Full text of McFadden Act

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[Public— No. 639—69th Congress]
[H. R. 2]
An Aot To further amend the national banking laws and
Federal Reserve Aot, and for other purposes.

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Be it enacted by the Senate and House of Representatives of
United States of America in Congress assembled} That the Act
entitled “An Act to provide for the consolidation of national
banking associations,” approved November 7, 1918, be amended by
adding at the end thereof a new section to read as follows:
“ Sec. 3. That any bank incorporated under the laws of any State,
or any bank incorporated in the District of Columbia, may be
consolidated with a national banking association located in the
same county, city, town, or village under the charter of such
national banking association on such terms and conditions as may
be lawfully agreed upon by a majority of the board of directors o f
each association or bank proposing to consolidate, and which agree*
ment shall be ratified and confirmed by the affirmative vote o i the
shareholders of each such association or bank owning at least two*
thirds of its capital stock outstanding, or by a greater proportion
of such capital stock in the case of such State bank if the laws o f
the State where the same is organized so require, at a meeting to
be held on the call of the'directors after publishing notice o f the
time, place, and object of the meeting for four consecutive weeks
in some newspaper of general circulation published in the place
where the said association or bank is situated, and in the legal*
newspaper for the publication of legal notions or advertisements,
if any such paper has been designated by the rules of a court in
the county where such association or bank is situated, and if no
newspaper is published in the place, then in a paper of general
circulation published nearest thereto, unless such notice of meeting
is waived in writing by all stockholders of any such association
or bank, and after sending such notice to each shareholder of-record
by registered mail at least ten days prior to said meeting, but any1
additional notice shall be given to the shareholders of such State
bank which may be required by the laws of the State where the
same is organized. The capital stock of such consolidated association
shall not be less than that required under existing law for the
organization of a national banking association in the place in which
such consolidated association is located; and all the rights, franchises,
and interests of such State or District bank so consolidated.. with a
national banking association in and to every species of property,
real, personal, and mixed, and choses in action thereto belonging,
shall De deemed to be transferred to and vested in such national
banking association into which it is consolidated without any deed
or other transfer, and the said consolidated national banking asso­
ciation shall hold and enjoy the same and all rights of property,
franchises, and interests including the right of succession as trustee,
executor, or in any other fiduciary capacity in the same manner ana
to the same extent as was held and enjoyed by such State or District




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[ P u b . f>39.)

bank so consolidated with such national banking association. When
such consolidation shall have been effected and approved by the comp­
troller any shareholder of either the association or o f the State or
District bank so consolidated, who has not voted for such consolida­
tion, may give notice to the directors o f the consolidated association
within twenty days from the date o f the certificate o f approval of the
comptroller that he dissents from the plan o f consolidation as
adopted and approved, whereupon he shall be entitled to reeeive the
value o f the shares so held by him, to be ascertained by an appraisal
mode by a committee o f three persons, one to be selected by the
shareholder, one by the directors o f the consolidated association, and
the third by the two so chosen; and in case the valuejso fixed shall
Currency, who
cauge a reappraisal to be made, which shall be
final and binding; and the consolidated association shall pay the
expenses o f reappraisal, and the value as ascertained by such
appraisal or reappraisal shall be deemed to be a debt due and shall
be forthwith paia to said shareholder by said consolidated associa­
tion, and the shares so paid for shall be surrendered and, after due
ftotice; sold at public auction within thirty days after the final
appraisement provided for in this A ct; and i f the shares so sold at
public auction shall be sold at a price greater than the final
appraised value, the excess in such sale price shall be paid to the
said shareholder; and the consolidated association shall have the
right to purchase puch shares at public auction, if it is the highest
bidder
for the purpose o f reselling such shares within
thirty days thereafter to such person or persons and at such price
as it« board o f directors by resolution may determine. The liquida­
tion o f such shares o f stock in any State bank shall be determined
in the manner prescribed by the law o f the State in such cases i f
such provision is made in the State la w ; otherwise as hereinbefore
>rovided. No such consolidation shall be in contravention o f the
aw of the State under which such bank is incorporated.
u The Avoi ds 4State bank,’ 4State banks,’ 4bank/ or 4banks,’ a$
used in this section, shall be held to include trust companies, savings
banks, or other such corporations or institutions carrying on tho
banking business under the authority o f State laws.”
Sec. 2. (a) That section 5130 o f the Revised Statutes o f th$
United States, subsection “ second n thereof as amended, be amended

therefor,

f

to read as follows:

