Full text of Federal Reserve Act

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[ P u b l i c — No.

43— 63d

C o n g r e s s .]

[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.

Be it enacted by the Senate and Hous? o f Representatives o f the United
States o f America in Congress assembled, That the short title of this

A ct shall be the “ Federal Reserve A ct.”
Wherever the word “ ban k” is used in this Act, the word shall be
held to include State bank, banking association, and trust company,
except where national banks or Federal reserve banks are specifically
referred to.
The terms “ national ba n k ” and “ national banking association”
used in this A ct shall be held to be synonymous and interchangeable..
The term “ member bank” shall be neld to mean any national bank,
State bank; or bank or trust com pany which has become a member
of one of the reserve banks created by this A ct. 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.
FE D ER AL RESER VE DISTRICTS.

Sec. 2. As soon as practicable, the Secretary of the Treasury, the
Secretary of Agriculture and the Comptroller of the Currency, act­
ing as “ The Reserve Bank Organization Committee,” shall designate
not less than eight nor more than twelve cities to be known as Federal
reserve cities, and shall divide the continental United States, ex­
cluding Alaska, into districts, each district to contain only one of such
Federal reserve cities. The determination of said organization
committee shall not be subject to review except by the Federal
Reserve Board when organized: Provided, That the districts shall be
apportioned with due regard to the convenience and customary course
of business and shall not necessarily be coterminous with any State
or States. The districts thus created m ay be readjusted and new
districts m ay from time to time be created b y the Federal Reserve
Board, not to exceed twelve in all. Such districts shall be known as
Federal reserve districts and m ay be designated b y number. A ma­
jority of the organization com m ittee shall constitute a quorum with
authority to act.
Said organization com m ittee shall be authorized to em ploy counsel
and expert aid, to take testimony, to send for persons and papers, to
administer oaths, and to make such investigation as m ay be deemed
necessary b y the said com m ittee in determining the reserve districts
and in designating the cities within such districts where such Federal
reserve banks shall be severally located. The said com m ittee shall
supervise the organization in each of the cities designated of a
Federal reserve bank, which shall include in its title the name of the
city in which it is situated, as “ Federal Reserve Bank of Chicago.”




2

43.)

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 organi­
zation 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 association
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 on 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 sub­
scription, or any part thereof, shall be subject to call when deemed
necessary by tne Federal Resei’ve Board, said payments to be in
gold or gold certificates.
The shareholders of every Federal reserve bank shall be held indi­
vidually responsible, equally and ratably, and not one for another,
for all contracts, debts, and engagements of such bank to the extent
of the amount of their subscriptions to such stock at the par value
thereof in addition to the amount subscribed, whether such subscrip­
tions have been paid up in whole or in part, under the provisions of
this Act.
Any national bank failing to signify its acceptance of the terms of
this Act within the sixty days aforesaid, shall cease to act as a reserve
agent, upon thirty days’ notice, to be given within the discretion of the
said organization committee or of the Federal Reserve Board.
Should any national banking association in the United States now
organized fau within one year after the passage of this Act to become
a member bank or fail to comply with any of the provisions of this
Act applicable thereto, all of the rights, privileges, and franchises of
such association granted to it under the national-bank Act, or under
the provisions of this Act, shall be thereby forfeited. Any noncom­
pliance with or violation of this Act shall, however, be determined
and adjudged by any court of the United States of competent juris­
diction in a suit brought for that purpose in the district or territory
in which, such bank is located, under direction of the Federal Reserve
Board, by the Comptroller ox the Currency in his own name before
the association shallbe declared dissolved. In cases of such noncomliance or violation, other than the failure to become a member
ank under the provisions of this Act, every director who partici­
pated in or assented to the same shall be held liable in his personal
or individual capacity for all damages which said bank, its share­
holders, or any other person shall have sustained in consequence of
such violation.
Such dissolution shall, not take away or impair any remedy against
such corporation, its stockholders or officers, for any liability or
penalty which shall have been previously incurred.
Should the subscriptions by banks to the stock of said Federal
reserve banks or any one or more of them be, in the judgment of jthe
organization committee., insufficient to provide the amount of capital

E




(P ro . 43.)

3

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

S e c . 3. Each Federal reserve bank shall establish branch banks
within the Federal reserve district in which it is located and may do
so in the district of any Federal reserve bank which may bave been
suspended. Such branches shall be 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.
203(16 O ...')»------ 22




4

(P ub . 43.)

FE D E R A L RE SE R V E B AN K S.

S e c . 4. W hen the organization com m ittee shall have established
Federal reserve districts as provided in section two o f this A ct, a
certificate shall be filed with the Comptroller of the Currency showing
the geographical limits o f such districts and the Federal reserve city
designated in each of such districts. The Comptroller o f the Cur­
rency shall thereupon cause to be forwarded to each national bank
located in each district, and to such other banks declared to be eli­
gible b y the organization com m ittee which m ay apply therefor, an
application blank in form to be approved b y tne organization com ­
mittee, which blank shall contain a resolution to be adopted b y the
board o f directors o f each bank executing such application, author­
izing a subscription to the capital stock o f the Federal reserve bank
organizing in that district in accordance with the provisions of this
A ct.
W hen the minimum amount of capital stock prescribed b y this
A ct for the organization of any Federal reserve bank shall have been
subscribed and allotted, the organization com m ittee shall designate
any five banks o f those whose applications have been received, to
execute a certificate o f organization, and thereupon the banks so
designated shall, under their seals, make an organization certificate
which shall specifically state the name o f such Federal reserve bank,
the territorial extent o f the district over which the operations o f such
Federal reserve bank axe to be carried on, the city and State in which
said bank is to be located, the amount o f capital stock and the num ­
ber of shares into which the same is divided, the name and place of
doing business of each bank executing such certificate, and of all
banks which have subscribed to the capital 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 banks executing
same, and all banks which have subscribed or m ay thereafter sub­
scribe to the capital stock o f such Federal reserve bank, to avail them­
selves of the advantages of this Act.
The said organization certificate shall be acknowledged before a
judge of some court o f record or notary public > and shall be, together
with the acknowledgment thereof, authenticated b y the seal o f such
court, or notary, 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
Currency as aforesaid, the said Federal reserve bank shall becom e a
body corporate and as such, and in the name designated in such
organization certificate, shall have power—
First. T 9 adopt and use a corporate seal.
Second. T o have succession for a period of twenty years from its
organization unless it is sooner dissolved by an A ct of Congress, or
umess its franchise becomes forfeited by some violation of law.
Third. T o make contracts.
Fourth. T o sue and be sued, com plain and defend, in any court of
law or equity.
Fifth. To appoint b y its board of directors, such officers and em­
ployees as are not otherwise provided for in this A ct, to define their
duties, require bonds of them and fix the penalty thereof, and to dis­
miss at pleasure such officers or employees.




(P ub . 43.]

5

Sixth. To prescribe by its board of directors, by-laws not inconsist­
ent with law, regulating the manner in which its general business
may be conducted, ana the privileges granted to it by law may be
exercised and enjoyed.
Seventh* To exercise by its board of directors, or duly authorized
officers or agents, all powers specifically granted by the provisions of
this Act ana such incidental powers as shall be necessary to carry on
the business of banking within the limitations prescribed by this Act.
Eighth. Upon deposit with the Treasurer of the United States of
any bonds of the United States in the maimer provided by existing
law relating to national banks, to receive from the Comptroller of the
Curri
1 ■'
■ ' ”
’ -egistered and countersigned as
rov
the par value of the bonds so
eposited, such notes to be issued under the same conditions and pro­
visions of law as relate to the issue of circulating notes 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
camtalstock 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 o f this Act.
Every Federal reserve bank shall be conducted under the super­
vision 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 sucn duties as
are prescribed by law.
Said board shall administer the affaire of said bank fairly and impar­
tially and without discrimination in favor of or against any member
bank or banks and shall, subject to the provisions 01 law and the orderp
of the Federal Reserve Board, extend to each member bank such dis­
counts, advancements and accommodations as may be safely and
reasonably mac1; with due regard for the claims and demands of
other member L«.uk>•.
Such board of directors shall be selected as hereinafter specified and
shall consist of nine members, holding office for three years, and
divided into three classes, designated as classes A. B, and C.
Class A shall consist of three members, who shall be chosen by and
be representative of the stock-holding banks.
Class B shall consist of three members, who at (he time of their
election shall be actively engaged in their district in commerce, agri­
culture or some other industrial pursuit.
Class C shall consist of three members who shall be designated by
the Federal Reserve Board. When the necessary subscriptions to the
capital stock have been obtained for the organization of any Federal
reserve bank, the Federal Reserve Board shall appoint the class C
directors and shall designate one of such directors as chairman of the
board to be selected, rending the designation of such chairman, the
organization committee shall exercise the powers and duties apper­
taining to the office of chairman in the organization of such Federal
reserve bank.
No Senator or Representative in Congress shall be a member of the
Federal Reserve Board or an officer or a director of a Federal reserve
bank.

S




6

[P u b . 43.]

