Full text of Federal Reserve Act : Public Law 63-43, 63d Congress, H.R. 7837: An Act to Provide for the Establishment of Federal Reserve Banks, to Furnish an Elastic Currency, to Afford Means of Rediscounting Commercial Paper, to Establish a More Effective Supervision of Banking in the United States, and for Other Purposes
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H.R. 7837 Sixty-third Congress of the United States of America;At the Second Session, Begun and held at the City of W ashington on M onday, the first day of D ecem ber, one- t housand nine hundred and thirteen. AN ACTTo provide for the establishment of Federal reserve banks, to furnish an elasticcurrency, to afford means of rediscounting commercial paper, to establish a more effective su p ervision of b an k in g in th e U n ited S tates, an d for oth er purposes. Be it enacted by the Senate and House of Representatives of the United S tates of America in Congress assembled, That the short title of this Act shallbe the “Federal Reserve Act.” Wherever the word “bank” is used in this Act, the word shall be held toinclude State bank, banking association, and trust company, except wherenational banks or Federal reserve banks are specifically referred to. The terms “national bank” and “national banking association" used in this Act shall be held to be synonymous and interchangeable. The term “member bank” shall be held to mean any national bank. State bank, or bankor trust company which has become a member of one of the reserve banks createdby this Act. The term “board” shall be held to mean Federal Reserve Board;the term “district” shall be held to mean Federal reserve district; the term “reserve bank” shall be held to mean Federal reserve bank. FEDERAL RESERVE DISTRICTS. Sec. 2. As soon as practicable, the Secretary of the Treasury, the Secretaryof Agriculture and the Comptroller of the Currency, acting 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, excluding Alaska, into only one of such Federal reserve cities. The determination of said organi zation committee shall not be subject to review except by the Federal Reserve Board when organized : Provided, That the districts shall be apportioned withdue regard to the convenience and customary course of business and shall notnecessarily be coterminous districts, each district tocontain w ith any State or States. The districts thus time be created Such districts shall be known as Federal reserve districts and may be designated by number. A majority of the organization committee shall constitute a quorum with authority cre a te d may be readjusted and new districts may from tim e to by the Federal Reserve Board, not to exceed twelve in all. to act. Said organization committee shall be authorized to employ counsel and expert aid, to take testimony, to send for persons and papers, to administer oaths, and to make such investigation as may be deemed necessary by the said committee in determining the reserve districts and in designating the cities within such districts where such Federal reserve banks shall be severally The said committee shall supervise the organization in each of the cities designated of a Federal reserve bank, which shall include in its title the located. name of the city in which it is situated, as “ Federal Reserve Bank of Chicago.” Under regulations to be prescribed by the organization committee, every national banking association in the United States is hereby required, and every eligible bank in the United States and every trust company within the District of Columbia, is hereby authorized to signify in writing, within sixty days after the passage of this Act, its acceptance of the terms and provisions hereof. When the organization committee shall have designated the cities in which Federal reserve banks are to be organized, and fixed the geographical limits of the Federal reserve districts, every national banking a ssocia tion within that district shall be required within thirty days after notice from the organization committee, to subscribe to the capital stock of such Federal reserve bank in a sum equal to six per centum of the paid-up capital stock and surplus of such bank, one-sixth of the subscription to be payable 011 call of the organization committee or of the Federal Reserve Board, one-sixth within three months and one-sixth within six months thereafter, and the remainder of the subscription, or any part thereof, shall be subject to call when deemed necessary by the Federal Reserve Board, said payments to be in gold or gold certificates. The shareholders of every Federal reserve bank shall be held individually responsible, equally and ratably, and not one for another, for all contracts, debts, and engagements of such bank to the extent of the amount subscriptions to such stock at the par value thereof in addition to the amount subscribed, whether such subscriptions have been paid up in whole or inpr at under the provisions of this Act. A n y n ation a l b a n k fa ilin g to sign ify its accep ta n ce of th e term s of th is A ct w ith in th e s ix ty d a y s a fo r e s a id , s h a ll c e a s e to a c t a s a r e s e rv e a g e n t, u p o n th irty d a y s’ n o tic e , to b e g iv e n w ith in th e d iscre tio n o f th e s a id o r g a n iz a tio n committee or of the Federal Reserve Board. Should any national banking association in the United States now organized fail w ithin one year after the passage of this A ct to b ecom e a m em b e r b a n k o r fa il to co m p ly w ith a n y o f th e p ro v isio n s o f th is A ct 3 applicable thereto, all of the rights, privileges, and franchises of suchassociation granted to it under the national-bank Act, or under the pro visions of this Act, shall be thereby forfeited. Any noncompliance withor violation of this Act shall, however, be determined and adjudged byany court of the United States of competent jurisdiction in a suit brought forthat purpose in the district or territory in which such bank is located, underdirection of the Federal Reserve Board, by the Comptroller of the Currency inhis own name before the association shall be declared dissolved. In cases ofsuch noncompliance or violation, other than the failure to become a member bank under the provisions of this Act, every director who participated in orassented to the same shall be held liable in his personal or individual capacity for all damages which said bank, its shareholders, or any other person shallhave 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 shallhave been previously incurred. Should the subscriptions by banks to the stock of said Federal reservebanks or any one or more of them be, in the judgment of the organizationcommittee, insufficient to provide the amount of capital required therefor, thenand in that event the said organization committee 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, assaid committee shall determine, subject to the same conditions as to paymentand stock liability as provided for member banks. Xo individual, copartnership, or corporation other than a member bank ofits 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 beknown as public stock and may be transferred on the books of the Federalreserve bank by the chairman of the board of directors of such bank. Should the total subscriptions by banks and the public to the stock ofsaid Federal reserve banks, or any one or more of them, be, in the judgment ofthe organization committee, insufficient to provide the amount of capital required therefor, then and in that event the said organization committee shall allotto the United States such an amount of said stock as said committee shalldetermine. Said United States stock shall be paid for at par out of any money in the Treasury not otherwise appropriated, and shall be held by the Secretaryor the Treasury and disposed of for the benefit of the United States in suchmanner, at such times, and at such price, not less than par, as the Secretary ofthe 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 promulgaterules and regulations governing the transfers of said . k c o t s No Federal reserve bank shall commence business with a subscribed capitalless than $4,000,000. The organization of reserve districts and Federal reserve cities shall not be construed as changing the present status oi reserve c i t i e s and central reserve cities, e x c e pt in so far as this Act c h a n g e s theamount of reserves that may be carried with approved reserve agents located therein. The organization committee shall have power to appoint such assistants and incur sucli expenses in carrying out the provisions of this Act ;i it shall deem necessary, and such expenses shall be payable by the Treasurer ofthe U n i t e d States upon voucher approved by the Secretary of the Treasury, and the sum of $100,000, or so much thereof as may be necessary, is hereby appropriated, out of any moneys in the Treasury not otherwise appropriated, forthe payment of such expenses. bank shall establish branch banks BRANCH OFFICES. Sec. 3. Each Federal reserve withinthe Federal reserve district in which it is located and may do so in the districtof any Federal reserve bank which may have been suspended. Such branches shall he operated by a board of directors under rules