44 Second. To have succession from the date o f the approval o f
this Act, or from the date o f its organization if organized after such
date o f approval until such time as it be dissolved by the act o f its
shareholders owning two-thirds o f its stock, or until its franchise
becomes forfeited by reason of violation o f law, or until terminated
by either a general or a special Act of Congress or until its affairs
be placed in the hands of a receiver and finally wound up by him.”
(b)
That section 5136 o f the Revised Statutes o f the United
States, subsection “ seventh ” thereof, be further amended by adding
at the end o f the first paragraph thereof the follow ing:
“ Provided , That the business o f buying and selling investment
securities shall hereafter be limited to buying and selling without




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8

recourse marketable obligations evidencing indebtedness of any
person, copartnership, association, or corporation, in the form o f
bonds, notes and/or debentures, commonly known as investment
securities, under such further definition of the term ‘ investment
securities ’ as may bv regulation be prescribed by the Comptroller
of the Currency, ana the total amount of such investment securities
o f any one obligor or maker held by such association shall at no
time exceed 25 per centum of the amount of the capital stock o f such
association actually paid in and unimpaired and 25 per centum o f
its unimpaired surplus fund, but this limitation as to total amount
shall not apply to obligations of the United States, or general
obligations or any State or of any political subdivision thereof, or
obligations issued under authority of the Federal Farm Loan A c t:
And provided further, That in carrying on the business commonly
known as the safe-deposit business no such association shall invest
in the capital stock o f a corporation organized under the law of jtny
State to conduct a safe-deposit business in an amount in excess o f
15 per centiim of the capital stock of such association actually paid
in and unimpaired and 15 per centum of its unimpaired surplus,99
so that the subsection as amended shall read as follows:
“ Seventh. To exercise by its board of directors, or duly authorized
officers or agents, subject to law, all such incidental powers as shall
be necessary to carry on the .business of banking; oy discounting
and negotiating promissory notes, drafts, bills o f exchange, and
other evidences * f debt; by receiving deposits; by buying and
selling exchange, ooin, and bullion; by loaning money on personal
security; and by obtaining, issuing, and circulating notes according
to the provisions of this title: Prmnded, That the business of buying
and selling investment securities shall hereafter be limited to buying
and selling without recourse marketable obligations evidencing
indebtedness of any person, copartnership, association, or corpora­
tion, in the form at bonds, notes and/or debentures, commonly
known as investment securities, under such fifrther definition o f the
term 4investment securities ’ as may by regulation be prescribed by
the Comptroller of the Currency, and the total amount of sucn
investment securities of any one obligor or maker held by such
association shall at no time exceed 25 per centum of the amount of
the capital stock of such association actually paid in and unimpaired
and 25 per centum of its unimpaired surplus fund, but this limitation
as to total amount shall not apply to obligations of the United
States, or general obligations of any State or of any political
subdivision thereof, or obligations issued under authority of the
Federal Farm Loan Act: And provided further, That in carrying
on the business commonly known as the safe deposit business no
such association shall invest in the capital stock of a corporation
organized under the law of any State to conduct a safe deposit
business in an amount in excess of 15 per centum of the capital
stock of such association actually paid in and unimpaired and 15
per centum of its unimpaired surplus.
“ But no association 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 com­
mence the business of banking.”
20366 O— 58------ 2-6