N o 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, 01*
stockholder of any bank.
Directors of class A and class B shall be chosen in the following
manner:
The chairman of the board of directors of the Federal reserve bank
of the district in which the bank is situated or, pending the appoint­
ment of such chairman, the organization committee shall classify the
member banks of the district m to three general groups or divisions.
Each group shall contain as nearly as m ay be one-third of the aggre­
gate number of the member banks of the district and shall consist, as
nearly as m ay be, of banks of similar capitalization. The groups shall
be designated b y number by the chairman.
A t a regularly called meeting of the board of directors of each
member bank in the district it shall elect b y ballot a district reserve
elector and shall certify his name to the chairman of the board of
directors of the Federal reserve bank of the district. The chairman
shall make lists of the district reserve electors thus named by banks
in each of the aforesaid three groups and shall transmit one list to each
elector in each group.
Each member bank shall be permitted to nominate to the chair­
man one candidate for director of class A and one candidate for
director of class B. The candidates so nominated shall be listed by
the chairman, indicating b y whom nominated, and a cop y of said list
shall, within fifteen days after its completion, be furnished by the
chairman to each elector.
E very elector shall, m th in fifteen days after the receipt of the said
list, certify to the chairman his first, second, and other choices of a
director o f class A and class B, respectively, upon a preferential bal­
lot, on a form furnished b y the chairman of the board of directors of
the Federal reserve bank of the district. Each elector shall make a
cross opposite the name o f the first, second, and other choices for a
director of class A ami for a director of class B, but shall not vote
more than one choice for any one candidate.
A n y candidate having a m ajority of all votes cast in the column
of first choice shall b-e declared elected. If no candidate have a
m ajority of all the votes in the first column, then there shall be added
together the votes cast by the electors for such candidates in the
second column and the votes cast for the several candidates in the first
column. If any candidate then have a m ajority of the electors vot­
ing, by adding together the first and second choices, he shall be de­
clared elected. I? no candidate have a m ajority of electors voting
when the first and second choices shall have been added, then the
votes cast in the third column for other choices shall be added to­
gether in like manner, and the candidate then having the highest
number of votes shall be declared elected. An immediate report of
election shall be declared.
Class C directors shall be appointed by the Federal Reserve Board.
They shall have been for at least tw o years residents of the district
for which they are appointed, one of whom shall be designated by
said board as chairman of the board of directors of the Federal
reserve bank and as “ Federal reserve agent.” H e shall be a person of
tested banking experience; and in addition to his duties as chairman




[ P u b . 43.J

7

of the board of directors of the Federal reserve bank he shall be
required to maintain under regulations to be established b y the
Federal Reserve Board a local office of said board on the
premises o f the Federal reserve bank. H e shall make regular
reports to the Federal Reserve Board, and shall act as its official
representative for the performance o f the functions conferred
upon it b y this A ct. H e shall receive an annual compensation
to be fixed by the Federal Reserve Board and paid m onthly by
the Federal reserve bank to which he is designated. One of
the directors of class C, who shall be a person of tested banking
experience, shall be appointed b v the Federal Reserve Board as
deputy chairman and deputy Federal reserve agent to exercise the
powers of the chairman of the board and Federal reserve agent in
case of absence or disability o f his principal.
Directors o f Federal reserve banks shall receive, in addition to any
compensation otherwise provided, a reasonable allowance for neces­
sary expenses in attending meetings of their respective boards, which
amount shall be paid b y the respective Federal reserve banks. A ny
compensation that m ay be provided b y boards o f directors of Federal
reserve banks for directors, officers or employees shall be subject to
the approval o f the Federal Reserve Board.
The Reserve Bank Organization Committee may, in organizing
Federal reserve banks, call such meetings o f bank directors in the sev­
eral districts as m ay be necessary to carry out the purposes of this
A ct, and m ay exercise the functions herein conferred upon the chair­
man of the board of directors o f each Federal reserve hank pending
the com plete organization of such bank.
A t the first meeting of the full board of directors of each Federal
reserve 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 o f such meeting, one whose term of office shall expire
at the end of two years from said date, and one whose term of office
shall expire at the end o f three years from said date. Thereafter
every director of a Federal reserve bank chosen as hereinbefore pro­
vided shall hold office for a ternf of three years. Vacancies that
m ay occur in the several classes of directors of Federal reserve banks
may be filled in the manner provided for the original selection of
such directors, such appointees to hold office for the unexpirtd terms
of their predecessors.
STOCK

is s u e s ;

in c r e a s e

and

decrease

of

c a p it a l .

S e c . 5. The capital stock of each Federal reserve bank shall be
divided into shares of $100 each. The outstanding capital stock
shall be increased from time to time as member banlS increase their
capital stock and surplus or as additional banks becom e members,
and m ay be decreased as member banks reduce their capital stock or
surplus or cease to be members, Shares of the capital stock of
Federal reserve banks owned b y member banks shall not be trans­
ferred or hypothecated. W hen a member bank increases its capi­
tal stock or surplus, it shall thereupon subscribe for an additional
amount of capital stock o f the Federal reserve bank o f its district
equal to six per centum of the said increase, one-half of said sub-




8

[P u b . 43.)

scription to be paid in the maimer hereinbefore provided for original
subscription, and one-half subject to call of the Federal Reserve
Board. A bank applying fo r stock in a Federal reserve bank at any
time after the organization thereof must subscribe for an amount of
the capital stock of the Federal reserve bank equal to six per centum
of the paid-up capital stock and surplus o f said applicant bank, pay­
ing therefor its par value plus one-half o f one per centum a m onth
from the period of the last dividend. W hen the capital stock of any
Federal reserve bank shall have been increased either on account of
the increase of capital stock of member banks or on account of the
increase in the number of member banks, the board o f directors shall
cause to be executed a certificate to the Comptroller of the Currency
showing the increase in capital stock, the amount paid in, and by
whom paid. W hen a member bank reduces its capital stock it shall
surrender a proportionate amount of its holdings in the capital of
said Federal reserve bank, and when a member bank voluntarily
liquidates it shall surrender all of its holdings of the capital
stock o f said Federal reserve bank and be released from its stock
subscription not previously called. In either case the shares sur­
rendered shall be canceled and the member bank shall receive in
paym ent therefor, under regulations to be prescribed b y the Federal
Reserve Board, a sum equal to its cash-paid subscriptions on the
shares surrendered and one-half of one per centum a m onth from the
period o f the last dividend, not to exceed the book value thereof, less
any liability of such member bank to the Federal reserve bank.
S e c . 6. If any member bank shall be declared insolvent and a
receiver appointed therefor, the stock held b y it in said Federal
reserve bank shall be canceled, without impairment o f its liability,
and all cash-paid subscriptions on said stock, with one-half of one per
centum per m onth from the period of last dividend, not to exceed
the book value thereof, shall be first applied to all debts of the insol­
vent member bank to the Federal reserve bank, and the balance, if
any, shall be paid to the receiver o f the insolvent bank. W henever
the capital stock of a Federal reserve bank is reduced, either on
account o f a reduction in capital stock of any member bank or of the
liquidation or insolvency or such bank, the board of directors shall
cause to be executed a certificate to the Comptroller of the Currency
showing such reduction o f capital stock and the am ount repaid to
such bank.
D IV ISIO N OF E A RN IN G S.

S e c . 7. A fter all necessary expenses of a Federal reserve bank
have been paid or provided for, the stockholders shall be entitled to
receive an annual dividend of six per centum on the paid-in capital
stock, which dividend shall be cumulative. A fter the aforesaid
dividend claims have been fully met, all the net earnings shall be
paid to the United States as a franchise tax, except that one-half of
such net earnings shall be paid into a surplus fund until it shall
amount to forty per centum of the paid-in capital stock of such
bank.
The net earnings derived b y the U nited States from Federal reserve
banks shall, in the discretion o f the Secretary, be used to supplement
the gold reserve held against outstanding United States notes, or shall
be applied to the reduction of the outstanding bonded indebtedness o f




IPtm. 43.]

9

the United States under regulations to be prescribed b y the Secre­
tary of the Treasury. Should a Federal reserve bank r>e dissolved
or go into liquidation, any surplus remaining, after the paym ent of all
debts, dividend requirements as hereinbefore provided, and the par
value o f the stock, shall be paid to and becom e the property of the
United States and shall be similarly applied.
Federal reserve banks, including tne capital stock and surplus
therein, and the income derived therefrom shall be exem pt from
Federal, State, and local taxation, except taxes upon real estate.
S e c . 8 . Section fifty-one hundred and fifty-four, U nited States
Revised Statutes, is hereby amended to read as follows:
A ny bank incorporated b y special law of any State or of the
United States or organized under the general laws of any State or of
the United States and having an unimpaired capital sufficient to
entitle it to becom e a national banking association under the pro­
visions o f the existing laws may, b y tne vote of the shareholders
owning not less than fifty-one per centum o f the capital stock of
such bank or banking association, with the approval of the Comp­
troller of the Currency be converted into a national banking associ­
ation, with any name"approved b y the Comptroller of the Currency:
Provided, however, That said conversion shall not be in contravention
of the State law. In such case the articles of association and organi­
zation certificate m ay be executed b y a m ajority of the directors of
the bank or banking institution, and "the certificate shall declare that
the owners of fifty-one per centum o f the capital stock have author­
ized the directors to make such certificate and to change or convert
the bank or banking institution into a national association. A ma­
jority of the directors, after executing the articles o f association and
the organization certificate, shall have power to execute all other
papers and to do whatever m ay be required to make its organization
perfect and com plete as a national association. The shares of any
such bank m ay continue to be for the same amount each as they
were before tlie conversion, and the directors m ay continue to be
directors of the association until others are elected or appointed in
accordance with the provisions of the statutes o f the United States.
W hen the Comptroller has given to such bank or banking association
a certificate that the provisions o f this A ct have been com plied with,
such bank or banking association, and all its stockholders, officers,
and employees, shall nave the same powers and privileges, and shall
be subject to the same duties, liabilities, and regulations, in all re­
spects, as shall have been prescribed b y the Federal Reserve A ct and
b y the national banking A ct for associations originally organized as
national banking associations.
STATE BANKS AS MEMBERS.