and regulations approved by the Federal Reserve Board. Directors of branch banks shall possess the same qualifications as directors of the Federal reserve banks. Four of said directors shall be selected by the reserve bank and three by the Federal Reserve Board, and they shall hold office during the pleasure, respectively, of the parent bank and the Federal Reserve Board. The reserve bank shall designate one of the directors as manager. FEDERAL RESERVE BANKS. Sec, 4. When the organization committee shall have established Federalreserve districts as provided in section two of this Act, a certificate shall be filed with the Comptroller of the Currency showing the geographical limits of such districts and the Federal reserve city designated in each of such districts. The Comptroller of the Currency shall thereupon cause to be forwarded to each national bank located in each district, and to such other banks declared to be eligible by the organization committee which may apply therefor, an application blank in form to be approved by the organization committee, which blank shall contain a resolution to be adopted by the board of directors of each bank executing such application, authorizing a subscription to the capital stock of theFederal reserve bank organizing in that district in accordance with the provisionsof this Act. When the minimum amount of capital stock prescribed by this Act for the organization of any Federal reserve bank shall have been subscribed find allotted, the organization committee shall designate any five banks of those whose applications have been received, to execute a certificate of organization,and thereupon the banks so designated shall, under their seals, make anorganization certificate which shall specifically state the name of such F l a r d e 5 reserve bank, the territorial extent of the district over which the operationsof such Federal reserve bank are to be carried on, the city and State in whichsaid bank is to be located, the amount of capital stock and the number of sharesinto which the same is divided, the name and place of doing business of eachbank executing such certificate, and of all banks which have subscribed to thecapital stock of such Federal reserve bank and the number of shares subscribed b y each, and the fact that the certificate is made to enable those b a n k s executing sam e, and all banks which have subscribed or may thereafter subscribe to the capital stock of such Federal reserve bank, to avail themselves of the advantages of this Act. The said organization certificate shall be acknowledged before a judge ofsome court of record or notary public; and shall be, together with theacknowledgment thereof, authenticated by the seal of such court, or notan ,transmitted to the Comptroller of the Currency, who shall file, record and carefully preserve the same in his office. Upon the filing of such certificate with the Comptroller of the Currencyas aforesaid, the said Federal reserve bank shall become a body corporate andas such, and in the name designated in such organization certificate, shallhave power— First. To adopt and use a corporate seal. Second. To have succession for a period of twenty years from itsorganization unless it is sooner dissolved by an Act of Congress, or unless itsfranchise becomes forfeited by some violation of law. Third. To make contracts. Fourth. To sue and be sued, complain and defend, in any court of law orequity. Fifth. To appoint by its board of directors, such officers and employees asare not otherwise provided for in this Act, to define their duties, require bondsof them and fix the penalty thereof, and to dismiss at pleasure such officers oremployees. Sixth. To prescribe by its board of directors, by-laws not inconsistent withlaw, regulating the manner in which its general business may be conducted,and the privileges granted to it by law may be exercised and enjoyed. Seventh. To exercise by its board of directors, or duly authorized officersor agents, all powers specifically granted by the provisions of this Act and suchincidental powers as shall be necessary to carry on the business of banking withinthe limitations prescribed by this Act. Eighth. Upon deposit with the Treasurer of the United States of anybonds of the United States in the manner provided by existing law relating tonational banks, to receive from the Comptroller of the Currency circulatingnotes in blank, registered and countersigned as provided by law, equal in amountto the par value of the bonds so deposited, such notes to be issued under the sameconditions and provisions of law as relate to the issue s e g n t a l u r i c f o 6 of national banks secured by bonds of the United States bearing the circulating privilege, except that the issue of such notes shall not be limited to the capital stock of such Federal reserve bank. But no Federal reserve bank shall transact any business except such as is incidental and necessarily preliminary to its organization until it has been authorized by the Comptroller of the Currency to commence business under the provisions of this Act. Every Federal reserve bank shall be conducted under the supervision and control of a board of directors. The board of directors shall perform the duties usually appertaining to the office of directors of banking associations and all such duties as are prescribed by law. Said board shall administer the affairs of said bank fairly and impartiallyand without discrimination in favor of or against any member bank or banksand shall, subject to the provisions of law and the orders of the Federal ReserveBoard, extend to each member bank such discounts, advancements andaccommodations as may be safely and reasonably made with due regard for theclaims and demands of other member banks. Such board of directors shall be selected as hereinafter specified and shallconsist of nine members, holding office for three years, and divided into threeclasses, designated as classes A, B, and C Class A shall consist of three members, . who shall be chosen by and berepresentative of the stock-holding banks. Class B shall consist of three members, who at the time of their electionshall be actively engaged in their district in commerce, agriculture or someother industrial pursuit. Class C shall consist of three members who shall be designated by theFederal 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 designateone of such directors as chairman of the board to be selected. Pending thedesignation of such chairman, the organization committee shall exercise thepowers and duties appertaining 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 FederalReserve Board or an officer or a director of a Federal reserve 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 stockholderof 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 thedistrict in which the bank is situated or, pending the appointment of such chairman, the organization committee shall classify the member banks of t e h d istrict into three gen eral g roups o r divisio n s. E ach g rou p sh all co n tain as nearly as m ay he one-third of the aggregate num ber of the m em ber banks of the district a n d s h a ll c o n s is t, a s n e a rly a s m a y b e , o f b a n k s o f s im ila r c a p ita liz a tio n . T h e g ro u p s sh a ll b e d e sig n a te d b y n u m b e r b y th e ch a irm a n . A t a re g u la rly c a lle d m e e tin g o f th e b o a rd o f d ire c to rs o f e a c h m e m b e r b a n k in th e d is tric t it s h a ll e le c t b y b a llo t a d is tric t re s e rv e e le c to r a n d s h a ll c e rtify h is n a m e to th e c h a irm a n o f th e b o a rd o f d ire c to rs o f th e F e d e ra l re se rv e b a n k o f th e d is tric t. T h e c h a irm a n s h a ll m a k e lis ts o f th e d is tric t re s e rv e e le c t o rs t h u s n a m e d b y b a n k s in e a c h o f th e a fo re s a id th re e g ro u p s a n d s h a ll tra n s m it o n e lis t to e a c h elector in each group. E ach m em b er b an k sh all b e perm itted to n o m in a te to th e ch a irm a n o n e can d id a te fo r d ire cto r o f c la ss A a n d o n e c a n d id a te fo r d ire c to r o f c la s s B . T h e c a n d id a te s s o n o m in a te d s h a ll b e lis te d b y th e c h a irm a n , in d ic a tin g b y w h o m n o m in a te d , a n d a c o p y o f s a id lis t s h a ll, w ith in fifte e n d a y s a fte r its c o m p le tio n , b e fu rn ish e d b y th e c h a irm a n to e a c h elector. Every elector shall, within fifteen days after th e r e c e ip t o f th e s a id lis t, c e rtify to t h e c h a ir m a n h is firs t , s e c o n d , a n d other ch o ice s o f a d ire cto r o f class A an d class B , re sp ectively, u p o n a p re fere n tial b a llo t , o n a fo rm fu rn is h e d b y t h e c h a ir m a n o f t h e b o a r d o f d ir e c t o r s o f t h e F e d e ra l re s e rv e b a n k o f th e d is tric t. E a c h e le c to r s h a ll m a k e a c ro s s o p p o s ite th e n a m e o f th e firs t, s e c o n d , a n d o th e r c h o ic e s fo r a d ire c t o r o f c la s s A a n d fo r a d ire c to r o f c la s s B , b u t s h a ll n o t v o te m o re t h a n o n e c h o ic e fo r a n v o n e candidate. Any candidate having a m ajority of all votes cast in th e c o lu m n o f first ch o