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63 d CONGRESS : : 2 d SESSION
DECEMBER 1, 1913-O C T O B E R 24, 1914
HOUSE REPORTS
( P UB L I C )
V ol.4
WASHINGTON
:
:
GOVERNMENT
PRINTING
OFFICE
:
:
1913
CONGRESS)
63b 1
M ' Session
f
HOUSE OF REPRESENTATIVES
R eport
No.
163
REPORT OF THE
COMMITTEE OF CONFERENCE
OF THE TWO HOUSES OF CONGRESS
ON THE BILL
H. R. 7837
TO PROVIDE FOR THE ESTABLISHMENT OF FEDERAL RESERVE BANKS, TO
FURNISH AN ELASTIC CURRENCY, TO AFFORD MEANS OF REDIS
COUNTING COMMERCIAL PAPER, TO ESTABLISH A MORE
EFFECTIVE SUPERVISION OF BANKING IN THE
UNITED STATES, AND FOR OTHER PURPOSES
SIXTY-THIRD CONGRESS, SECOND SESSION
PRESENTED BY MR. GLASS
DECEMBER 22, 1913.— Ordered to be printed
WASHINGTON
GOVERNMENT PRINTING OFFICE
1913
63d C on gress \
2d Session
HOUSE OF REPRKSENTATIVKS
f
f
Report
I
No. 163
BANKING AND CURRENCY BILL.
D ecem ber
22, 1913.—Ordered to be printed.
Mr. G la s s , from the com m ittee o f con feren ce su bm itted the follow in g
CONFERENCE REPORT:
[To accompany H. R. 7837.]
The committee of conference on the disagreeing votes of the two
Houses on the amendment of the Senate to the bill (II. 11. 7837) to
provide for the establishment of Federal reserve banks, to furnish an
elastic currency, to afford means of rediscounting commercial paper,
to establish a more effective supervision of banking in the United
States, and for other purposes, having met, after full and free confer
ence have agreed to recommend and do recommend to their respective
Houses as follows:
That the House recede from its disagreement to the amendment of
the Senate and agree to the same with an amendment as follows:
In lieu of the amendment proposed by the Senate insert the following:
B e it enacted by the Senate and House o f Representatives o f the United
States o f America in Congress assembled, That the short title of this
Act shall be the ' ‘Federal Reserve Act.”
Wherever the word “ bank” 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 bank” and “ national banking association”
used in this Act shall be held to be synonymous and interchangeable.
The term “ member bank” shall be held to mean any national bank,
State bank, or bank or trust company which has become a member
of one of the reserve banks created by this Act. The term “ board”
shall be held to mean Federal Reserve Board: the term “ district”
shall be held to mean Federal reserve district; the term “ reserve
bank” shall be held to mean Federal reserve bank.
FEDERAL RESERVE DISTRICTS.
S e c . 2. As soon as practicable, the Secretary of the Treasury, the
Secretary of Agriculture and the Comptroller of the Currency, act
ing as “ The Reserve Bank Organization Committee,” shall designate
l
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 bo 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 may be readjusted and new
districts may from time to time bo created by the Federal Reserve
Board, not to exceed twelve in all. Such districts shall be known as
Federal reserve districts and may be designated by number. A ma
jority of the organization committee shall constitute a quorum with
authority to act.
Said organization committee shall be authorized to employ counsel
and expert aid, to take testimony, to send for persons and papers, to
administer oaths, and to make such investigation as may be deemed
necessary by the said committee in determining the reserve districts
and in designating the cities within such districts where such Federal
reserve banks shall bo severally located. The said committee shall
supervise the organization in each of the cities designated of a
Federal reserve bank, which shall include in its title the name of the
city in which it is situated, as “ Federal Reserve Bank of Chicago.”
tJndor 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 resorve districts, every national banking association
within that district shall be required within thirty days after notice
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BACKING a n d c u b r e n o y .
BANKING AND CURRENCY.
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 the Federal Reserve Board, said payments to be in
gold or gold centificates.
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 fail 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 of the Currency in his own name before
the association shall be declared dissolved. In cases of such noncom
pliance or violation, other than the failure to become a member
bank 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 the
organization committee, insufficient to provide the amount of capital
required therefor, then and in that event the said organization com
mittee may, under conditions and regulations to be prescribed by it,
offer to public subscription at par such an amount of stock in said
Federal reserve banks, or any one or more of them, as said committee
shall determine, subject to the same conditions as to payment and
st^ck liability as provided for member banks.
No individual, copartnership, or corporation other than a member
bank of its district shall be permitted to subscribe for or to hold at
any time more than $25,000 par value of stock in any Federal reserve
bank. Such stock shall be known as public stock and may be trans
ferred on the books of the Federal reserve bank by the chairman of
the board of directors of such bank.
Should the total subscriptions by banks and the public to the stock
of said Federal reserve banks, or any one or more of them, be, 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 held by the Secretary
of the Treasury and disposed of 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 expenses 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 by 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 O FFICES.
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 have 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 saia directors shall
be selected by the reserve bank and three by the Federal Reserve
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BANKING AND CURRENCY.
BANKING AND CURRENCY.
Board, and they shall hold office during the pleasure, respectively,
of the parent bank arid the Federal Reserve Board. The reserve
bank shall designate one of the directors as manager.
Second. To have succession for a period of twenty years from its
organization unless it is sooner dissolved by an Act of Congress, or
unless its franchise becomes forfeited by some violation of law.
Third. To make contracts.
Fourth. To sue and be sued, complain and defend, in any court of
law or equity.
Fifth. To appoint by its board of directors, such officers and emplo}rees as are not otherwise provided for in this Act, to define their
duties, require bonds of them and fix the penalty thereof, and to dis
miss at pleasure such officers or employees.
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, and 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 and 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 manner provided by existing
law relating to national banks, to receive from the Comptroller of the
Currency circulating notes in blank, registered and countersigned as
provided by law, equal in amount to the par value of the bonds so
deposited, 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
capital stock of such Federal reserve bank.
But no Federal reserve bank shall transact any business except such
as is incidental and necessarily preliminary to its organization until it
has been authorized by the Comptroller of the Currency to commence
business under the provisions of this Act.
Every Federal reserve bank shall be conducted under the 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 such duties as
are prescribed by law.
Said board shall administer the affairs 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 of law and the orders
of the Federal Reserve Board, extend to each member bank such dis
counts, advancements and accommodations as may be safely and
reasonably made with due regard for the claims and demands of other
member banks.
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.
FEDERAL RESERVE B A N K S.
S e c . 4. When the organization committee shall have established
Federal reserve districts as provided in section two of this Act, a
certificate shall be filed with the Comptroller of the Currency showing
the geographical limits of such districts and the Federal reserve city
designated in each of such districts. The Comptroller of the 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 by the organization committee which may apply therefor, an
application blank in form to be approved by the organization com
mittee, which blank shall contain a resolution to be adopted by the
board of directors of each bank executing such application, author
izing a subscription to the capital stock of the Federal reserve bank
organizing in that district in accordance with the provisions of this
Act.
When the minimum amount of capital stock prescribed by this
Act for the organization of any Federal reserve bank shall have been
subscribed and allotted, the organization committee shall designate
any five banks of those whoso applications have been received, to
execute a certificate of organization, and thereupon the banks so
designated shall, under their seals, make an organization certificate
which shall specifically state the name of such Federal reserve bank,
the territorial extent of the district over which the operations of such
Federal reserve bank are to be carried on, the city and State in which
said bank is to be located, the amount of 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 by each, and the
fact that the certificate is made to enable those banks executing
same, and all banks which have subscribed or may thereafter subscribe
to the capital stock of such Federal reserve bank, to avail themselves
of the advantages of this Act.
The said organization certificate shall be acknowledged before a
judge of some court of record or notary public; and shall be, together
with the acknowledgment thereof, authenticated by the seal of 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 become a
body corporate and as such, and in the name designated in such
organization certificate, shall have power—
First. To adopt and use a corporate seal.
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BANKING AND CURRENCY.
BANKING AND CURRENCY.
Class A shall consist of three members, who shall be chosen by and
be representative of the stock-holding banks.
Class B shall consist of three members, who at the time of their
election shall be actively engaged in their district in commerce, agri
culture or some other industrial pursuit.
Class C shall consist 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. Pending the designation of such chairman, the
organization committee shall exercise the powers and duties apper
taining to the office of chairman in the organization of such Federal
reserve bank.
No Senator or Representative in Congress shall be a member of the
Federal Reserve Board or an officer or a director of a Federal re
serve bank.
No director of class B shall be an officer, director, or employee of
any bank..
No director of class C shall be an officer, director, employee, or
stockholder of any bank.
Directors of class A and class B shall be chosen in the following
manner:
The chairman of the board of directors of the Federal reserve bank
of the district in which the bank is situated or, pending the appoint
ment of such chairman, the organization committee shall classify the
member banks of the district into three general groups or divisions.
Each group shall contain as nearly as may be one-third of the aggre
gate number of the member banks of the district and shall consist, as
nearly as may be, of banks of similar capitalization. The groups shall
be designated by 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 by ballot a district reserve
elector and shall certify his name to the chairman of the board of
directors of the Federal reserve bank of the district. The chairman
shall make lists of the district reserve electors thus named by banks
in each of the aforesaid three groups and shall transmit one list to each
elector in each group.
Each member bank shall be permitted to nominate to the chair
man one candidate for director of class A and one candidate for
director of class B. The candidates so nominated shall be listed by
the chairman, indicating by whom nominated, and a copy of said list
shall, within fifteen days after its completion, be furnished by the
chairman to each elector.
Every elector shall, within fifteen days after the receipt of the said
list, certify to the chairman his first, second, and other choices of a
director of class A and class B, respectively, upon a preferential bal
lot, on a form furnished by the chairman of the board of directors of
the Federal reserve bank of the district. Each elector shall make a
cross opposite the name of the first, second, and other choices for a
director of class A and for a director of class B, but shall not vote
more than one choice for any one candidate.
Any candidate having a majority of all votes cast in the column
of first choice shall be declared elected. If no candidate have a
majority of all the votes in the first column, then there shall be added
together the votes cast by the electors for such candidates in the
second column and the votes cast for the several candidates in the first
column. If any candidate then have a majority of the electors vot
ing, by adding together the first and second choices, he shall be de
clared elected. If no candidate have a majority of electors voting
when the first and second choices shall have been added, then the
votes cast in the third column for other choices shall be added to
gether in like manner, and the candidate then having the highest
number of votes shall be declared elected. An immediate report of
election shall be declared.
Class C directors shall be appointed by the Federal Reserve Board.
They shall have been for at least two years residents of the district
for which they are appointed, one of whom shall be designated by
said board as chairman of the board of directors of the Federal
reserve bank and as “ Federal reserve agent.” He shall be a person of
tested banking experience; and in addition to his duties as chairman
of the board of directors of the Federal reserve bank he shall be
required to maintain under regulations to be established by the
Federal Reserve Board a local office of said board on the
premises of the Federal reserve bank. He shall make regular
reports to the Federal Reserve Board, and shall act as its official
representative for the performance of the functions conferred
upon it by this Act. lie shall receive an annual compensation
to be fixed by the Federal Reserve Board and paid monthly by
the Federal reserve bank to which he is designated. One of
the directors of class C, who shall be a person of tested banking
experience, shall be appointed by the Federal Reserve Board as
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 of his principal.
Directors of Federal reserve bants 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 by the respective Federal reserve banks. Any
compensation that may be provided by boards of directors of Federal
reserve banks for directors, officers or employees shall be subject to
the approval of the Federal Reserve Board.
The Reserve Bank Organization Committee may, in organizing
Federal reserve banks, call such meetings of bank directors in the sev
eral districts as may be necessary to carry out the purposes of this
Act, and may exercise the functions herein conferred upon the chair
man of the board of directors of each Federal reserve bank pending
the complete organization of such bank.
At the first meeting of the full board of directors of each Federal
reserve bank, it shall be the duty of the directors of classes A, B and
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BANKING AND CURRENCY.
BANKING AND CURRENCY.
C, respectively, to designate one of the members of each class whose
term of office shall expire in one year from the first of January
nearest to date of such meeting, on*' whose term of office shall expire
at the end of two years from said date, and one whose term of office
shall expire at the end of three years from said date. Thereafter
every director of a Federal reserve bank chosen as hereinbefore pro
vided shall hold office for a term of three years. Vacancies that
may occur in the several classes of directors of Federal reserve banks
may be filled in the manner provided for the original selection of
such directors, such appointees to hold office for the unexpired terms
of their predecessors.
S e c . 6. If any member bank shall be declared insolvent and a
receiver appointed therefor, the stock held by it in said Federal
reserve banK shall be canceled, without impairment of its liability,
and all cash-paid subscriptions on said stock, with one-half of one per
centum per month 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 of the insolvent bank. Whenever
the capital stock of a Federal reserve bank is reduced, either on
account of a reduction in capital stock of any member bank or of the
liquidation or insolvency of such bank, the board of directors shall
cause to be executed a certificate to the Comptroller of the Currency
showing such reduction of capital stock and the amount repaid to
such bank.
stock
is s u e s ;
in c r e a s e
and
d ecrease
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 banks increase their
capital stock and surplus or as additional banks become members,
and may be decreased as member banks reduce their capital stock or
surplus or cease to be members. Shares of the capital stock of
Federal reserve banks owned by member banks shall not be trans
ferred or hypothecated. When a member bank increases its capi
tal stock or surplus, it shall thereupon subscribe for an additional
amount of capital stock of the Federal reserve bank of its district
equal to six per centum of the said increase, one-half of said sub
scription to be paid in the manner hereinbefore provided for original
subscription, and one-half subject to call of the Federal Reserve
Board. A bank applying for stock in a Federal reserve bank at any
time after the organization thereof must subscribe for an amount of
the capital stock of the Federal reserve bank equal to six per centum
of the paid-up capital stock and surplus of said applicant bank, pay
ing therefor its par value plus one-half of one per centum a month
from the period of the last dividend. When 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 of directors shall
cause to be executed a certificate to the Comptroller of the Currency
showing the increase in capital stock, the amount paid in, and by
whom paid. When a 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 of said Federal reserve bank and be released from its stock
subscription not previously called. In either case the shares sur
rendered shall be canceled and the member bank shall receive in
payment therefor, under regulations to be prescribed by the Federal
Reserve Board, a sum equal to its cash-paid subscriptions on the
shares surrendered and one-half of one per centum a month from the
period of the last dividend, not to exceed the book value thereof, less
any liability of such member bank to the Federal reserve bank.
D IVISIO N OF EARNIN GS.
S e c . 7. After 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. After the aforesaid
dividend claims have been fully met, all the net earnings shall be
paid to the United States as a franchise tax, except that one-half of
such net earnings shall be paid into a surplus fund until it shall
amount to forty per centum of the paid-in capital stock of such
bank.
The net earnings derived by the United States from Federal reserve
banks shall, in the discretion of the Secretary, be used to supplement
the gold reserve held against outstanding United States notes, or shall
be applied to the reduction of the outstanding bonded indebtedness of
the United States under regulations to be prescribed by the Secre
tary of the Treasury. Should a Federal reserve bank be dissolved
or go into liquidation, any surplus remaining, after the payment of all
debts, dividend requirements as hereinbefore provided, and the par
value of the stock, shall be paid to and become the property of the
United States and shall be similarly applied.
Federal reserve banks, including the capital stock and surplus
therein, and the income derived therefrom shall be exempt from
Federal, State, and local taxation, except taxes upon real estate.
S e c . 8. Section fifty-one hundred and fifty-four, United States
Revised Statutes, is hereby amended to read as follows:
Any bank incorporated by special law of any State or of the
United States or organized under the general laws of any State or of
the United States and having an unimpaired capital sufficient to
entitle it to become a national banking association under the pro
visions of the existing laws may, by the vote of the shareholders
owning not less than fifty-one per centum of the capital stock of
such bank or banking association, with the approval of the Comp
troller of the Currency be converted into a national banking associ
ation, with any name approved by the Comptroller of the Currency:
Provided, however, That said conversion shall not be in contravention
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BANKING AND CURRENCY.
BANKING AND CURRENCY.
of the State law. In such case the articles of association and organi
zation certificate may be executed by a majority of the directors of
the bank or banking institution, and the certificate shall declare that
the owners of fifty-one per centum of the capital stock have author
ized the directors to make Sich certificate and to change or convert
the bank or banking institution into a national association. A ma
jority of the directors, after executing the articles of association and
the organization certificate, shall have power to execute all other
papers and to do whatever may be required to make its organization
perfect and complete as a national association. The shares of any
such bank may continue to be for the same amount each as they
were before the conversion, and the directors may continue to be
directors of the association until others are elected or appointed in
accordance with the provisions of the statutes of the United States.
When the comptroller has given to such bank or banking association
a certificate that the provisions of this Act have been complied with,
such bank or banking association, and all its stockholders, officers,
and employees, shall have the same powers and privileges, and shall
be subject to the same duties, liabilities, and regulations, in all re
spects, as shall have been prescribed by the Federal Reserve A ct and
by the national banking Act for associations originally organized as
national banking associations.
entitle it to become a national banking association in the place where
it is situated, under the provisions of the national banking Act.
Any bank becoming a member of a Federal reserve bank under the
provisions of this section shall, in addition to the regulations and
restrictions hereinbefore provided, be required to conform to the
>rovisions of law imposed on the national banks respecting the
imitation of liability which may be incurred by any person, film, or
corporation to such banks, the prohibition against making purchase
of or loans on stock of such banks, and the withdrawal or impairment
of capital, or the payment of unearned dividends, and to such rules
and regulations as the Federal Reserve Board may, in pursuance
thereof, prescribe.
Such banks, and the officers, agents, and employees thereof, shall
also be subject to the provisions of and to the penalties prescribed
by sections fifty-one hundred and ninety-eight, fifty-two hundred,
fifty-two hundred and one, and fifty-tw;o hundred and eight, and
fifty-two hundred and nine of the Revised Statutes. The member
banks shall also be required to make reports of the conditions and
of the payments of dividends to the comptroller, as provided in
sections fifty-two hundred and eleven and fifty-two hundred and
twelve of the Revised Statutes, and shall be subject to the penalties
prescribed by section fifty-two hundred and thirteen for the failure
to make such report.
If at any time it shall appear to the Federal Reserve Board that a
member bank has failed to comply with the provisions of this section
or the regulations of the Federal Reserve Board, it shall be within the
power of the said board, after hearing, to require such bank to sur
render its stock in the Federal reserve bank; upon such surrender the
Federal reserve bank shall pay the cash-paid subscriptions to the said
stock with interest at the rate of one-half of one per centum per
month, computed from the last dividend, if earned, not to exceed
the book value thereof, less any liability to said Federal reserve bank,
except the subscription liability not previously called, which shall be
canceled, and said Federal reserve bank shall, upon notice from the
Federal Reserve Board, be required to suspend said bank from further
privileges of membership, and shall within thirty days of such notice
cancel and retire its stock and make payment therefor in the manner
herein provided.
The Federal Reserve Board may restore membership upon due
proof of compliance with the conditions imposed by this section.
STATE BAN K S AS MEMBERS.
S e c . 9. Any bank incorporated by special law of any State, or
organized under the general laws of any State or of the United
States, may make application to the reserve bank organization
committee, pending organization, and thereafter to the Federal
Reserve Board for the right to subscribe to the stock of 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
it may prescribe, subject to the provisions of this section, may
permit the applying bank to become a stockholder in the Federal
reserve bank of the district in which the applying bank is located.
Whenever the organization committee or the Federal Reserve Board
shall permit the applying bank to become a stockholder in the Federal
reserve bank of the district, stock shall be issued and paid for under
the rules and regulations in this Act provided for national banks
which become stockholders in Federal reserve banks.
The organization committee or the Federal Reserve Board shall
establish by-laws for the general government of its conduct in acting
upon applications made by the State banks and banking associations
and trust companies for stock ownership in Federal reserve banks.
Such by-laws shall require applying banks not organized under
Federal law to comply with the reserve and capital requirements
and to submit to the examination and regulations prescribed by the
organization committee or by the Federal Reserve Board. No ap
plying bank shall be admitted to membership in a Federal reserve
bank unless it possesses a paid-up unimpaired capital sufficient to
!
FE D E R A L R ESE R V E BO ARD .
S e c . 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 shatl be members ex
officio, and five members appointed by the President of the United
States, by and with the advice and consent of the Senate. In
selecting the five appointive members of the Federal Reserve
Board, not more than one of whom shall be selected from any
13
14
BANKING AND CURRENCY.
BANKING AND CURRENCY.
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 of said Board.
The members of said board, the Secretary of the Treasury, the
Assistant Secretaries of the Treasury, and the Comptroller of the Cur
rency shall be ineligible during the time they are in office and for two
years thereafter to hold any office, position, or employment in any
member bank. Of the five members thus appointed by the President
at least two shall be persons experienced in Danking 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 the President as governor and
one as vice governor of the Federal Reserve Board. The governor of
the Federal Reserve Board, subject to its supervision, shall be the
active executive officer. The Secretary of the Treasury may assign
offices in the Department of the Treasury for the use of the Federal
Reserve Board. Each member of the Federal Reserve Board shall
wTithin fifteen days after notice of appointment make and subscribe
to the oath of office.
The Federal Reserve Board shall have power to levy semiannually
upon the Federal reserve banks, in proportion to their capital stock
and surplus, an assessment sufficient to pay its estimated expenses and
the salaries of its members and employees for the half year succeed
ing the levying of such assessment, together with any deficit carried
forward from the preceding half year.
The first meeting of the Federal Reserve Board shall be held in
Washington, District of Columbia, as soon as may be after the passage
of this Act, at a date to be fixed by the Reserve Bank Organization
Committee. The Secretary of the Treasury shall be ex officio chair
man of the Federal Reserve Board. No member of the Federal
Reserve Board shall be an officer or director of any bank, banking
institution, trust company, or Federal reserve bank nor hold stock
in any bank, banking institution, or trust company; and before
entering upon his duties as a member of the Federal Reserve Board
he shall certify under oath to the Secretary of the Treasury that he
has complied with this requirement. Whenever a vacancy shall
occur, other than by expiration of term, among the five members of
the Federal Reserve Board appointed by the President, as above
provided, a successor shall be appointed by the President, with the
advice and consent of the Senate, to fill such vacancy, and when
appointed he shall hold office for the unexpired term of the member
whose place he is selected to fill.