S e c . 9. A n y bank incorporated b y special law of any State, or
organized under the general laws of any State or of the United
States, m ay make application to the reserve bank organization
committee, pending organization, and thereafter to the Federal
Reserve B oard for the right to subscribe to the stock o f the Federal
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




10

[PUB. 43.J

it m a y prescribe, su b ject to the provision s o f this section, m a y
perm it the a pp lyin g b an k to b ecom e a stock h old er in the F ederal
reserve b a n k o f the district in w h ich the app lyin g b a n k is loca ted .
W h en ever the organization com m ittee or the F ederal R eserve B oa rd
shall p erm it the a pplying b an k to b ecom e a stock h old er in the Federal
reserve b an k o f the district, sto ck shall b e issued and p aid fo r under
the rules and regulations in this A c t p rovid ed fo r n ation al banks
w hich b ecom e stockholders in F ederal reserve banks.
T h e organization com m ittee o r the F ederal R eserve B o a rd shall
establish b y-la w s fo r the general govern m en t o f its co n d u ct in actin g
u pon applications m ade b y the State banks and ban k in g associations
and trust com panies fo r s tock ow nership in F ederal reserve banks.
Such by-la w s shall require app lyin g banks n ot organized under
F ederal law to co m p ly w ith the reserve and ca p ita l requirem ents
and to su bm it to the exam ination and regulations prescribed b y the
organization com m ittee or b y the F ederal R eserve B oard . N o ap­
p lyin g b an k shall be adm itted to m em bership in a F ed eral reserve
ban k unless it possesses a paid-u p unim paired ca p ita l sufficient to
entitle it to b ecom e a n ation al bank in g association in the p la ce where
it is situated, under the provisions o f the n ation al ban k in g A c t.

A n y bank becom ing a member o f a Federal reserve bank under the
provisions of this section shall, in addition to the regulations and
restrictions hereinbefore provided, be required to conform to the
provisions of law imposed on, the national banks respecting the
limitation of liability which m ay be incurred b y any person, firm, or
corporation to such banks, the prohibition against making purchase
o f or loans on stock of such banks, and the withdrawal or impairment
of capital, or the paym ent o f unearned dividends, and to such rule3
and regulations as the Federal Reserve Board may, in pursuance
thereof, prescribe.
Such banks, and the officers, agents, and em ployees thereof, shall
also be su b ject to the provisions o f and to the penalties prescribed
b y sections fifty -on e hundred and nin ety-eigh t, fifty -tw o hundred,
fifty -tw o hundred and one, and fifty -tw o h undred and eight, and
fifty -tw o hundred and nine o f the R evised Statutes. T h e m em ber
banks shall also b e requ ired to m a ke rep orts o f th e co n d itio n s and
o f the p aym en ts o f divid en d s to the com p troller, as p ro v id e d in
sections fifty -tw o h un dred and eleven ana fifty -tw o h u n dred and
tw elve o f th e R ev ised Statutes, and shall b e s u b je ct to th e penalties
prescribed b y section fifty -tw o hu n dred and thirteen fo r th e failu re
to m a k e su ch rep ort.
I f a t a n y tim e it shall app ear to th e F ed era l R eserve B o a rd th a t a
m em ber b a n k has failed to co m p ly w ith th e p rovision s o f this section
o r th e regulations o f the F ed era l R eserve B oard, it shall b e w ith in the
p ow er o f th e said b oa rd , after hearing, to require su ch b a n k to sur­
ren der its s to ck in the F ederal reserve b a n k ; u p on su ch surrender the
F ed era l reserve b a n k shall p a y the cash -p aid su bscrip tion s to the said
s to ck w ith interest at th e ra te o f on e-n aif o f on e p er cen tu m per
m on th , co m p u te d fr o m the last d ivid en d , if earned, n o t to e xceed
the b o o k va lu e th ereof, less a n y lia b ility to said Federal reserve bank,
e x ce p t th e subscription, lia b ility n o t p reviou sly called, w h ich shall be
can celed, and said F ederal reserve b an k shall, u p o n n o tice fro m the
F ederal R eserve Board,, b e required to suspend said b a n k fro m furth er
p rivileges o f m em bership, and shall w ithin th irty d ays o f su ch n o tice




[PWB.4S.1

11

cancel and retire its stock and make payment therefor in the manner
herein provided. The Federal Reserve Board may restore member­
ship upon due proof of compliance with the conditions imposed by
this section.
FEDERAL RESERVE BOARD.

Sec. 10. A Federal Reserve Board is hereby created which shall
consist of seven members, including the Secretary of the Treasury
and the Comptroller of the Currency, who shall be members ex
officio, and fiye members appointed by the President of the United
States, by and with the advice ana consent of the Senate. In
selecting the five appointive members of the Federal Reserve
Board, not more than one of whom shall be selected from any
one Federal reserve district, the President shall have due regard to
a fair representation of the different commercial, industrial and
geographical divisions of the country. The five members of the
Federal Reserve Board appointed by the President and confirmed
as aforesaid shall devote their entire time<to the business of the
Federal Reserve Board and shall each receive an annual salary of
$12,000, payable monthly together with actual necessary traveling
expenses, and the Comptroller of the Currency, as ex officio member
of the Federal Reserve Board, shall, in addition to the salary now
paid him as Comptroller of the Currency, receive the sum of $7,000
annually for his services as a member ot said Board.
The members of said board, the Secretary of the Treasury, the
Assistant Secretaries of the Treasury, and the Comptroller of the Cur­
rency shall be ineligible during the time they are in office and for two
years thereafter to hold any office, position, or employment in any
member bank. Of the five members thus appointed Dy the President
at least two shall be persons experienced in banking or finance. One
shall be designated by the President to serve for two, one for four, one
for six, one for eight, and one for ten years, and thereafter each
member so appointed shall serve for a term of ten years unless
sooner removed for cause by the President. Of the five persons thus
appointed, one shall be designated by ths President as governor and
one as vice governor of the Federal Reserve Board. The governor of
the Federal Reserve Board, subject to its supervision, shall be the
active executive officer. The Secretary of the Treasury may assign
offices in the Department of the Treasury for the use of the'Federal
Reserve Board. Each member of the Eederal Reserve Board shall
within fifteen days after notice of appointment make and subscribe
to the oath of office.
The Federal Reserve Board shall have power to levy semiannually
upon the Federal reserve banks^ in proportion to their capital stock
and surplus, an assessment sufficient to pay its estimated expenses and
the salaries of its members and employees for the half year succeed­
ing the bvying of such assessment, together with any deficit carried
forward from the preceding half year.
The first meeting of the Federal Reserve Board shall be held in
Washington, District of Columbia, as soon as may be after the passage
of this Act, at a date to be fixed by the Reserve Bank Oreanization
Committee. The Secretary of the Treasury shall be ex officio chair­
man of the Federal Reserve Board. No member of the Federal
Reserve Board shall be an officer or director of any bank, banking




12

[Pub. 43.)