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S e c , 3. That section 0187 of the Revised Statute* o l the United
Staten, subsection “ First ” thereof, be amended to rettd as follows:
“ First Such m shall b« necessary for its accommodation in the
transaction of its business.”
Sbo. 4. That section 5188 o f tho Revised Statutes o f the ITnited
States, as amended, be amended to read as follows:
“ Skc. 5138. No national banking association shall be organized
with a less capital than $100,000, except that such associations w ith
a capital of not less than $50,000 may, with the approval of the
Secretary of the Treasury, be organized in any place Che popula­
tion of which does not excced six thousand inhabitants, aikf except
that such associations with a capital of not less than $25,000 may,
with die sanction o f the Secretary o f tile Treasury, be organized fn
any plaoe the population o f which does not exceed three thousand
inhabitants. No such association shall be organized in a city the
population of which exceeds fifty thousand persons with a capital
o f less than $200,000, except that in the outlying districts of such a
city where the State laws permit the organization of State banks
with a capital of $100,000 or less, national banking associations now
organized or hereafter organized may, with the approval of the
Comptroller of the Currency, have a capital of not less than

$100,000.”
See. 5. That section 6142 of the Revised Statutes o f the United
States, as amended, be amended to read as follows:
“ S ec. 5142. Any national banking association may, with the
approval of the Comptroller of the Currency, and by a vote o f
shareholders owning two-thirds o f the stock of such associations,
increase its capital stock to any sutn approved by the said comp­
troller, but no increase in capital shall be valid until the whole
amount of such increase is paid in and notice thereof, duly acknowl­
edged before a notary public by the president, vioe president, or
cashier of said association, has been transmitted to the Comptroller
o f the Currency and his certificate obtained specifying the amount
of such increase in capital stock and his approval thereof, and
that it has been duly paid in as part o f the capital o f such association:
Provided, hon-cner, That a national banking association mav, with
the approval of the Comptroller of the Currency, and by me vote
of shareholders owning two-thirds of the stock of such association,
increase its capital stock by the declaration of a stock dividend,
provided tlmt the surplus of said lysociation, after the approval o f
the increase, i-hall be at least equal to 20 per centum of the capital
stock as increased. Such increase shall not be effective until a
certificate certifying to such declaration of dividend, signed by the
president, vice president, or cashier of said association and duly
acknowledged before a notary public, shall have been forwarded
to the Comptroller of the Currency and his certificate obtaihed speci­
fying the amount of such increase of capital stock by stock dividend,
and his approval thereof.”
Sr.o. 6. That section 5150 of the Revised Statutes of the United
States be amended to read as follows:
“ S ec . 5150. The president of the bank shall be a member of the
board and shall be the chairman thereof, but the board may designate




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5

a director in lieu of the president to be chairman of the board,
who shall perform such duties as may be designated by the board.”
Seo. 7. That section 5155 of the Kevised Statutes of the United
States be amended to read as follows:
“ S e c , 5155. The conditions upon which a national banking asso­
ciation may retain or establish and operate a branch or branches are
the following:
“ (a) A national banking association may retain and operate
such branch or branches as it may have in lawful operation at the
date of the approval of this Act, and any national banking associa­
tion which has continuously maintained and operated not more than
one branch for a period of more than twenty-five years immediately
preceding the approval of this Act may continue to maintain and
operate such branch.
“ (b) I f a State bank is hereafter converted into or consolidated
with a national banking association, or if two or more national bank­
ing associations are consolidated, such converted or consolidated
association may, with respect to any of such banks, retain and oper­
ate any of their branches which may have been in lawful operation
by any bank at the date of the approval of the Act.
“ (c) A national banking association may, after the date of the
approval of this Act, establish and operate new brandies within the
limits of the city, town, or village in which said association is situated
if such establishment and operation are at the time permitted to
State banks by the law of the State in question.
“ (d) No branch shall be established after the date of the approval
of tnis Act within the limits of any city, town, or village of which
the population by the last decennial census was less than twenty-five
thousand. No more than one such branch may be thus established
where the'population, so determined, of such municipal unit does not
exceed fifty thousand.; and not more than two such branches where
the population does not exceed one hundred thousand. In any such
municipal unit where the population exceeds one hundred thousand
the determination of the number of branches shall be within the
discretion of the Comptroller of the Currency.
“ (e) No branch ot any national banking association shall be
established or moved from one location to another without first
obtaining the consent and approval of the Comptroller of the
Currency.
“ (f) The term ‘ branch’ as used in this section shall be held to
include any branch bank, branch office, branch agency, additional
office, or any branch place of business located in any State or Ter­
ritory of the United States or in the District of Columbia at which
deposits are received, or checks paid, or money lent.
“ (g) This section shall not be construed to amend or repeal sec­
tion 25 of the Federal Reserve Act, as amended, authorizing the
establishment by national banking associations of branches in for­
eign countries, or dependencies, or insular possessions of the United
Stilt es.
“ (h) The words ‘ State bank,’ ‘ State banks,’ ‘ bank,’ or ‘ banks,’
as used in this section, shall be held to include trust companies,
savings banks, or other such corporations or institutions carrying
on the banking business under the authority of State laws.”