ice sh a ll b e d e cla re d e le c te d . If n o ca n d id a te h a v e a m ajo rity o f all th e v o te s in th e first co lu m n , th e n th e re sh all b e ad d e d to g e th e r th e v o te s c a s t b y th e e le c to rs fo r s u c h c a n d id a t e s in t h e s e c o n d c o lu m n a n d th e v o te s c a s t fo r th e s e v e ra l c a n d id a te s in th e firs t c o lu m n . If a n y c a n d id a te th e n h a v e a m a jo rity o f th e e le c to rs v o tin g , b y a d d in g to g e t h e r th e firs t a n d s e c o n d c h o ic e s , h e s h a ll b e d e c la re d e le c te d . If n o c a n d id a te h a v e a m a jo rity o f e le c to rs v o tin g w h e n t h e firs t a n d s e c o n d c h o ic e s s h a ll h a v e b e e n a d d e d , th e n th e vo te s cast in th e th ird co lu m n fo r o th er ch o ice s sh all b e a d d ed to g e th er in lik e m an n er, an d th e c a n d id ate th e n h avin g th e h ig h e st n u m b e r o f vo te s sh all b e d e c la re d e le c te d . A n im m e d ia te re p o rt o f e le c tio n s h a ll b e d e c la re d . C la s s C directors shall be appointed by the Federal Reserve B o a rd . T h e y sh a ll h a v e b e e n fo r a t le a st tw o y e a rs re sid e n ts o f th e d istric t fo r w h ich th e y are a p p o in te d , o n e o f w h o m sh a ll b e d e sig n ate d b y said b o ard as c h a irm a n o f th e b o a rd o f d ire cto rs o f th e F e d e ra l re se rv e b a n k a n d a s “F e d e ra l reserve agent.''H e shall be a person of tested banking experience; and in addition to h is d u tie s a s ch a irm a n o f th e b o a rd o f d ire c to rs o f th e F e d e ra l re se rv e b a n k h e s h a ll b e re q u ire d to m a in ta in u n d e r re g u la tio n s to b e e s ta b lis h e d b y th e F e d e ra l R e s e rv e B o a rd a lo c a l o ffic e o f s a id b o a rd o n th e p re m is e s o f th e F e d e ra l re se rve b a n k . H e sh a ll m a k e re g u la r re p o rts to th e F e d e ra l R e se rv e B o a rd , an d sh all a ct as its o fficial re p re se n tative fo r th e p e rfo rm a n ce o f th e s o i t c n u f 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 Federalreserve bank to which he is designated. One of the directors of class C, whoshall be a, person of tested banking experience, shall be appointed by theFederal Reserve Board as deputy chairman and deputy Federal reserve agentto exercise the powers of the chairman of the board and Federal reserve agentin case of absence or disability of his principal. Directors of Federal reserve banks shall receive, in addition to any compensation otherwise provided, a reasonable allowance for necessary expensesin attending meetings of their respective boards, which amount shall be paidby the respective Federal reserve banks. Any compensation that may beprovided 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 Federalreserve banks, call such meetings of bank directors in the several districts as may be necessary to carry out the purposes of this Act, and may exercise the functions herein conferred upon the chairman 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 Federalreserve bank, it shall be 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 ofsuch meeting, one whose term of office shall expire at the end of two yearsfrom said date, and one whose term of office shall expire at the end of threeyears from said date. Thereafter every director of a Federal reserve bankchosen as hereinbefore provided 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 suchdirectors, such appointees to hold office for the unexpired terms of their predecessors. STOCK ISSUES; INCREASE AND DECREASE OF CAPITAL. S ec . 5. The capital stock of each Federal reserve bank shall be dividedinto shares of $100 each. The outstanding capital stock shall be increased fromtime to time as member banks increase their capital stock and surplus or asadditional banks become members, and may be decreased as member banksreduce their capital stock or surplus or cease to be members. Shares of thecapital stock of Federal reserve banks owned by member banks shall not bee transferred or hypothecated. When a member bank increases its capitalstock or surplus, it shall thereupon subscribe for an additional amount of capitalstock of the Federal reserve bank of its district equal to six per centum of thesaid increase, one-half of said subscription to be paid in the manner hereinbefore provided for original subscription, and one-half subject to call of the F l a r d e Reserve Board. A bank applying for stock in a Federal reserve bank at anytime after the organization thereof must subscribe for an amount of the capitalstock of the Federal reserve bank equal to six per centum of the paid-up capital stock and surplus of said applicant bank, paying therefor its par value plus one-half of one per centum a month from the period of the last dividend. W henthe capital stock of any Federal reserve bank shall have been increased eitheron account of the increase of capital stock of member banks or on account of theincrease in the number of member banks, the board of directors shall cause tobe executed, a certificate to the Comptroller of the Currency showing the increasein capital stock, the amount paid in. and by whom paid. When a memberbank 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 bankvoluntarily liquidates it shall surrender all of its holdings of the capital stockof said Federal reserve bank and be released from its stock subscription notpreviously called. In either case the shares surrendered shall be canceledand the member bank shall receive in payment therefor, under regulations to be prescribed by the Federal Reserve Board, a sum equal to its cash-paidsubscriptions on the shares surrendered and one-half of one per centum a monthfrom the period of the last dividend, not to exceed the book value thereof, lessany liability of such member bank to the Federal reserve bank. S ec . 6. If any member bank shall be declared insolvent and a receiverappointed therefor, the stock held by it in said Federal reserve bank shall becanceled, without impairment of its liability, and all cash-paid subscriptions onsaid stock, with one-half of one per centum per month from the period oflast dividend, not to exceed the book value thereof, shall be first applied toall debts of the insolvent member bank to the Federal reserve bank, and thebalance, if any, shall be paid to the receiver of the insolvent bank. Wheneverthe capital stock of a Federal reserve bank is reduced, either on account of areduction in capital stock of any member bank or of the liquidation or insolvencyof such bank, the board of directors shall cause to lie executed a certificate tothe Comptroller of the Currency showing such reduction of capital stock andthe amount repaid to such bank. DIVISION OF EARNINGS. Sec. 7. After all necessary expenses of a Federal reserve bank have beenpaid or provided for, the stockholders shall be entitled to receive an annualdividend of six per centum on the paid-in capital stock, which dividend shallbe 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 "hall 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 banksshall, in the discretion of the Secretary, be used to supplement the gold v s e r 10 held against outstanding United States notes, or shall be applied to thereduction of the outstanding bonded indebtedness of the United States underregulations to be prescribed by the Secretary of the Treasury. Should aFederal 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 theUnited 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, andlocal taxation, except taxes upon real estate. S e c . 8 . Section fifty-one hundred and fifty-four, United States R e vised Statutes, is hereby amended to read as follows: Any bank incorporated by special law of any State or of the UnitedStates or organized under the general laws of any State or of the United Statesand having an unimpaired capital sufficient to entitle it to become a nationalbanking association under the provisions of the existing laws may, by thevote of the shareholders owning not less than fifty-one per centum of the capitalstock of such bank or banking association, with the approval of the Comptrollerof the Currency be converted into a national banking association, with anyname 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 organization certificatemay be executed by a majority of the directors of the bank or banking institu tion, and the certificate shall declare that the owners of fifty-one per centumof the capital stock have authorized the directors to make such certificate andto change or convert the bank or banking institution into a national associa tion. A majority of the directors, after executing the articles of association and the organization certificate, shall have power to execute all other papers andto 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 forthe same amount each as they 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 thesame powers and privileges, and shall be subject to the same duties, liabilities,and regulations, in all respects, as shall have been prescribed by the FederalReserve Act and by the national banking Act for associations originally organizedas national