institution, trust com p a n y , o r F ederal reserve b an k n or h old stock
in any bank, ban k ing institution, or trust co m p a n y ; and before
entering u pon his duties as a m em ber o f the F ed eral K eserve B oard
h e shall certify under oath to the S ecretary o f the T reasu ry that he
has com plied" w ith this requirem ent. W h en ev er a v a ca n cy shall
occu r, oth er than b y expiration o f term , am ong the five m em bers o f
the F ederal R eserve B oard appoin ted b y the P resident, as a bove
provid ed , a successor shall be a ppoin ted b y the P residen t, w ith the
a dvice and con sen t o f the Senate, to fill such v a ca n cy , and w hen
app oin ted h e shall h old office fo r the u n exp ired term , o f the m em ber
whose p lace he is selected to fill.
T h e rre sid e n t shall h ave p ow er to fill all vacan cies th at m a y h ap ­
pen on the F ederal R eserve B oard during the recess o f th e Senate, b y
granting com m issions w hich shall exp ire th irty days after the n ext
session o f the Senate con venes.
N oth in g in this Ac1i con ta ined shall be con stru ed as taking aw ay
any pow ers h eretofore vested b y law in the S ecretary o f the Treasu ry
which relate to the supervision, m anagem ent, and co n tro l o f the
T reasury D ep artm en t and bureaus un der such d epartm ent, and w her­
ever any p ow er vested b y this A c t in the F ederal R eserve B oard or
the F ederal reserve agent appears to conflict w ith the p ow ers o f the
Secretary o f the Treasury, such pow ers shall be exercised su bject
to the supervision and con trol o f tne S ecretary.
T h e Federal R eserve B oard shall annually m ake a fu ll rep ort o f
its operation s to the Speaker o f the H ouse o f R epresen tatives, w ho
shall cause the sam e to h e printed fo r the in form ation o f the Congress.
Section three hundred and tw en ty -fou r o f the R e v ise d S tatutes o f
the U nited States shall be am ended so as to read as fo llo w s : T h ere
shall b e in the D epartm ent o f the Treasury a bureau ch a rg ed w ith
the ex ecu tion o f all laws passed b y Congress relating to the issue and
regulation o f national cu rren cy secured b y U n ited S tates b on d s and,
u n der the general supervision o f the Federal R eserve B oard , o f all
Federal reserve notes, th e ch ief officer o f w hich bureau shall be called
the C om ptroller o f the C urrency and shall p erform his duties under
the general directions o f the Secretary o f the Treasury.
Sec. 11. T h e Federal R eserve B oard shall be authorized and em ­
pow ered :
(a) T o exam ine at its discretion the accou n ts, b o ok s and affairs
o f each Federal reserve bank and o f each m em ber ban k and to require
such statem ents and reports as it m a y deem necessary. T h e said
board shall publish on ce each w eek a statem en t sh ow in g the co n d i­
tion o f each Federal reserve bank and a con solid ated statem en t fo r all
Federal reserve banks. Such statem ents shall sh ow in d etail the
assets and liabilities o f the Federal reserve banks, single and co m ­
bined, and shall furnish full in form ation regarding the ch aracter o f the
m on ey held as reserve and the am ount, nature and m aturities o f the
paper and oth er investm ents ow n ed or held b y Federal reserve
banks.
(b) T o perm it, or, on the affirm ative v o te o f at least five m em bers
o f the R eserve B oard to require Federal reserve banks to red iscou n t
the d iscou nted paper o f oth er Federal reserve banks at rates o f in ­
terest to be fixed b y the Federal R eserve B oard.
(c) T o suspend io r a period n o t exceedin g th irty days, and from
tim e to tim e to renew such suspension fo r periods n o t exceed in g




(Pub. 43.1

13

fifteen days, any reserve requirement specified in tins Act: Provided,
That it snaU establish a graduated tax upon the amounts by which
the reserve requirements of this Act may be permitted to fall below
the level hereinafter specified: And provided further, That when the
gold reserve held against Federal reserve notes falls below forty per
centum, the Federal Reserve Board shall establish a graduated tax of
not more than one per centum per annum upon such deficiency until
the reserves fall to thirty-two and one-haft per centum, and when
said reserve falls below tmrty-two and one-hali 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 associa­
tions are subject to the reserve requirements set forth in section
twenty of this Act; or to reclassify existing reserve and central
reserve cities or to terminate their designation as such.
(f) To suspend or remove any officer or director of any Federal
reserve bank, the cause of such removal to be forthwith communi­
cated in writing by the Federal Reserve Board to the removed officer
or director and to said bank.
(e)
To require the writing off of doubtful or worthless assets upon
the Dooks and balance sheets of Federal reserve banks.
(h) To suspend, for the violation of any of the provisions of this
Act, the operations of any Federal reserve bank, to take possession
thereof, administer the same during the period of suspension, and,
when deemed advisable, to liquidate or reorganize such bank.
(i) To require bonds of Federal reserve agents, to make regulations
for the safeguarding of all collateral, bonds, Federal reserve notes,
money or property of any kind deposited in the hands of such
agents, and said board shall perform the duties, functions, or services
specified in this Act, and make all rules and regulations necessary to
enable said board effectively to perform the same.
) To exercise general supervision over said Federal reserve banks.
:) To grant by special permit to national banks applying therefor,
when not in contravention of State or local law, the right to act as
trustee, executor, administrator, or registrar of stocks and bonds
under such rules and regulations as the said board may prescribe.
(I) To employ such attorneys, experts, assistants, clerks, or other
employees as may be deemed necessary to conduct the business of
the board. All salaries and fees shall be fixed in advance by said
board and shall be paid in the same manner as the salaries of the
members of said board. All such attorneys, experts, assistants,
clerks, and other employees shall be appointed without regard to the
provisions of the Act of January sixteenth, eighteen hundred and
eighty-three (volume twenty-two, United States Statutes at Large,

a




14

[P u b . 43.J

page four hundred and three), and amendments thereto, or any rule
or regulation made in pursuance thereof: Provided, That nothing
herein shall prevent the President from placing said employees in the
classified service.
FED ER AL A D VISO RY COUNCIL.

S e c . 12. There is hereby created a F ederal A d v is o ry C ouncil,
w h ich shall con sist o f as m a n y m em bers as there are F ederal reserve
districts. E ach Federal reserve bank b y its board o f d irectors shall
annually select from its ow n Federal reserve d istrict one m em ber o f
said cou n cil, w ho shall receive such com pen sation and allow ances as
m a y be fixed b y his board o f directors su b ject to the a pp rov al o f the
F ederal R eserve B oard. Th e m eetings o f said a dvisory cou n cil shall
be held at W ashin gton, D istrict o f C olum bia, at least fou r tim es each
year, and often er i f called b y the Federal R eserve B oard. Th e
co u n cil m a y in addition to the m eetings a b ove p rov id ed for h old such
other m eetm gs in W ash in gton , D istrict o f C olum bia, or elsewhere, as
it m a y deem necessary, m a y select its ow n officers and a d op t its ow n
m ethods o f procedure, and a m a jority o f its m em bers shall con stitu te
a quorum for the transaction oi business. V acan cies in the cou n cil
shall be filled b y the respective reserve banks, and m em bers selected
to fill vacancies, shall serve for the unexpired term .
T he F ederal A d v isory C ouncil shall h ave pow er, b y itself o r through
its officers, (1) to con fer d irectly w ith the F ed era l.R eserve B oard on
general business con d ition s; (2) to m ake oral o r w ritten representa­
tions con cern in g m atters w ithin the ju risdiction o f said b o a rd ; (3) to
call fo r inform ation and to m ake recom m en dation s in regard to
discou n t rates, rediscou nt business, n ote issues, reserve con d ition s in
the various districts, the purchase and sale o f gold o r securities b y
reserve banks, open-m arket operations b y said banks, and the general
affairs o f the reserve banking system .
PO W ERS O F FE D E R A L RESE R V E BA N K S.

S e c . 13. A n y Federal reserve bank m ay receive from any of its
member banks, and from the United States, deposits of current funds
in lawful money, national-bank notes, Federal reserve notes, or
checks and drafts upon solvent m ember banks, payable upon presen­
tation; or, solely for exchange purposes, m ay receive from other
Federal reserve banks deposits o f current funds in lawful money,
national-bank notes, or checks and drafts upon solvent member or
other Federal reserve banks, payable upon presentation.
U pon the indorsement of any o f its member banks, with a waiver of
demand, notice and protest b y such bank, any Federal reserve bank
m ay discount notes, drafts, and bills o f exchange arising out o f actual
com m ercial transactions; that is, notes, drafts, and bills of exchange
issued or drawn for agricultural, industrial, or commercial purposes,
or the proceeds o f which have been used, or are to be used, fo r 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 Ajct. N othing in this A ct contained shall be
construed to prohibit such notes, drafts, and bills of exchange, secured
by staple agricultural products, or other goods, wares, or merchandise




[P ot. 43.)

15

from being eligible for such discount; but such definition shall not
include notes, drafts, or bills covering merely investments or issued
or drawn for the purpose of carrying or trading in stocks, bonds, or
other investment securities, except bonds and notes of tne Govern­
ment of the United States. Notes, drafts, and bills admitted to dis­
count under the terms of this paragraph must have a maturity at
the time of discount of not more than ninety days: Provided, That
notes, drafts, and bills drawn or issued for agricultural purposes or
based on live stock and having a maturity not exceeding six months
may 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 oi not more wan three months, and
indorsed by at least one member bank. The amount of acceptances
so discounted shall at no time exceed one-half the paid-up capital stock
and surplus of the bank for which the rediscounts are made.
The aggregate of such notes and bills bearing the signature or in­
dorsement of any one person, company, firm, or corporation redis­
counted for any one bank shall at no time exceed ten per centum of the
unimpaired capital and surplus of said bank; but this restriction shall
not apply to the discount of bills of exchange drawn in good faith
against actually existing values.
Any member bank may accept drafts or bills of exchange drawn
upon it and growing out of transactions involving the importation
or exportation of goods having not more than six months sight to
run; but no bank shall accept such bills to an amount equal at any
time in the aggregate to more than one-half its paid-up capital stock
and surplus.
Section fifty-two hundred and two of the Revised Statutes of the
United States is hereby amended so as to read as follows: No national
banking association shall at any time be indebted, or in any wav
liable, to an amount exceeding the amount of its capital stock at such
time actually paid in and remaining undiminished by losses or other­
wise, except on account of demands of the nature following:
First. Notes of circulation.
Second. Moneys deposited with or collected by the association.
Third. Bills ox exchange or drafts drawn against money actually
on deposit to the credit of the association, or due thereto.
Fourth. Liabilities to the stockholders of the association for
dividends and reserve profits.
Fifth. liabilities incurred under the provisions of the Federal
Reserve Act.
The rediscount by any Federal reserve bank of any bills receivable
and of domestic and foreign bills of exchange, ana of acceptances
authorized by this Act, shall be subject to such restrictions, limita­
tions, and regulations as may be imposed by the Federal Reserve
Board.
OPEN-MARKET OPERATIONS.