The President shall have power to fill all vacancies that may hap
pen on the Federal Reserve Board during the recess of the Senate, by
granting commissions which shall expire thirty days after the next
session of the Senate convenes.
Nothing in this Act contained shall be construed as taking away
any powers heretofore vested by law in the Secretary of the Treasury
which relate to the supervision, management, and control of the
Treasury Department and bureaus under such department, and wher
ever any power vested by this Act in the Federal Reserve Board or
the Federal reserve agent appears to conflict with the powers of the
Secretary of the Treasury, such powers shall be exercised subject
to the supervision and control of the Secretary.
The Federal Reserve Board shall annually make a full report of
its operations to the Speaker of the House of Representatives, who
shall cause the same to be printed for the information of the Congress.
Section three hundred and twenty-four of the Revised Statutes of
the United States shall be amended so as to read as follows: There
shall be in the Department of the Treasury a bureau charged with
the execution of all laws passed by Congress relating to the issue and
regulation of national currency secured by United States bonds and,
under the general supervision of the Federal Reserve Board, of all
Federal reserve notes, the chief officer of which bureau shall be called
the Comptroller of the Currency and shall perform his duties under
the general directions of the Secretary of the Treasury.
S e c . 11. The Federal Reserve Board shall be authorized and em
powered :
(a) To examine at its discretion the accounts, books and affairs
of each Federal reserve bank and of each member bank and to require
such statements and reports as it may deem necessary. The said
board shall publish once each week a statement showing the condi
tion of each Federal reserve bank and a consolidated statement for all
Federal reserve banks. Such statements shall show in detail the
assets and liabilities of the Federal reserve banks, single and com
bined, and shall furnish full information regarding the character of the
money held as reserve and the amount, nature and maturities of the
aper and other investments owned or held by Federal reserve
anks.
(b) To permit, or, on the affirmative vote of at least five members
of the Reserve Board, to require Federal reserve banks to rediscount
the discounted paper of other Federal reserve banks at rates of in
terest to be fixed by the Federal Reserve Board.
(c) To suspend for a period not exceeding thirty days, and from
time to time to renew such suspension for periods not exceeding
fifteen days, any reserve requirement specified in this Act: Provided,
That it shall establish a graduated tax upon the amounts by which
the reserve requirements of this Act may be permitted to fall below
the level hereinafter specified: And provided further, That when the
gold reserve held against Federal reserve notes falls below forty per
H. Rep. 163, 62-3----- 2
E
15
16
BANKING AND CURRENCY.
BANKING AND CURRENCY.
centum, the Federal Reserve Board shall establish a graduated tax of
not more than one per centum per annum upon such deficiency until
the reserves fall to thirty-two and one-half per centum, and when
said reserve falls below thirty-two and one-half per centum per annum,
a tax at the rate increasingly of not less than one and one-half per
centum per annum upon each two and one-half per centum or
fraction thereof that such reserve falls below thirty-two and onehalf per centum. The tax shall be paid by the reserve bank, but
the reserve bank shall add an amount equal to said tax to the rates
of interest and discount fixed by the Federal Reserve Board.
(d) To supervise and regulate through the bureau under the charge
of the Comptroller of the Currency the issue and retirement of Federal
reserve notes, and to prescribe rules and regulations under which such
notes may be delivered by the comptroller to the Federal reserve
agents applying therefor.
(e) To add to the number of cities classified as reserve and central
reserve cities under existing law in which national banking associa
tions are subject to the reserve requirements set forth in section
twenty of this Act; or to reclassify existing reserve and central
reserve cities or to terminate their designation as such.
( f ) To suspend or remove any officer or director of any Federal
reserve bank, the cause of such removal to be forthwith communi
cated in writing by the Federal Reserve Board to the removed officer
or director and to said bank.
(g) To require the writing off of doubtful or worthless assets upon
the books and balance sheets of Federal reserve banks.
(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.
(j) To exercise general supervision over said Federal reserve banks.
(k) 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.
(1) To employ such attorneys, experts, assistants, clerks, or other
employees as may be deemed necessary to conduct the business of
the board. All salaries and fees shall 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,
page four hundred and three), and amendments thereto, or any rule
orregulation made in pursuance thereof.: Provided, That nothing herein
shall prevent the President from placing said employes in the classi
fied service.
FED E R A L AD VISO RY COUNCIL.
S e c . 12. There is hereby created a Federal Advisory Council,
which shall consist of as many members as there are Federal reserve
districts. Each Federal reserve bank by its board of directors shall
annually select from its own Federal reserve district one member of
said council, who shall receive such compensation and allowances as
may be fixed by his board of directors subject to the approval of the
Federal Reserve Board. The meetings of said advisory council shall
be held at Washington, District of Columbia, at least four times each
year, and oftener if called by the Federal Reserve Board. The
council may in addition to the meetings above provided for hold such
other meetings in Washington, District of Columbia, or elsewhere, as
it may deem necessary, may select its own officers and adopt its own
methods of procedure, and a majority of its members shall constitute
a quorum for the transaction of business. Vacancies in the council
shall be filled by the respective reserve banks, and members selected
to fill vacancies, shall serve for the unexpired term.
The Federal Advisory Council shall have power, by itself or tfrrougii
its officers, (1) to confer directly with the Federal Reserve Board on
general business conditions; (2) to make oral or written representa
tions concerning matters within the jurisdiction of said board: (3) to
call for information and to make recommendations in regard to
discount rates, rediscount business, note issues, reserve conditions in
the various districts, the purchase and sale of gold or securities by
reserve banks, open-market operations by said banks, and the general
affairs of the reserve banking system.
POW ERS OF F E D E R A L R ESER VE BA N K S.
S e c . 13. Any Federal reserve bank may' 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 member banks, payable upon presen
tation; or, solely for exchange purposes, may receive from other
Federal reserve banks deposits of current funds in lawful money,
national-bank notes, or checks and drafts upon solvent member or
other Federal reserve banks, payable upon presentation.
Upon the indorsement of any of its member banks, with a waiver of
demand, notice and protest by such bank, any Federal reserve bank
may discount notes, drafts, and bills of exchange arising out of actual
commercial transactions; that is, notes, drafts, and bills of exchange
issued or drawn for agricultural, industrial, or commercial purposes,
or the proceeds of which have been used, or are to be used, for such
purposes, the Federal Reserve Board to have the right to determine
or define the character of the paper thus eligible for discount, within
17
18
BANKING AND CUBBENCY.
BANKING AND CURRENCY.
the meaning of this Act. Nothing in this Act contained shall be
construed to prohibit such notes, drafts, and bills of exchange, secured
by staple agricultural products, or other goods, wares, or merchandise
from being eligible for such discount; but such definition shall not
include notes, drafts, or bills covering merely investments or issued
or drawn for the purpose of carrying or trading in stocks, bonds, or
other investment securities, except bonds and notes of the Govern
ment of the United States. Notes, drafts, and bills admitted to dis
count under the terms of this paragraph must have a maturity at
the time of discount of not more than ninety days: Provided, That
notes, drafts, and bills drawn or issued for agricultural purposes or
based on live stock and having a maturity not exceeding six months
may be discounted in an amount to be limited to a percentage of the
capital of the Federal reserve bank, to be ascertained and fixed by the
Federal Reserve Board.
Any Federal reserve bank may discount acceptances which are
based on the importation or exportation of goods and which
have a maturity, at time of discount of not more than three
months, and indorsed by at least one 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 redis
counts 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 way
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 h j the association.
Third. Bills of exchange or drafts drawn against money actually
on deposit to the credit of the association, or due thereto.
Fourth. Liabilities to the stockholders of the association lor
dividends and reserve profits.
Fifth. Liabilities incurred under the provisions of the Federal
Reserve Act.
The rediscount by any Federal reserve bank of any bills receivable
and of domestic and foreign bills of exchange, and of acceptances
authorized by this Act, shall be subject to such restrictions, limita
tions, and regulations as may be imposed by the Federal Reserve
Board.
O PE N -M ARK E T O PERATIO N S.
S e c . 14. Any Federal reserve bank may, under rules and regula
tions prescribed by the Federal Reserve Board, purchase and sell in
the open market, at home or abroad, either from or to domestic or
foreign banks, firms, corporations, or individuals, cable transfers and
bankers’ acceptances 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 of assured revenues by any State, county, district, political
subdivision, or municipality in the continental United States, includ
ing irrigation, drainage and reclamation districts, such purchases to
be made in accordance with rules and regulations 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,
and 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 run and which bear the signature of two
or more responsible parties.
GOVERNMENT DEPOSITS.
S e c . 15. The moneys held in the general fund of the Treasury,
except the five per centum fund for the redemption of outstanding
19
BANKING AND CURRENCY.
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 o f the United States; and the revenues of the Government or
any part thereof may be deposited in such banks, and disbursements
may be made by checks drawn against such deposits.
No public funds of the Philippine Islands, or of the postal savings,
or any Government funds, shall be deposited in the continental United
States in any bank not belonging to the system established by this Act:
Provided, however, That nothing in this Act shall be construed to deny
the right of the Secretary of the Treasury to use member banks as
depositories.
note
is s u e s .
S e c . 16. Federal reserve notes, to be issued at the discretion of the
Federal Reserve Board for the purpose of making advances to Federal
reserve banks through the Federal reserve agents as hereinafter set
forth and for no other purpose, are hereby authorized. The said notes
shall be obligations of the United States and shall be receivable by all
national and member banks and Federal reserve banks and for all
taxes, customs, and other public dues. They shall be redeemed in
gold on demand at the Treasury Department of the United States, in
the city of Washington, District of Columbia, or in gold or lawful
money at any Federal reserve bank.
Any Federal reserve bank may make application to the local
Federal reserve agent for such amount of the Federal reserve notes
hereinbefore provided for as it may require. Such application shall
be accompanied with a tender to the local Federal reserve agent of
collateral in amount equal to the sum of the Federal reserve notes thus
applied for and issued pursuant to such application. The collateral
security thus offered shall be notes and bills, accepted for rediscount
under the provisions of section thirteen of this Act, and the Federal
reserve agent shall each day notify the Federal Reserve Board of all
issues and withdrawals of Federal reserve notes to and bv 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
reserve agent. Notes so paid out shall bear upon their faces a
distinctive letter and serial number, which snail be assigned
by the Federal Reserve Board to each Federal reserve bank. When
ever Federal reserve notes issued through one Federal reserve bank
shall be received by 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
b a n k in g
and
currency.
20
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
presented for redemption at the Treasury of the United States shall
be paid out of the redemption fund and returned to the Federal
reserve banks through which they were originally issued, and there
upon such Federal reserve bank shall, upon demand of the Secretary
of the Treasury, reimburse such redemption fund in lawful money
or, if such 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
hereinafter provided and returned to the reserve bank through which
they were originally issued, or they may be returned to such bank
for the credit of the United States. Federal reserve notes unfit for
circulation shall be returned by the Federal reserve agents to the
Comptroller of the Currency for cancellation and destruction.
The Federal Reserve Board shall require each Federal reserve bank
to maintain on deposit in the Treasury of the United States a sum in
gold sufficient in the judgment of the Secretary of the Treasury for
the redemption of the Federal reserve notes issued to such
bank, but in no event less than five per centum; but such de
posit of gold shall be counted and included as part of the forty per
centum reserve hereinbefore required. The board shall have the
right, acting through the Federal reserve agent, to grant in whole
or in part or to reject entirely the application of any Federal
reserve bank for Federal reserve notes; but to the extent that such
application may be granted the Federal Reserve Board shall, through
its local Federal reserve agent, supply Federal reserve notes to the
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-Federal
reserve agent, its Federal reserve notes, gold, gold certificates, or
lawful money of the United States. Federal reserve notes so depos
ited shall not be reissued, except upon compliance with the conditions
of an original issue.
The Federal reserve agent shall hold such gold, gold certificates, or
lawful money available exclusively for exchange for the outstanding
Federal reserve notes when offered by the reserve bank of which he is
21
22
BANKING AND CURRENCY.
BANKING AND CURRENCY.
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 shall bear the
distinctive numbers of the several Federal reserve banks through
which they are issued.
When such notes have been prepared, they shall be deposited in
the Treasury, or in the subtreasury or mint of the United States
nearest the place of business of 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 for 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
by the Federal reserve banks, and the Federal Reserve Board shall
include in its estimate of expenses levied against the Federal reserve
banks a sufficient amount to cover the expenses herein provided for.
The examination of plates, dies, bed pieces, and so forth, and
regulations relating to such examination of plates, dies, and so forth,
of national-bank notes provided for in section fifty-one hundred and
seventy-four Revised Statutes, is herbey extended to include notes
herein provided for.
Any appropriation heretofore made out of the general funds of
the Treasury for engraving plates and dies, the purchase of distinc
tive paper, or to cover any other expense in connection with the
printing of national-bank notes or notes provided for by the Act of
May thirtieth, nineteen hundred and eight, and any distinctive paper
that may be on 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 to
reimburse the United States for any expenses incurred in printing
and issuing circulating notes.
Every Federal reserve bank shall receive on deposit at par from mem
ber banks or from Federal reserve banks checks and drafts drawn upon
any of its depositors, and when remitted by a Federal reserve bank,
checks and drafts drawn by any depositor in any other Federal
reserve bank or member bank upon funds to the credit of said deposi
tor in said reserve bank or member bank. Nothing herein contained
shall be construed as prohibiting a member bank from charging its
actual expense incurred in collecting and remitting funds, or for
exchange sold to its patrons. The Federal Reserve Board shall, by
rule, fix the charges to be collected by the member banks from its
patrons whose checks are cleared through the Federal reserve bank
and the charge which may be imposed for the service of clearing or
collection rendered by the Federal reserve bank.
The Federal Reserve Board shall make and promulgate from time
to time regulations governing the transfer of funds and charges
therefor among Federal reserve banks and their branches, and may
at its discretion exercise the functions of a clearing house for such
Federal reserve banks, or may designate a Federal reserve bank to
exercise such functions, and may also require each such bank to
exercise the functions of a clearing house for its member banks.
S e c . 17. So much of the provisions of section fifty-one hundred
and fifty-nine of the Revised Statutes of the United States, and
section four of the Act of June twentieth, eighteen hundred and
seventy-four, and section eight of the Act of July twelfth, eighteen
hundred and eighty-two, and of any other provisions of existing
statutes as require that before any national banking association
shall be authorized to commence banking business it shall transfer
and deliver to the Treasurer of the United States a stated amount of
United States registered bonds is hereby repealed.
REFUND ING BONDS.
S e c . 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 w^hole 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
23
24
BANKING AND CURRENCY.
BANKING AND CURRENCY.
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.
Upon notice from the Treasurer of the amount of bonds so sold for
its account, each member bank shall duly assign and transfer, in
writing, such bonds to the Federal reserve bank purchasing the
same, and such Federal reserve bank shall, thereupon, deposit lawful
money with the Treasurer of the United States for the purchase price
of such bonds, and the Treasurer shall pay to the member bank selling
such bonds any balance due after deducting a sufficient sum to
redeem its outstanding notes secured by such bonds, which notes
shall be canceled and permanently retired when redeemed.
The Federal reserve banks purchasing such bonds shall be per
mitted to take out an amount of circulating notes equal to the par
value of such bonds.
Upon the deposit with the Treasurer of the United States of bonds
so purchased, or any bonds with the circulating privilege acquired
under section four of this Act, any Federal reserve bank making
such deposit in the manner provided by existing law, shall be entitled
to receive from the Comptroller of the Currency circulating notes
in blank, registered and countersigned as provided by law, equal in
amount to the par value of the bonds so deposited. Such notes
shall be the obligations of the Federal reserve bank procuring the
same, and shall be in form prescribed by the Secretary of the Treas
ury, and to the same tenor and effect as national-bank notes now
provided by law. They shall be issued and redeemed under the
same terms and conditions as national-bank notes except that they
shall not be limited to the amount of the capital stock of the Federal
reserve bank issuing them.
Upon application of any Federal reserve bank, approved by the
Federal Reserve Board, the Secretary of 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 remamder of the
two per centum bonds so tendered: Provided, 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 bv 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 A N K R ESER VES.
S e c . 19. Demand deposits within the meaning of this Act shall
comprise all deposits payable within thirty days, and time deposits
shall comprise all deposits payable after thirty days, and all savings
accounts and certificates of deposit which are subject to not less than
thirty days; notice before payment.
When the Secretary of the Treasury shall have officially announced,
in such manner as he may elect, the establishment of a Federal reserve
bank in 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 Dank 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.
25
BANKING AND CURRENCY.
BANKING AND CURRENCY.
After said thirty-six months’ period said reserves, other than
those hereinbefore required to be held in the vaults of the member
bank and in the Federal reserve bank, shall be held in the vaults of
the member bank or in the Federal reserve bank, or in both, at the
option of the member bank.
(b) A bank in a reserve city, as now or hereafter defined, shall hold
and maintain reserves equal to fifteen per centum of the aggregate
amount of its demand deposits and nve 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
described in section fourteen properly indorsed and acceptable to
the said reserve bank.
If a State bank or trust company is required by the law of its State
to keep its reserves either in its own vaults or with another State bank
or trust co*mpany, 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 no bank shall at any time make new
loans or shall pay any dividends unless and until the total reserve
required by law is fully restored.
In estimating the reserves required by this Act, the net balance of
amounts due to and from other banks shall be taken as the basis for
ascertaining the deposits against which reserves shall be determined.
Balances in reserve banks due to member banks shall, to the extent
herein provided, be counted as reserves.
National banks located in Alaska or outside the continental 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 . 2 0 . So much of sections two and three of the Act of June
twentieth, eighteen hundred and seventy-four, entitled “ An Act
fixing the amount of United States notes, providing for a redistribu
tion of the national-bank currency, and for other purposes/’ as pro
vides that the fund deposited by any national banking association
with the Treasurer of the United States for the redemption of its notes
shall be counted as a part of its lawful reserve as provided in the Act
aforesaid is hereby repealed. And from and after the 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 Re
vised Statutes, is amended to read as follows:
The Comptroller of the Currency, with the approval of the Secre
tary of the Treasury, shall appoint examiners who shall examine
every member bank at least twice in each calendar year and oftener
if considered necessary: Provided, however, That the Federal Reserve
Board may authorize examination by the State authorities to be
accepted in the case of State banks and trust companies and may at
any time direct the holding of a special examination of State banks
or trust companies that are stockholders in any Federal reserve
bank. The examiner making the examination of any national bank,
or of any other member bank, shall have power to make a thorough
examination of all the affairs of the bank and in doing so he shall
have power to administer oaths and to examine any oi the officers
and agents thereof under oath and shall make a full and detailed
27
28
BANKING AND CURRENCY.
BANKING AND CURRENCY.
report of the condition of said bank to the Comptroller of the Cur
rency.
The Federal Reserve Board, upon the recommendation of the
Comptroller of the Currency, shall fix the salaries of all bank exam
iners and make report thereof to Congress. The expense of the
examinations herein provided for shall be assessed by the Comptroller
of the Currency upon the banks examined in proportion to assets or
resources held by the banks upon the dates of examination of the
various banks.
In addition to the examinations made and conducted by the
Comptroller of the Currency, every Federal reserve bank may, with
the approval of the Federal reserve agent or the Federal Reserve Board,
provide for special examination of member banks within its district.
The expense of such examinations shall be borne by the bank exam
ined. Such examinations shall be so conducted as to inform the
Federal reserve bank of the condition of its member banks and of the
lines of credit which are being extended by them. Every Federal
reserve bank shall at all times furnish to the Federal Reserve? Boaid
such information as may be demanded concerning the condition of
any member bank within the district of the said Federal reserve bank.
No bank shall be subject to any visitatorial powers other than such
as are authorized by law, or jested 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 Federal Reserve Board shall, at least once each year, order an
examination of each Federal reserve bank, and upon joint applica
tion of ten member banks the Federal Reserve Board shall order a
special examination and report of the condition of any Federal
reserve bank.
Sec . 22. No member bank or any officer, director, or employee
thereof shall hereafter make any loan or grant any gratuity to any
bank examiner. Any bank officer, director, or employee violat
ing this provision shall be deemed guilty of a misdemeanor and shall
be imprisoned not exceeding one year or fined not more than $5,000,
or botn; and may be fined a further sum equal to the money so loaned
or gratuity given. Any examiner accepting a loan or gratuity from any
bank examined by him or from an officer, director, or employee thereof
shall be deemed guilty of a misdemeanor and shall be imprisoned not
exceeding one year or fined not more than $5,000, or both; and may be
fined a further sum equal to the money so loaned or gratuity given;
and shall forever thereafter be disqualified from holding office as a
national-bank examiner. No national-bank examiner shall perform
any other service for compensation while holding such office for any
bank or officer, director, or employee thereof.
Other than the usual salary or director's fee paid to any officer,
director, or employee of a member bank and other than a reasonable
fee paid by said bank to such officer, director, or employee for services
rendered to such bank, no officer, director, employee, or attorney of a
member bank shall be a beneficiary of or receive, directly or indirectly,
any fee, commission, gift, or other consideration for or in connection
with any transaction or business of the bank. No examiner, public
or private, shall disclose the names of borrowers or the collateral for
loans of a member bank to other than the proper officers of such
bank without first having obtained the express permission in writing
from the Comptroller of the Currency, or from the board of directors
of such bank, except when ordered to do so by a court of competent
jurisdiction, or by direction of the Congress of the United States, or
of either House thereof, or any committee of Congress or of either
House duly authorized. Any person violating any provision of this
section shall be punished by a fine of not exceeding $5,000 or by
imprisonment not exceeding one year, or both.
Except as provided in existing laws, this provision shall not take
effect until sixty days after the passage ot 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. Any national banking association not situated in a
central reserve city may make loans secured by improved and unen
cumbered farm land, situated within its Federal reserve district,
but no such loan shall be made for a longer time than five years, nor
for an amount exceeding fifty per centum of the actual value of the
property offered as security. Any such bank may make such loans
m an aggregate sum equal to twenty-five per centum of its capital
and surplus or to one-third of its time deposits and such banks may
continue hereafter as heretofore to receive time deposits and to pay
interest on the same.