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Gftw-JMJ

S m & TJv»t section 5190 of the Reyised Statute* ot tb» United
States be amended to read m follows:
“ S e c . 6190. The general business o f each national banking
association shall be transacted in the place specified in its
organisation certificate and in the brunch or branches, i l any.
established or maintained by it in accordance with the provision* o f
section 5155 o f the Revised Statutes, as amended by this Act.”
Sec. 9, That the first paragraph o f action 9 o f the Federal
Reserve Act, as amended, be amended sp tut to read as follows:
“ Sec. 9. Any hank incorporated by special law o i any State, or
organized under the general laws o f any State or of the United
States, desiring to become a member o f th» Federal reserve system,
may make application to the Federal Reserve Board, under such
rules and regulations as it may prescribe, for th» right to subscribe
to the stock o f the Federal reserve bank organized within the district
in which the applying' bank is located, Such application shall be
for the same amount of stock that the applying bank would be
required to subscribe to as a national bank. The. Federal Reserve
Roard* subject to the provisions o f this Act and to such conditions
as it may prescribe pursuant thereto niuy permit the applying bank
to become a stockholder o f such Federal reserve bank.
“ Any such State bank which, at the date of the approval of this
Act, has established and is operating a branch or branches in
conformity with the State law, may retain and- operate the same
while remaining, or upon becoming a stockholder o f such Federal
reserve bank; but no such State bank may retain or acquire stock
in a Federal reserve bank except upon relinquishment o f any branch
or branches established after the date of the approval of this Act
beyond the limits of the city, town, or village in which the parent
bank is situated,”
S ec. 10, That section 5200 of the Revised Statutes of the United
States, as amended, be amended to read a? follows:
u S ec, 5200. The total obligations to any national banking associa­
tion o f any person, copartnership, association, or corporation shall
at no time exceed 10 per centum o f the amount of the capital stock
of such association actually paid in and unimpaired and 10 per
centum of its unimpaired surplus fund. The te m ‘ obligations ’
shall mean the direct liability of the maker or acceptor of paper
discounted with or sold to such association and the liability o f the
indorser, drawer, or guarantor who obtains a loan from or discounts
paper with or sells paper under tiis guaranty to such association
and shall include in the case o f obligations of a copartnership or
association the obligations of the several members thereof. Sueh
limitation o f 10 per centum shall be subject to the following
exceptions:
“ (1) Obligations in the form of drafts or bills of exchange
drawn in good faith against actually existing values shall not be
subject under this section to any limitation based upon such capital
and surplus.
“ (2) Obligations arising out o f the discount o f commercial or
business paper actually owned by the person, copartnership, associa­
tion, or corporation negotiating the same shall not be subject under
this section to any limitation based upon such capital and surplus.