Sec. 14. Any Federal reserve bank may, under rules and regula­
tions prescribed by the Federal Reserve Board, purchase and sell in
the open market, at home or abroad, either from or to domestic or




16

[P ot. 43.)

foreign banks, firms, 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 indorse­
ment of a member bank.
Every Federal reserve bank shall have power:
(a) To deal in gold coin and bullion at home or abroad, to make
loans thereon, exchange Federal reserve notes for gold, gold coin, or
gold certificates, and to contract for loans of gold coin or bullion, giv­
ing therefor, when necessary, acceptable security, including the hy­
pothecation of United States bonds or other securities which Federal
reserve banks are authorized to hold;
(b) To buy and sell, at home or abroad, bonds and notes of the
United States, and bills, notes, revenue bonds, and warrants with a
maturity from date of purchase of not exceeding six months, issued
in anticipation of the collection of taxes or in anticipation of the
receipt ox assured revenues by any State, county, district, political
subdivision, or municipality in the continental United States, includ­
ing irrigation, drainage and reclamation districts, such purchases to
be made in accordance with rules and regulations prescribed by the
Federal Reserve Board;
(c) To purchase from member banks and to sell, with or without its
indorsement, bills of exchange arising out of commercial transactions,
as hereinbefore defined;
(d) To establish from time to time, subject to review and determi­
nation of the Federal Reserve Board, rates of discount to be charged
by the Federal reserve bank for each class of paper, which shall be
fixed with a view of accommodating commerce and business;
(e) To establish accounts with other Federal reserve banks for
exchange purposes and, with the consent of the Federal Reserve
Board, to open and maintain banking accounts in foreign countries,
appoint correspondents, and establish agencies in such countries
wheresoever it may deem best for the purpose of purchasing, selling,
aid collecting bills of exchange, and to buy and sell with or without its
indorsement, through such correspondents or agencies, bills of exchange
arising out of actual commercial transactions which have not more
than ninety days to mn and which bear the signature of two or more
responsible parties
GOVERNMENT DEPOSITS.
S e c . 15. T h e moneys held in the general fund of the Treasury,
except the five per centum fund for the redemption of outstanding
national-bank notes and the funds provided in this Act for the redemp­
tion of Federal reserve notes may, upon the direction of the Secretary
of the Treasury, be deposited in Federal reserve banks, which banks,
when required by the Secretary of the Treasury, shall act as fiscal
agents of the United States; and the revenues of the Government or
any part thereof may be deposited in such banks, and disbursements
may De made by ch eck s drawn against such deposits.
No public funds of the Philippine Islands, or of the postal savings,
or any Government funds, shall be deposited in the contmental 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 banka as
depositories.




[Pub. 43.J

17
NOTE ISSUES.

Sec. 16. Federal reserve notes, to be issued at the discretion of the
Federal Reserve Board for the purpose of making advances to Federal
reserve banks through the Federal reserve agents as hereinafter set
forth and for no other purpose, are hereby authorized. The said notes
shall be obligations of the United States and shall be receivable by all
national ana member banks and Federal reserve banks and for all
taxes, customs, and other public dues. They shall be redeemed in
gold on demand at the Treasury Department of the United States, in
the city of Washington, District of Columbia, or in gold or lawful
money at any Federal reserve bank.
Any Federal reserve bank may make application to the local
Federal reserve agent for such amount of the Federal reserve notes
hereinbefore provided for as it may require. Such application shall
be accompanied with a tender to the local Federal reserve agent of
collateral m amount equal to the sum of the Federal reserve notes thus
applied for and issued pursuant to such application. The collateral
security thus offered shall be notes and bills, accepted for rediscount
under the provisions of section thirteen of this Act, and the Federal
reserve agent shall each day notify the Federal Reserve Board of all
issues and withdrawals of Federal reserve notes to and by the Federal
reserve bank to which he is accredited. The said Federal Reserve
Board may at any time call upon a Federal reserve bank for addi­
tional security to protect the Federal reserve notes issued to it.
Every Federal reserve bank shall maintain reserves in gold or
lawful money of not less than thirty-five per centum against its
deposits and reserves in gold of not less than forty per centum
against its Federal reserve notes in actual circulation, and not
onset by gold or lawful money deposited with the Federal re­
serve 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. Wnenever Federal reserve notes issued through one Federal reserve bank
shall be received bv another Federal reserve bank they shall be
promptly returned for credit or redemption to the Federal reserve
bank through which they were originally issued. No Federal reserve
bank shall pay out notes issued through another under penalty of a
tax of ten per centum upon the face value of notes so paid out. Notes
resented for redemption at the Treasury of the United States shall
e paid out of the redemption fund and returned to the Federal
reserve banks through which they were originally issued, and there­
upon such Federal reserve bank snail, upon demand of the Secretary
oi 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, then such 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 reserve notes received by the Treasury, otherwise than for
redemption, may be exchanged for gold out of the redemption fund

P




18

[Pub. 43.)

hereinafter provided and returned to the reserve bant 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
to maintain on deposit in the Treasury of the United States a sum
in gold sufficient m the judgment of the Secretary of the Treasurv
for the redemption of the Federal reserve notes issued to such
bank, but in no event less than five per centum; but such de­
posit of gold shall be counted and included as part of the forty per
centum reserve hereinbefore required. The board shall have the
right, acting through the Federal reserve agent, to grant in whole
or in part or to reject entirely the application of any Federal
reserve bank for Federal reserve notes; but to the extent that such
application may be granted the Federal Reserve Board shall, through
its local Federal reserve agent, supply Federal reserve notes to tne
bank so applying, and such bank shall be charged with the amount
of such notes and shall pay such rate of interest on said amount as
may be established by the Federal Reserve Board, and the amount of
such Federal reserve notes so issued to any such bank shall, upon
delivery, together with such notes of such Federal reserve bank as
may be issued under section eighteen of this Act upon security of
United States two per centum Government bonds, become a first and
paramount lien on all the assets of such bank.
Any Federal reserve bank may at any time reduce its liability for
outstanding Federal reserve notes by depositing, with the Feaeral
reserve agent, its Federal reserve notes, gold, gold certificates, or
lawful money of the United States. Federal reserve notes so depos­
ited shall not be reissued, except upon compliance with the conditions
of an original issue.
The Federal reserve agent shall hold such gold,, gold certificates, or
lawful money available exclusively for exchange for the outstanding
Federal reserve notes when offered by the reserve bank of which he is
a director. Upon the request of the Secretary of the Treasury the
Federal Reserve Board shall require the Federal reserve agent to
transmit so much of said gold to the Treasury of the United States as
may be required for the exclusive purpose of the redemption of such
notes.
Any Federal reserve bank may at its discretion withdraw collateral
deposited with the local Federal reserve agent for the protection of
its Federal reserve notes deposited with it.and shall at the same time
substitute therefor other like collateral of equal amount with the
approval of the Federal reserve agent under regulations to be pre­
scribed by the Federal Reserve Board.
In order to furnish suitable notes for circulation as Federal reserve
notes, the Comptroller of the Currency shall, under the direction of
the Secretary of the Treasury, cause plates and dies to be engraved
in the best manner to guard against counterfeits and fraudulent
alterations, and shall have printed therefrom and numbered such
quantities of such notes of the denominations of $5, $10, $20,
$50, $100, as may be required to supply the Federal reserve banks.
Such notes shall be in form and tenor as directed by the Secretary of
the Treasury under the provisions of this Act and shail bear the




[P u b .

43.]

19

distinctive numbers of the several Federal reserve banks through
which they are issued.
When such notes have been prepared, they shall be deposited in
the Treasury, or in the subtreasury or mint of the United States
nearest the place of business of each Federal reserve bank and shall
be held for the use of such bank subject to the order of the Comp­
troller of the Currency for their delivery, as provided by this Act.
The plates and dies to be procured by the Comptroller of the Cur­
rency ror the printing of such circulating notes shall remain under
his control and direction, and the expenses necessarily incurred in
executing the laws relating to the procuring of such notes, and all
other expenses incidental to their issue and retirement, shall be paid
hy 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 Revised Statutes, is hereby extended to include notes
herein provided for.
Any appropriation heretofore made out of the general funds of
the Treasury for engraving plates and dies, the purchase of distinc­
tive paper, or to cover any other expense in connection with the
rintmg of national-bank notes or notes provided for by the Act of
[ay 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 Act in addition to circulating notes
provided for by existing law, the Secretary is hereby authorized to
use so much of any funds in the Treasury not otherwise appropriated
for the purpose of furnishing the notes aforesaid: Provided, however,
That nothing in this section contained shall be construed as exempt­
ing national banks or Federal reserve banks from their liability
reimbruse the United States for any expenses incurred in p.'
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 deposi­
tor in said reserve bank or member bank. Nothing herein contained
shall be construed as prohibiting a member bank from charging its
actual expense incurred in collecting and remitting funds, or for
exchange sold to its patrons. The Federal Reserve 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 ior the service of clearing or
collection rendered by the Federal reserve bank.
The Federal Reserve Board shall make and promulgate from time
to time regulations governing the transfer of funds and charges
therefor among Federal reserve banks and their branches, and may
at its discretion exercise the functions of a clearing house for such
Federal reserve banks, or ma}^ designate a Federal reserve bank to

K

203(H) 0 — 58------ 23




20

[Pub. 43.)

exercise such functions, and may also require each such bank to
exercise the functions of a clearing house for its member banks.
Sec. 17. So much of the provisions of section fifty-one hundred
and fifty-nine of the Revised Statutes of the United States, and
section four of the Act of June twentieth, eighteen hundred and
seventy-four, and section eight of the Act of July twelfth, eighteen
hundred and eighty-two, and of any other provisions of existing
statutes as require that before any national banking associations
shall be authorized to commence banldng business it shall transfer
and deliver to the Treasurer of the United States a stated amount of
United States registered bonds is hereby repealed.
REFUNDING BONDS.

