only
hereby repealed: Provided, Nothing in this Act contained shall be con
strued to repeal the parity provision or provisions contained in an
Act approved 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
xefund the public debt, and for other purposes,” and the Secretary of




BANKING AND CUBBENCY.

29

the Treasury may for the purpose of maintaining such parity and to
strengthen the gold reserve, borrow gold on the security of United
States bonds authorized by section two of the Act last referred to
or for one-year gold notes Bearing interest at a rate of not to exceed
three per centum per annum, or sell the same if necessaiy to obtain
gold. When the funds of the Treasury on hand justify, he may
purchase and retire such outstanding bonds and notes.
S e c . 27. The provisions of the Act of May thirtieth, nineteen
hundred and eignt, authorizing national currency associations, the
issue of additional national-bank circulation, and creating a National
Monetary Commission, which expires by limitation under the terms
of such Act on the thirtieth day of June, nineteen hundred and four­
teen, are hereby extended to June thirtieth, nineteenth hundred and
fifteen, and sections fifty-one hundred *and fifty-three, fifty-one
hundred and seventy-two, fifty-one hundred and ninety-one, and
fifty-two hundred and fourteen of the Revised Statutes of the United
States, which were amended by the Act of May thirtieth, nineteen
hundred and eight, are hereby reenacted to read as such sections
read prior to May thirtieth, nineteen hundred and eight, subject to
such amendments or modifications as are prescribed in this Act:
Provided, however, That section nine of the Act first referred to in
this section is hereby amended so as to change the tax rates fixed
in said Act by making the portion applicable thereto read as follows:
National banking associations having circulating notes secured
otherwise than by bonds of the United States, shall pay for the first
three months a tax at the rate of three per centum per annum upon
the average amount of such of their notes in circulation as are based
upon the deposit of such securities, and afterwards an additional tax
rate of one-naif of one per centum per annum for each month until a
tax of six per centum per atinum is reached, and thereafter such tax
of six per centum per annum upon the average amount of such
notes.
S e c . 28. Section fifty-one hundred and forty-three of the Revised
Statutes is hereby amended and reenacted to read as follows: Any
association formed under this title may, by the vote of shareholders
owning two-thirds of its capital stock, reduce its capital to any sum
not below the amount required by this title to authorize the forma­
tion of associations; but no such reduction shall be allowable which
will reduce the capital of the association below the amount required
for its outstanding circulation, nor shall any reduction be made until
the amount of the proposed reduction has been reported to the Comp­
troller of the Currency and such reduction has been approved by the
said Comptroller of tfie Currency and by the Federal Reserve Board,
or by the organization committee pending the organization of the
Federal Reserve Board.
S e c . 29. If any clause, sentence, paragraph, or part of this Act
shall for any reason be adjudged by any court of competent juris­
diction to be invalid, such judgment shall not affect, impair, or
invalidate the remainder of this Act, but shall be confined in its
operation to the clause, sentence, paragraph, or part thereof directly
involved in the controversy in which such judgment shall have been
rendered.




30

BANKING} AND CUBBENCY.

Sec. 30. The right to amend, alter, or repeal this Act is hereby
expressly reserved.
Managers on the part of the Managers on the part of the
House:
Senate:
C a b t e b G l a ss ,
CHABLE8 A. E o r b l t .

R obt. L. O w en,

J. A.

O ’G o r h a n ,

J a s. A. R e e d ,
A tlee P om erene,
J. F. S h a f r o t h ,
H e n r y F. H o l l i s .




o