IPmlMJ

7

“ (8) Obligations drawn in good faith against actually existing
value* and secured by goods or commodities in process o f shipment
shall not be subject under tliia section to any limitation based upon
•uch capital and surplus.
“ (4) Obligations as indorwr or guarantor o f notes, other than
commercial or business paper excepted under (2) hereof, having a
maturity o f not more than six months, and owned by the person,
Corporation, association, or copartnership indorsing and negotiating
the same, shall be subject under this section to a limitation o f 15
per centum of such capital and surplus in addition to such 10 per
centum of such capital and surplus.
“ (5) Obligations in the form of banker’s acceptances of other
banks of the kind described in section 18 of the Federal Reserve
Act, shall not be subject under this section to any limitation based
upon such capital and surplus*
“ (6) Obligations o f any person, copartnership, association or
corporation, in the form o f notes or drafts secured by shipping
documents, warehouse receipts or other such documents transferring
pr securing title covering readily marketable nonpenshable staples
when such property is fully covered by insurance, if it is customary
to insure such staples, shall be subject under this seetion to a limita­
tion o f 15 per centum of such capital and surplus in addition to
such 10 per centum o f such capital and surplus when the market
value of such staples securing such obligation is not at any time less
than 115 per centum of the face amount of such obligation, and to an
additional increase o f limitation of 5 per centum of such capital and
surplus in addition to such 25 per centum of such capital and surplus
when the market value o f such staples securing such additional
obligation is not at any time less than 120 per centum of the face
amount of such additional obligation, and to a further additional
increase of limitation of 5 per centum of such capital and surplus
in addition to such 30 per centum of such capital and surplus
when the market value of such staples securing such additional
obligation is not at any time less than 125 per centum of the face
amount of such additional obligation, and to a further additional
increase of limitation o f 5 per centum of such capital and surplus
in addition to such 35 per centum of such capital and surplus when
the market value o f such staples securing sucn additional obligation
is not at any time less than 130 per centum of the face amount of such
additional obligation, and to a further additional increase of limita­
tion of 5 per centum of such capital and surplus in addition to such
40 per centum of such capital and surplus when the market value
of such staples securing such additional, obligation is not at any
time less than 135 per centum of the face amount of such additional
obligation, and to a further additional increase of limitation of
5 per centum of such capital and surplus in addition to such 45
per centum of such capital and surplus when the market value of
such staples securing such additional obligation
not at any time
less than 140 per centum of the face amount of such additional
obligation, but this exception shall not apply to obligations of any
one person* copartnership, association or corporation arising from
the same transactions and/or secured upon the identical staples for
more than ten months.




8

“ (7) Obligations of any person, copartnership, association, or
corporation in the forip of notes or drafts secured bv shipping
documents or instruments transferring or securing title covering
livestock or giving a lien on livestock when the market value ox
the livestock securing the obligation is not at any time less than
115 per centum of the face amount of the notes covered by such
documents shall be subject under this section to a limitation of
15 per centum of such capital and surplus in addition to such 10
per centum of such capital and surplus.
“ (8) Obligations of any person, copartnership, association, ^or
corporation m the form of notes secured by not less than a like
amount of bonds or notes of the United States issued since April
24, 1917, or certificates of indebtedness of the United States, snail
(except to the extent permitted by rules and regulations prescribed
by the Comptroller of the Currency, with the approval of the
Secretary or the Treasury) be subject under this section to a
limitation of 15 per centujpi of such capital and surplus in addition
to such 10 per centum of such capital and surplus.”
S ec. 11. That section 5202 of the Revised Statutes of the United
States as amended be amended by adding at the end thereof a new
paragraph to read as follows:
“ Eighth. Liabilities incurred under the provisions of section 202
of Title II of the Federal Farm Loan Act, approved July 17, 1916,
as amended by the Agricultural Credits Act or 1923.”
Seo. 12. That section 5208 of the Revised Statutes of the United
States as amended be amended by striking out the words “ or who
shall certify a check before the amount thereof shall have been
regularly entered to the credit of the drawer upon the books of the
bank,” and in lieu thereof inserting the following: “ or who shall
certify a check before the amount thereof shall have been regularly
deposited in the bank by the drawer thereof,” so that the section
as amended shall read as follows:
“ S eo. 5208. It shall be unlawful for any officer, director, agent,
or employee of any Federal reserve bank, or any member bans as
defined in the Act. of December 23, 1913, known as the Federal
Reserve Act, to certify any check drawn upon such Federal reserve
bank or member bank unless the person, firm, or corporation drawing
the (‘heck has on deposit with such Federal reserve bank or member
bank, at the time such check is certified, an amount of money not
less than the amount specified in such check. Any check so
certified by a duly authorized officer, director, agent, or employee
shall be a good and valid obligation against such Federal reserve
bank or member bank; but the act of any officer, director, agent, or
employee of any such Federal reserve bank or member bank in
violation of this section shall, in the discretion of the Federal
Reserve Board, subject such Federal reserve bank to the penalties
imposed by section 11, subsection (h) of the Federal Reserve Act,
and shall subject such member bank, if a national bank, to
the liabilities and proceedings on the part of the Comptroller of
the Currency provided for in section 5234, Revised Statutes,
and shall, in the discretion of the Federal Reserve Board, sub­
ject any other member bank to the penalties imposed by section 9
ol* said Federal Reserve Aet for the violation of any of the provi-