^Seo. 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 Treasurer of the United States an application to sell for
its account, at par and accrued interest, United States bonds secur­
ing 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 bonds from the banks whose appli­
cations have been filed with the Treasurer at least ten days before
the end of any quarterly period at which the Federal Reserve Board
may direct the purchase to be made: Provided, That Federal reserve
banks shall not be permitted to purchase an amount to exceed
$25,000,000 of such 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 bank such proportion of such bonds as the
capital and surplus of such bank shall bear to the aggregate capital
and surplus of all the Federal reserve banks.
U p on n otice fro m th e Treasurer o f the am ou nt o f b on d s so sold fo r
its a ccou n t, each m em ber ban k shall d u ly assign and transfer, in
w riting, such bond s to the Federal reserve ban k purch asin g the
sam e, and such Federal reserve ban k shall, th ereu pon , d ep osit law fu l
m on ey w ith the Treasurer o f th e U n ited States fo r th e purchase price
o f such b ond s, and th e Treasurer shall p a y t o the m em b er b a n k selling
such bon d s an y balan ce due after d ed u ctin g a sufficient sum to
redeem its ou tstan d in g n otes secured b y sucn b ond s, w hich notes
shall b e canceled and perm an ently retired w hen redeem ed.
T h e Federal reserve banks purchasing such b on d s shall be per­
m itted to take o u t an am ount o f circu lating n otes equal to the par
valu e o f such bonds.
U p o n th e d eposit w ith th e Treasurer o f th e U n ited States o f b on d s
so purchased, or a ny bon d s w ith th e circu latin g privilege acquired
u n der section fo u r o f this A c t, an y Federal reserve b an k m akin g
such d ep osit in th e m anner p rovid ed b y existin g law , shall be entitled
to receive from th e C om ptroller o f the C urrency circu la tin g notes
in blank, registered and countersigned as p rovid ed b y law , equal in
am ount to the p ar valu e o f the bond s so deposited. Su ch notea




fPro.43.1

21

shall be the obligations of the Federal reserve bank procuring the
same, and shall be in form prescribed by the Secretary of the Treas­
ury, and to the same tenor and effect as national-bank notes now
provided by law. They shall be issued and redeemed under the
same terms and conditions as national-bank notes except that they
shall not be limited to the amount of the capital stock of the Federal
reserve bank issuing them.
Upon application of any Federal reserve bank, approved by the
Federal Reserve Board, the Secretary of the Treasury may issue, in
exchange for United States two per centum gold bonds bearing the cir­
culation privilege, but against which no circulation is outstanding,
one-year gold notes of the United States without the circulation
privilege, to an amount not to exceed one-half of the two per centum
bonds so tendered for exchange, and thirty-year three per centum
gold bonds without the circulation privilege for the remainder of the
two per centum bonds so tendered: JProvided, That at the time of such
exchange the Federal reserve bank obtaining such one-year gold
notes shall enter into an obligation with the Secretary of the Treas­
ury binding itself to purchase from the United States for gold at the
maturity of such one-year notes, an amount equal to those delivered
in exchange for such bonds, if so requested by the Secretary, and at
each maturity of one-year notes so purchased by such Federal reserve
bank, to purchase from the United States such an amount of one-year
notes as the Secretary may tender to such bank, not to exceed the
amount issued to such bank in the first instance, in exchange for the
two per centum United States gold bonds; said obligation to pur­
chase at maturity such notes shall continue in force for a period not
to exceed thirty years.
For the purpose of making the exchange herein provided for, the
Secretary of the Treasury is authorized to issue at par Treasury notes
in coupon or registered form as he may prescribe in denominations
of one hundred dollars, or any multiple thereof, bearing interest at
the rate of three per centum per annum, payable quarterly, such
Treasury notes to be payable not more than one year from the date of
their issue in gold coin of the present standard value, and to be exempt
as to principal and interest from the payment of all taxes and duties
of the United States except as provided by this Act, as well as from
taxes in any form by or under State, municipal, or local authorities.
And for the same purpose, the Secretary is authorized and empowered
to issue United States gold bonds at par, bearing three per centum
interest payable thirty years from date of issue, such bonds to be of
the same general tenor and effect and to be issued under the same
eneral terms and conditions as the United States three per centum
onds without the circulation privilege now issued and outstanding.
Upon application of any Federal reserve bank, approved by the
Federal Reserve Board, the Secretary may issue at par such three
per centum bonds in exchange for the one-year gold notes herein
provided for.

f

B ANK RESERVES.

S e c . 19. D em and deposits w ithin the m eaning o f this A c t shall
com prise all deposits p ayable w ith in th irty d ays, and tim e deposits
shall com prise all deposits p aya b le after th irty d ays, and ail savings
accou n ts and certificates o f d ep osit w h ich are s u b je c t to n o t less than
th irty d ays’ n otice b efore p aym en t.




22

IP u b . 43.)

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 any district, 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 here­
after defined shall hold and maintain reserves equal to twelve per
centum of the aggregate amount of its demand deposits and five per
centum of its time deposits, as follows:
In its vaults for a period of thirty-six months after said date
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 additional one-twelfth, until five-twelfths have been so
deposited, which shall be the amount permanently required.
For a period of thirty-six months after said date the balance of
the reserves may be held in its own vaults, or in the Federal reserve
bank, or in national banks in reserve or central reserve cities as now
defined by law.
After said thirty-six months’ period said reserves, other than
those hereinbefore required to be neld 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
and maintain reserves equal to fifteen per centum of the aggregate
amount of its demand deposits and five per centum of its time
deposits, as follows:
In its vaults for a period of thirty-six months after said date
six-fifteenths thereof, and permanently thereafter five-fifteenths.

In the Federal reserve bank of its district for a period of twelve
months after the date aforesaid at least three-fifteenths, and for each
succeeding six months an additional one-fifteenth, until six-fifteenths
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 reserves may be held in its own vaults, or in the Federal reserve
bank, or in national banks in reserve or central reserve cities as now
defined by law.
After said thirty-six months' period all of said reserves, except
those hereinbefore required to be held permanently in the vaults of
the member bank ana in the Federal reserve bank, shall be held in
its vaults or in the Federal reserve bank, or in both, at the option
of the member bank.
(c) A bank in a central reserve city, as now or hereafter defined,
shall hold and maintain a reserve equal to eighteen per centum of
the aggregate amount of its demand deposits and five per centum of
its time deposits, as follows:
In its vaults six-eighteenths thereof.
In the Federal reserve bank seven-eighteenths.
The balance of said reserves shall be held in its own vaults or in
the Federal reserve bank, at its option.
Any Federal reserve bank may receive from the member banks as
reserves, not exceeding one-half of each installment, eligible paper as




P u b , 43.)

23

described in section fou rteen properly indorsed and acceptable to
the said reserve bank.
If a State bank or trust company is required by the law of its State
to keep its reserves either in its own vaults or with another State bank
or trust company, such reserve deposits so kept in such State bank
or trust company shall be construed, within the meaning of this sec­
tion, as if they were reserve deposits in a national bank in a reserve
or central reserve city for a period of three years after the Secretary
of the Treasury shall have officially announced the establishment of a
Federal reserve bank in the district in which such State bank or
trust company is situate. Except as thus provided, no member
bank shall keep on deposit with any nonmember bank a sum in
excess of ten per centum of its own paid-up capital and surplus.
No member bank shall act as the medium or agent of a nonmember
bank in applying for or receiving discounts 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 the Federal Reserve Board, be checked against and
withdrawn by such member bank for the purpose of meeting existing
liabilities: Provided, however, That 110 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 United
States may remain nonmember banks, and shall in that event
maintain reserves and comply with all the conditions now provided
by law regulating them; or said banks, except in the Philippine
Islands, may, with the consent of the Reserve Board, become member
banks of any one of the reserve districts, and shall, in that event, take
stock, maintain reserves, and be subject to all the other provisions
of this Act.
S e c . 20. So much of sections two and three of the Act of June
twentieth, eighteen hundred and seventy-four, entitled u An Act
fixing the amount of United States notes, providing for a redistribu­
tion of the national-bank currency, and for other purposes,” as pro­
vides that the fund deposited by any national banking association
with the Treasurer of the United States for the redemption of its notes
shall be counted as a part of its lawful reserve as provided in the Act
aforesaid, is hereby repealed. And from and after the passage of
this Act such fund of nve per centum shall in no case be counted by
any national banking association as a part of its lawful reserve.
B A N K E X A M IN A T IO N S.