The Federal Reserve Board shall have power from time to time to
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,
FOREIGN BRANCHES.
S e c . 25. Any national banking association possessing a capital and
surplus of $1,000,000 or more may file application with the Federal
Reserve Board, upon such conditions ana under such regulations as
29
30
BANKING AND CURRENCY.
BANKING AND CURRENCY.
may be prescribed by the said board, for the purpose of securing
authority to establish branches in foreign countries or dependencies
of the United States for the furtherance of the foreign commerce of
the United States, and to act, if required to do so, as fiscal agents of
the United States. Such application shall specify, in addition to the
name and capital of the banking association filing it, the place or
places where the banking operations proposed are to be carried on,
and the amount of capital set aside for the conduct of its foreign
business. The Federal Reserve Board shall have power to approve
or to reject such application if, in its judgment, the amount o f cap
ital proposed to be set aside for the conduct of foreign business is
inadequate, or if for other reasons the granting of such application
is deemed inexpedient.
Every national banking association which shall receive authority
to establish foreign branches shall be required at all times to furnish
information concerning the condition of such branches to the Comp
troller of the Currency upon demand, and the Federal Reserve Board
may order special examinations of the said foreign branches at such
time or times as it may deem best. Every such national banking as
sociation shall conduct the accounts of each foreign branch inde
pendently of the accounts of other foreign branches established
by it and of its home office, and shall at the end of each fiscal period
transfer to its general ledger the profit or loss accruing at each branch
as a separate item.
S e c . 26. All provisions of law inconsistent with or superseded by any
of the provisions of this Act are to that extent and to that extent only
hereby repealed: Provided, Nothing in this Act contained shall be con
strued to repeal the parity provision or provisions contained in an
Act approved March fourteenth, nineteen hundred entitled “ An
Act to define and fix the standard of value, to maintain the parity
of all forms of money issued or coined by the United States, to
refund the public debt, and for other purposes,” and the Secretary of
the Treasury may for the purpose of maintaining such parity and to
strengthen the gold reserve, borrow gold on the security of United
States bonds authorized by section two of the Act last referred to
or for one-year gold notes bearing interest at a rate of not to exceed
three per centum per annum, or sell the same if necessary to obtain
gold. When the funds of the Treasury on hand justify, he may
purchase and retire such outstanding bonds and notes.
S e c . 27. The provisions of the Act of May thirtieth, nineteen
hundred and eight, authorizing national currency associations, the
issue of additional national-bank circulation, and creating a National
Monetary Commission, which expires by limitation under the terms
of such Act on the thirtieth day of June, nineteen hundred and four
teen, are hereby extended to June thirtieth, nineteenth hundred and
fifteen, and sections fifty-one hundred and fifty-three, fifty-one
hundred and seventy-two, fifty-one hundred and ninety-one, and
fifty-two hundred and fourteen of the Revised Statutes of the United
States, which were amended by the Act of May thirtieth, nineteen
hundred and eight, are hereby reenacted to read as such sections
read prior to May thirtieth, nineteen hundred and eight, subject to
such amendments or modifications as are prescribed in this Act:
Provided, however, That section nine of the Act first referred to in
this section is hereby amended so as to change the tax rates fixed
in said Act by making the portion applicable thereto read as follows:
National banking associations having circulating notes secured
otherwise than by bonds of the United States, shall pay for the first
three months a tax at the rate of three per centum per annum upon
the average amount of such of their notes in circulation as are based
upon the deposit of such securities, and afterwards an additional tax
rate of one-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 e c . 28. Section fifty-one hundred and forty-three of the Revised
Statutes is hereby amended and reenacted to read as follows: Any
association formed under this title may, by the vote of shareholders
owning two-thirds of its capital stock, reduce its capital to any sum
not below the amount required by this title to authorize the forma
tion of associations; but no such reduction shall be allowable which
will reduce the capital of the association below the amount required
for its outstanding circulation, nor shall any reduction be made until
the amount of the proposed reduction has been reported to the Comp
troller of the Currency and such reduction has been approved by the
said Comptroller of the Currency and by the Federal Reserve Board,
or by the organization committee pending the organization of the
Federal Reserve Board.
S e c . 29. If any clause, sentence, paragraph, or part of this Act
shall for any reason be adjudged by any court of competent juris
diction to be invalid, such judgment shall not affect, impair, or
invalidate the remainder of this Act, but shall be confined in its
operation to the clause, sentence, paragraph, or part thereof directly
involved in the controversy in which such judgment shall have been
rendered.
S e c . 30. The right to amend, alter, or repeal this Act is hereby
expressly reserved.
H, Hep. 163, 63—
2----- 3
Managers on
House:
the part of the
Carter G lass,
C h a r l e s A. K o r b l y .
Managers on the part of the
Senate:
R o b t . L. O w e n ,
J. A . O ’G o r m a n ,
Jas. A . R eed,
A tlee P om eren e,
J. F. S h a f r o t h ,
H e n r y F. H o l l i s .
STATEMENT OF THE MANAGERS ON THE PART OF THE HOUSE.
The managers on the part of the House at the conference on the
disagreeing vote of the two Houses on the amendment of the Senate
to the bill, H. R. 7837, entitled “ An act to provide for the establish
ment o f Federal reserve banks, to furnish an elastic currency, to
afford means o f rediscounting commercial paper, to establish a more
effective supervision of banking in the United States, and for other
purposes,” submit the following statement:
The House recedes from its disagreement to the amendment o f the
Senate to the House bill with certain amendments which are more
specifically shown in Senate Document No. 335, Sixty-third Con
31
gress, second session, a copy of which is attached hereto, and which
shows the House bill as it passed the House o f Representatives as
amended by the Senate as agreed to in conference. The column in
this document containing the bill as agreed to m conference shows
by brackets and bold-face type that portion of the Senate amendment
which was stricken out and the parts inserted by the House managers,
lespectively.
C arter G
lass,
A. K o r b l y ,
Managers on the part of the House.
C
harles
[Senate Document No. 335, Sixty-third Congress, second session]
BANKING AND CURRENCY BILL
COMPARATIVE PRINT
SHOWING
H. R. 7837
AN ACT TO PROVIDE FOR THE ESTABLISHMENT OF FEDERAL RESERVE BANKS, TO
FURNISH AN ELASTIC CURRENCY, TO AFFORD MEANS OF REDISCOUNTING COM
MERCIAL PAPER, TO ESTABLISH A MORE EFFECTIVE SUPERVISION OF
BANKING IN THE UNITED STATES, AND FOR OTHER PURPOSES
AS PASSED BY THE HOUSE, AS PASSED BY THE SENATE,
AND AS AGREED TO IN CONFERENCE
33
SUBMITTED BY MR. OWEN.
In t h e S e n a t e o f t h e U n i t e d S t a t e s , December 18, 1918.
Ordered, That there be printed as a Senate Hocument, in document type and in three parallel columns, a
comparative print of the banking and currency bill (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,” showing the
bill as passed by the House, the bill as passed by the Senate, and the bill as agreed to in conference, and that
5,000 additional copies be printed for the use of the Senate document room.
Attest:
J a m e s M. B a k e r , Secretary.
(34)
63 d
CONGRESS,
H . R . 7837.
2 d S e s s io n .
IN THE SENATE OF THE UNITED STATES.
[The part printed in small capitals shows the new matter proposed; the part inclosed in heavy brackets £ J
shows matter proposed to be omitted.]
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.
SECTION
1.
HOUSE B ILL .
PASSED B Y SENATE.
Be it enacted by the Senate and
House of Representatives of the United
States o f America in Congress assem
bled, That the short title of this Act
shall be the “ Federal Reserve A ct.”
Be it enacted by the Senate and
House of Representatives of the
United States of America in Con
gress assembled, That the short title
of this Act shall be the “ Federal Re
serve Act.”
Wherever the word “ bank” is used
in this Act, the word shall be held to
include State bank, banking associa
tion, and trust company, except where
national banks or Federal reserve
banks are specifically referred to.
The terms “ national bank” and
*1national
banking association ’9
used in this Act shall be held
to be synonymous and interchange
able. The term 11member bank”
shall be held to mean any national
bank, State bank, or bank or trust
company which has become a member
of one of the reserve banks created by
this Act. The term “ board” shall be
held to mean Federal Reserve Board;
the term “ district” shall be held to
mean Federal reserve district; the
term “ reserve bank” shall be held to
mean Federal reserve bank.
SECTION
CONFERENCE AGREEM ENT
Be it enacted by the Senate and
House of Representatives of the
United States oi America in Con
gress assembled, That the short title
oi this Act shall be the “ Federal Re
serve Act.”
Wherever the word “ bank” is used
in this Act, the word shall be held to
include State bank, banking associa
tion, and trust company, except where
national banks or Federal reserve
banks are specifically reierred to.
The terms “ national bank” and
unational
banking
association”
used in this Act shall be held to be
synonymous and interchangeable.
The term “ member bank” shall be
held to mean any national bank,
State bank, or bank or trust company
which has become a member oi one oi
the reserve banks created by this Act.
The term “ board” shall be held to
mean Federal Reserve Board; the
term “ district ” shall be held to mean
Federal reserve district; the term
“ reserve bank” shall be held to mean
Federal reserve bank.
2.
FEDERAL R ESER VE DISTRICTS.
FEDERAL RESERVE DISTRICTS.
FEDERAL RESER VE DISTRICTS.
S e c . 2. That within ninety days
after the passage of this Act, or as
soon thereafter as practicable, the
Secretary of the Treasury, the Sec
retary of Agriculture, and the Comp
troller of the Currency,
As soon feheffeflrftep as practicable,
the Secretary of the Treasury, the
S e c . 2 . As soon as practicable, the
Secretary of the Treasury, £^and not
less than two other members o f the
Federal Reserve Board, hereinafter
(35)
36
SECTION
HOUSE B ILL.
acting as
“ The Reserve Bank Organization
Committee,” shall designate from
among the reserve and central re
serve cities now authorized by law a
number of such cities to be known
as Federal reserve cities, and shall
divide the continental United States
into districts, each district to con
tain one of such Federal reserve
cities: Provided, That the districts
shall be apportioned with due re
gard to the convenience and
2
customary course of business
of the community and shall
not necessarily coincide with the
area of such State or States as may
be wholly or in part included in any
2—C o n t i n u e d .
P A SSE D B Y SEN ATE.
not less than two other members of the 'provided fo r, to be assigned by the
Federal Reserve Board, hereinafter President, J t h e s e c r e t a r y o f a g
provided for, to be assigned by the r i c u l t u r e AND TH E COM PTROLLER
President, acting as “ The Reserve o f t h e c u r r e n c y , acting as “ The
Bank Organization Committee,” Reserve Banlc Organization Commit
shall designate &»om-amo ng- fche-f e- tee,” shall designate not less than eight
ftttfeherized-by law a numbe¥-ef m eb
not less than eight nor more than
twelve cities to be known as Federal
reserve cities, and shall divide the
continental United States, including
Alaslca, into districts, each district
to contain one, and only one, of such
Federal reserve cities.
The determi
nation of said organization committee
shall not be subject to review except
by the Federal Reserve Board when
organized: Provided, That the dis
tricts shall be apportioned with
due regard to the convenience
and customary course of business
e£~fche--comimiR&p and shall not
necessarily eeineide-with—the-a#eft
o f '—
sueh be coterminous with any
State or States ag-may-be-whetly-e*8
given district. The districts thus teiefc. The districts thus created
created may be readjusted and new may be readjusted and new districts
districts may from time to time be may from time to time be created
created by the Federal Reserve by the Federal Reserve Board he*eBoard hereinafter established, act
ing upon a joint application made
by not less than ten member banks
not
desiring to be organized into a new
to exceed twelve in all. The Such
district. The districts thus consti districts fehus- constituted shall be
tuted shall be known as Federal known as Federal reserve districts
reserve districts and shall be desig and shftU may be designated by
nated by number according to the number
pleasure of the organization com
mittee, and no Federal reserve dis
trict shall be abolished, nor the
location of a Federal reserve bank
changed, except upon the applica
tion of three-fourths of the member
banks of such district.
disfcpiefc. A majority of the organization committee shall constitute a
quorum with authority to act.
_
The organization committee shall,
in accordance with regulations to
be established by itself, proceed to
organize in each of the reserve cities
designated as hereinbefore speci
fied a Federal reserve bank. Each
such Federal reserve bank shall in
clude in its title the name of the
city in which it is situated, as “ Fed
eral Reserve Bank of Chicago,” and as-—-Federal ■Rosefve- Bank- of Chiso forth. The total number of re-
CONFERENCE AGREEM ENT.
nor more than twelve cities to be Tcnown
as Federal reserve cities, and shall
divide the continental United States,
fincluding'l e x c l u d i n g Alaska, into
districts, each district to contain
£one, and'J only one£, J o f such Fed
eral reserve cities.
The
determination o f said organization
committee shall not be subject to re
view except by the Federal Reserve
Board when organized: Provided,
That the districts shall be appor
tioned with due regard to the conven
ience and customary course o f business
and shall not necessarily be cotermi
nous with any State or States. The
districts thus created may be read
justed and new districts may from
time to time be created by the Federal
Reserve Board,
not to exceed twelve in all. Such dis
tricts shall be Tcnown as Federal re
serve districts and may be designated
by number.
A majority o f the organization committee shall constitute
a Quorum with authority to act.
37
SECTION
HOUSE B ILL.
serve cities designated by the or
ganization committee shall be not
less than twelve, and the organiza
tion committee shall be authorized
to employ counsel and expert aid,
to take testimony, to send for per
sons and papers, to administer
oaths, and to make such investiga
tions as may be deemed necessary
by the said committee for the
3
purpose of determining the
reserve cities to be desig
nated and organizing the reserve
districts hereinbefore provided.
Every national bank located with
in a given district shall be required
to subscribe to the capital stock of
the Federal reserve bank of that
district a sum equal to twenty per
centum of the capital stock of such
national bank fully paid in and un
impaired, one-fourth of such sub
scription to be paid in cash and onefourth within sixty days after said
subscription is made. The remain
der of the subscription or any part
thereof shall become a liability of
the member bank, subject to call
and payment thereof whenever nec
essary to meet the obligations of the
Federal reserve bank under such
terms and in accordance with such
regulations as the board of directors
of said Federal reserve bank may
prescribe: Provided, That no
2—C o n t i n u e d .
PA SSE D B Y SENATE.
CONFEBENCE AGREEMENT.
be-not loss fchan twelve, and fcho orgftaizftfcion eommktee--shftIl- bo--ftU:fche fizcd-te-erapley counsel and ox
toy-oathsj-ftnd feo-make-sueh-mvcsti-
sfeeek -o f -the -EedeyfttnpeseFve -bank
~fehe--eftpitebl
se*»ipfciof*-ey-a ny- part- the?ee£-shall
beeeme a --liab4ity- of-fefao--membeg
sef ¥e -bank unde?- sueh-feefms ■and-m
Said organization committee shall
be authorized to employ counsel and
expert aid, to take testimony, to send
for persons and papers, to administer
oathsj and to make such investigation
as may he deemed necessary by the
said committee in determining the
reserve districts and in determining the cities within such districts
where such Federal reserve banks
shall be severally located. The said
committee shall supervise the organi
zation, in each of the cities designated,
o f a Federal reserve bank, which shall
include in its title the name of the city
in which it is situated, as u Federal
Reserve Bank of Chicago ”
Under regulations to be prescribed
by the organization committee, every
national banking association in the
United States is hereby required and
every eligible bank in the United
States and every trust company
within the District of Columbia in
corporated under an Act of Congress
approved October first, eighteen hunrea and ninety-one, is hereby
authorized to signify in writing,
Said organization committee shall
be authorized to employ counsel and
expert aid, to take testimony, to send
for persons and papers, to administer
oaths, and to make such investigation
as may be deemed necessary by the
said committee in determining the
reserve districts and in J^determining'J
d e s i g n a t i n g the dties within such
districts where such Federal reserve
banks shall be severally located. The
said committee shall supervise the or
ganization £ J i n each of the cities des
ignated[ , J 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 o f Chicago
Under regulations to be prescribed
by the organization committee, every
national banking association in the
United S t a t e s i s hereby required,
and every eligible bank in the United
States and every trust company within
the District of Columbia £ incorpo
rated under an Act of Congress ap
proved October first, eighteen hun
dred and ninety-one] , is hereby
authorized to signify in writing,
38
SECTION
SO U SE BELL*.
2—C o n t i n u e d .
PA SSE D B Y SENATE.
CONFERENCE AGREEM ENT.
within sixty days after the passage orf
this Act, its acceptance of the terms arid
provisions hereof When a Federal
reserve lank shall have been organized,
every national banking association
within that district shall he required
and every eligible bank may be per
mitted to subscribe to the capital stock
thereof in a sum equal to six per cen
tum of the paid-up capital stock and
surplus of such bank, one-sixth of
the subscription to be payable on
call o f the organization committee
or o f the Federal Reserve Board,
one-sixth within three months and
one-sixth within six months there
after, and the remainder of the sub
scription, or any part thereof, shall
be subject to call when deemed
necessary by the Federal Re
serve Board, said payments to be in
gold or gold certiHcates.
within sixty days after the passage of
this Act, its acceptance of the terms aria
provisions hereof. [ When a Federal
reserve bank shall have been organ
ized, ] W h e n t h e o r g a n i z a t i o n
The shareholders o f every Federal
reserve bank shall be held individually
responsible, equally and ratably, ana
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 sub
scriptions have been paid up in
whole or in party under the provisions
o f this A c t
Any national bank failing to sig
nify 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 or
ganization committee or of the Fed
eral Reserve Board.
Should any national banking asso
ciation in the United States now
organized fail, within one year after
the passage of this Act, to become a
member bank under the provisions
hereinbefore stated, 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 naiional-bank Act, or under
the provisions of this Act, shall
be thereby forfeited. Any non-
COMMITTEE
SH ALL
H AVE DESIG
NATED TH E CITIES IN W H ICH F E D
E R A L RESE R V E BAN K S A RE TO BE
O RG AN IZED, AND F IX E D THE GEO
G RAPH ICAL LIM ITS OF TH E F E D
d is t r ic t s ,
every
ERAL r e s e r v e
national banking association within
that district shall be required, J^and
every eligible bank may be per
mitted3 W IT H IN TH IR TY DAYS AFTER
NOTICE
FROM
THE O RG AN IZATIO N
to subscribe, to the
capital stock ^thereof J o f s u c h
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 o f the organization committee
or of the Federal Reserve Board,
one-sixth within three months and
one-sixth within six months there
after, and the remainder of the sub
scription, or any part thereof, shall
be subject to call when deemed
necessary by the Federal Re
serve Board, said payments to be in
gold or gold certificates.
The shareholders of every Federal
reserve bank shall be held individually
responsible, equally and ratably, ana
not one for another, fo r all contracts,
debts, and engagements o f such bank
to the extent or the amount o f their
subscriptions to such stock at the par
value thereof in addition to the
amount subscribed, whether such sub
scriptions have been paid up in
whole or in part, under the provisions
o f this A ct
Any national bank failing to sig
nify its acceptance o f the terms o f this
A d within the sixty days aforesaid,
shall cease to act as a reserve agent,
upon thirty days9 notice, to be given
within the discretion o f the said or
ganization committee or o f the Fed
eral Reserve Board.
Should any national banking asso
ciation in the United States now or
ganized fail within one year after
the passage of this Act to become a
member bank funder the provisions
hereinbefore stated, ] or fa il to comply
with any of the provisions o f this Act
applicable thereto, all of the rights,
privileges, and franchises of such
association granted to it under the
national-banlc Act, or under the pro
visions of this Act, shall be thereby
forfeited/ Any noncompliance with
c o m m it t e e ,
39
SECTION
HOUSE B ILL.
H. Rep. 163. 03-2
2—C o n t i n u e d .
P ASSED B Y SENATE.
compliance with or violation of
this
Act
shall,
however,
be
determined
and
adjudged
by
any court of the United States
of competent jurisdiction in a suit
brought for that purpose in the dis
trict or territory in which such bank
is located, under direction of the
Federal Reserve Board, hy the Comp
troller of the Currency in his own
name before the association shall be
declared dissolved. In cases of such
noncompliance or violation, other
than the failure to become a member
bank under the provisions of this
Act, every director who participated
in or assented to the same shall be
held liable in his personal or indi
vidual capacity for all damages which
said bank, its shareholders, 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 o f said Federal reserve
banks or any one or more of them be,
in the judgment of the organization
committee, insufficient to provide the
amount of capital required therefor,
then and in that event the said organi
zation committee may, under condi
tions 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 in 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 $10,000 par value of stock
in any Federal reserve bank. Such
stock shall be known as public stock
and may be transferred on the books
of the Federal reserve bank by the
chairman of the board of directors of
such bank.
Should the total subscriptions by
banks and the public to the stock of
said Federal reserve banks, or any
one or more of them, be, in the judg
ment of the organization committee,
insufficient to provide the amount of
capital required therefor, then and in
that event the said organization com
mittee shall allot to the United States
such an amount of said stock as said
CONFERENCE AGREEM ENT.
or violation of this Act shall, how
ever,
be determined and ad
judged by any court o f the
United
States
of
competent
jurisdiction in a suit brought for that
purpose in the District or Territory
m which such bank is located, under
direction of the Federal Reserve
Board, by the Comptroller o f the Cur
rency in his own
name before the association shall be
declared dissolved. In cases o f such
noncompliance or violation, other
than the failure to become a member
bank under the provisions of this
Act, every director who participated
in or assented to the same shall be
held liable in his personal or indi
vidual capacity for all damages which
said bank, its shareholders, 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 the organization
committee, insufficient to provide the
amount of capital required therefor,
then and m that event the said organi
zation committee may, under condi
tions and regulations to be prescribed
by it, offer to public subscription at
ar such an amount of stock in said
nederal reserve banks, or any one
or more of them, as said committee
shall determine, subject to the same
conditions as to payment [ m J and
stock liability as provided fo r 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 £ $ 10,000J $25,000 par
value of stock in any Federal reserve
bank. Such stock shall be known as
public stock and may be transferred
on the books of the Federal reserve
bank by the chairman of the board
of directors of such bank.