•tow of rtrfd Act. Any ofllcor, director, agent, or employee of any
SeAw*! reserve bank or member tank who snail willfully violate
lb* provisions of this weetion, or who shfltll resort to any device,
or'*eeelv« any fictitious obligation, directly or collaterally, in order
to •vide the provMons thereof, or who shall certify a check
%e#ord the amount thereof ahall have been regularly deposited in tho
bank by the drawer thereof, shall be deemed guilty of a misdemeanor
and ctMli, on conviction thereof in any district court of the United
States, be fined not more than $5,00(), or shall be imprisoned for not
more than five years, or both, in the discretion o f tne court.”
Sw. 18. That section 5211 of the Revised Statutes of the United
IStfttea as amended be amended to read as follows:
*8 »c. 5211. Every association shall make to the Comptroller of
the Currency not leas than three reports during each year, according
to the form which may be prescribed by him, verified by the oath or
affirmation o f the president, or of the cashier, or of a vice president,
Or of an assistant cashier o f the association designated by its board
of directors to verify such reports in the absence of the president
and cashier, taken before a notary public properly authorised find
■commissioned by the State in which such notary resides and tho
association is located, or any other officer having an official seal,
anthomed in such State to administer oaths, ana attested by the
signature of at least three of the directors. Each such report shall
exhibit, in detail and under appropriate heads, the resources and
liabilities of the association at the close o f business on any past day
by him specified, and shall be transmitted to the comptroller within
five days after the receipt of a request or requisition therefor from
him; and the statement of resources and liabilities, together with
acknowledgment and attestation in the same form in which it is
made to the comptroller, shall be published in a newspaper published
in the place where such association is established, or if there is rio
newspaper in the place, then in the one published nearest thereto in
the same county* at the expense of the association; and such proof
o f publication shall be furnished as may be required by the comp­
troller. The comptroller shall also have power to calf for special
reports from any particular association whenever in his judgment
th® same are necessary in order to obtain a full and complete
knowledge of its condition.”
Sec. 15. That section 22 of the Federal Reserve Act, subsection
(a), paragraph 2 thereof, be amended to read as follows:
“ (a) No member bank and no officer, director, or employee thereof
shall hereafter make any loan or grant any gratuity to any bank
examiner. Any bank officer, director, or employee violating this
provision dhall lie deemed guilty o f a misdemeanor and shall bo
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.
“ Any examiner Or assistant examiner who shall accept a loan or
gratuity from any bank examined by him, or from an officer,
director, or employee thereof, or who shall steal, or unlawfully take,
or unlawfully conceal any money, note, draft, bond, or security or
any other property of value in the possession of any memt>or bank or
from any safe deposit box in or adjacent to the" premises of such