banking associations. STATE BANKS AS MEMBERS. Sec. 9. Any bank incorporated by special law of any State, or organizedunder the general laws of any State or of the United States, may make applicationto the reserve bank organization committee, pending organization, f a r e h t d n 11 to the Federal Reserve Board for the right to subscribe to the stock of theFederal reserve bank organized or to be organized within the Federal reserve,district where the applicant is located. The organization committee or the Federal Reserve Board, under such rules and regulations as it may p r e s c r i b e , subject to the provisions of this section, may permit the 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 FederalReserve Board shall permit the applying bank to become a stockholder in the Federal reserve bank of the district, stock shall be issued and paid for underthe rules and regulations in this Act provided for national banks which becomestockholders 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 applicationsmade by the State banks and banking associations and trust companies for stock ownership in Federal reserve banks. Such by-laws shall requireapplying banks not organized under Federal law to comply with the reserve and capital requirements and to submit to the examination and regulations prescribed by the organization committee or by the Federal Reserve Board.No applying bank shall be admitted to membership in a Federal reserve bankunless it possesses a paid-up unimpaired capital sufficient to entitle it to becomea national banking association in the place where it is situated, under theprovisions of the national banking Act. Any bank becoming a member of a Federal reserve bank under theprovisions of this section shall, in addition to the regulations and restrictionshereinbefore provided, be required to conform to the provisions of law im posed on the national banks respecting the lim itation of liability which may be incurred by any person, firm, or corporation to such banks, the prohibitionagainst making purchase of or loans on stock of such banks, and the withdrawalor impairment of capital, or the payment of unearned dividends, and to suchrules 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, fifty-two hundred and one, and fifty-two hundred and eight, and fifty-two hundred and nine of the RevisedStatutes. The member banks shall also be required to make reports of theconditions 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 memberbank has failed to comply with the provisions of this section or the regulationsof the Federal Reserve Board, it shall be within the power of the said . d r a o b 12 after hearing, to require such bank to surrender its stock in the Federalreserve 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-halfof one per centum per month, computed from the last dividend, if earned, notto 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, be 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 payment therefor in the manner herein provided. The Federal Reserve Boardmay restore membership upon due proof of compliance with the conditionsimposed by this section. FEDERAL RESERVE BOARD. S e c . 10. A Federal Reserve Board is hereby created which shall consistof seven members, including the Secretary of the Treasury and the Comptrollerof the Currency, who shall be members ex officio, and five members appointedby the President of the United States, by and with the advice and consent ofthe Senate. In selecting the five appointive members of the Federal ReserveBoard, not more than one of whom shall be selected from any one Federal reservedistrict, the President shall have due regard to a fair representation of thedifferent commercial, industrial and geographical divisions of the country.The five members of the Federal Reserve Board appointed by the Presidentand confirmed as aforesaid shall devote their entire time to the business of theFederal Reserve Board and shall each receive an annual salary of $12,000,payable monthly together with actual necessary traveling expenses, and theComptroller 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 AssistantSecretaries of the Treasury, and the Comptroller of the Currency shall beineligible during the time they are in office and for two years thereafter to holdany office, position, or employment in any member bank. Of the five membersthus appointed by the President at least two shall be persons experienced inbanking or finance. One shall be designated by the President to serve for two,one for four, one for six, one for eight, and one for ten years, and thereafter eachmember so appointed shall serve for a term of ten years unless sooner removedfor cause by the President. Of the five persons thus appointed, one shall bedesignated by the President as governor and one as vice governor of the Federal Reserve Board. The governor of the Federal Reserve Board, subject to itssupervision, shall be the active executive officer. The Secretary of the Treasurymay assign offices in the Department of the Treasury for the use of the FederalReserve Board. Each member of the Federal Reserve Board shall withinfifteen days after notice of appointment make and subscribe to the oath of . e c i f o 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 succeeding 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 dateto be fixed by the Reserve Bank Organization Committee. The Secretary ofthe Treasury shall be ex officio chairman of the Federal Reserve Board. Nomember of the Federal Reserve Board shall be an officer or director of any bank,banking institution, trust company, or Federal reserve bank nor hold stockin any bank, banking institution, or trust company; and before entering uponhis duties as a member of the Federal Reserve Board he shall certify underoath to the Secretary of the Treasury that he has complied with this requirement.Whenever a vacancy shall occur, other than by expiration of term, among thefive members of the Federal Reserve Board appointed by the President, as aboveprovided, a successor shall be appointed by the President, with the advice andconsent of the Senate, to fill such vacancy, and when appointed he shall holdoffice 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 happen onthe Federal Reserve Board during the recess of the Senate, by grantingcommissions which shall expire thirty days after the next session of the Senateconvenes. Nothing in this Act contained shall be construed as taking away any powers heretofore vested by law in the Secretary of the Treasury which relateto the supervision, management, and control of the Treasury Department and bureaus under such department, and wherever any power vested by this Actin 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 the 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 tobe printed for the information of the Congress. Section three hundred and twenty-four of the Revised Statutes of theUnited 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 alllaws 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 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. S ec . 11. The Federal Reserve Board shall be authorized and empowered: (a) To examine at its discretion the accounts, books and affairs of eachFederal reserve bank and of each mem ber bank and to require such n m e a t s 14 and reports as it may deem necessary. The said board shall publish once each week a statement showing the condition 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 andcombined, 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 banks. (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 interest to be fixed by the Federal Reserve Board. (c) To suspend for a period not exceeding thirty days, and from time totime 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 f rther, u That w hen 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-half per cent um, and when said reserve falls below thirty-two and one-half per centum, 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 one-half 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 associations 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 reservebank, the cause of such removal to be forthwith communicated in writing bythe 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 thebooks and balance sheets of Federal reserve banks. (h) To suspend, for the violation of any of the provisions of this Act, theoperations of any Federal reserve bank, to take possession thereof, administerthe same during the period of suspension, and, when deemed advisable, to liquidate or reorganize such . k n a b 15 (i) T o re q u ire b o n d s o f F e d e ra l re s e rv e a g e n t s , t o m a k e r e g u la t io n s fo r the s a f e g u a r d in g o f a ll c o lla t e r a l, b o n d s , F e d e r a l r e s e r v e n o t e s , m o n e y o r p ro p e rty o f a n y k in d d e p o s it e d in t h e h a n d s o f s u c h a g e n t s , a n d s a id b o a rd sh a ll p e rfo rm t h e d u t ie s , fu n c t io n s , o r s e r v ic e s s p e c ifie d in t h is A c t , and m ake all rules a n d re g u la tio n s n e c e s s a ry t o e n a b le s a id b o a rd e ffe c t iv e ly to perfo rm the sam e. (j) T o e x e rc is e g e n e ra l s u p e rv is io n o v e r s