S e c . 21. Section fifty-two hundred and forty, United States R e ­
vised Statutes, is amended to read as follows:
The Comptroller of the Currency, with the approval of the Secre­
tary of the Treasury, shall appoint examiners who shall exam ine




24

[P u b . 43.)

every member bank at least twice in each calendar year and oftener
if considered necessary: Provided, however, That the Federal Reserve
Board may authorize examination by the State authorities to be
accepted in the case of State banks and trust companies and may at
any time direct the holding of a special examination of State banks
or trust companies that are stockholders in any Federal reserve
bank. The examiner making the examination of any national bank,
or of any other member bank, shall have power to make a thorough
examination of all the affairs of the bank and in doing so he shall
have power to administer oaths and to examine any oi the officers
and agents thereof under oath and shall make a full and detailed
report of the condition of said bank to the Comptroller of the Cur­
rency.
The Federal Reserve Board, upon the recommendation of the
Comptroller of the Currency, shall fix the salaries of all bank exam­
iners and make report thereof to Congress. The expense of the
examinations herein provided for shall be assessed by the Comptroller
of the Currency upon the banks examined in proportion to assets or
resources held by the banks upon the dates of examination of the
various banks.
In addition to the examinations made and conducted by the
Comptroller of the Currency, every Federal reserve bank may, with
the approval of the Federal reserve agent or the Federal Reserve Board,
provide for special examination of member banks within its district.
The expense of such examinations shall be borne by the bank exam­
ined. Such examinations shall be so conducted as go inform the
Federal reserve bank of the condition of its member banks and of the
lines of credit which are being extended by them. Every Federal
reserve bank shall at all times furnish to the Federal Reserve 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 authorized.
The Fecleral Reserve Board shall, at least once each year, order an
examination of each Federal reserve bank, and upon joint applica­
tion of ten member banks the Federal Reserve Board shall order a
special examination and report of the condition of any Federal
reserve bank.
S e c . 22. No member bank or any officer, director, or employee
thereof shall hereafter make any loan or grant any gratuity to any
bank examiner. Any bank officer, director, or employee violat­
ing this provision shall be deemed guilty of a misdemeanor and shall
be imprisoned not exceeding one year or fined not more than $5,000,
or botn; and may be fined a further sum equal to the money so loaned
or gratuity given. Any examiner accepting a loan or gratuity from any
bank examined by him or from an officer, director, or employee thereof
shall be deemed guilty of a misdemeanor and shall be imprisoned not
exceeding one year or fined not more than $5,000, or both; and may be
fined a further sum equal to the money so loaned or gratuity given;
and shall forever thereafter be disqualified from holding omce as a
national-bank examine]'. No national-bank examiner shall perform




fPUB. 43.]

25

any other service for compensation while holding such office for any
bank or officer, director, or employee thereof.
O ther than the usual salary or d irector’s fee paid to a ny officer,
director, or em ployee o f a m em ber ban k and oth er than a reasonable
fee p aid b y said ban k to such officer, director, o r em p loyee fo r services
rendered to such bank, n o officer, director, em ployee, o r a ttorn ey o f a
m em ber bank shall be a beneficiary o f or receive, d irectly or in d irectly,
a n y fee, com m ission, gift, or oth er consideration fo r o r in con n ection
w ith any transaction or business o f the bank. N o exam iner, p u b lic
or private, shall disclose the nam es o f borrow ers or the collateral for
loans o f a m em ber bank to oth er than the p rop er officers o f such
bank w ith ou t first having obtain ed the express perm ission in w riting
from the C om ptroller o f the Currency, or from the board o f directors
o f su ch bank, e x c e p t w hen ordered to d o so b y a co u rt o f com p eten t
ju risdiction , or b y d irection o f the Congress o f the U nited States, or
o f either H ouse thereof, o r a n y com m ittee o f Congress o r o f either
H ouse d u ly authorized. A n y person viola tin g a n y provision o f this
section shall be punished b y a fine o f n o t exceedin g $5,000 or b y
im prisonm ent n o t exceed in g one year, or both .

Except as provided in existing laws, this provision shall not take
effect until sixty days after the passage of this Act.
S e c . 23. The stockholders of every national banking association
shall be held individually responsible for all contracts, debts, and
engagements of such association, each to the amount of his stock
therein, at the par value thereof in addition to the amount invested
in such stock. The stockholders in any national banking association
who shall have transferred their shares or registered the transfer
thereof within sixty days next before the date of the failure of such
association to meet its obligations, or with knowledge of such im­
pending failure, shall be liable to the same extent as if they had made
no such transfer, to the extent that the subsequent transferee fails to
meet such liability; but this provision shall not be construed to
affect in any way any recourse which such shareholders might other­
wise have against those in whose names such shares are registered at
the time of such failure.
LOANS ON FARM LAN DS.

S e c . 24. A n y n ational ban k in g association n ot situ ated in a cen tral
reserve c ity m a y m ake loans secured b y im p roved and u nencum ­
bered farm land, situated w ithin its Federal reserve d istrict, b u t
n o such loan shall be m ade fo r a lon ger tim e than five years, n or
fo r an am ount exceedin g fifty p er cen tu m o f the actual va lu e o f the
p ro p e rty offered as secu ritv. A n y such ban k m a y m ake such loans
m an aggregate sum equal to tw en ty -fiv e per cen tu m o f its ca p ita l
and surplus o r to on e-th ird o f its tim e d eposits and such banks m a y
con tin u e hereafter as h eretofore to receive tim e deposits and to p a y
interest o n th e sam e.

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 loans secured upon real estate in the manner described in
this section.




!

26
FO REIG N

[Pub. 43.3

BRAN C H ES.

S e c . 25. A n y n ation al bank in g association possessing a ca p ital and
surplus o f $1,000,000 o r m ore m a y file a p p lica tion w ith the Federal
R eserve B oard , u p on su ch con d ition s ana u n der su ch regu lation s as
m a y b e p rescribed b y the said b oard, fo r the pu rp ose o f secu rin g
a u th ority to establish, branches in foreign cou n tries o r dependencies
o f the XJnited States fo r th e furth eran ce o f th e foreign co m m e rce o f
the U n ited States, and to act, i f requ ired to d o so, as fiscal agents o f
the U n ited States. Su ch a p p lica tion shall s p e cify , in a d d ition to the
n am e and ca p ita l o f the b an k in g a ssociation fifing it, the p la ce o r
places w here the b an k in g operation s p rop osed are to b e carried on,
and the am ou n t o f ca p ita l set aside fo r the c o n d u ct o f its fo re ig n
business. T h e F ederal R eserve B o a rd shall h av e p ow er to a p p ro v e
o r to reje ct su ch a pp lica tion if, in its ju d gm en t, the a m ou n t o f ca p ­
ital p rop osed to b e set aside fo r the c o n d u c t o f foreign business is
inadequate, or if fo r oth er reasons the gran tin g o f su ch app lica tion
is deem ed inexped ien t.
E v e r y nation al ban king association w h ich shall receiv e a u th ority
to establish foreign brancnes shall b e required at all tim es to furnish
in form ation con cern in g the co n d ition o f su ch branches to the C om p ­
troller o f the C urrency u p on dem and, and the F ederal R e se rv e B oard
m a y ord er special exam inations o f the said foreign branch es a t su ch
tim e o r tim es as it m a y deem best. E v e r y su ch n ation al b an k in g
association shall co n d u ct the accou n ts o f each foreig n b ran ch
in d ep end en tly o f the accounts o f oth er foreign branches established
b y it and o f its h om e office, and shall a t the end o f ea ch fiscal p eriod
transfer to its general ledger the p rofit o r loss a ccru in g a t each b ra n ch
as a separate item .
S e c . 26. A ll provision s o f law incon sisten t w ith o r superseded b y a n y
o f the provision s o f this A c t are to th a t e x ten t and to th a t e x te n t o n ly
h ereb y repealed: Provided, N oth in g in this A c t con ta in ed shall b e co n ­
strued to repeal the p a rity p rovision o r provision s con ta in ed in an
A c t a p p rov ed M arch fourteen th , nineteen h u ndred en titled “ A n
A c t to define and fix the stan dard o f value, to m ain tain the p a rity
o f all form s o f m on ey issued o r coin ed b y the U n ited States, to
refund the p u b lic debt, and fo r oth er pu rp oses,” and the S ecretary o f
the T reasury m a y fo r the p urp ose o f m ain tain in g su ch p a r ity and to
strengthen the g old reserve, b orrow g old on the secu rity o f U n ited
States bond s authorized b y section tw o o f the A c t last referred to
o r fo r on e-year g old notes bearing interest a t a rate o f n o t to exceed
three p er cen tu m p er annum, or sell the sam e if necessary to ob ta in
gold . W h en the fun ds o f the T reasu ry on h and ju stify, he m a y
purchase and retire su ch outstan ding b on d s and notes.
S e c . 27. T h e p rovision s o f the A c t o f M a y thirtieth, nineteen
hundred and eight, authorizing national cu rren cy associations, the
issue o f addition al n ation al-ban k circu lation, and creatin g a N ation al
M on eta ry C om m ission, w h ich expires, b y lim itation un der the term s
o f such A c t o n the thirtieth d a y o f June, nineteen h u ndred and four­
teen, are h ereb y exten d ed to June thirtieth, nineteen hundred and
fifteen, and sections fifty -on e hundred and fifty-th ree, fifty -o n e
h u ndred and seven ty-tw o, fifty -on e hundred and n in ety-on e, and
fifty -tw o h u ndred ana fourteen o f the R evised Statutes o f the U n ited
States, w hich were am ended b y the A c t o f M ay thirtieth, nineteen




{P u b . 43.)