Should the total subscriptions by
banks and the public to the stock of
said Federal reserve banks, or any
one or more of them, be, in the judg
ment of the organization committee,
insufficient to provide the amount of
capital required therefor, then and in
that event the said organization com
mittee shall allot to the United States
such an amount of said stock as said
?
HOUSE P IL L .
PASSED B Y SENATE.
committee shall determine.
Said
United States stock shall be paid for
at par out of any money in the
Treasury not otherwise appropriated,
and shall be held by the Secretary of
the Treasury and disposed of for the
benefit of the United States in such
manner, at such times, and at quch
price, not less than par, as the Secre
tary of the Treasury shall determine.
Stock not held by member banks
shall not be entitled to voting power
in the hands of its holders, but the
voting power thereon shall be vested
in and be exercised solely by the class
C directors of the Federal reserve
bank in which said stock may be held}
and who shall be designated a s“ voting
trustees ” The voting power on said
public stock shall be limited to one vote
for each $15,000 par value thereof\
fractional amounts not to be consid
ered. The voting trustees shall exer
cise the same powers as member banks
in voting for class A and class B
directors.
The Federal Reserve Board is
hereby empowered to adopt and pro
mulgate rules and regulations gov
erning the transfers of said stock and
the exercise of the voting power thereon.
Fed
No Federal reserve bankshall com
eral reserve bank shall commence mence business with a paid-wp-and
business with a paid-up and unim
paired capital less in amount than amount than $5^000; 000 $3,000,000.
$5,000,000.
The organization of reserve districts
and Federal reserve cities shall not
be construed as changing the present
status o f 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 com
The
mittee shall have power to appoint organization committee shall have
such assistants and incur such ex power to appoint such assistants
penses in carrying out the provi and incur such expenses in carrying
sions of this Act as it shall deem nec out the provisions of this Act as
essary, and such expenses shall be it shall deem necessary, and such
payable by the Treasurer of the expenses shall be payable by the
United States upon voucher ap- Treasurer of the United States upon
roved by the Secretary of the voucher approved by the Secretary
*reasury, and the sum of $100,000, of the Treasury, and the sum of
or so much thereof as may be neces $100,000, or so much thereof as may
sary, is hereby appropriated, out of be necessary, is hereby appropriated,
any moneys in the Treasury not out of any moneys in tne Treasury
otherwise appropriated, for the pay not otherwise appropriated, for the
ment of such expenses.
payment of such expenses.
?
CONFERENCE AGREEM ENT.
committee shall determine.
Said
United States stock shall be paid fo r
at par out o f any' money in the
Treasury not otherwise appropriated,
and shall be held by the Secretary of
the Treasury and disposed of fo r the
benefit of the United States in such
manner, at such times, and at such
price, not less than par, as the Secre
tary of the Treasury shall determine.
Stock not held by member banks
shall not be entitled to voting power
the hands of its holders, but the
voting power thereon shall be vested
in and be exercised solely by the class
0 directors of the Federal reserve
bank in which said stock may be held,
and who shall be designated as “ voting
trustees ” The voting power on said
public stock shall be limited to one vote
for each $15,000 par value thereof,
fractional amounts not to be consid
ered,. The voting trustees shall exer
cise the same powers as member banks
in voting for class A and class B
directors] .
The federal Reserve Bbard is
hereby empowered to adopt and pro
mulgate rules and regulations govern•
ing the transfers of said stock f^and the
exercise of the voting power thereon]J.
No federal reserve bank shall com
mence business with a subscribed
capital less [ m
amount^ than
£$8,000,0001 $4,000,000. The or
ganization of reserve districts and
Federal reserve cities shall not be
construed as changing the present
status o f 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 expenses in carrying
out the provisions of this Act as
it shall deem necessary, and such
expenses shall be payable by the
Treasurer of the TJmted States upon
voucher approved by the Secretary
of the Treasury, and the sum o f
$100,000, or so much thereof as may
be necessary, is hereby appropriated,
out of any moneys in the Treasury
not otherwise appropriated, fo r the
payment of such expenses.
41
SECTION
HOUSE B ILL.
3.
P A SSE D B Y SENATE.
B R A N C H OFFICES
STOCK ISSUES.
S e c . 3. That the capital
stock of each Federal reserve
bank shall be divided into shares of
$100 each. The outstanding capi
tal stock shall be increased from
time to time as member banks in
crease their capital stock or as addi
tional banks become members, and
shall be decreased as member banks
reduce their capital stock or cease
to be members. Each Federal re
serve bank may establish branch
offices under regulations of the Fed
eral Reserve Board at points within
the Federal reserve district in which
it is located: Provided, That the
total number of such branches shall
not exceed one for each $500,000 of
the capital stock of said Federal
reserve bank.
CONFERENCE AGREEM ENT.
4
Section 3 was stricken out and the follow
ing inserted:
within the Federal reserve district in
which it is located and also in the
district o f any Federal reserve lank
which may have been suspended, such
branches to be established and con
ducted at places and under regula
tions approved by the Federal Beserve Board.
SECTION
FEDERAL RESERVE BANKS.
S e c . 4. The national banks in
each Federal reserve district uniting
to form the Federal reserve bank
therein, hereinbefore provided for,
shall under their seals, make *an
organization certificate, which shall
specifically state the name of such
Federal reserve bank so organized,
the territorial extent of the district
over which the operations of said
Federal reserve bank are to be car
ried on, the city and State in which
said bank is to bo located, the
amount of capital stock and the
number of shares into which the
same is divided, the names and
places of doing business of each of
FED ERAL R ESER VE
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 dis
trict o f any Federal reserve bank
which may have been suspended.
Such branches shall be operated by a
board o f directors under rules and
regulations approved by the Federal
Reserve Board. Directors o f branch
banks shall possess the same qualifica
tions as directors o f the Federal reserve
banks. Four o f 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, o f the parent
bank and the Federal Reserve Board.
The reserve bank shall designate one
o f the directors as manager.
4.
BAN K S.
S e c . /+. When the organization
committee shall have established
Federal reserve districts as provided
in section two of this Act, a
certificate
shall be filed with
the Comptroller of the Currency
showing' the geographical limits of
such districts and the Federal re
serve city designated in each of such
districts. The Comptroller of the
Currency shall thereupon cause to
be forwarded to each national bank
located in each district, and to such
other banks declared to be eligible
by the organization committee which
may apply therefor, an application
blank in form to be approved by
FEDERAL RESER VE B A N K S .
Sec. 4- When the organization
committee shall have established
Federal reserve districts as provided
in section two of this Act, a
certificate shall
be filed with
the Comptroller o f the Currency
showing the geographical limits of
such districts and the Federal re
serve city designated in each o f such
districts. The Comptroller o f the
Currency shall thereupon cause to
be forwarded to each national bank
located in each district, and to such
other banks declared to be eligible
by the organization committee which
may apply therefor, an application
blank in form to be approved by
42
SECTION
4— Continue
HOUSE BILL.
P A SSE D B Y SENATE.
CONFERENCE AGREEM EN T.
the makers of said certificate and
the number of shares held by
5
each of them, and the fact
that the certificate is made
to enable such banks to avail them
selves of the advantages of this Act.
the organization committee, which
blank shall contain a resolution to
be adopted by the board of directors
of each bank executing such appli
cation, authorizing a subscription
to the capital stock of the Federal
reserve bank organizing in that dis
trict in accordance with the provi
sions of this Act.
When the minimum amount of
capital stock prescribed by this Act
for the organization of any Federal
reserve bank shall have been sub
scribed and allotted the organization
committee shall designate any Jive
banks of those whose applications
have been received, to execute a cer
tificate of organization, and there
upon the banks so designated shall,
under their seals, make an organi
zation certificate which shall specifi
cally state the name o f such Fed
eral reserve bank, the territorial ex
tent of the district over which the
operations of such Federal reserve
bank are to be carried on, the
city and State in which said bank
is to be located, the amount of capi
tal stock and the number of shares
into which the same is divided,
the name and place of doing busi
ness 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 by
each, and the fact that the certificate
is made to enable those banks exe
cuting same, and all banks which
have subscribed or may thereafter
subscribe to the capital stock of such
Federal reserve bank, to avail themselves of the advantages of this Act.
The said organization certificate
shall be acknowledged before a judge
o f some court o f record or notary
public; and shall be, toaether with the
acknowledgment thereof, authenticated
by the seal o f such court or notary,
transmitted to the Comptroller o f the
Currency, who shall file, record, and
carefully preserve the same in his
office.
Upon the filing o f such certificate
with the Comptroller o f the Currency
as aforesaid, the said Federal reserve
bank shall become a body corporate
and as such, and in the name desig
nated in such organization certificate,
shall have power—
First. To adopt and use a corpo
rate seal.
the organization committee, which
blank shall contain a resolution to
be adopted by the board o f directors
o f each bank executing such appli
cation, authorizing a subscription
to the capital stock o f the Federal
reserve bank organizing in that dis
trict in accordance with the provi
sions o f this Act.
When the minimum amount of
capital stock prescribed by this Act
1or the organization oi any Federal
reserve bank shall have been sub
scribed and allotted, the organization
committee shall designate any five
banks oi those whose applications
have been received, to execute a cer
tificate o f organization, and there
upon the banks so designated shall,
under their seals, make an organi
zation certificate which shall specifi
cally state the name of such Fed
eral reserve bank, the territorial ex
tent oi the district over which the
operations oi such Federal reserve
bank are to be carried on, the
city and State in which said bank
is to be located, the amount oi capi
tal stock and the number o f shares
into which the same is divided,
the name and place of doing busi
ness of each bank executing such
certificate, and of dll banks which
have subscribed to the capital stock
of such Federal reserve bank and
the number oi shares subscribed by
each, and the iact that the certificate
is made to enable those banks exe
cuting same, and all banks which
have subscribed or may thereafter
subscribe to the capital stock of such
Federal reserve bank, to avail them
selves of the advantages of this A ct.
The said organization certificate
shall be acknowledged before a judge
oi some court oi record or notary
public; and shall be, together with the
acknowledgment thereoi, authenticated
by the seal oi such court, or notary,
transmitted to the Comptroller oi the
Currency, who shall file, record and
careiully preserve the same in his
office.
Upon the filing oi such certificate
with the Comptroller oi the Currency
as aioresaid, the said Federal reserve
banic shall become a body corporate
and as such, and in the name desig
nated in such organization certificate,
shall have power—
First. To adopt and use a corpo
rate seal.
The said organization certificate
shall be acknowledged before a
judge of some court of record or
notary public; and shall be, together
with the acknowledgment thereof,
authenticated by the seal of such
court, or notarv, transmitted to the
Comptroller of the Currency, who
shall file, record, and carefully pre
serve the same in his office.
Upon
the filing of such certificate with the
Comptroller of the Currency as
aforesaid, the said Federal reserve
bank so formed shall become a body
corporate, and as such, and in the
name designated in such organiza
tion certificate, shall have power to
perform all those acts an to enjoy
43
S 3CTION
HOUSE B ILL.
4— Continue!
PA SSE D B Y SENATE.
all those privileges and to exercise
Second. To have succession for a
all those powers described in section period o f twenty yearsfrom its organi
fifty-one hundred and thirty-six, zation unless it is sooner dissolved by
Revised Statutes, save in so far as an Act o f Congress, or unless its
the same shall be limited by the pro franchise becomes forfeited by some
visions of this Act. The Federal violation o f law.
reserve bank so incorporated shall
Third. To make contracts.
have succession for a period of
Fourth. To sue and be sued, com
twenty years from its organization, plain and defend, in any court of law
unless sooner dissolved by Act of or equity.
Congress.
Fifth. To appoint by its board of
directors, elected as hereinafter pro
vided, such officers as are not other
wise provided for in this Act, to define
their duties, require bonds o f them
and fix the penalty thereof, to dismiss
such officers or any o f them as may be
appointed by them at pleasure, and to
appoint others to fill their places.
CONFERENCE AGREEMENT.
Second. To have succession for a
period o f twenty yearsfrom its organi
zation unless it is sooner dissolved by
an Act o f Congress, or unless its
ranchise becomes forfeited by some
violation o f law.
Third. To make contracts.
Fourth. To sue and be sued, com
plain and defend, in any court o f law
or equity.
Fifth. To appoint by its board o f
directors, [ elected as hereinafter pro
v i d e d s u c h officers a n d e m p l o y e e s
as are not otherwise provided fo r in
this Act, to define their duties, require
bonds o f them and fix the penalty
thereof, a n d to dismiss a t p l e a s u r e
such officers or [ any of them as may
be appointed by them at pleasure, and
to appoint others to fill their places]
EM PLOYEES.
Sixth. To prescribe by its board o f
directors by-laws not inconsistent
with law, regulating the manner in
which its general business may be con
ducted, and the privileges granted to
it by law may be exercised and en
joyed.
Seventh. To exercise by its board
o f directors, or duly authorized officers
or agents, all powers specifically
granted by the provisions o f this Act
and such incidental powers as shall
be necessary to carry on the business
o f 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 man
ner provided by existing law relating
to national banks, to receive from the
Comptroller of the Currency circulat
ing notes in blank, registered and
countersigned as provided by law,
equal in amount to the par value of
the bonds so deposited, such notes to
be issued under the same conditions
and provisions o f law which relate to
the issue of circulating notes of na
tional banks secured by bonds of the
United States bearing the circulating
privilege, except that the issue o f
such notes shall not be limited to the
amount of the capital stock o f such
Federal reserve bank.
But no Federal reserve bank shall
transact any business except such as
is incidental and necessarily pre
liminary to its organization until it
has been authorized by the Comp
troller of the Currency to commence
business under the provisions of this
Act.
Every Federal reserve bank shall
Every Federal reserve bank shall
be conducted under the oversight be conducted under the
and control of a board of directors, supervision and control of a board
whose powers shall be the same as
those conferred upon the boards of
Sixth. To prescribe by its board o f
directors, by-laws not inconsistent
with law, regulating^ the manner in
which its general business may be con
ducted, and the privileges granted to
it by law may be exercised and en
joyed.
Seventh. To exercise by its board
of directors, or duly authorized ojjicers
or agents, all powers specifically
granted by the provisions of this Act
and such incidental powers as shall
be necessary to carry on the business
of banking within the limitations pre
scribed by this Act.
Eighth. Upon deposit with the
Treasurer of the United States of any
bonds of the United States in the man
ner provided by existing law relating
to national banks, to receive from the
Comptroller of the Currency circulat
ing notes in blank, registered and
countersigned as provided by law,
equal in amount to the par value of
the bonds so deposited, such notes to
be issued under the same conditions
and provisions of law a s relate to
the issue of circulating notes o f na
tional banks secured by bonds of the
United States bearing the circulating
privilege, except that the issue o f such
notes shall not be limited to the capital
stock of such Federal reserve bank.
But no Federal reserve bank shall
transact any business except such as
is incidental and necessarily pre
liminary to its organization until it
has been authorized by the Comp
troller of the Currency to commence
business under the provisions of this
Act.
Every Federal reserve bank shall
be conducted under the supervision
and control of a board of directors.
U
s ECTION
P A SSE D B Y SENATE.
HOUSE B IL L
directors of national banking asso
ciations under existing law, not in
consistent with the provisions of
this Act.
4— Continued.
CONFERENCE AGREEM ENT.
fche--beftf ds-ef—direefcera-of-n ftfcioBal
The board o f directors shall per
The board of directors shall per
form the duties usually appertaining form the duties usually appertaining
to the office of directors of banking as to the office o f directors o f banking as
sociations and all such duties as are sociations and all such duties as are
prescribed by law.
prescribed by law.
Said board shall administer the af
Said board shall administer the af
fairs of said bank fairly and impar fairs of said bank fairly and impar
tially and without discrimination in tially and without discrimination in
favor of or against any member bank favor of or against any member bank
or banks and shall, subject to the pro or banks and shall, subject to the pro
visions of law and the orders of the visions o f law and the orders o f the
Federal Beserve Board, extend to each Federal rteserve Board, extend to each
member bank such discounts, ad member bank such discounts, advance
vancements, and accommodations as ments^ , ] and accommodations as
may be safely and reasonably made may be safely and reasonably made
with due regard for the claims and de with due regard fo r the claims and de
mands of other member banks.
mands of other member banks.
Such boards of directors
Such board o f directors shall be se
Such board of directors shall
shall be constituted and elected as KU au p A TIIJi Q hTi hT On Uf i c Un lni lnl nt l “PilAnfrptfi
v U w t J t t oQ
v£>1
M /l/v v lv
lected as hereinafter specified and shall
hereinafter specified and shall as hereinafter specified and shall consist of nine members, holding office
6
consist of nine members, hold consist of nine members, holding or three years, and divided into three
ing office for three years, office for three years, and divided lasses, designated as classes A , B y
and divided into three classes, desig into three classes, designated as and 0
nated as classes A, B, and C.
classes A, B, and C.
Class A shall consist of three
Class A shall consist o f three
Class A shall consist of three
members, who shall be chosen by members, who shall be chosen by members, who shall be chosen by
and be representative of the stock and be representative of the stock and be representative o f the stock
holding banks.
holding banks.
holding banks.
Class B shall consist of three
Class B shall consist o f three
Class B shall consist of three
members, who shall be representa members, who
members, who at the time o f their
tive of the general public interests
election shall be actively engaged in
of the reserve district.
at the time of their district in commerce, [ m jj agri
their election shall be actively en c u l t u r e o r [ m ] some other indus
gaged in their district in commerce, trial pursuit.
in agriculture, or in some other indus
trial pursuit.
Class C shall consist of three
Class C shall consist o f three
Class C shall consist of three
members, who shall be designated members, who shall be designated members^ ,] who shall be designated
by the Federal Reserve Board.
by the Federal Reserve Board. by the Federal Beserve Board.
When the necessary subscriptions to When the necessary subscriptions to
the capital stock have been obtained the capital stock have been obtained
fo r the organization o f any Federal for the organization o f any Federal
Directors of class A shall bechosen reserve bank, the Federal Beserve reserve bank, the Federal Beserve
in the following manner:
Board shall appoint the class C direc Board shall appoint the class C direc
tors herein provided for and shall tors £herein provided for\] and shall
designate one o f such directors as designate one o f such directors as
chairman o f the board to be selected. chairman o f the board to be selected.
Pending designation o f such chair Pending t h e designation o f such
man the organization committee shall, chairman, the organization committee
as provided in this section, exercise shall^ , as provided in this section, ] ex
the powers and duties appertaining ercise the powers and duties appertain
to the office o f chairman in the organi ing to the office o f chairman %n the or
zation o f such Federal reserve bank. ganization o f such Federal reserve
bank.
No Senator or Bepresentative in
No Senator or Bepresentative in
Congress shall be a member of the Congress shall be a member o f the
Federal Beserve Board, a director of Federal B e s e r v e o r a n o f
a Federal Beserve Bank, or an officer f i c e r o r a director oj a Federal Be
or director of any member bank.
serve Bankf^, or an officer, or director
No director of class B or of dass C of any member bank*\.
No director o f class B [ o r o f class
shaU be an officer, director, employee,
or stockholder of any bank.
CJ shall be an officer, director £ ,3 o r
w
j u
v
45
SECTION
HOUSE B ILL .
4— Continued.
P ASSED B Y SENATE.
CONFERENCE AGREEM ENT.
employee[ , or stockholder]
bank.
o f any
NO DIRECTOR OF CLASS O SHALL
BE AN O FFICER, D IRECTOR, EM
PLOYEE OR STOCKHOLDER OF AN Y
BANK.
It shall be the duty of the chair
man of the board of directors of the
Federal reserve bank of the district
in which each such bank is situated
to classify the member banks of the
said district into three general
groups or divisions. Each such
group shall contain as nearly as
may be one-third of the aggregate
number of said member banks of
the said district and shall consist,
as nearly as may be, of banks of
similar capitalization. The said
groups shall be designated by num
ber at the pleasure of the chairman
of the board of directors of the Fed
eral reserve bank.
At a regularly called directors’
meeting of each member bank in the
Federal reserve district aforesaid,
the board of directois of such mem
ber bank shall elect by ballot one
of its own members as a district
reserve elector and shall certify his
name to the chairman of the board
of directors of the Federal
7
reserve bank of the district.
The said chairman shall es
tablish lists of the district reserve
electors, class A, thus named by
banks in each of the aforesaid three
groups and shall transmit one list,
to each such elector in each group.
Directors of class A and class B
shall be chosen in the following
manner:
It shall- bo the -dufey -ef -fche The
chairman of the board of directors
of the Federal reserve bank of the
district in which eaeh-s^eh the bank
is situated te or, vending the ap
pointment o f such chairman, the or
ganization committee shall classify the
member banks of the said district
into three general groups or divi
sions. Each s«ehgroup shall contain,
as nearly as may be, one-third of the
aggregate number of said the mem
ber banks of the said district, and
shall consist, as nearly as may be,
of banks of similar capitalization.
The said groups shall be designated
by number
chairman
Directors o f class A and class B
shall be chosen in the following
manner:
The chairman o f the board o f di
rectors of the Federal reserve bank of
the district in which the bank is situ
ated or, pending the appointment
o f such chairman, the organization
committee shall classify the member banks of the district into three general groups or divisions. Each group
shall contain as nearly as may be
one-third of the aggregate number of
the member banks o f the district arid
shall consist, as nearly as may be, of
banks of similar capitalization. The
groups shall be designated by number
by the chairman.
At a regularly called d w e e b s 2
At a regularly called meeting o f the
meeting o f the board of directors of board of directors o f each member bank
each member bank in the Federal in the district it shall elect by ballot a
reserve district i
district reserve elector and shall certify
his name to the chairman o f the board
it shall elect by ballot
of directors of the Federal reserve
own members-as a district reserve bank of the district.
elector and shall certify his name
to the chairman of the board of
directors of the Federal reserve
bank of the district.