a id F e d e ra l R e se rv e b a n k s. (k ) T o g r a n t b y s p e c ia l p e r m it t o n a t io n a l b a n k s a p p ly in g tra n s fe r, w h e n n o t in c o n t r a v e n t io n o f S t a t e o r lo c a l la w , t h e r ig h t to a c t a s tru ste e , e x e c u t o r , a d m in is t r a t o r , o r r e g is t r a r o f s t o c k s a n d b o n d s under such rules and regulations as the said board m ay prescribe. (l) T o e m p lo y s u c h a t t o rn e y s , e x p e rt s , a s s is t a n t s , c le r k s , o r o th e r e m p lo y e e s a s m a y b e d e e m e d n e c e s s a r y t o c o n d u c t t h e b u s in e s s o f th e b o a rd . A ll s a la r ie s a n d f e e s s h a ll b e f ix e d in a d v a n c e b y s a id b o a r d a n d shall be paid in th e s a m e m a n n e r a s th e s a la rie s o f th e m e m b e rs o f s a id b o a rd . All such a t t o r n e y s , e x p e r t s , a s s is t a n t s , c le r k s , a n d o t h e r e m p lo y e e s s h a ll b e appointed w it h o u t r e g a r d t o t h e p r o v is io n s o f t h e A c t o f J a n u a r y s ix t e e n t h , eighteen h u n d re d a n d e ig h ty -th re e (v o lu m e tw e n ty -tw o , U n ite d S ta te s S ta tu te s at L a rg e , p a g e fo u r h u n d re d a n d th re e ), a n d a m e n d m e n ts th e re to , o r a n y ru le o r r e g u la tio n m a d e in p u rs u a n c e th e r e o f : P ro v id e d , T h a t n o t h in g h e r in s h a ll p re v e n t th e P re sid e n t fro m p la c in g sa id e m p lo y e e s in th e c la ssifie d se rv ic e . FED ERAL AD VISO RY C O U N C I L . S E C . 1 2 . T h e re is h e re b y c re a te d a F e d e ra l A d v is o ry C o u n c il, which shall c o n s is t o f a s m a n y m e m b e rs a s th e re a re F e d e ra l re s e rv e d is t ric t s . Each Federal re s e rv e b a n k b y it s b o a r d o f d ir e c t o r s s h a ll a n n u a lly s e le c t fr o m its ow n Federal R e s e rv e d is tric t o n e m e m b e r o f s a id c o u n c il, w h o s h a ll re c e iv e su ch co m p e n satio n a n d a llo w a n c e s a s m a y b e fix e d b y h is b o a r d o f d ir e c t o r s s u b je c t to th e a p p ro v a l o f t h e F e d e r a l R e s e r v e B o a r d . T h e m e e t in g s o f s a id a d v is o ry c o u n c il s h a ll b e h e ld a t W a s h in g t o n , D is t r ic t o f C o lu m b ia , a t le a s t fo u r tim e s e a c h y e a r, a n d o ft e n e r if c a lle d b y t h e F e d e r a l R e s e r v e B o a r d . T h e c o u n c il m a y in a d d itio n t o t h e m e e t in g s a b o v e p r o v id e d f o r h o ld s u c h o t h e r m e e tin g s in W a sh in g to n , D is t ric t o f C o lu m b ia , o r e ls e w h e r e , a s it m a y d e e m n ecessary, m ay select its o w n o ffic e rs a n d a d o p t its o w n m e th o d s o f p ro c e d u re , an d a m ajo rity o f its m e m b e rs s h a ll c o n s titu t e a q u o ru m fo r t h e t ra n s a c t io n o f business. Vacancies in th e c o u n c il s h a ll b e fille d b y th e re sp e c tiv e re s e rv e b a n k s , and members selected to fill vacancies, shall serve for the unexpired term. T h e F e d e ra l A d v is o ry C o u n c il s h a ll h a v e p o w e r, b y it s e lf o r t h ro u g h its o f fic e r s , (1 ) t o c o n fe r d ir e c t ly w it h t h e F e d e r a l R e s e r v e B o a r d o n g e n e r a l b u s in e s s c o n d itio n s ; (2 ) to m a k e o ra l o r w rit t e n re p re s e n t a t io n s c o n c e rn in g m a tte rs w ith in th e ju ris d ic tio n o f s a id b o a rd ; (3 ) to c a ll fo r in fo rm a tio n a n d to m a k e re c o m m e n d a tio n s in re g a rd to d is c o u n t ra te s, re d is c o u n t b u s in e s s , n o te is s u e s , r e s e r v e c o n d it io n s in t h e v a r io u s d is t r ic t s , t h e p u r c h a s e a n d s a le o f gold o r se c u ritie s b y re se rv e b a n k s , o p e n -m a rk e t o p e ra tio n s b y s a id b a n k s, a n d the general affairs of the reserve banking system . 16 POWERS OF FEDERAL RESERVE BANKS. Sec. 13. Any Federal reserve bank may receive from any of its memberbanks, and from the United States, deposits of current funds in lawful money,national-bank notes, Federal reserve notes, or checks and drafts upon solventmember banks, payable upon presentation; or, solely for exchange purposes,may receive from other Federal reserve banks deposits of current funds inlawful money, national-bank notes, or checks and drafts upon solvent m em ber 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 agriculturalproducts, or other goods, wares, or merchandise from being eligible for such discount; but such definition shall not include notes, drafts, or bills coveringmerely investments or issued or drawn for the purpose of carrying or trading in stocks, bonds, or other investment securities, except bonds and notes of theGovernment of the United States. Notes, drafts, and bills adm itted to discount under the terms of this paragraph must have a maturity at the time of discountof 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 notexceeding six months may be 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 reserve bank may discount acceptances which are based 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 mem ber bank. The amount of acceptances so discounted shall at n0 time exceedone-half the paid up capital stock and surplus of the bank for which the rediscounts are made. The aggregate of such notes and bills bearing the signature or indorsementof any one person, company, firm, or corporation rediscounted for any one bank shall at no time exceed ten per centum of the unimpaired capital and surplusof said bank; but this restriction shall not apply to the discount of bills ofexchange drawn in good faith against actually existing values. Any member bank may accept drafts or hills of exchange drawn upon itand growing out of transactions involving the importation or exportationof goods having not more than six months sight to run; but no bank s l a h 17 a c c e p t such bills to an amount equal at any time in the aggregate; to more t h a n one-half its paid-up capital stock and surplus. Section fifty-two hundred and two of the Revised Statutes of the United S ta tes is h ereby am en ded so as to read as follow s: N o nation al ban k ing association shall at any time be indebted, or in any way liable, to an amount exceeding the am ount of its capital stock at such time actually paid in and remaining undiminished by losses or otherwise, except on account of demands of the nature following: First. Notes of circulation. Second. Moneys deposited with or collected by 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, and of acceptances authorized by this Act, shall be subject to such restrictions, limitations, and regulations as may be imposed by the Federal Reserve Board. OPEN-MARKET OPERATIONS. Sec. 14. Any Federal reserve bank may, under rules and regulationsprescribed by the Federal Reserve Board, purchase and sell in the open market,at home or abroad, either from or to dom estic or foreign banks, firm s, corporations, or individuals, cable transfers and bankers’ acceptances and bills of exchange of the kinds and maturities by this Act made eligible for rediscount, with or without the indorsement 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 loansthereon, exchange Federal reserve notes for gold, gold coin, or gold certificates,and to contract for loans of gold coin or bullion, giving therefor, when necessary, acceptable security, including the hypothecation of United States bonds or othersecurities 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 dateof 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,including irrigation, drainage and reclamation districts, such purchases to bemade in accordance with rules and regulations prescribed by the FederalReserve Board; (c) To purchase from member banks and to sell, with or without its indorsement, bills of exchange arising out of commercial transactions, ashereinbefore d ; n i f e 18 (d) To establish from time to time, subject to review and determination of the Federal Reserve Board, rates of discount to be charged by the Federalreserve bank for each class of paper, which shall be fixed with a view ofaccommodating commerce and business; (e) To establish accounts with other Federal reserve banks for exchangepurposes and, with the consent of the Federal Reserve Board, to open andmaintain banking accounts in foreign countries, appoint correspondents, and establish agencies in such countries wheresoever it may deem best for the purposeof purchasing, selling, and collecting bills of exchange, and to buy and sell withor without its indorsement, through such correspondents or agencies, bills ofexchange arising out of actual commercial transactions which have not morethan ninety days to run and which bear the signature of two or more responsibleparties. GOVERNMENT DEPOSITS. Sec. 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 redemption of Federal reserve notes may, upon the direction of the Secretary of the Treasury, be deposited in Federalreserve banks, which banks, when required by the Secretary of the Treasury,shall act as fiscal agents of the United States; and the revenues of the Governmentor 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 anyGovernment funds, shall be deposited in the continental United States in any bank not belonging to 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 ISSUES. S ec . 