27

hundred and eight, are hereby reenacted to read as such sections
read prior to May thirtieth, nineteen hundred and eight, subject to
such amendments or modifications as are prescribed in this Act:
Provided, however, That section nine of the Act first referred to in
this section is hereby amended so as to change the tax rates fixed
in said Act by making.the portion applicable thereto read as follows:
National banking associations haying circulating notes secured
otherwise than by bonds of the United States, shall pay for the first
three months a tax at the rate of three per centum per annum upon
the average amount of such of their notes in circulation as are based
upon the deposit of such securities, and afterwards an additional tax
rate of one-half of one per centum per annum for each month until a
tax of six per centum per annum is reached, and thereafter such 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
Statutes is hereby amended and reenacted to read as follows: Any
association formed under this title may, by the vote of shareholders
owning two-thirds of its capital stock, reduce its capital to any sum
not below the amount required by this title to authorize the forma­
tion of associations; but no such reduction shall be allowable which
will reduce the capital of the association below the amount required
for its outstanding circulation, nor shall any reduction be made until
the amount of the proposed reduction has been reported to the Comp­
troller of the Currency and such reduction has been approved by tne
said Comptroller of the Currency and by the Federal Reserve Board,
or by the organization committee pending the organization of the
Federal Reserve Board.
S ec . 29. If any clause, sentence, paragraph, or part of this Act
shall for any reason be adjudged by any court of competent juris­
diction to be invalid, such judgment shall not affect^ impair, or
invalidate the remainder of this Act, but shall be confined in its
operation to the clause, sentence, paragraph, or part thereof directly
involved in the controversy in which such judgment shall have been
rendered.
S ec . 30. The right to amend, alter, or repeal this A ct is hereby
expressly reserved.
Approved, December 23, 1913.







INDEX TO FEDERAL RESERVE ACT.
Page.

Section.

A.
A pplication
For Membership Federal Reserve

Bank..

________

4

4

1

1

1

1

3
3
3
3

3
3
3
3

21

19

5
3
25
25

4
3
22
22

2

2

1

1

8
8
8
8
8

7
7
7
7
7

26

27

24
24
24
24
24
24

21
21
21
21
21
21

B.
Bank
...................................r ................................................................................ - .................................................. -

B a n k E xam inations
See Examinations.
B a n k R eserves
See Reserve.
B oard
"OefiTiitioTi..........................................................................................
Federal Reserve. (See Federal Reserve Board.)
B ranch B anks
How established..........................................................................................
Managed b y Board of Directors.................................................. ..
TTnw Selected ............................. ......................................................................................................................................
Manager of................................................................................................................................................................ ...
B ranch O ffices
See Branch Banks.
D.
D em and D eposits
Definition .................................................................................................................................................................................
D irectors

of Federal Reserve Banks.............................................................................
of Branch Banks..................................................................................................................... ...................................
of Member banks, fees or commissions for loans prohibited_______
Penalty for.............................................................................................................................................................................
D issolution
of Member Banks effect ..................................................................................................................................
D istrict
Definition............................................................................................. ...................................................................................
D ivision o f Earnings

See Earnings.
E.
E a r n in g s

of Federal Reserve Banks........................................ ................................................
How distributed..................................................................
Dividends to Stockholders.........................................................
U. S. franchise tax .....................................................................
Surplus fund..............................................................................
U. S. Earnings, how applied.....................................................
E mergency Currency

Limitations of, Act of May 30, 1908, extended to June 30, 1915..
E x a m in a tio n s

of Member Banks.......................................................................
Periodical...................................................................... ...........
Special examinations by order of Federal Reserve Board.......
By Federal Reserve Banks.......................................................
Expenses of, how paid..............................................................
Other visitorial powers.............................................................




30

E xaminers
How appointed.................................................................................
Salaries...............................................................................................
Not to receive gratuities from banks examined..........................
Penalty for........................................................................................
Not to perform other services for banks examined...................
F.
F arm Lands
See Loans on tarm Lands.
F ederal A dvisory Council
How appointed..................................................................................
Meetings.............................................................................................
Powers............................... .................................................................
F ederal R eserve Agent..................................................•...............
Salary..................................................................................................
Deputy................................................................................................
F ederal R eserve B anks
Organized by Reserve Bank Organization Committee..............
Name of........................ .....................................................................
National Banks to signify intention to become members.........
Subscription of member banks 6% of capital & surplus...........
Stock (see stock)...............................................................................
Payments, how made.......................................................................
How organized...................................................................................
Powers..........................................................................................
Directors, how elected.....................................................................
Class A by Member Banks......................................................
Class B by Member Banks....................................................
Class C by Federal Reserve Board.........................................
No senator or congressman eligible..............................................
Electors selected from groups.........................................................
Preferential ballot............................................................................
Directors, salaries & expenses........................................................
Decrease and increase of stock ^................................. ..................
May be Government depositaries and required to act as
fiscal agents....................................................................................
To receive checks at par...................................................................
Required to purchase 2 % Government bonds at par after two
years................................................................................................
Limitation of purchase....................................................................
May issue notes against bonds purchased....................................
May exchange 2% bonds purchased for 3% bonds...................
Must re-purchase one-year bonds from year to year................
F ederal R eserve B oard
How appointed................ .................................................................
Secretary of the Treasury, Comptroller of the Currency, mem­
bers ex officio.................................................................................
Salaries.............................................................................................
Terms of office...................................................................................
Expenses, how paid.........................................................................
First meeting.....................................................................................
Members ineligible to serve as Directors or officers of member
banks for two years after retirement.........................................
Vacancies, how filled......................................................................
Powers in conflict with those of the Secretary of the Treasury
To supervise issue of Federal Reserve Notes..............................
General powers..................................................................................
General powers...................................................... ..........................
Power to fix rules governing exchange charges...........................
To act as clearing house for Federal Reserve Banks---- ...



?e.

Section.

23
24
24
24
25

21
21
22
22
22

14
14
14
6
7
7

12
12
12
4
4
4

1
1
1
7
2
4
4
14
15
16
5
5
5
5
5
6
6
77

2
2
2
2
5
2
4
4
13
14
14
4
4
4
4
4
4
4
4
5

16
19

15
16

20
20
21
21
21

18
18
18
18
18

11

10

11
11
11
11
11

10
10
10
10
10

11
12
12
12
12
13
19
19

10
10
10
10
11
11
16
16

31
Section.

F ederal R eserve Cities
Number........................................................................................................ .
Designated b y ............................................................................................
How determined.......................................................................................
Subject to review b y ............................................................................... .
F ederal R eserve D istricts
Number........................................................................................................
Designated.by number........................................................................... .
How changed...............................................................................................
Reviewed b y .............................................................................................. .
F ederal R eserve N otes
How issued...................................................................................................
Term and effect......................................................................................... .
Reserve against, held by banks................................... ................ ........
Redemption of........................................................................................... .
Withdrawal of collateral security f o r ............................................... .
How printed.............................................................................................. .
Whare deposited............................................................................. ..........
Denominations...........................................................................................
Delivered to Federal Reserve A g en t............................................... .
Appropriation fo r ........................... .........................................................
Expenses of issue, how p a id .................................................................
F oreign B ranches
National banks may establish w hen..................................................
Regulations to be prescribed by Federal Reserve Board..........
May be required to act as fiscal agents of United States............

1

2
2
2
2
2
2
2
2

17
17
17
17
18
18
19
18
19
19
19

16
16
16
16
16
16
16
16
16
16
16

26
26
26

25
25
25

26

26

16
16

15
15

I nconsistent L aw s R epealed ................................................................

26

26

L.
L oans on F arm L ands
Member banks not in reserve cities may make.............................
Federal Reserve Board may extend list..........................................
Amount and time of such loans...........................................................

25
25
25

24
24
24

1

1

15

13

20

17
28

G.
G old R eserve
Secretary to maintain..............................................................................
G overnment D eposits
May be made with Federal Reserve Banks.................. ..................
With Member Banks................................................................................

1
1

1

1
1

1
1

I.

N.
N ational B a n k .
Definition...................................................................................................
limitation of liabilities extended to include debts due Federal
Reserve Banks.......................................................................................
Need not deposit U. S. Government bonds before commencing
business....................................................................................................
Reduction of Capital Stock, how affected.......................................
N ote I ssue
See Federal Reserve Notes

27

O.
O rganization Committee
See Reserve Bank Organization Committee.
P.
P enalty
For failure to signify acceptance of provisions of this act..........
For violating provisions..........................................................................
For violating provisions b y State Bank Members........................




2
2
10

32

Section.
R.
R eser ve B a n k

Definition.............................................................
R eserve B a n k O rganization Committee

Composed of..........................................................
Powers.............................. ....................................

C
P C
O C
O C
O C
O C
O

Converted to National Banks...............................
May become Members as State Banks.................
Conditions of membership...................................
Regulations...........................................................
Must be eligible to conversion as National Banks
Penalty for violation of provisions.......................
Reserve required..................................................

00

S.
State B a n k s

Member banks.....................................................
Public stock — ..................................................
Non Voting..........................................................
U. S. Stock..........................................................
How Public and U. S. stock transferred.............
Minimum Capital for any Federal Reserve Bank ,




o

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Stock