The said
The chairman
chairman shall establish lists of the shall £m
establish'2 m a k e lists of the
district reserve electors, class A ? district reserve electors thus named by
thus named by banks in each of the banks in each c f the aforesaid three
aforesaid three groups and shall groups and shall transmit one list to
transmit one list to each sueh each elector in each group.
elector in each group. Every
EACH MEMBER B AN K SHALL BE P E R
doctor shall,--within fifteen-days-el M ITTED TO NOMINATE TO TH E C H AIR
ted -te -h im -by—fche - eha irman^ -ese
greatest—number—of -votes-on-the
MAN ONE CANDIDATE FOR D IREC TO R
OF CLASS A AND ONE CANDIDATE FOR
D IRECTOR OF CLASS B .
THE CANDI
DATES SO NOMINATED SH ALL BE
LISTED BY THE CHAIRM AN, IN DICAT
ING BY WHOM NOM INATED, AND A
COPY OF SAID LIST SHALL, W ITHIN
FIFTEEN DAYS AFTER ITS COMPLE
TIO N , BE FURNISHED B Y THE CH AIR
MAN TO EACH ELECTOR.
46
SE C TI O N 4— Continued.
HOTTSE B H iI i.
passed
by
sen ate
.
conference
agreem ent.
Srofc— ballet}—aad—shall—teaasmifc
n« mber-of sneb- vofees -shall-b e -de-
^hafe-they- musfe—be-seieefced-lrem-a
merabey-bank^- and stteh-flamos-skftH
Every elector shall, within fifteen
days of the receipt of the said list,
select and certify to the said chair
man from among the names on the
list pertaining to his group, trans
mitted to him by the chairman, one
name, not his own, as representing
his choice for Federal reserve di
rector, class A. The name receiv
ing the greatest number of votes,
not less than a majority, shall be
designated by said chairman as
Federal reserve director for the
group to which he belongs. In case
no candidate shall receive a ma
jority of all votes cast in any group,
the chairman aforesaid shall estab
lish an eligible list, consisting of
the three names receiving the great
est number of votes on the first
ballot, and shall transmit said list
to the electors in each of the groups
of banks established by him. Each
elector shall at once select and
certify to the said chairman from
among the three persons submitted
to him his choice for Federal reserve
director, class A, and the name re
ceiving the greatest number of such
votes shall be declared by the chair
man as Federal reserve director,
class A. In case of a tie vote the
balloting shall continue in the man
ner hereinbefore prescribed until
one candidate receives more votes
than either of the others.
8
Directors of class B khall
be chosen by the electors of
the respective groups at the same
asseeifttieftr
Every elector shall, within fifteen
days after the receipt of the said list,
certify to the chairman his first, sec
ond, and other choices of a director of
class A and class B , respectively
upon a preferential ballot, on a form
furnished by the chairman of the
board of directors of the Federal re
serve bank of the district. Each
elector shall make a cross opposite the
name of the first, second, and other
choices fo r a director of class A and
for a director of class i>, but shall not
vote more than one choice fo r any one
candidate.
Any candidate having a majority
of alt votes cast in the coluinn of
first choice shall be declared elected.
If no candidate have a majority
of all the votes in the first column,
then there shall be added together
the votes cast by the electors for
such candidates in tjie second col
umn to the votes cast for the sev
eral candidates in the first column.
I f any candidate then have a majority
of the electors voting, by adding
together the first and second choices,
he shall be declared elected. I f no
candidate have a majority of electors
voting when the first and second
choices shall have been added, then
the votes cast in the third column for
other choices shall be added together
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.
Every elector shall, within fifteen
days after the receipt of the said list,
certify to the chairman his first, sec
ond, and other choices of a director of
class A and class B , respectively,
upon a preferential ballot, on a form
furnished by the chairman o f the
board of directors o f the Federal re
serve oanlc of the district. Each
elector shall make a cross opposite the
name of the first, second, and other
choices fo r a director of class A and
for a director of class B, but shall not
vote more than one choice fo r any one
candidate.
Any candidate having a majority
of all votes cast in the column of
first choice shall be declared elected.
I f no candidate have a majority of
all the votes in the first column, then
there shall be added together the votes
cast by the electors for such candidates,
in the second column
a n d the votes
cast for the several candidates in the
first column. I f any candidate then
have a majority of the electors voting,
by adding together thefirst and second
choices, he shall be declared elected.
I f no candidate have a majority of
electors voting when the first and
second choices shall have been added,
then the votes cast in the third column
for other choices shall be added to
gether in like manner, and the candi
date then having the highest number of
votes shall be declared elected. An
immediate report of election shall be
declared.
47
SECTION
HOUSE BILL*
time and in the same manner pre
scribed for directors of class A, ex
cept that they must be selected from
a list of names furnished, one by
each member bank, and such names
shall in no case be those of officers
or directors of any bank or banking
association. They shall not accept
office as such during the term of their
service as directors of the Federal
reserve bank. They shall be fairly
representative of the commercial,
agricultural, .or industrial interests
01 their respective districts. The
Federal Reserve Board shall have
power at its discretion to remove
any director of class B in any Fed
eral reserve bank, if it should appear
at any time that such director does
not fairly represent the commercial,
agricultural, or industrial interests
oi his district.
Three directors belonging to class
C shall be chosen directly by the
Federal Reserve Board, and shall be
residents of the district for which
they are selected, one of whom shall
be designated by said board as chair
man of the board of directors of the
Federal reserve bank of the district
to which he is appointed and shall
be designated as “ Federal reserve
agent.” He shall be a person of
tested banking experience; and in
addition to his duties as chairman
of the board of directors of the Fed
eral reserve bank of the district to
which he is appointed, he shall be
required to maintain under regula
tions to be established by the Fed
eral Reserve Board a local
9
office of said board, which
shall be situated on the
premises of the Federal reserve bank
of the district. He shall make reg
ular reports to the Federal Reserve
Board, and shall act as its official
representative for the performance
of the functions conferred upon it by
this Act. He shall receive an an
nual compensation to be fixed by
the Federal Reserve Board and paid
monthly by the Federal reserve
bank to which he is designated.
H. Rep. 163, 63-2------5
4— Continued.
P ASSED B Y SENATE.
CONFERENCE AGREEM ENT.
[ Three directors belonging to class]
Three directors belonging to class
C shall bo ehesen appointed directly C l a s s C d i r e c t o r s shall be ap
by the Federal Reservo Board, and pointed ['directly'J by the Federal
shall fee have beenfor at least two years Reserve B oard s a n d ] , t h e y shall
residents of the district for which have been for at least two years
they are seleefced appointed, one of residents of the district fo r which
whom shall be designated by said they are appointed, one o f whom
board as chairman of the board of shall be designated by said board as
directors of the Federal reserve chairman of the board o f directors
bank of the district to which he is of the Federal reserve bank [ o / the
appointed and shall be designated district to which he is appointed]
by said board as “ Federal reserve and Ushall be designated by said
agent.” He shall be a person of boardl as “ Federal reserve agent”
tested banking experience; and in lie shall be a person of tested banking
addition to his duties as chairman experience; and in addition to his
of tho board of directors of the duties as chairman of the board o f di
Fodoral reserve bank of the district rectors of the Federal reserve bankJ[of
to which he is appointed, he shall the district to which he is appointed, j
be required to maintain under regu he shall be required to maintain under
lations to be established by iho regulations to be established by the
Federal Reserve Board a local Federal Reserve Board a local office of
office of said board, which shall be said board[ , which shall be situated J
situated on the premises of the on the premises of the Federal reserve
Fodoral reserve bank of the dis bank £ of the district^. He shall make
trict. He shall make rogular re regular reports to the Federal Reserve
ports to tho Federal Rcsorvo Board, Board, and shall act as its official
and shall act as its official repre representative for the performance of
sentative for the performance of the functions conferred upon it by
the functions conferred upon it by this A ct He shall receive an an
this Act. He shall receive an an nual compensation to be fixed by
nual compensation to be fixed by the Federal Reserve Board and paid
the Federal Reserve Board and paiS monthly by the Federal reserve bank
monthly by the Federal reserve to which he is designated. One of
bank to which ho is designated. the directors of class 0 , who shall be
One of the directors of class 0 who a person of tested banking experience,
shall be a person of tested banking shall be appointed by the Federal
experience shaV be appointed by Reserve Board as deputy chairman
the Federal Reserve Board as dep and deputy Federal reserve agent to
uty chairman and deputy Federal exercise the powers of the chairman
reserve agent to exercise the powers oi of the board and Federal reserve agent
the chairman of the board and Fed in case of absence or disability o f his
eral reserve agent in case of the ab principal.
sence or disability of his principal.
48
SECTION
4— C o n t i n u e d
HOUSE B ILL .
PA SSE D B Y SENATE.
CONFERENCE AGREEM ENT.
Directors of Federal reserve banks
shall receive, in addition to any
compensation otherwise provided, a
reasonable allowance for necc*ssary
expenses in attending meetings of
their respective boards, which
amount shall be paid by the re
spective Federal reserve banks.
Any compensation that may be
provided by boards of directors of
Federal reserve banks for members
of such boards shall be subject to
review by the Federal Reserve
Board.
Directors of Federal reserve banks
shall receive, in addition to any
compensation otherwise provided,
a reasonable allowance for neces
sary expenses in attending meet
ings of their respective boards,
which amount
shall be paid
by the respective Federal reserve
banks. Any compensation that
may be provided by boards of di
rectors oi Federal reserve banks for
members of such boards shall be
subject to review and subsequent
readjustment at any time by the Fed
eral Reserve Board.
The Reserve Bank Organization
Committee may, in organizing Fed
eral reserve banks for the first time,
call such meetings of bank directors
in the several districts as may be
necessary to carry out the purposes
of this Act and may exercise the
functions herein conferred upon the
chairman of the board of directors
of each Federal reserve bank pend
ing the complete organization of
such bank.
At the first meeting of the
full board of directors of each
Federal reserve bank after organi
zation it shall be the duty of
10
the directors of classes A and
B and C, respectively, to
designate one of the members of
each class whose term of office shall
expire in one year from the first of
January' nearest to date of such
meeting, 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 of
three years from said date. There
after every director of a Federal
reserve bank chosen as hereinbefore
provided shall hold office for a term
of three years; but the chairman of
the board of directors of each Fed
eral reserve bank designated by the
Federal Reserve Board, as herein
before described, shall be removable
at the pleasure of the said board
without notice, and his successor
shall hold office during the unex
pired term of the director in whose
place he wns appointed. Vacancies
that may occur in the several
classcs of directors of Federal re
serve banks may be filled in the
manner provided for the original
selection of such directors, such
appointees to hold office for the
unexpired terms of their prede
cessors.
The Reserve Bank Organization
Committee may, in organizing Fed
eral reserve banks for the first time,
call such meetings of bank directors
in the several districts as may be
necessary to carry out the purposes
of this Act, and may exercise the
functions herein conferred upon the
chairman of the board of directors
of each Federal reserve bank pend
ing the complete organization of
such bank.
At the first meeting of the full
board of directors of each Federal
reserve bank after organization it
shall be the duty of the directors of
classes A and B and C, respectively,
to designate one of the members of
each class whose term of office shall
expire in one year from the first of
January nearest to date of such
meeting, 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 of
three years from said date. There
after every director of a Federal re
serve bank chosen as herein
before provided shall hold office
for a term of three years-f-bttfc-fcfee
Directors o f Federal reserve banks
shall receive, in addition to anv
compensation otherwise provided,
a reasonable allowance fo r neces
sary expenses in attending meet
ings of their respective boards,
which amount shall
be
paid
by the respective Federal reserve
banks. #Any compensation that may
be provided by boards o f directors of
Federal reserve banks for [ members
of such boards] d i r e c t o r s , o f f i
cers or
e m p l o y e e s shall be sub
ject to preview and subsequent read
justment at any time &?/] t h e a p
proval
of
the Federal Reserve
Board.
The Reserve Bank Organization
Committee may, in organizing Federal
reserve banks [ fo r the first time'J,
call such meetings o f bank directors
in the several districts as may be
necessary to carry out the purposes
of this Act, and may exercise the
junctions herein conferred upon the
chairman of the board o f directors
of each Federal reserve bank pend
ing the complete organization o f
such banlc.
At the first meeting o f the full
board of directors of each Federal
reserve bank, Rafter organization] it
shall be the duty of the directors of
classes A , [ a W ] B and G, respect
ively, to designate one of the members o f
each class whose term o f office shall
expire in one year from the first of
January nearest to date of such
meeting, one whose term o f office
shall exjnre at the end o f two years
from said date, and one whose term
of office shall expire at the end of
three years from said date. There
after every director of a Federal
reserve bank chosen as herein
before provided shall hold office
peiftfced. Vacancies that may occui
m 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 unexpired terms of their pred
ecessors.
for a term of three years. Va
cancies that may occur in the
several classes of directors of Federal
reserve banks may be filled in the
manner provided fo r the original
selection of such directors, such ap
pointees to hold office for the unex
pired terms o f their predecessors.
49
SECTION
PASSED B Y SENATE.
HOUSE B ILL.
INCREASE AND DECREASE OF CAPI
TAL.
S e c . 5. That shares of the capital
stock of Federal reserve banks shall
not be transferable, nor be hvothecated In case a member
ank increases its capital, it shall
thereupon subscribe for an addi
tional amount of capital stock of
the Federal reserve bank of its dis
trict equal to twenty per centum of
the bank’s own increase of
11
capital, one-half of said sub
scription to be paid in cash
in the manner hereinbefore provided
for original subscription, and onehalf to become a liability o the
member bank according to the
terms of the original subscription.
E
A bank applying for stock in a Fed
eral reserve bank at any time after
the formation of the latter must
subscribe for an amount of the capi
tal of said Federal reserve bank
equal to twenty per centum of the
capital stock of said subscribing
bank, paying therefor its par value
in accordance with the terms pre
scribed by section two of this Act
5.
STOCK
INCREASE AND
CREASE OF CAPITAL.
ISSUES;
CONFERENCE AGREEMENT.
DE-
S e c . 5. Tbafc-skafes The capital
stock of each Federal reserve bank
shall be divided into shares of SI00
each. The outstanding capital stock
shall be increased from time to time as
member banks increase their capital
stock and surplus or as additional
banks become members, and may be
decreased as member banks reduce
their capital stock or surplus or cease
to be members.
Shares of the capital
stock of Federal reserve banks
owned by member banks shall not be
transferable, nor be hypefcheeated
hypothecate. In case a member
bank feefeases increase its capital
stock or surplus, it shall thereupon
subscribe for an additional amount
of capital stock of the Federal re
serve bank of its district equal to
tw enfcy six per centum of the
bankas—ewft said increase el-eapifcai, one-half of said subscription
to be paid in-eash in the man
ner hereinbefore provided for orig
inal subscription, and one-half fce
subject to call
of the Federal Reserve Board. A
bank applying for stock in a Federal
reserve bank at any time after the
thereof must subscribe for an amount
of the capital stock of said the
Federal reserve bank equal to
twenty six per centum of the paidup capital stock and surplus of said
subscribing applicant bank, paying
therefor its par value
plus one-hal^ of one
per centum a month from the period
of the last dividend.
When the capi
tal stock of any Federal reserve
bank has shall have been increased
either on account of the increase of
capital stock of member banks or on
account of the increase in the num
ber of member banks, the board of
When the capital stock of any Fed
eral reserve bank has been increased
either on account of the increase of
capital stock of member banks or on
account of the increase in the num
ber of member banks, the board of
directors shall make and execute a cause to be executed a certificate to
certificate to the Comptroller of the the Comptroller of the Currency
Currency showing said increase in showing said the increase in capital
capital, the amount paid in, and by stock, the amount paid in, ana by
whom paid. In case a member whom paid. In case a member
bank reduces its capital stock it bank reduces its capital stock it
shal- surrender a proportionate shall surrender a proportionate
amount of its holdings in the capital amount of its holdings in the capital
STOCK ISSUES;
INCREASE
AND
DE-
CREASE OF CAPITAL.
S e c . 5. The capital stock o f each
Federal reserve bank shall be divided
into shares of $100 each. The out
standing capital stock shall be in
creased from time to time as member
banks increase their capital stock and
surplus or as additional banks betcome members, and may be decreased
as member banks reduce their capital
stock or surplus or cease to be mem
bers.
Shares of the capital stock o f Fed
eral reserve banks owned by member
banks shall not be [ transferable
nor be hypothecablejj t r a n s f e r r e d
or
h ypothecated.
[ In case'J
w hen
a member bank [ i n c r e a s e ]
i n c r e a s e s its capital stock or sur
plus, it shall thereupon subscribe
for an additional amount of capital
stock of the Federal reserve bank of
its district equal to six per centum
o f ' the said increase, one-half of
said subscription to
be paid
in e the
manner
hereinbefore
provided for original subscription,
and one-half subject to call o f the
Federal Reserve Board. A bank
applying for stock in a Federal re
serve bank at any time after the
organization thereof must subscribe
for an amount of the capital stock o f
the Federal reserve bank equal to six
per centum of the paid-up capital
stock and surplus of said applicant
bank, paying therefor its par value
plus one-half of one per centum a
month from the period o f the last
dividend. When the capital stock
of any Federal reserve bank shall have
been increased either on account o f the
increase of capital stock o f member
banks or on account of the increase
in the number of member banks, the
board of directors shall cause to be
executed a certificate to the Comptroller
of the Currency showing the increase
in capital stock, the amount paid in\
and by whom paid. [ In case 3 w h e n
a member bank reduces its capital stock
it shall surrender a proportionate
amount of its holdings m the capital
50
SECTION
HOUSE B ILL .
of said Federal reserve bank, and in
case a member bank goes into volun
tary liquidation it shall surrender
all of its holdings of the capital
stock of said Federal reserve bank.
In either case the shares surrendered
shall be canceled and such member
bank shall receive in payment
therefor, under regulations to be
rescribed by the Federal Reserve
loard, a sum equal to its cash paid
subscriptions on the shares surren
dered.
S
5— Continue
P A SSE D B Y SENATE.
of said Federal reserve bank, and in of said Federal reserve bank, and, £ in
case a member bank goes into volun case3 w h e n a member bank [ goes
tary liquidation it shall surrender into voluntary liquidation] v o l u n
all of its holdings of the capital stock t a r i l y l i q u i d a t e s it shall surrender
of said Federal reserve bank and be all o f its holdings o1 the capital stock oi
released from its stock subscription said Federal reserve bank and be re
leased from its stock subscription not
not previously called.
In either case the shares sur previously called. In either case the
rendered shall be canceled and shares surrendered shall be canceled
such member bank shall receive and t s u c h l t h e member bank shall
in payment therefor, under regula receive in payment therefor,under regu
tions to be prescribed by the Federal lations to be prescribed by the Federal
Reserve Board, a sum equal to /its Reserve Board, a sum equal to its
cash paid subscriptions on the cash-paid subscriptions on the
shares surrendered and one-half of shares surrendered and one-half of
one per centum a month from the one per centum a month from the
period of the last dividend, not to period o f the last dividend, not to
exceed the book value thereof, less any exceed the book value thereof, less any
liability of such member iank to the liability of such member bank to the
Federal reserve bank.
Federal reserve bank.
SECTION
S e c . 6. That if any mem
ber bank shall become in
solvent and a receiver be appointed,
the stock held by it in said Federal
reserve bank shall be canceled and
the balance, after deducting from
the amount of its cash paid sub
scriptions all debts due by such in
solvent bank to said Federal reserve
bank, shall be paid to the receiver of
the insolvent bank.
CONFERENCE AGREEM EN T.
6.
12
bftftk I f any member bank shall be
declared insolvent and a receiver ap
pointed therefor, the stock held by itm
said Federal reserve bank shall be can
celed, and all cash-paid subscriptions
on said stock, with one-half of one per
centum per month from trie period of
last dividend, not to exceed the book
value thereof, shall be first applied to
all debts of the insolvent member bank:
to the Federal reserve bank, and the
balance, i f any, shall be paid to the
Whenever the receiver of the insolvent banlc. When
capital stock of a Federal reserve ever the capital stock of a Federal
bank is reduced, either on account reserve bank is reduced, either on
of a reduction in capital stock of any account of a reduction in capital
member bank or of the liquidation stock of any member bank or of the
or insolvency of any such member liquidation or insolvency of aey
bank, the board of directors shall such-member such bank, the board
directors
shall
make -and
make and execute a certificate to of
the Comptroller of the Currency execute cause to be executed a
showing such reduction of capital certificate to the Comptroller
stock and the amount repaid to such of the Currency showing such re
duction of capital stock and the
bank.
amount repaid to such bank.
S e c . 6. If any member bank shall be
declared insolvent and a receiver ap
pointed thereior, the stock held by it m
said Federal reserve bank shall be can
celed, w i t h o u t i m p a i r m e n t o f i t s
l i a b i l i t y , and all cash-paid subscrip
tions on said stock, with one-half of one
per centum per month from the period
of last dividend, not to exceed the book
value thereof, shall be first applied to
all debts of the insolvent member banlc
to the Federal reserve bank, and the
balance, if any, shall be paid to the
receiver of the insolvent bank. When
ever the capital stock of a Federal
reserve banlc is reduced, either on
account of a reduction in capital
stock of any member bank or of the
liquidation or insolvency of such
bank, the board of directors shall
cause to be executed a certi
ficate
to
the Comptroller
of
the Currency showing such reduction of capital stock and the
amount repaid to such bank.
51
SECTION
HOUSE B IL L
DIVISION OF EARNINGS
S e c . 7. That after the payment of
all necessary expenses and taxes of a
Federal reserve bank, the member
banks shall be entitled to receive an
annual dividend of five per centum
on the paid-in capital stock, which
dividend shall be cumulative. Onehalf of the net earnings, after the
aforesaid dividend claims have been
fully met, shall be paid into a sur
plus fund until such fund shall
amount, to twenty per centum of
the paid-in capital stock of such
bank, and of the remaining one-lialf
sixty per centum shall be paid to
the United States and forty per
centum to the member banks in
the ratio of their average
13
balances with the Federal re
serve bank for the preceding
year. Whenever and so long as the
surplus fund of a Federal reserve
bank amounts to twenty per centum
of the paid-in capital stock and the
member banks shall have received
the dividends at the rate of five per
centum per annum hereinbefore
provided for, sixty per centum of all
excess earnings shall be paid to the
United States and forty per centum
to the member banks in proportion
to their annual average balances
with such Federal reserve bank;
7.