16. Federal reserve notes, to be issued at the discretion of the FederalReserve Board for the purpose of making advances to Federal reserve banksthrough 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 ofthe United States, in the city of Washington, District of Columbia, or ingold 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 tothe local Federal reserve agent of collateral in amount equal to t he sum of theFederal reserve notes thus applied for and issued pursuant to such a . n o t c i l p 10 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 with drawals of Federal reserve notes to and by the Federal reserve bank to which he is accredited. The said Federal Reserve Board may at anytime call upon a Federal reserve bank for additional security to protect the Federal reservenotes issued to it. Every Federal reserve bank shall maintain reserves in gold or lawfulmoney of not less than thirty-five per centum against its deposits and re serves in gold of not less than forty per centum against its Federal reserve notes in actual circulation, and not offset by gold or lawful money de posited with the Federal reserve agent. Notes so paid out shall bear upon their faces a distinctive letter and serial number, which shall be assigned by the Federal Reserve Board to each Federal reserve bank. When ever Federal reserve notes issued through one Federal reserve bank shallbe received by another Federal reserve bank they shall be promptly returnedfor credit or redemption to the Federal reserve bank through which they wereoriginally issued. No Federal reserve bank shall pay out notes issued throughanother under penalty of a tax of ten per centum upon the face value of notesso paid out. Notes presented for redemption at the Treasury of the UnitedStates shall be paid out of the redemption fund and returned to the Federalreserve banks through which they were originally issued, and thereupon suchFederal reserve bank shall, upon demand of the Secretary of the Treasury, reimburse such redemption fund in lawful money or. if such Federal reserve notes have been redeemed by the Treasurer in gold or gold certificates, thensuch funds shall be reimbursed to the extent deemed necessary by 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 the Treasurer. Federal reservenotes received by the Treasury, otherwise than for redemption, may be exchangedfor gold out of the redemption fund hereinafter provided and returned to thereserve bank through which they were originally issued, or they may be returned to such bank for the 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 tomaintain on deposit in the Treasury of the United States a sum in gold sufficientin the judgment of the Secretary of the Treasury for the redemption of theFederal reserve notes issued to such bank, but in no event less than five percentum; but such deposit of gold shall be counted and included as part of theforty per centum reserve hereinbefore required. The board shall have the right,acting through the Federal reserve agent, to grant in whole or in part o r o t 20 reject entirely the application of any Federal reserve bank for Federal reserve notes: but to the extent that such application m ay be granted the Federal Reserve Board shall, through its local Federal reserve agent, supply Federal reserve notes to the bank s o applying, and such bank shall be charged withthe amount of such notes and shall pay such rate of interest on said amount asmay be established by the Federal Reserve Board, and the amount of such Federal reserve notes so issued to any such bank shall, upon delivery, togetherwith such notes of such Federal reserve bank as may be issued under sectioneighteen of this Act upon security of United States two per centum Governmentbonds, 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 UnitedStates. Federal reserve notes so deposited 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 lawfulmoney available exclusively for exchange for the outstanding Federal reservenotes when offered by the reserve bank of which he is a director. Upon therequest of the Secretary of the Treasury the Federal Reserve Board shall requirethe Federal reserve agent to transmit so much of said gold to the Treasury of theUnited States as may he required for the exclusive purpose of the redemptionof such notes. Any Federal reserve bank may at its discretion withdraw collateraldeposited with the local Federal reserve agent for the protection of its Federal reserve notes deposited with it and shall at the same time substitute thereforother like collateral of equal amount with the approval of the Federal reserve agent under regulations to be prescribed 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 ofthe Treasury, cause plates and dies to be engraved in the best manner to guardagainst counterfeits and fraudulent alterations, and shall have printed therefromand numbered such quantities of such notes of the denominations of 85.$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 he deposited in the Treasury, or in the subtreasury or mint of the United States nearest the place of business of each Federal reserve bank and shall be held for the use of such bank subject to the order of the Comptroller of the Currency for their delivery. as provided by this Act. The plates and dies to be procured by the Comptroller of the Currency for the printing of such circulating notes shall remain under his control and . n o t c e r i d 21 and the expenses necessarily incurred in executing the laws relating to the procuring of such notes, and all other expenses incidental to their issue and retirem ent, shall be paid by the Federal reserve banks, and the Federal Reserve Board shall include in its estimate of expenses levied against the Federal 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 Statutes, is hereby extended to include notes herein provided for. Revised Any appropriation heretofore made out of the general funds of the Treasury for engraving plates and dies, the purchase of distinctive paper, or to cover any other expense in connection with the printing of national-bank notes or notes provided for by the A ct of May thirtieth, nineteen hundred and eight, and any distinctive paper that may be on hand 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 A ct 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, however, That nothing in this section contained shall be construed as exempting 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 member 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 depositor 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, exchange sold to its patrons. 0r for The Federal Reserve Board 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 for 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 such Federal reserve banks, or may designate a Federal reserve bank to exercise such functions, and may also requ eachsu ban ire ch k to exercise the functions of a clearing house for its member banks. 22 SEC. 17 . So m uch 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 rightof the Act of July twelfth, eighteen hundred and eighty-two, and of any otherprovisions of existing statutes as require that before any national bankingassociation shall be authorized to commence banking business it shall transfer and deliver to the Treasurer of the United States a stated amount of UnitedStated registered bonds is hereby repealed. REFUNDING BONDS. S ec . 18. After two years from the passage of this Act, and at any time during' a period of twenty years thereafter, any member bank desiring to retire the whole or any part of its circulating notes, may file with the the Treasurer of the United States an application to sell for its account, at par and accrued interest,United States bonds securing circulation to be retired. The Treasurer shall, at the end of each quarterly period, furnish the Federal Reserve Board with a list of such applications, and the Federal Reserve Board may, in its discretion, require the Federal reserve banks to purchase such bondsfrom the banks whose applications have been filed with the Treasurer at leastten days before the end of any quarterly period at which the Federal ReserveBoard may direct the purchase to be made: Provided, That Federal reservebanks shall not be permitted to purchase an amount to exceed $25,000,000 ofSuch bonds in any one year, and which amount shall include bonds acquired under Section four of this Act by the Federal reserve bank: Provided further.That the Federal Reserve Board shall allot to each Federal reserve banksuch proportion of such bonds as the capital and surplus of such bank shall bearto 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 theFederal reserve bank purchasing the same, and such Federal reserve bank shall,thereupon, deposit lawful money with the Treasurer of the United States forthe purchase price of such bonds, and the Treasurer shall pay to the memberbank selling such bonds any balance due after deducting a sufficient sum to redeem its outstanding notes secured by such bonds, which