http://fraser.stlouisfed.org/
Federal Reserve Bank
of St. Louis
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bank, shall be deemed guilty o f a misdemeanor and Bfrall, upon
conviction thereof m any district court of the United States, be
imprisoned for not exceeding one year, or fined not more than
$5,000, or both, and may be fined a farther sum equal to the money
so loaned, gratuity given, or property stolen, and shall forever
thereafter be disqualified from holding office as a national bank
examiner.”
Sec. 16. That section 24 of the Federal Reserve Act be amended
to read as follows:
“ Sec. 24. Any national banking association may make loans
secured by first lien upon improved real estate, including improved
farm land, situated within its Federal reserve district or within a
radius of one hundred miles of the place in which such bank is
located, irrespective of district lines. A loan secured by real estate
within the meaning of this section shall be in the form o f an
obligation or obligations secured by mortgage, trust deed, or other
such instrument upon real estate when the entire amount o f such
obligation or obligations is made or is sold to such association. The
amount of any-such loan shall not exceed 50 per centum o f the
actual value of the real estate offered for security, but. no such loan
upon such security shall be made for a longer term- than five years.
Any such bank may make such loans in an aggregate sum including
in such aggregate any such loans on which it is liable as indorser or
guarantor or otherwise equal to 25 per centum of the amount o f the
capital stock of such association actually paid in and unimpaired
and 25 per centum of its unimpaired surplus fund, or to one-half
of its savings deposits, at the election of the association, subject to
the general limitation contained in section 5200 of the Revised
Statutes of the United States. Such banks may continue hereafter
as heretofore to receive time and savings deposits and to pay
interest on the same, but the rate of interest which such banks
may pay upon suoh time deposits or upon savings or other deposits
shall not exceed the maximum rate authorized by law to be
paid upon 6uch deposits by State banks or trust companies organized
under the laws o f the State wherein such national banking association
is located.”
Seo. 16. That section 5139 of the Revised Statutes o f the United
States be amended by inserting in the first sentence thereof the
following words: ‘‘ or into shares o f such less amount as may be
provided in the articles: o f association ” so that the section as amended
shall read as follows:
“ Sec. 5139. The capital stock of each association shall be divided
into shares of $100 each, or into shares o f such less amount as may
be provided in the articles of association, and be deemed personal
property, and transferable on the books of the association in such
manner as may be prescribed in the by-laws or articles of association.
Every person becoming a shareholder by such transfer shall, in
proportion to his shares, succeed to all rights and liabilities of the
prior holder of such shares; and no change shall be made in the
articles of association by which the rights, remedies, or security of
the existing creditors of the association snail be impaired.”
S f.c . 17. That section 5146 of the Revised Statutes of the United
States as amended be amended b y inserting in lieu of the second




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sentence thereof the follow ing: “ Evenr director must, own in his
own right shares o f the capital stock o f the association o f which he
is a director the aggregate par value o f which shall not be less than
$1,000, unless the capital o f the bank shall not exceed $25,000 in
which case he must own in his own right shares o f such capital
stock the aggregate value o f which shall not be less than $500,” so
that the section as amended shall read as follows:
a S ec. 5146. Every director must during his whole term of serv­
ice, be a citizen o f the United States, and at least three-fourths of
the directors must have resided in the State, Territory, or District
in which the association is located, or within fifty miles of the loca­
tion o f the office o f the association, for at least one year immediately
preceding their election, and must be residents of such State or
within a fifty-mile territory of the location o f the association during
their continuance in office. Every director must own in his own
right shares o f the capital stock o f the association of which he is a
director the aggregate par value of which shall not be less than
$1,000, unless the capital of the bank shall not exceed $25,000 in
which case he must own in. his own right shares of such capital stock
the aggregate par value of which shall not be less than $500. Any
director who ceases to be the owner o f the required number of shares
o f the stock, or who becomes in any other manner disqualified, shall
thereby vacate his place.”
S kc. 18. That the second subdivision o f the fourth paragraph o f
section 4 o f the Federal Reserve Act be amended to read as follows:
“ Second. To have succession after the approval o f this Act until
dissolved bv Act o f Congress or until forfeiture o f franchise for
violation o f law.”
Sec. 19. That section 3 o f the Federal Reserve Act, as amended,
is further amended by adding at the end thereof the following:
44The Federal Reserve Board may at any time require any Federal
Reserve Bank to discontinue any "branch o f such Federal Reserve
Bank established under this section. The Federal IWerve Bank
shall thereupon proceed to wind up the business of such branch bank,
subject to such rules and regulations as the Federal Reserve Board
may prescribe.”
Approved, February 25, 1927.