P ASSED B Y SENATE.
CONFERENCE AGREEMENT.
DIVISION OF EARNIN GS.
DIVISION OF EARNINQ8.
S e c . 7. That--after th e-payment
ef After all necessary expenses and
taxes of a Federal reserve bank
have been paid or provided fo r, the
member-banks stockholders shall be
entitled to receive an annual divi
dend of fi^e six per centum on the
paid-in capital stock, which divi
dend shall be cumulative. Onehalf of the net earnings, after the
aforesaid dividend claims have been
fully met, shall be paid into a sur
plus fund until such fund shall
amount to twenty/orfa/ per centum
of the paid-in capital stock of such
bank, and of the remaining onehalf sixty fifty per centum shall be
paid to the United States and-fe-pty
Sec. 7. After all necessary ex
penses of a Federal reserve bank have
been paid or provided for, the stock
holders shall be entitled to receive an
annual dividend of six per centum on
the paid-in capital stock, which divi
dend shall be cumulative. [ One-half
of the net earnings, after*! A f t e r the
aforesaid dividend claims, have been
fully met, f^shall be paid into a sur
plus fund until such fund shall
amount to forty per centum o f the
paidrin capital stock o f such bank,
and of the remaining one-half fifty
per centum] a l l t h e n e t e a r n i n g s
shall be paid to the United States
chise tax, and fifty per centum shall
be paid to the United States, as a
trustee for the benefit of depositors
in all failed member banks in the
United Slates, and failed member
trust companies in the District of
Columbia, the money to be kept in and
losses from, failures to be paid from it
as a depositors' insurance fund under
a division of the Treasury to be con
stituted and managed under such reg
ulations as may be prescribed by the
Secretary of the Treasury. Whenever
the Secretary of the Treasury, out of
said fund, shall pay any amounts due
to depositors of failed member banks,
the Secretary of the Treasury shall be
subrogated to all the rights of said de
positors, and in the settlement of the
affairs of any such bank all dividends
that would have been due to such de
positors shall be paid to the Secretary
of the Treasury, and the same shall be
by him paid into and become a part
of said depositors' insurance fund.
as a franchise tax, ^and fifty 'per
centum shall be paid to the United
States, as a trustee for the benefit o f
depositors in all failed member banks
in the United States, and failed mem
ber trust companies in the District of
Columbia, the money to be kept in and
losses from failures to be paid from
it as a depositors’ insurance fund
under a division of the Treasury to
be constituted ana managed under
such regulations as may be prescribed
by the Secretary of the Treasury.
Whenever the Secretary o f the Treas
ury, out of said fund, shall pay any
amounts due to depositors o f failed
member banks, the Secretary of the
Treasury shall be subrogated to all
the rights of said depositors and in
the settlement of the affairs oj any
such bank all dividends that would
have been due to such depositors
shall be paid to the Secretary of
the Treasury, and the same shall be
by him paid into and become a part
of said depositors1 insurance fu nd '!
E X C E PT TH AT O N E -n A L F OF SUCH
NET EARNIN GS SHALL BE PAID IN TO
A SURPLUS FUND UN TIL IT SH ALL
AMOUNT TO FORTY PER CENTUM
OF THE P A ID -IN CAPITAL STOCK O F
SUCH B A N K .
52
SECTION
HOUSE B IL L .
all
earnings derived by the United
States from Federal reserve banks
shall constitute a sinking fund to be
held for the reduction of the out
standing bonded indebtedness of the
United States, said reduction to be
accomplished under regulations to
be prescribed by the Secretary of
the Treasury. Should a Federal
reserve bank be dissolved or go into
liquidation, the surplus fund of said
bank, after the payment of all debts
and dividend requirements as here
inbefore provided for, shall be paid
to and become the property of the
United States.
Every Federal reserve bank in
corporated under the terms of this
Act and the capital stock therein
held by member banks shall be ex
empt from Federal, State, and local
taxation, except in respect to taxes
upon real estate.
7— C o n t i n u e d .
P A SSED B Y SENATE.
lAllJi T h e net earnings derived by
the United States from Federal re
serve banks shall, in the discretion of
the Secretary, be used to supplement
, in the discretion of the Secretary, be the gold reserve held against out
used to supplement the gold reserve standing United States notes, or shall
held against outstanding United be applied to the reduction o f the out
States notes, or shall be applied to the standing bonded indebtedness o f the
reduction of the outstanding bonded United States under regulations to be
indebtedness of the United States prescribed by the Secretary o f the Treas
ury. Shoulda Federalreserve bank be
under regulations to be prescribed
by the Secretary of the Treasury.
Should a Federal reserve bank be
dissolved or go into liquidation, the dissolved or go into liquidation, any
surplus remaining, after the payment o f
plus remaining, after the payment all de bts, dividend requirements as here
of all debts, and dividend require inbefore provided, and the par value
ments as hereinbefore provided, of the stock, shall be paid to and be
and the par value of the stock, come the property o f the United States
shall be paid to and become die and shall be similarly applied.
property of the United States and
shall be similarly applied.
Every Federal reserve bank incor
[E V m /] Federal reserve
porated. under the terms of this Act B a n k s ([incorporated, under the
ftftd, the capital stock and surplus terms of this Act'J, i n c l u d i n g
therein, held-by- member-banks and the capital stock and surplus therein,
the income derived therefrom shall be and the income derived therefrom
exempt from Federal, State, and shall be exempt from Federal, State,
local taxation, except in respect to and local taxation, except [ i n respect
taxes upon real estate.
to 3 taxes upon real estate.
All net earnings
derived by the United States from
Federal reserve banks shall eensfci-
SECTION
8.
The Senate proposed to eliminate _thia
section of the House bill.fi
Seo. 8. That any national bank
ing association heretofore organized
may upon application at any
14
time within one year after the
passage of this Act, and with
the approval of the Comptroller of
the Currency, be granted, as herein
provided, all the rights, and be sub@ct to all the liabilities, of national
>anking associations organized sub
sequent to the passage of this Act:
Provided, That such application on
the part of such associations shall
be authorized by the consent in
writing of stockholders owning not
less than a majority of the capital
stock of the association. Any na
tional banking association now or
ganized which shall not, within one
year after the passage of this Act,
become a national banking associa
tion under the provisions herein
before stated, or which shall fail to
comply with any of the provisions
of this Act applicable thereto, shall
be dissolved; out such dissolution
shall not take away or impair any
remedy against such corporation, its
stockholders or officers, for any lia
bility or penalty which shall have
previously been incurred.
t
CONFERENCE AGREEM ENT.
53
SECTION
HOUSE BILL.
9.
PASSED B Y SENATE
CONFERENCE AGREEMENT.
Sec. 8. £ That section] S e c t io n
S e c . 0 <S\ That any section fiftyone hundred and fifty-four, Vnited fifty-one hundred and fifty-four t
States Revised Statutes, he amended United States Revised Statutes, fc&e]
is h e r e b y amended to read as fol
to read as follows:
lows:
Any hank incorporated hy spe
incorporated by special law of any cial law o f any State or o f the
State or of the United States, or United States |[, j or organized under
organized under the general laws the general laws o f any State^ or of
and having an
of any State or of the United the United States
State's, and having an unimpaired unimpaired capital sufficient to entitle
capital sufficient to entitle it to it to become a national hanlcing as
become a national banking asso sociation under the provisions o f the
ciation under the provisions of existing laws may, by the vote o f the
existing laws, may, by the een- shareholders owning not less than
sent-in--writ rag vote of the share fifty-one per centum o f the capital
holders owning not less than stock of such bank or hanlcing associa
fifty-one per centum of the capital tion, with the approval o f the Comp
stock of such bank or banking troller of the Currency, he converted
association, and with the approval into a national banking association,
of the Comptroller of the Cur- with any name approved by the
The roncjy-beeeme he converted into a Comptroller of the Currency:
directors thereof may continue to national banking association, unde*
be the directors of the association so
organized until others arc elected or name approved by the Comptroller
appointed in accordance with the of the Currency: Provided, however,
Provided, however, That said
provisions of the law.
That said conversion shall not he conversion shall not be in contraven
in contravention o f the State law. In tion o f the State law. In such case
such case the articles o f association and the articles o f association and organi
organization certificate may he executed zation certificate may be executed by a
hy a majority of the directors of the hank majority of the directors o f the bank
or hanking institution, and the cer or banking institution, and the cer
tificate shall declare that the owners tificate shall declare that the owners
o f fifty-one per centum of the capital of fifty-one per centum o f the capital
stock have authorized the directors to stock have authorized the directors to
make such certificate and to change or malce such certificate and to change or
convert the hank or hanking institu convert the bank or banking institu
tion into a national association. A tion into a national association» A
majority o f the directors, after execut majority o f the directors, after execut
ing the articles o f association and the ing the articles o f association and the
organization certificate, shall have organization certificate, shall have
power to execute all other papers and power to execute ail other papers and
to do whatever may he required to to do whatever may be required to
make its organization perfect and make its organization perfect and
complete as a national association. complete as a national association.
The shares o f any such hank may The shares o f any such bank may
continue to lie for the same amount continue to he for the same amount
each as they v:ere before the conver each as they were before the conver
sion, and the directors the-Fee^ may sion, and the directors may continue
continue to be the directors of the to be directors of the association until
association se-e^am^ed until others others are elected or appointed in ac
are elected or appointed in accord cordance with the provisions of the
ance with the provisions of the statutes of the United States. When
law statutes o f the United States. the comptroller has given to such
When the 'When the comptroller has given to hank or hanking association a cer
comptroller has given to such bank such bank or banking association tificate that the provisions of this Act
or banking association a certificate a certificate that the provisions of have been complied with, such hank
that the provisions of this Act have this Act have been complied with, or hanlcing association, and all its
been complied with, such bank or such bank or banking association, stockholders, officers, and employees,
banking association, and all its and all its stockholders, officers, ami shall have the same powers and privi
stockholders, officers, and employ employees, shall have the same leges, and shall be subject to the same
ees, shall have the same powers and powers and privileges, and shall bo duties, liabilities, and regulations, in
privileges, and shall be subject to subject to the same duties, liabili all respects, as shall have been pre
the same duties, liabilities, and regu ties, and regulations, in all respects, scribed hy the Federal R e s e r v e Act
lations, in all respects, as shall have as shall have been prescribed by this and by the national banking Act for
been prescribed by this Act or by the the Federal reserve Act e* and by the associations originally organized as
national banking Act for associa national banking Act for associa national banking associations.
tions originally organized as na tions originally organized as national
banking associations.”
http://fraser.stlouisfed.org/tional banking associations.
S e c . 9. That any bank or banking
association incorporated by special
law of any State or of the United
States, or organized under the gen
eral laws of any State or the United
States, and having an unimpaired
capital sufficient to entitle it to be
come a national banking association
under the provisions of existing
laws, may, by the consent in writing
of the shareholders owning not less
than fifty-one per centum of the
capital stock of such bank or
15
banking association, and with
the approval of the Comp
troller of the Currency, become a
national banking association under
its former name or by any name ap
proved by the comptroller.
Federal Reserve Bank of St. Louis
54
SECTION
10.
HOUSE B ILL .
PASSED B Y SENATE.
CONFERENCE AGREEM ENT.
STATE BANKS AS MEMBERS.
STATE BANKS AS MEMBERS.
STATE BAN K S AS MEMBERS.
S e c . 10. That from and after the
passage of this Act any bank or
banking association or trust com
pany incorporated by special law
of any State, or organized under
the general laws of any State or the
United States, may make applica
tion
to the Federal Reserve Board
hereinafter created for the right to
subscribe to the stock of the Fed
eral reserve bank organized or to
be organized within the Federal re
serve district where the applicant is
located.
The Federal Reserve
Board, under such rules and
16
regulations as it may permit
such applying bank to be
come a stockholder in the Federal
reserve bank of the district in
which such applying bank is lo
cated. Whenever the Federal Re
serve Board shall permit such ap
plying bank to become a stock
holder in the Federal reserve bank
of the district in which the apply
ing bank is located, stock shall be
issued and paid for under the rules
and regulations in this Act provided
for national banks which become
stockholders in Federal reserve
banks.
It shall be the duty of the Fed
eral Reserve Board to establish by
laws for the general government of
its conduct in acting upon applica
tions made by the State banks and
banking associations and trust com
panies hereinbefore referred to for
stock ownership in Federal reserve
banks. Such by-laws shall require
applying bank not organized un
der Federal law to comply with the
reserve requirements and submit to
the inspection and regulation pro
vided for in this and other laws re
lating to national banks.
Sec. 9. Any bank incorporated by
special law o f any State, or organized
under the general laws o f any State
incorporated by special or of the United States, may make
law of any State, or organized under application to the reserve bank or
the general laws of any State or ganization committee, pending or
of the United States, may make ganization, and thereafter to the
application to the reserve bank Federal Reserve Board fo r the right
organization
committee, pending to subscribe to the stock o f the Federal
organization, and thereafter to the reserve bank organized or to be or
Federal Reserve Board he^em- ganized vnthin the Federal reserve dis
ftfter- ereafced for the right to sub trict where the applicant is located.
scribe to the stock of the Federal
reserve bank organized or to be
organized within the Federal re
serve district where the applicant is
located.
The organization committee or the
The organization commit
tee or the Federal Reserve Board, un Federal 'Reserve Board, under such
der such rules and regulations as it rules and regulations as it may pre
may prescribe, subject to the provi scribe, subject to the. provisions of
sions of this section, shall may per this section, may permit the apply
mit sueh the applying bank to be ing bank to become a stockholder m
come a stockholder in the Federal the Federal reserve bank o f the dis
reserve bank of the district in which trict in which the applying bank is
s«eh the applying bank is located. located. Whenever the organization
Whenever trie organization commit committee or the Federal Reserve
tee or the Federal Reserve Board Board shall permit the applying bank
shall permit s«eh the applying bank to become a stockholder in the Fed
to become a stockholder in the Fed eral reserve bank o f the district, stock
eral reserve bank of the district in shall be issued and paid fo r under the
ttt h 1
a k ^ n / \ ft »% v\ I T » i r \ /vi_ V \n y i l r i n I
^
rules and regulations in this Act pro
yr l l l u l l u l l v
r
j
n
stock shall be issued and paid for vided for national banks which become
under the rules and regulations in stockholders in Federal reserve banks.
this Act provided for national banks
which become stockholders in Fed
eral reserve banks.
The
Ifc-s hftll- bo the dttty- of- fcho The
organization committee or the Federal organization committee or the Federal
Reserve Board fce shall establish by Reserve Board shall establish by-laws
laws for the general government of fo r the general government o f its con
its conduct in acting upon applica duct in acting upon applications made
tions made by the State banks and by the State banks and banking asso
banking associations and trust corn- ciations and trust companies fo r stock
mvnership in Federal reserve banks.
stock ownership in Federal reserve Such by-laws shall require applying
banks. Such by-laws shall require banks not organized under Federal
applying banks not organized under law to comply with the reserve and
Federal law to comply with the re capital requirements and to submit to
serve and capital requirements and the examination and regulations pre
to submit to the inspeefcien examina scribed by the organization committee
tion and ye^ala^ien-pfo^ided-fey-in or by the Federal Reserve Board.
S e c . 4G 9.
f t i i fl
u ii i s
ny\/j
c iiiu
f n r\ ti
u D iiL < r
1
iu * vt kj
1 n 4- i n / v » _
i v jtn r c x x im
f/ \
tu
iit i
fcional banks regulations prescribed by
the organization committee or by the
Federal Reserve Board.
No sweh applying bank
No such
applying bank shall be admitted shall be admitted to membership
to membership in a Federal reserve in a Federal reserve bank unless it
bank unless it possesses a paid-up possesses a paid-up unimpaired cap
unimpaired capital sufficient to en ital sufficient to entitle it to become
title it to become a national bank a national banking association in the
ing association in the place where place where it is situated, under the
it is situated, under the provisions provisions of the national banking
of the national banking Act, and
No applying bank
shall be admitted to membership in a
Federal reserve bank unless it possesses' a paid-up unimpaired capital
sufficient to entitle it to become a
national banking association in the
place where it is situated, under the
provisions o f the national banking
Act.
55
SECTION
10— Continued.
HOUSE B ILL.
PASSED B Y SENATE,
conforms to the provisions herein
prescribed for national banking as
sociations of similar capitalization
and to the regulations of the Federal
Reserve Board.
he^eifi— preflef i bed— for— national
17
If at any time it shall ap
pear to the Federal Reserve
Board that a banking association or
trust company organized under the
laws of any State or of the United
States has failed to comply with the
>rovisions of this section or the reguations of the Federal Reserve
Board, it shall be within the power
of the said board to require such
banking association or trust com
pany to surrender its stock in the
Federal reserve bank in which it
holds stock upon receiving from
such Federal reserve bank the cashpaid subscriptions to the said stock
f
H. Rep. 163. 63-2
CONFERENuifi A 6RE EU EN T*
eapifeatiaftfeien and-—fee--the -regttlaAny bank becoming a member o f
a Federal reserve bank under the
provisions o f this section shall, in
addition to the regulations and re
strictions hereinbefore provided, be
required to conform to the provisions
o f law imposed on the national banks
respecting the limitation o f liability
which may be incurred by 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 payment o f unearned
dividends, and to such rules and regu
lations as the Federal Reserve Board
may, in pursuance thereof prescribe.
Such banks, and the officers,
agents,
and
employees thereof
shall also be subject to the provisions
o f and to the penalties prescribed
by sections jifty-one hundred and
ninety-eight, fifty-two hundred, fiftytwo hundred and one, and fifty-two
hundred and eight and fifty-two hun
dred and nine o f the Revised Statutes.
The member banks shall also be
required to make reports o f the con
ditions and o f the payments o f divi
dends to the comptroller, as provided
in sections fifty-two hundred and
eleven and fifty-two hundred and
twelve o f the Revised Statutes, and
shall be subject to the penalties pre
scribed by section fifty-two hundred
and thirteen for the failure to make
such report.
Any bank becoming a member o f
a Federal reserve bank under the
provisions o f this section shall, in
addition to the regulations and re
strictions hereinbefore provided, be
required to conform to the provisions
oj law imposed on the national banks
respecting the limitation o f liability
which may be incurred by any person,
iirm, or corporation to such banks, the
prohibition against making purchase
of or loam on stock o f such banks,
and the withdrawal or impairment o f
capital, or the payment o f unearned
dividends, and to such rules and regu
lations as the Federal Reserve Board
may, in pursuance thereof, prescribe.
Such banks, and the officers, agents,
and employees thereof, shall also be
subject to tlie provisions o f and to the
penalties prescribed by sections fiftyone hundred and ninety-eight, fiftytwo hundred, iifty-two hundred and
one, and fifty-two hundred and
eight, and fifty-two hundred and
nine o f the Revised Statutes. The
member banks shall also be required
to make reports o f the conditions
and o f the payments o f dividends
to the comptroller, as p rov id ed
in sections fifty-two hundred and
eleven and fifty-two hundred and
twelve o f the Revised Statutes, and
shall be subject to the penalties pre
scribed by section fifty-two hundred
and thirteen for the failure to make
such report.
If at any time it shall appear to
the Federal Reserve Board that a
banking association or trust com
pany organized under the laws of
any State or of the United States
and having become a member bank
has failed to comply with the pro
visions of this section or the regula
tions of the Federal Reserve Board,
it shall be within the power of the
said board, after hearing, to require
such banking association or trust
company to surrender its stock in
the Federal reserve bank; ia -whieh
ife-helds-sfeeefe upon yeeem ng-from
such surrender the Federal reserve
bank shall pay the cash-paid sub
scriptions to trie said stock in- eur*
yenfe fands with interest at the rate o f
one-half o f one per centum per month,
computed from the last dividend, i f
earned, not to exceed the book value
I f at any time it shall apeear to
the Federal Reserve Board that a
[ 'banking association or trust com
pany organized under the laws o f any
State or o f the United States and having
become a ] member bank has failed to
comply with the provisions o f this
section or the regulations o f the Fed
eral Reserve Board, it shall be within
the power o f the said board, after hear
ing, to require such [ banking associa
tion or trust company^ b a n k to sur
render its stock in the Federal reserve
bank; upon such surrender the Federal
reserve bank shall pay the cash-paid
subscriptions to the said stock with
interest at the rate o f one-half o f one
per centum per month, computed
from the last dividend, i f earned, not
to exceed the book value ihereof\ less
any liability to said Federal reserve
bank, except the subscription liability
56
SECTION
HOUSE B IL L
in current funds, and said Federal
reserve bank shall upon notice from
the Federal Reserve Board be re
quired to suspend said banking as
sociation or trust company from fur
ther privileges of membership, and
shall within thirty days of such no
tice cancel and retire its stock and
make payment therefor in the man
ner herein provided.
10— Continued.
PA SSE D B Y SENATE.
CONFERENCE AGREEM ENT.
thereof, less any liability to said
Federal reserve bank, except the sub
scription liability not previously
called, which shall be canceled,
and said Federal reserve bank
shall,
upon
notice
from the
Federal Reserve Board, be re
quired to suspend said banking as
sociation or trust company from
further privileges of membership,
and shall within thirty days of such
notice cancel and retire its stock
and make payment therefor in
the manner herein provided.
not previously called, which shall be
canceled, and said Federal reserve
bank shall, upon notice from the
Federal Reserve Board, be required
to suspend said [ banking association
or trust company] b a n k from further
privileges o f membership, and shall
within thirty days o f such notice
cancel and retire its stock and make
payment therefor in the manner
herein provided.
The
Federal Reserve Board may restore
membership upon due proof o f com
pliance with the conditions imposed
oy this section.
The
Federal Reserve Board mau restore
membership upon due proof o f com
pliance with the conditions imposed
oy this section.
SECTION
FEDERAL RESERVE BOARD.