notes shall be canceled andpermanently retired when redeemed. The Federal reserVe banks purchasing such bonds shall be permitted totake 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 mannerprovided by existing law, shall be entitled to receive from the Comptroller ofthe Currency circulating notes in blank, registered and countersigned asprovided by law, equal in amount to the par value of the bonds . t i p e d o s 23 Such notes shall he the obligations of the Federal reserve bank procuring the same, and shall be in form prescribed by the Secretary of the Treasury, and to the same tenor and effect as national-bank notes now provided by law. Theyshall 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 capitalstock of the Federal reserve bank issuing them. Upon application of any Federal reserve bank, approved by the FederalReserve Board, the Secretary of the Treasury may issue, in exchange for UnitedStates two per centum gold bonds bearing the circulation privilege, but against which no circulation is outstanding, one-year gold notes of the United Stateswithout the circulation privilege, to an amount not to exceed one-half of the two per centum bonds so tendered for exchange, and thirty-year three per centum gold bonds without the circulation privilege for the remainder of the two percentum bonds so tendered : Provided, That at the time of such exchange the Fed eral reserve bank obtaining such one-year gold notes shall enter into an obligationwith the Secretary of the Treasury binding itself to purchase from the UnitedStates for gold at the maturity of such one-year notes, an amount equal to thosedelivered in exchange for such bonds, if so requested by the Secretary, and ateach maturity of one-year notes so purchased by such Federal reserve bank, topurchase from the United States such an amount of one-year notes as the Secretarymay tender to such bank, not to exceed the amount issued to such bank in thefirst instance, in exchange for the two per centum United States gold bonds;said obligation to purchase at maturity such notes shall continue in force for aperiod not to exceed thirty years. For the purpose of making the exchange herein provided for, the Secretaryof the Treasury is authorized to issue at par Treasury notes in coupon or registeredform as he may prescribe in denominations of one hundred dollars, or any multiplethereof, bearing interest at the rate of three per centum per annum, payable quar terly, such Treasury notes to be payable not more than one year from the date oftheir issue in gold coin of the present standard value, and to be exempt as to prin cipal and interest from the payment of all taxes and duties of the United Statesexcept as provided by this Act, as well as from taxes in any form by or understate,municipal, or local authorities. And for the same purpose, the Secretary isauthorized and empowered to issue United States gold bonds at par, bearing threeper centum interest payable thirty years from date of issue, such bonds to be ofthe same general tenor and effect and to be issued under the same generalterms and conditions as the United States three per centum bonds without thecirculation privilege now issued and outstanding. U pon application of any Federal reserve bank, approved by the FederalReserve Board, the Secretary may issue at par such three per centum bonds inexchange for the one-year gold notes herein provided . r o f 24 BANK RESERVES. S e c . 19. Demand deposits within the meaning of this Act shall compriseall deposits payable within thirty days, and time deposits shall comprise alldeposits payable after thirty days, and all savings accounts and certificates of deposit which are subject to not less than thirty days’ notice before payment. When the Secretary of the Treasury shall have officially announced, in such manner as he may elect, the establishment of a Federal reserve bank in anydistrict, every subscribing member bank shall establish and maintain reserves as follows: (a) A bank not in a reserve or central reserve city as now or hereafter defined shall hold and maintain reserves equal to twelve per centum of theaggregate 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 bank of its district, for a period of twelve months after said date, two-twelfths, and for each succeeding six months an additionalone-twelfth, until five-twelfths have been so deposited, which shall be theamount permanently required. For a period of thirty-six months after said date the balance of the reservesmay 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 bylaw. After said thirty-six months’ period said reserves, other than thosehereinbefore required to be held in the vaults of the member bank and in the Federal reserve bank, shall be held in the 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 andmaintain reserves equal to fifteen per centum of the aggregate amount of itsdemand 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 the Federal reserve bank of its district for a period of twelve months afterthe date aforesaid at least three-fifteenths, and for each succeeding six monthsan additional one-fifteenth, until six-fifteenths have been so deposited, which shall be the amount permanently required. For a period of thirty-six months after said date the balance of the reservesmay be held in its own vaults, or in the Federal reserve bank, or in nationalbanks in reserve or central reserve cities as now defined by law. After said thirty-six months’ period all of said reserves, except those hereinbefore required to be held permanently in the vaults of the member bank and in the Federal reserve bank, shall be held in its vaults or in the Federalreserve bank, or in both, at the option of the member b . k n a (e) 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 installm ent, eligible paper as described in sectionfourteen 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 keepits 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 beconstrued, within the meaning of this section, as if they were reserve deposits in a national bank in a reserve or central reserve city for a period of threeyears after the Secretary of the Treasury shall have officially announced theestablishment 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 nonmember bank in applying for or receiving dis counts from a Federal reserve bank under the 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 theFederal Reserve Board, be checked against and withdrawn by such member bank for the 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 required 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, be counted as reserves. National banks located in Alaska or outside the continental UnitedStates may remain nonmember banks, and shall in that event maintain reserves and comply with all the conditions now provided by law regulating them: orsaid banks, except in the Philippine Islands, may, with the consent of theReserve 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 theother provisions of this Act. Sec . 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 26 United States notes, providing for a redistribution of the national-bankcurrency, and for other purposes," as provides that the fund deposited by any national banking association with the Treasurer of the United S t a t e s f o r t h e redemption of its notes shall be counted as a part of its lawful reserve as providedin the Act aforesaid, is hereby repealed. And from and after the passage of t h i s Act such fund of five per centum shall in no case be counted by any nationalbanking association as a part of its lawful reserve. BANK EXAMINATIONS. Sec. 21. Section fifty-two hundred and forty7, United States Revised Statutes, is amended to read as follows: The Comptroller of the Currency, with the approval of the Secretary ofthe Treasury, shall appoint examiners who shall examine every member bank at least twice in each calendar year and oftener if considered necessary : Provided, h owever, That the Federal Reserve Board may authorize examination by theState authorities to be accepted in the case of State banks and trust companiesand may at any time direct the holding of a special examination of State banksor trust companies that are stockholders in any Federal reserve bank. Theexaminer making the examination of any national bank, or of any other memberbank, 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 examineany of 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 Currency. The Federal Reserve Board, upon the recommendation of the Comptroller of the Currency, shall fix the salaries of all bank examiners and make report thereof to Congress. The expense of the examinations herein provided for shall be assessed by the Com ptroller of the Currency upon the banks examined in proportion to assets or resources held by the banks upon the dates of examinationof 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 r e s e r v e agent or the Federal Reserve Board, provide for special examina tion of member banks within its district. The expense of such examinations shall be borne by the bank examined. 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 Federalreserve bank shall at all times furnish to the Federal Reserve Board 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 either House thereof or by any committee of Congress or of either House duly . d e z i r o h t u a 27 T h e F ederal R eserve B oard sh all, at least once each year, order u n examination of each Federal reserve bank, and upon joint application of ten member banks the Federal Reserve Board shall order a special examinationand report of the condition of any Federal reserve bank. S e c . 2 2 . No member bank or any officer, director, or employee thereof s h a l l hereafter make any loan or grant any gratuity to any bank examiner.Any bank officer, director, or employee violating this provision shall be deemed guilty of a misdemeanor and shall be imprisoned not exceeding one year or fined not n; ab hv tp e5 rb o1 m ;oh bm 0s ,a 5r $u ua is fl,f ye dy lg q s0 x A .h v g ch p n rq ,a h d e k b m fit y ie u t: m d n o r t c x f y a d n o l g i b e d is q u a lif ie d f r o m h o ld in g o f f ic e a s a n a t io n a l- b a n k e x a m in e r . N o n a tio n a l-b a n k e x a m in e r s h a ll p e r fo r m a n y o th e r s e r v ic e fo r c o m p e n s a t io n w h ile h o ld in g s u c h o ffic e fo r a n y b a n k o r o ffic e r , d ir e c to r , o r e m p lo y e e th e r e o f. O t h e r t h a n t h e u s u a l s a la r y o r d ir e c t o r ’s fe e p a id t o a n y o ffic e r , d ir e c t o r , o r e m p lo y e e o f a m e m b e r b a n k a n d o th e r th a n a r e a s o n a b le fe e p a id b y s a id b a n k to s u c h o f f i c e r , d ir e c t o r , o r e m p lo y e e f o r s e r v ic e s r e n d e r e d t o s u c h b a n k , n o o f f ic e r , d ir e c t o r , e m p lo y e e , o r a t t o r n e y o f a m e m b e r b a n k s h a ll b e a b e n e fic ia r y o f o r r e c e iv e , d ir e c t ly o r in d ir e c t ly , a n y fe e , c o m m is s io n , g ift, o r o th e r c o n s id e r a tio n fo r o r in c o n n e c tio n w it h a n y t r a n s a c t io n o r b u s in e s s o f t h e b a n k . N o e x a m in e r , p u b lic o r p r iv a t e , s h a ll d is c lo s e t h e n a m e s o f b o r r o w e r s o r t h e c o lla t e r a l fo r lo a n s o f a m e m b e r b a n k to o th e r th a n th e p r o p e r o ffic e r s o f s u c h b a n k w it h o u t fir s t h a v in g o b t a in e d t h e e x p r e s s p e r m is s io n in w r i t in g f r o m t h e C o m p t r o lle r o f t h e C u r r e n c y , o r fr o m t h e b o a r d o f d ire cto rso f s u c h b a n k , e x ce p t w h e n o rd e re d to d o so b y a c o u rt o f c o m p e t e n t ju r is d ic t io n , o r b y d ir e c t io n o f t h e C o n g r e s s o f t h e U n ite d S ta te s , o r o f e ith e r H o u s e t h e r e o f, o r a n y c o m m itte e o f C o n g r e s s o r o f e it h e r H o u s e d u ly a u t h o r iz e d . A n y p e r s o n v io la t in g a n y p r o v is io n o f th is s e c tio n s h a ll b e p u n is h e d b y a fin e o f n o t e x c e e d in g $ 5 ,0 0 0 o r b y im p r is o n m e n t n o t e x c e e d in g o n e y e a r , or both. E x c e p t a s p r o v id e d in e x is t in g la w s , t h is p r o v is io n s h a ll n o t t a k e e ffe c t u n t il s ix t y d a y s a ft e r t h e p a s s a g e o f t h is A c t . S e c . 2 3 . T h e s t o c k h o ld e r s o f e v e r y n a t io n a l b a n k in g a s s o c ia t io n s h a ll b e h e l d in d iv id u a lly r e s p o n s ib le f o r a ll c o n t r a c t s , d e b t s , and engagem ents of such association, each to the am ount of h is s to c k th e r e in , a t th e p a r v a lu e th e r e o f in a d d itio n to th e a m o u n t in v e s t e d in s u c h s t o c k . T h e s t o c k h o ld e r s in a n y n a t io n a l h a n k in g a s s o c ia t io n w h o s h a ll h a v e tr a n s fe r r e d th e ir s h a r e s o r r e g is t e r e d t h e t r a n s fe r t h e r e o f w it h in s ix ty d a y s n e x t b e fo r e th e d a t e o f t h e f a il u r e o f s u c h a s s o c ia t i o n t o m e e t i t s o b l i g a t io n s , o r w i t h k n o w l e d g e o f s u c h i m p e n d i n g f a i lu r e , s h a l l b e l ia b l e t o t h e sa m e e x te n t a s if th e y h a d m a d e n o s u c h tra n s fe r , to th e e x te n t th a t th e s u b s e q u e n t tr a n s fe r e e fa ils t o m e e t s u c h lia b ility ; b u t s i h t 28 provision shall not be construed to affect in any way any recourse which s u c h shareholders might otherwise have against those in whose names s u c h s h a r e s are registered at the time of such failure. LOANS ON FARM LANDS. Sec. 24. Any national banking association not situated in a centralreserve city may make loans secured by improved and unencumbered farm land, situated within its Federal reserve district, but no such loan shall bemade for a longer time than five years, nor for an amount exceeding fiftyper centum of the actual value of the property offered as security. Any suchbank may make such loans in an aggregate sum equal to twenty-five per centum of its capital and surplus or to one-third of its time deposits and such banksm a y continue hereafter as heretofore to receive time deposits and to pay intereston the same. The Federal Reserve Board shall have power from time to time to add to the list of cities in which national banks shall not be permitted to make loanssecured upon real estate in the manner described in this section. FOREIGN BRANCHES. 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 thesaid board, for the purpose of securing authority to establish branches in foreigncountries 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 agentsof 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 thebanking operations proposed are to be carried on, and the amount of capital setaside for the conduct of its foreign business. The Federal Reserve Board shallhave power to approve or to reject such application if, in its judgment, the amount of capital proposed to be set aside for the conduct of foreign business isinadequate, 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 informationconcerning the condition of such branches to the Comptroller of the Currency upon demand, and the Federal Reserve Board may order special examinations of the said foreign branches at such time or times as it may deem best. Every such national banking association shall conduct the accounts of each foreign branchindependently of the accounts of other foreign branches established by it andof its home offce, and shall at the end of each fiscal period transfer to its generalledger the profit or loss accruing at each branch as a separate . m e t i 29 S ec . 26. All provisions of law inconsistent with or superseded by any of the p ro vi s i on s of this Act are to that extent and to that extent only h e r e b y r e pe al e d : Provided, Nothing in this Act contained shall b e construed to repeal t h e 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 refund the public debt, and for other purposes,” and the Secretary of the Treasurymay 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 necessaryto obtain gold. When the funds of the Treasury on hand just ify, he may purchase and retire such outstanding bonds and notes. Sec. 27. The provisions of the Act of May thirtieth, nineteen hundred and eight, authorizing national currency associations, the issue of additionalnational-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 fourteen, are hereby extended to June thirtieth,nineteen 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 am endm ents or m odifications 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 Actby making the portion applicable thereto read as follows : National banking associations having circulating notes secured otherwisethan by bonds of the United States, shall pay for the first three months a tax atthe rate of three per centum per annum upon the average amount of such oftheir notes in circulation as are based upon the deposit of such securities, and afterwards an additional tax rate of one-half of one per centum per annum for each month until a tax of six per centum per annum is reached, and thereaftersuch tax of six per centum per annum upon the average amount of such notes. S ec . 28. Section fifty-one hundred and forty-three of the Revised Statutesis 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 capitalstock, reduce its capital to any sum not below the am ount required by this title to authorize the formation 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 m ade until the amount of the proposed reduction has been reported to the Comptroller ofthe Currency and such reduction has been approved by the said e l r t p m o C 30 of the Currency and by the Federal Reserve Board, or by the organization pending the organization of the Federal R eserve Board. com m ittee Sec . 29. If any clause, sentence, paragraph, or part of this Act shall for any reason be adjudged by any court of competent jurisdiction to be invalid, s u c h judgment shall not affect, impair, or invalidate the remainder of this A ct, 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. SEC. 30. The right to amend, alter, or repeal this A ct is hereby expressly reserved. Speaker of the House of Representatives Vi ce President o f the United States and President o f the Senate. I certify that this A c t originated in the House of Representatives.