S e c . 11. That there shall be cre
ated a Federal Reserve Board,
which shall consist of seven mem
bers, including the Secretary of the
Treasury, the Secretary of Agricul
ture, and the Comptroller of the
Currency, who shall be members ex
officio, and four members appointed
by the President of the United
States, by and with the advice and
consent of the Senate. In selecting
the four appointive members of the
Federal Reserve Board, not
18
more than one of whom shall
be selected from any one
Federal reserve district, the Presi
dent shall have due regard to a fair
representation of different geograph
ical divisions of the country. The
four members of the Federal Re
serve Board appointed by the Presi
dent and confirmed as aforesaid
shall devote their entire time to the
business of the Federal Reserve
Board and shall each receive an an
nual salary of $10,000, together with
an allowance for actual necessary
traveling expenses, and the Comp
troller of the Currency, as ex officio
member of said Federal Reserve
Board, shall, in addition to the sal
ary now paid him as comptroller, re
ceive the sum of $5,000 annually for
his services as a member of said
board. Of the four members thus
appointed by the President not more
11.
federal reserve board
.
A Federal Reserve Board*
is hereby created which shall consist
of seven members, including the
Secretary of the Treasury, fche-Seeshall be members a member ex
officio, and #e*H* six members ap
pointed by the President of tne
United States, by and with the ad
vice and consent of the Senate. In
selecting the lew* six appointive
members of the Federal Reserve
Board, not more than one of whom
shall be selected from any one Fed
eral reserve district, the President
shall have due regard to a fair rep
resentation of the different geo
graphical divisions of the country.
The fe&vsix 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 an
nual salary of $4-0^000 $12,000, to
gether with ftft-ftliewftnee-fo? actual
necessary traveling expenses—and
FEDERAL RESER VE BOARD.
Sec. 10. A Federal Reserve Board
is hereby created which shall consist
of seven members, including the Sec
retary of the Treasury a n d t h e C o m p
troller
of the
C u r r e n c y , who
shall be £ a member^ m e m b e r s ex
officio, and [ s i x ] f i v e members appointed by the President
~ent of
United States, by and with me advice and consent of the Senate. In
selecting the [ s z x j f i v e 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 o f the
different c o m m e r c i a l , i n d u s t r i a l
a n d geographical
divisions o f the
country. The [ six] f i v e members o f
th* 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, p a y a b l e
m o n t h l y , together with actual neces
sary traveling expenses a n d t o e
Com ptroller of the Cu rren cy,
AS E X OFFICIO M EM BER OF TH E F E D
ER A L R e s e r v e B o a r d , s h a l l , i n
ADDITION TO THE SA L A R Y NOW PAID
h im a s C o m p t r o l l e r o f t h e C u r
r e n c y , RECEIV E TH E SUM OF $7,000
AN N U ALLY FOR I1TS SERVICES AS A
M EM BER OF SAID B O A R D .
57
SECTION
1 1— C o n t i n u e d .
PASSED B Y SENATE.
HOUSE B ILL .
than two shall be of the same polit
The members o f said board, the
ical party, and at at least one of Secretary of the Treasury, the As
whom shall be a person experienced sistant Secretary of the Treasury, and
in banking. One shall be desig the Comptroller of the Currency shall
nated by the President to serve for be ineligible during the time they are
two, one for four, one for six, and in office and for two years thereafter
one for eight years, respectively, to hold any office, position, or employ
and thereafter each member so ap ment conferred by any member bam
pointed shall serve for a term of
eight years unless sooner removed
for cause by the President.
Of
Of the lett*
the four persons thus appointed, six members thus appointed by the
one shall be designated by the Presi President
dent as manager and one as vice
manager of the Federal Reserve at least efte-ej-whem two shall be ft
Board. The manager of the Fed pe-Fseft persons experienced in bank
eral Reserve Board, subject to the ing or finance. One shall be desig
supervision of the Secretary of the nated by the President to serve for
Treasury and Federal Reserve fcwe one, one for fe w two, one for
Board, shall be the active execu si* three, and one for eight - yea*^
tive officer of the Federal Reserve four, one for five, and one for six
years, gespeefcively? and thereafter
Board.
each member so appointed shall
serve for a term of e*ghfc six years
unless sooner removed for cause by
the President. Of the four six per
sons thus appointed, one shall be
designated by the President as man
age? governor and one as vice mafta* governor of the Federal Reserve
oard. The manage? governor of
the Federal Reserve Board, subject
to the its supervision ef-fche-See^e-
K
19
The Federal Reserve Board
shall have power to levy
semiannually upon the Federal re
serve banks, in proportion to their
capital stock, an assessment suffi
cient to pay its estimated expenses
for the half year succeeding the
levying of such assessment, together
with any deficit carried forward
from the preceding half year.
The Secretary of the
Treasury may assign offices in the
Department <rf the Treasury for the
use of the Federal Reserve Board.
Each member of the Federal Reserve
Board shall within fifteen days after
notice of appointment make and sub
scribe 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
salaries o f its members and employees
for the half year succeeding the
levying of such assessment, together
with any deficit carried forward
from the preceding half year.
CONFERENCE AGREEM ENT.
The members o f said board, the
Secretary o f the Treasury, the A s
sistant [Secretary"] S e c r e t a r i e s of
the Treasury, anil the Comptroller of
the Currency shall be ineligible dur
ing the time they are in office and
for two years thereafter to hold any
office, position, or employment [co n
ferred b y ] i n any member bank.
O f the
members thus appointed
by the President at least two shall be
persons experienced in banking or
finance. One shall be designated by
the President to serve for [one, one
f o r ] two, [ one for three,] one for
four, one fo r [fiv e ,] six. [a n d ] one
for [ s i x j EIGH T, AND ONE FOR TEN
years, and thereafter each member so
appointed shall serve for a term o f
[ s ^ x ] t e n years unless sooner re
moved for cause by the President.
Of the [ s i x J f i v e persons thus ap
pointed, one shall be designated by the
President as governor and one as vice
governor of the Federal Reserve Board.
The governor of the Federal Reserve
Board, subject to its supervision, shall
be the active executive officer.
[s ix ]
f iv e
The Secretary o f the
Treasury may assign offices in the
Department of the Treasury for the
use of the Federal Reserve Board.
Each member of the Federal Reserve
Board shall within fifteen days after
notice of appointment make and sub
scribe to the oath of office.
The Federal Reserve Board shall
have power to levy semiannually
upon the Federal reserve banks,
in proportion to their cajntal stock
ana surplus, an assessment sufficient
to pay its estimated expenses and t h e
salaries of its members and employees
for the half year succeeding the
levying of such assessment, together
with any deficit carried forward
from the preceding half year.
58
SECTION
1 1— C o n t i n u e d .
HOUSE B IL L .
P ASSED B Y SENATE.
CONFERENCE AGREEM ENT.
The first meeting of the Federal
Reserve Board shall be held in
Washington, District of Columbia,
as soon as may be after the passage
of this Act, at a date to be fixed by
the Reserve Bank Organization
Committee. The Secretary of the
Treasury shall be ex officio chair
man of the Federal Reserve Board.
No member of the Federal Reserve
Board shall be an officer or director
of any bank or banking institution
or Federal reserve bank nor hold
stock in any bank or banking insti
tution; and before entering upon his
duties as a member of the Federal
Reserve Board he shall certify under
oath to the Secretary of the Treas
ury that he has complied with this
requirement. Whenever a vacancy
shall occur, other than by expira
tion of term, among the four mem
bers of the Federal Reserve Board
appointed by the President, as
above provided, a successor shall
be appointed by the President, with
the advice and consent of the Sen
ate, to fill such vacancy, and when
appointed shall hold office for the
unexpired term of the member
whose place he is selected to fill.
The first meeting of the Federal
Reserve Board shall be held in
Washington, District of Columbia,
as soon as may be after the passage
of this Act, at a date to be fixed by
the Reserve Bank Organization
Committee. The Secretary of the
Treasury shall be ex officio chairman
of the Federal Reserve Board. No
member of the Federal Reserve
Board shall be an officer or director
of any bank, e? banking institution,
trust company, or Federal reserve
bank nor hold stock in any bank, e**
banking institution, or trust com
pany; and before entering upon his
duties as a member of the Federal
Reserve Board he shall certify under
oath to the Secretary of the Treas
ury that he has complied with this
requirement. Whenever a vacancy
shall occur, other than by expira
tion of term, among the feu-p six
members of the Federal Reserve
Board appointed by the President,
as above provided, a successor shall
be appointed by the President, with
the advice and consent of the Senate,
to fill such vacancy, and w^hen ap
pointed Tie shall hold office for the
unexpired term of the member whose
place he is selected to fill.
The President shall have power
to fill all vacancies that may happen
on the Federal Reserve Board during
the recess o f the Senate, by granting
commissions which shall expire at the
end o f the next session o f the Senate.
The first meeting o f the Federal
Reserve Board shall be held in
Washington, District o f Columbia,
as soon as may be after the passage
of this Act, at a date to be fixed by
the Reserve Bank Organization
Committee. The Secretary o f the
Treasury shall be ex officio chairman
o f the Federal Reserve Board. No
member of the Federal Reserve
Board shall be an officer or director
of any bank, banking institution,
trust company, or Federal reserve
bank nor hold stock in any bank,
banking institution, or trust com
pany; and before entering upon his
duties as a member o f the Federal
Reserve Board he shall certify under
oath to the Secretary o f the Treas
ury that he has compiled with this
requirement. Whenever a vacancy
shall occur, other than by expira
tion o f term, among the [ - s i x ] f i v e
members of the Federal Reserve Board
appointed by the President, as above
provided, a successor shall be ap
pointed by the President, with the
advice and consent o f the Senate, to
fill such vacancy, and when ap
pointed he shall hold office for the
unexpired term of the member whose
place he is selected to fill.
The President shall have power
to fill all vacancies that may happen
on the Federal Reserve Board during
the recess o f the Senate, by granting
commissions which shall. expire^at
the end o f j t h i r t y d a y s a f t e r the
next session of the Senate c o n v e n e s .
Nothing in this Act contained shall
be construed as taking a,way any
powers heretofore vested by law in the
Secretary o f the Treasury which re
late to the supervision,management,]
and control of the Treasury Depart
ment and bureaus under such depart
ment, and wherever any power vested
by this Act in the Federal Reserve
Board or the Federal reserve agent
appears to conflict with the powers of
the Secretary o f the Treasury, such
powers shall be exercised subject to
the supervision and control o f the
Secretary.
The Federal Reserve Board shall
annually make a full report o f its
operations to the Speaker o f the
House of Representatives, who shall
cause the same to be printed for the
information o f the Congress.
The Federal Reserve Board shall
annually make a report of its
20
fiscal operation to the Speaker
of the House of Repre
sentatives, who shall cause the
same to be printed for the infor
mation of the Congress.
Nothing in this Act contained shall
be construed as talcing away any
powers heretofore vested by law in the
Secretary o f the Treasury which re
late to the supervision, management,
and control o f the Treasury Depart
ment and bureaus under such depart
ment, and wherever any power vested
by this Act in the Federal Reserve
Board or the Federal reserve agent
appears to conflict with the powers o f
the Secretary o f the Treasury, such
powers shall be exercised subject to
the supervision and control o f the
Secretary.
The Federal Reserve Board shall
annually make a full report of its
fiseal operations to the Speaker of
the House of Representatives, who
shall cause the same to be printed
for the information of the Congress.
59
SECTION
HOUSE B ILL.
Section
_____
three
____
hundred
______
and
twenty-four of the Revised Statutes
of the United States shall be
amended so as to read as follows:
u There shall be in the Department
of the Treasury a bureau charged,
except as in this Act otherwise
provided, with the execution of
all laws passed by Congress relating
to the issue and regulation of cur
rency issued by or through banking
associations, the chief officer of
which bureau shall be called the
Comptroller of the Currency, and
shall perform his duties under the
general direction of the Secretary
of the Treasury, acting as the
chairman of the Federal Reserve
Board:” Provided, however, That
nothing herein contained shall be
construed to affect any power now
vested by law in the Comptroller
of the Currency or the Secretary
of the Treasury.
11 — C o n t i n u e d .
P ASSED B Y SENATE.
CONFERENCE AGREEM ENT.
Section
three hundred
and
Section three hundred and twentytwenty-four of the Revised Statutes four o f the Revised Statutes of the
of the United States shall be United States shall be amended so
amended so as to read as follows:
as to read as follows:
There
shall be in the Department of the
Treasury a bureau charged with the
execution of all laws passed by Con
gress relating to the issue and regula
tion of national currency secured by
United States bonds and, under the
general supervision of the Federal
Reserve Board, of all Federal reserve
notes, the chief officer of which bureau
shall be called the Comptroller of the
Currency and shall perform his duties
under the general directions f the
Secretary of the Treasury.1'
There shall be in the
Department o f the Treasury a bureau
charged with the execution o f all laws
passed by Congress relating to the
issue and regulation o f national
currency secured by United States
bonds and, under the general super
vision o f the Federal Reserve Board,
o f all Federal reserve notes, the chief
officer o f which bureau shall be
called the Comptroller o f the Cur
rency and shall perform his duties
under the general directions o f the
Secretary o f the Treasury.
60
SECTION
HOUSE BILL.
12.
PA SSE D B Y SENATE.
CONFERENCE AGREEM EN T.
S e c . 13 11.
The Federal
Sec. 11. The Federal Reserve
S e c . 12. That the Federal Re
Board shall be authorized and em
serve Board hereinbefore estab
lished shall be authorized and em lished shall be authorized and em powered:
powered :
(a)
To examine at its discretion
powered :
(a) To examine at its discretion the accounts,
(a) To examine at its discretion
and affairs o f
the accounts, books, and affairs of the accounts, books, and affairs of each Federal reserve bank and o f
each Federal reserve bank and to each Federal reserve bank and of each member bank and to require
require such statements and reports each member bank and to require such statements and reports as it
as it may deem necessary. The such statements and reports as it may deem necessary.
The said
said board shall publish once each may deem necessary. The said board shall publish once each week
week a statement showing the con board shall publish once each week a statement showing the condition
dition of each Federal reserve a statement showing the condition of each Federal reserve bank and a
bank and a consolidated of each Federal reserve bank and a consolidated statement fo r all Federal
21
statement for all Federal consolidated statement for all Fed reserve banks. Such statements shall
Such state show in detail the assets and liabilities
reserve banks. Such state eral reserve banks.
ments shall show in detail the as ments shall show in detail the of the Federal reserve banks, single
sets and liabilities of such Federal assets and liabilities of seek the and combined, and shall furnish
reserve banks, single and com Federal reserve banks, single and full information regarding the char
bined, and shall furnish full infor combined, and shall furnish full acter of the money held as reserve
mation regarding the character of information regarding the charac and the amount, nature[ , ] and matur
the lawful money held as reserve ter of the lawful money held as ities of the paper and other invest
and the amount, nature, and ma reserve and the amount, nature, ments owned or held by Federal
turities of the paper owned by and maturities of the paper and reserve banks.
other investments owned or held by
Federal reserve banks.
Federal reserve banks.
(b)
To permit, or, o n t h e a f f i r m a
(b) To permit or require—
(b) To permit or require, in time
of emergency, Federal reserve banks ef-emeyffeneyy Federal reserve banks t i v e VOTE OF AT LEAST FIV E MEM
to rediscount the discounted prime to rediscount the discounted ppime BERS o f t h e r e s e r v e b o a r d , t o re
paper of other Federal reserve banks, |>aper of other Federal reserve quire Federal reserve banks to redis
count the discounted paper of other
at least five members of the Federal
Federal reserve banks at rates o f
Reserve Board being present when
interest to be fixed [ each week or
such action is taken and all present
oftener'J by the Federal Reserve
consenting to the requirement. The
hoard.
exercise of this compulsory redis
count power by the Federal Reserve
Board shall be subject to an interest
charge to the accommodated bank
of not less than one nor greater than
three per centum abovo the higher
of the rates prevailing in the dis
f
Umg-in-tite-disfc-F >ets- imtricts immediately affected.
m e d H e e f c e d at rates of in terest
to be fixed each week or oftener by the
Federal Reserve Board.
(c)
To suspend for a period not (c)
(c) To suspend for a period not
To suspend for a period not
exceeding thirty days (and to renew exceeding thirty days, (and from exceeding thirty days, and from
such suspension for periods not to time to time to renew such suspension time to time to renew such suspension
exceed fifteen days) any and every for periods not fee-e xceed exceeding for periods not exceeding fifteen days,
reserve requirement specified in this fifteen days), any and-eve-ry reserve any reserve requirement specified in
act: Provided, That it shall estab requirement specified in this Act: this Act: Provided, That it shall exlish a graduated tax upon the Provided, That it shall establish a tablish a graduated tax upon the
amounts by which the reserve re graduated tax upon the amounts by amounts by which the reserve re
quirements of this act may be per which the reserve requirements of quirements of this Act may be per
mitted to fall below the level herein this Act may be permitted to fall mitted to fall below the level herein
after specified, such tax to be below the level hereinafter spcci- after specified.
uniform in its application to
22
all banks; but said board
61
SECTION
PASSED B Y SENATE
HOUSE B ILL.
shall not suspend the reserve re
quirements with reference to Fed
eral reserve notes.
A
“ T U I1 U L
__f /\
T3u
"
"
(e) To add to the number of cities
classified as reserve and central re
serve cities under existing law in
which national banking associations
are subject to the reserve require
ments sot forth in section twenty of
this act; or to reclassify existing
reserve and central reserve cities
and to designate the banks therein
situated as country banks at its
discretion.
(f) To suspend the officials of
Federal reserve banks and, for
cause stated in writing with oppor
tunity of hearing, require the re
moval of said officials for incom
petency, dereliction of duty, fraud,
or deceit, such removal to be subject
to approval by the President of the
United States.
CONFERENCE AGREEM ENT.
U /\ H /> n n I
r»/\ n /\ m ^ /%
. r C t t t J T n i T ..............TT3»3 v i T t 3
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 grad
uated tax of not more than one per
centum upon such deficiency until the
reserve# fall to thirty-two and one-half
per centum. and v:hen said reserve
falls below thirty-two and one-half
per centum, a tax at the rate increas
ingly of not less than one and onehalf per centum upon each two and,
one-half per centum or fraction thereof
that such reserve falls below thirtytv:o 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 the
and retirement of Federal re
notes and to prescribe the
arid tenor of such notes.
netes.
(d)
issue
serve
form
12 — C o n t i n u e d .
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 p e e a n n u m upon such defi
ciency until the reserves fall to thirtytv'o and one-half per centum, and
v'hen sa id reserve falls below thirtytwo and one-half per centum, a tax
at the rate increasingly of not less
than one and one-half per centum
p e it
annum
upon each two and
one-half per centum or fraction thereof
that such reserve falls below thirtytv:o and one-half per centum. The
tax shall be paid by the reserve banlc,
but the reserve banlc 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 supervise and regulate through the
bureau under the charge o f the Comp bureau under the charge of the Comp
troller o f the Currency the issue and troller of the Currency the issue and
retirement o f Federal reserve notes, retirement of Federal reserve notes,
and to prescribe rules and regulations and to prescribe rules and regulations
under which such notes may be de under which such notes may be de
livered by the comptroller to the Fed livered by the comptroller to the Fed
eral reserve agents applying therefor. eral reserve agents applying therefor.
(c)
To add to the number of cities (e)
To add to the number o f cities
classified as reserve and central re classified as reserve and central re
serve cities under existing law in serve cities under existing law in
which national banking associations which national banking associations
are subject to the reserve require are subject to the reserve require
ments set forth in section twenty of ments set forth in section twenty of
this Act; or to reclassify existing re this Act; or to reclassify existing re
serve and central reserve cities and serve and central reserve cities or to
terminate their designation as such.
e+*efcie« or to terminate their designa
tion as such.
(/)
To suspend or remove any
(f)
Te—suspend—the—effieiate—
officer or director of any Federal
Federalreserve bank, the cause of such
removal to be forthwith communicated
T*f*rYW\lyfl-1 ^ C ir t- 1/I /vffl m 1q r U iw» Ti tr
\
i
in writing by the Federal Reserve
T t T T T T U T T i t U I “ cT T v l U l l l “ iTtTJ5
l l l ^ U l 11
Board to the removed officer or direc
tor and to said bank.
President
To suspend or
remove any officer or director of any
Federal reserve bank, the cause of such
removal to be forth with communicated
in writing by the Federal Reserve
Board to the removed officer or direc
tor and to said bank.
62
SECTION
HOUSE B ILL .
(g) To require the writing off of
doubtful or worthless assets upon
the books and balance sheets of
Federal reserve banks.
(h) To suspend, for cause relating
to violation of any of the provisions
of this act, the operations of any
Federal reserve bank and appoint a
receiver therefor.
12 — C o n t i n u e d .
PA SSE D B Y SENATE.
(g) To require the writing off of
doubtful or worthless assets upon
the books and balance sheets of I ederal reserve banks.
(h) To suspend, for cause relating
to violation of any of the provisions
of this Act, the operations of any
Federal reserve bank and appeiflfc-ft
yeeeivef -fehe-Feley take possession
thereof and administer the same dur
ing the period of suspension.
CONFERENCE AGREEM EN T
(g) To require the writing off o f
doubtful or worthless assets upon
the books and balance sheets of Fed
eral reserve banks.
(h) To suspend, fo r £ cause relating
&>3 t h e violation o f any o f the provi
sions of this Act, the operations o f any
Federal reserve bank, ^and'J t o take
possession thereof, f^and'y administer
the same during the period o f sus
pension, AN D , W H E N D EEM ED AD
V ISA B LE , TO
LIQ U ID A TE
ORGANIZE SUCH B A N K .
(i) To perform the duties, func
tions, or services specified or im
plied in this Act.
OR
RE
(i)
To require bonds of Federal re (i) To require bonds of Federal re
serve agents, perform the duties, serve agents, t o m a k e r e g u l a t i o n s
functions, or services specified or im FOR THE SAFEGUARDING OF ALL
plied in this Act, and to make all CO LLATERAL, BONDS, FE D E R A L R E
rules and regulations necessary to en SERVE N OTES, M ONEY OR PR O PERTY
able said board effectively to perform OF A N Y K IN D DEPOSITED IN THE
HANDS OF SUCH AG EN TS, AND SAID
the same.
board
shall
perform the duties,
functions, or services specified [ o r
implied] in this A ct, and
make
all rules and regulations necessary to
enable said board effectively to perform
the same.
(j) To exercise general supervision
(j) To exercise general supervision
over said Federal reserve banks.
ov(r said Federal reserve banks.
[ (k) To authorize member banks to
Ic) To authorize member banks to
use, as reserves, Federal reserve notes, use, as reserves, Federal reserve notes,
or bank notes based on United States or bank notes based on United States
bonds, to the extent that said board bonds, to the extent that said board
may find necessary.3
may find necessary.
t(Z )3 (K )2 b grant by special permit
(I) To grant by special permit to
national banks applying therefor, to national banks applying therefor,
when not in contravention of State or when not in contravention of State or
local law, the right to act as trustee, local law, the right to act as trustee,
executor, administrator, or registrar of executor, administrator, or registrar o f
stocks and bonds under such rules and stocks and bonds under such rules and
regulations as the said board may regulations as the said board may
prescribe.
prescribe.
[ (m) J ( l ) T o employ such attorneys,
(m) To employ such attorneys, ex
perts, assistants, clerks, or other em experts, assistants, clerks, or other em
ployees as may be deemed necessary ployees as may be deemed necessary
to properly conduct the business of to iproperly'J conduct the business of
such board, and to accomplish the J^such 3 th e board\[, and to accomplish
purposes of this Act. All salaries, the purposes of this Act'y. All sala
allowances, and expenses of those ries^, allowances, and expenses o f those
employed to be fixed in advance by employed to3 a n d f e e s s h a l l be
said board and to be paid in the same fixed, in advance by said board and
manner as the salaries of the members [t o 3 s h a l l be paid in the same man
o f said board. All such attorneys, ner as the salaries of the members of
experts, assistants, clerks, and other said board. All such attorneys, ex
employees to be appointed without perts, assistants, clerks, and other
regard to the provisions of the Act of employees [fc>3 s h a l l be appointed
January sixth, eighteen hundred arid without regard to the provisions o f the
eighty-three ( Twenty-second Revised Act of January [siatf/1 3 s i x t e e n t h ,
Statutes, four hundred and three), eighteen hundred and eighty-three
and amendments thereto, or any rule ( £ Twenty-second Revised Statutes,^
T W E N T Y - TW O ,
UNITED
or regulation made in pursuance VOLUM E
thereof: Provided, That nothing here STATES STATUTES AT LAR GE , PAGE
in shall prevent the President from four hundred and three), and amend
placing said employees in the class ments thereto, or any rule or regula
ified service.
tion made in pursuance thereof: Pro
vided, That nothing herein shall pre
vent the President from placing said
employees in the cta&sified service•
63
SECTION
HOUSE B ILL.
23
FEDERAL ADVISORY COUNCIL.
S e c . 13. There is hereby created
a Federal Advisory Council, which
shall consist of as many members
as there are Federal reserve dis
tricts. Each Federal reserve bank
by its board of directors shall annu
ally select from its own Federal re
serve district one member of said
council, who shall receive no comcnsation for his services, but may
e reimbursed for actual necessary
expenses.
13.
PASSED B Y SENATE.
CONFERENCE AGREEMENT.
FEDERAL ADVISORY COUNCIL.
FEDERAL ADVISORY COUNCIL.
Se c .
12. There is hereby cre
ated a Federal Advisory Council,
which shall consist of as many
members as there are Federal re
serve districts. Each Federal re
serve bank by its board of directors
shall annualiy select from its own
Federal reserve district one member
of said council, who shall receive
S ec. 12. There is hereby created a
Federal Advisory Council, which
shall consist of as many members as
there are Federal reserve districts.
Each Federal reserve bank by its
board of directors shall annually
select from its own Federal reserve
district one member of said council,
who shall receive such compensation
and allowances as may be fixed by
his board of directors subject to the
approval of the Federcil Reserve
Board.
E
tion and allowances as may be fixed
by his board of directors subject to the
approval of the Federal Reserve
Board.
The meetings of said
The meetings of said ad
advisory council shall be held at visory council shall be held at Wash
Washington, District of Columbia, ington, District of Columbia, at least
at least four times each year, and four times each year, and oftener if
oftener if called by the Federal called by the Federal Reserve
Reserve Board. The council may Board. The council may in addi
select its own officers and adopt its tion to the meetings above provided for
own methods of procedure, and a hold such other meetings in Washing
majority of its members shall con ton, District of Columbia, or elsestitute a quorum for the transaction v:here, as it may deem necessary, may
of business. Vacancies in the coun select its own officers and adopt its
cil shall be filled by the respective own methods of procedure, and a
reserve banks, and members se majority of its members shall con
lected to fill vacancies shall serve stitute a quorum for the transaction
for the unexpired term.
of business. Vacancies in the coun
cil shall l)e filled by tho respective
reserve banks, and members selected
to fill vacancies shall serve for the
unexpired term.
The Federal Advisory Council
The Federal Advisory Council
shall have power (1) to meet and shall have power, by itself or through
confer directly with the Federal its officers, (1) to meefe-and confer
Reserve Board on general business directly with the Federal Reserve
conditions; (2) to make oral or Board on general business condi
written representations concerning tions; (2) to make oral or written
matters within the jurisdiction of representations concerning matters
said board; (3) to call for complete within the jurisdiction of said
information and to make recom board: (3) to call for eemplefce
mendations in regard to discount information and to make recom
rates, rediscount business, note is mendations in regai’d to dis
sues, reserve conditions in the va count rates, rediscount business,
rious districts, the purchase and note issues, reserve conditions in
sale of gold or securities by reserve the various districts, the purchase
banks, open-market opera!ions by and sale of gold or securities by
said banks, and the general affairs reserve banks, open-market opera
tions by said banks, and the general
of the reserve banking system.
affairs of the reserve banking sys
tem.
II. Rep. 163, (53-2----- 7
The meetings of said ad
visory council shall be held at Wash
ington, District of Columbia, at least
four times each year, and oftener i f
called by the Federal ' Reserve
Board.
The council may in addi
tion to the meetings above provided for
hold such other meetings in 'Washing
ton* District of Columbia, or else
where, as it may deem, necessary, may
select its ov:n officers and adopt its
own methods of procedure, and a
majority of its members shall con
stitute a quorum for the transaction
of business. Vacancies in the coun
cil shall be filled by the respective
reserve banks, and members selected
to fill vacancies, shall serve for the
unexpired term.
The Federal Advisory Council
shall have power, by itself or through
its officers, (1) to con fer directly with
the "Federal Reserve Board on general
business conditions; (2) to make oral
or v'ritten representations concerning
matters within the jurisdiction o f said
board: (3) to call for information and
to make recommendations in regard to
discount rates, rediscount business,
note issues, reserve conditions in the
various districts, the purchase and
sale of gold or securities by reserve
banks, open-market operations by
said banks, and the general affairs
of the reserve banking system.
64
SECTION
HOUSE B ILL.
24
REDISCOUNTS.
14
PA SSE D B Y SENATE.
R g P I S OOUNTS POWERS
OF
FE D E RAL
RESERVE B AN K S.
S e c . 14. That any Federal reserve
S e c . 44 13. That- ftfty Any Fed
bank may receive from any member eral reserve bank may receive from
bank deposits of current funds in any of its member b&ftfe banks, and
lawful money, national bank notes, from the United States, deposits of
Federal reserve notes, or checks current funds in lawful money,
and drafts upon solvent banks, pay national-bank notes, Federal re
able upon presentation; or, solely serve notes, or checks and drafts
for exchange purposes, may receive upon solvent banks of the Federal
from other Federal reserve banks reserve system, payable upon pres
deposits of current funds in lawful entation; or, solely for exchange
money, national bank notes, or purposes, may receive from other
checks and drafts upon solvent Federal reserve banks deposits of
banks, payable upon presentation. current funds in lawful money,
national-bank notes, or checks and
drafts upon solvent member or other
Federal reserve banks, payable upon
presentation.
Upon the indorsement of any
Upon the indorsement of any of
member bank any Federal reserve its member bask banks, with a
bank may discount notes and bills waiver of demand notice and protest
of exchange arising out of com by such bank any Federal reserve
mercial transactions; that is, notes bank may discount notes, drafts,
and bills of exchange issued or and bills of exchange arising out of
drawn for agricultural, industrial, or actual commercial transactions; that
commercial purposes, or the proceeds is, notes, drafts, and bills of ex
of which have been used, or may change issued or drawn for agri
be used, for such purposes, the Fed cultural, industrial, or commercial
eral Reserve Board to have the right purposes, or the proceeds of which
to determine or define the charac have been used, or may are to
ter of the paper thus eligible for be used, for such purposes, the
discount, within the meaning of this Federal Reserve Board to have
Act; nothing herein contained shall the right to determine or define
be construed to prohibit such notes the character of the paper thus
and bills of exchange, secured by eligible for discount, within the
staple agricultural products, or other meaning of this Acti— ftefchiftg
oods, wares, or merchandise from he-Feift. Nothing in this Act con
eing eligible for such discount; but tained shall be construed to pro
such definition shall not include hibit such notes, drafts, and bills of
notes or bills issued or drawn for exchange, secured by staple agri
the purpose of carrying or trading cultural products, or other goods,
in stocks, bonds, or other invest wares, or merchandise from being
ment securities. Notes and bills eligible for such discount; but such
admitted to discount under the definition shall not include notes,
terms of this paragraph must have drafts, or bills covering merely in
a maturity of not more than ninety vestments or issued or drawn for the
purpose of carrying or trading in
days.
stocks, bonds, or other investment
securities, except bonds and notes of
the Government of the United States.
Notes, drafts, and bills admitted to
discount under the terms of this
paragraph must have a maturity
at the time of discount of not more
than ninetv days: Provided, That
notes, drafts, and bills drawn or
issued for agricultural 'purposes or
based on live stock and having a man
turity not exceeding six months may
be discounted in an amount to be
limited to a percentage of the capital
o f the Federal reserve bank, to be as
certained and fixed by the Federal
Reserve Board.
CONFERENCE AGREEMENT
POW ERS OF FEDERAL RESEE VI
B A N K S.
Sec. 13. A ny Federal reserve bank
may receive from any o f 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 e m b e r banks [ o f the
Federal reserve system], payable upon
presentation; or, solely fo r exchange
purposes, may receive from other Fed
eral reserve banks deposits o f current
funds in lavjful money, national-bank
notes, or checks and drafts upon
solvent member or other Federal re
serve banks, payable upon presenta
tion.
Upon the indorsement o f any o f
its member banks, with a waiver o f
demand, notice and protest by such
bank, any Federal reserve bank may
discount notes, drafts, and bills o f
exchange arising out o f actual com
mercial transactions; that is, notes,
drafts, and bills of exchange issued or
drawn for agricultural, industrial,
or commercial purposes, or the pro
ceeds o f which have been used,
or are to be used, for such
purposes, the Federal Reserve Board
to have the right to determine or
define the character o f the paper
thus eligible for discount, within the
meaning of this Act. Nothing in
this Act contained shall be construed
to prohibit such notes, drafts, and
bills of exchange, secured by staple
agricultural products, or other goods,
wares, or merchandise from being
eligible for such discount; but such
definition shall not include notes,
drafts, or bills covering merely invest
ments or issued or drawn fo r the
purpose o f carrying or trading in
stocks, bonds, or other investment
securities, except bonds and notes o f
the Government o f the United States.
Notes, drafts, and bills admitted to
discount under the terms o f this
paragraph must have a maturity
at tTie time o f discount o f 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 ma
turity not exceeding six months may
be discounted in an amount to be
limited to a percentage of the capital
o f the Federal reserve bank, to be as
certained and fixed by the Federal
Reserve Board.
65
SECTION
HOUSE B ILL.
Upon the indorsement of
any member bank any Fed
eral reserve bank may discount the
paper of the classes hereinbefore de
scribed having a maturity of more
than ninety and not more than one
hundred and twenty days, when its
own cash reserve exceeds thirtythree and one-third per cent of its
total outstanding demand liabilities
exclusive of its outstanding Federal
reserve notes by an amount to be
fixed by the Federal Reserve Board;
but not more than fifty per cent of
the total paper so discounted for any
member bank shall have a maturity
of more than ninety days.
Upon the indorsement of any
member bank any Federal reserve
bank may discount acceptances of
such banks which are based on the
exportation or importation of goods
and which mature in not more than
six months and bear the signature
of at least one member bank in ad
dition to that of the accentor. The
amount so discounted snail at no
time exceed one-half the capital
stock of the bank for which the re
discounts are made.
14 — C o n t i n u e d .
P ASSED B Y SENATE.
CONFERENCE AGREEM ENT
25
The aggregate of such notes and
bills bearing the signature or in
dorsement of any one person, com
pany, 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.
2G
Any national bank may,
at its discretion, accept
drafts or bills of exchango drawn
upon it having not more than six
months sight to run and growing
out of transactions involving the
importation or export ation of goods;
but no bank shall accept such bills
to an amount equal at any time in
the aggrogato to more than one-half
the face value of its paid-up and un
impaired capital.
Section fifty-two hundred and
two of the Revised Statutes of the
United States is hereby amended so
as to read as follows: No associa
■fcfm—+*e9-fchi?fcy-fch-Fee-attd-ef+e-
ftfty
member—bank—a«^ Any Federal
reserve bank may discount accept
ances of—‘rueh—bftftks which are
based on the e^pe-Htatien-e-H impor
tation or exportation or domestic
shipment of goods and which raafcw-Fe
in have a maturity at time of discount
of not more than
three months,
and
indorsed
by at least one member hank in-addi-
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
arc made.
The aggregate of such notes and
bills bearing the signature or in
dorsement of any one person, com
pany, 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 val
ues.
Any national bank may^-afc-ifcs
dtse^efcteny accept drafts or bills of
exchange drawn upon it ’
and growing out of transactions
involving the importation,
expor
tation, or domestic shipment of goods
having not more than six months
sight to run: but no bank shall ac
cept such bills to an amount equal
at any time in the aggregate to
more than one-half fche-iaee-¥atee
e f its paid-up and—unimpaired
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
A n y Federal reserve bank may dis
count acceptances which are based on
the importation or exportation o f
goods and which have a maturity at
time o f discount o f not more than three
months, and indorsed by at least
one member bank. The amount o f
acceptances so discounted shall at no
time exceed one-half the paid-up capi
tal stock and surplus o f the bank fo r
which the rediscounts are made.
The aggregate o f such notes and
bills bearing the signature or indorse
ment o f any one person, company,
;firm, or corporation rediscounted for
any one bank shall at no time exceed
ten per centum o f the unimpaired
capital and surplus o f said bank; but
this restriction shall not apply to the
discount o f bills o f exchange drawn
in good faith against actually existing
values.
A ny J£national"\ m em ber bank
may accept drafts or bills of exchange
drawn upon it and growing out of
transactions involving the importa^ 0 7 7 [,] o r exportation[ , or domestic
shipment^ 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 it&
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
66
SECTION
Continued.
PASSED B Y SENATE
HOUSE BILL.
tion shall at any time be indebted
or in any way liable, to an amount
exceeding the amount of its capital
stock at such time actually paid in
and remaining undiminished by
losses or otherwise, except on ac
count of demands of the nature fol
lowing:
First. Notes of circulation.
Second. Moneys deposited with
or collected by the association.
Third. Bills of exchange or drafts
drawn against money actually on
deposit to the credit of the associa
tion, or due thereto.
Fourth. Liabilities to the stock
holders of the association for divi
dends and reserve profits.
Fifth. Liabilities incurred under
the provisions of sections two, five,
and fourteen of the Federal reserve
Act.
14-
association shall at any time be in national bankina association shall ai
debted, or in any way liable, to an any time be indebted, or in any way
amount exceeding the amount of its liable, to an amount exceeding the
capital stock at such time actually amount of its capital stock at such
aid in and remaining undiminished time actually paid in and remaining
y losses or otherwise, except on undiminished by losses or otherwise,
account of demands of the nature except on account o f demands of the
following:
nature following:
First. Notes of circulation.
First. Notes of circulation.
Second. Moneys deposited wTith
Second. Moneys deposited'W i t h or
or collected by the association.
collected by the association.
Third. Bills of exchange or drafts
Third. Bills of exchange or drafts
drawn against money actually on drawn against money actually on
deposit to the credit of the associa deposit to the credit of the association,
or due thereto.
tion, or due thereto.
Fourth. Liabilities to the stock
Fourth. Liabilities to the stock
holders of the association for divi holders of the association for divi
dends and reserve profits.
dends and reserve profits.
Fifth. Liabilities incurred under
Fifth. Liabilities incurred under
the provisions of
the provisions of£this'J th e F e d e r a l
R e se r v e Act.
this Act.
The Federal Reserve Board may
[ Tit e Federal Reserve Board may
authorize the reserve bank of the authorize the reserve bank o f the
district to discount the direct obli district to discount the direct obliga
gations of member banks, secured tions o f member banks, secured by
oy the pledge and deposit of satis the pledge and deposit o f satisfactory
factory securities; but in no case securities; but in no case shall the
shall the amount so loaned by a amount so loaned by a Federal re
Federal reserve bank exceed three- serve bank exceed three-fourths o f the
fourths of the actual value of the actual value of the securities so
securities so pledged.
pledged
The rediscount by any Federal
The rediscount by any Federal
reserve bank of any bills receivable reserve bank o f any bills receivable
and of domestic and foreign bills and of domestic and foreign bills
of exchange and acceptances shall of exchange, and o f acceptances
be subject to such restrictions, limi AUTHORIZED B Y TH IS ACT, shall
tations, and regulations as \may be subject to such restrictions, limi
be imposed by the Federal Reserve tations, and regulations as may be
Board.
imposed by the Federal Reserve Board.
E
SECTION
27
O PEN -M ARK ET
OPERATIONS.
S e c . 15. That any Federal reserve
bank may, under rules and regula
tions prescribed by the Fodoral Re
serve Board, purchase and sell in
the open market, either from or to
domestic or foreign banks, firms,
corporations, or individuals, prime
bankers’ bills, and bills of exchange
of the kinds and maturities by this
Act made eligible for rediscount,
and cable transfers.
Every Federal reserve bank shall
have power (a) to deal in gold coin
and million both at home and
abroad, to make loans thereon,
and to contract for loans of gold
coin or bullion, giving therefor,
CONFERENCE AGREEM ENT
15.
O PEN -M ARK ET OPERATIONS.
O PE N -M AR KE T OPERATIONS.
Se c .
Uh
any Any Fed
eral reserve bank may, under rules
and regulations prescribed by the
Federal Reserve Board, purchase
and sell in the open market, at
home or abroad, either from or to
domestic or foreign banks, firms,
corporations, or individuals,
cable transfers and bankers’ kills
acceptances and bills of exchange of
the kinds and maturities bv this
Act made eligible for rediscount*
with or without
the indorsement of a member bank.
Every Federal reserve bank shall
have power: (a) to deal in gold coin
and bullion teeth at home and or
abroad, to make loans thereon, ex
change Federal reserve notes for gold,
gold coin, or gold certificates, and to
S ec. H . Any Federal reserve bank
may, under rules and regulations
prescribed by the Federal Reserve
Board, purchase and sell in the open
market, at home or abroad, either
from or to domestic or foreign banks,
firms, corporations, or individuals,
cable transfers and bankers' accep
tances and bills o f exchange of the
kinds and maturities by this Act
made eligible for rediscount,.with or
without the indorsement o f 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 Fed
eral reserve notes for gold, gold
coin, or gold certificates, and to con-
67
SECTION
15 — C o n t i n u e d .
HOUSE B ILL.
PASSED B Y SENATE.
CONFERENCE AGREEMENT.
when necessary, acceptable security,
including the hypothecation of
contract for loans of gold coin or
bullion, giving therefor, when nec
essary, acceptable security, includ
ing the hypothecation of United
States bonds or other securities which
Federal reserve banks are authorized
to hold; (b) to in¥esfc-in buy and sell,
at home or abroad, bonds arid notes of
the United States bends, and bends
tract for loans o f gold coin or bul
lion, giving therefor, when neces
sary, acceptable security, including
the hypothecation o f United States
bonds or other securities which Fed
eral reserve banks are authorized
to hold; (6) to buy and sell, at
home or abroad, bonds and notes o f
the United States, and bills, notes,
revenue bonds, and warrants with
a maturity from date o f purchase
of not exceeding six months, issued
in anticipation of the collection
of taxes or in anticipation o f the
receipt of assured revenues by any
State, county, district, political sub
division, or municipality in the
continental United States, i n c l u d i n g
United States bonds; (b) to invest
in United States bonds, and bonds
issued by any State, county, dis
trict, or municipality;
(c) to pur
chase from member banks and to
sell, with’ or without its indorse
ment, bills of exchange arising out
of commercial transactions, as here
inbefore delined, payable in for
eign countries; but such bills of
exchange must have not exceeding
ninety days to run and must bear
the signature of two or more re
sponsible parties, of which the last
shall be that of a member bank;
(d) to establish each week, or as
much oftener as required, subject
to review and determination of the
Federal Reserve Board, a rate of
discount to be charged by such
bank for each class of paper, which
shall be fixed with a view of accom
modating the commerce of the
country; and
(e) with the
28
consent of the Federal Re
serve Board, to open and
maintain banking accounts in for
eign countries and establish agen
cies in such countries wheresoever
it may deem best for the purpose
of purchasing, selling, and collect
ing foreign bills of exchange, and to
buy and sell with or without its
indorsement, through such corre
spondents or agencies, prime for
eign bills of exchange arising out of
commercial transactions which have
not exceeding ninety days to run
and which bear the signature of
two or more responsible parties.
revenue bonds] and warrants with
a maturity from date of pur
chase of not exceeding six months,
issued in anticipation of the col
lection of taxes or in anticipation
of the receipt of assured revenues by
any State, county, district, %)olitical
subdivision, or municipality in the IR RIG ATIO N , DRAINAGE AND RECLA
continental United States, such pur MATION d i s t r i c t s , such purchases
chases to be made in accordance with to be made in accordance with rules
rules and regulations prescribed by and regulations prescribed by the
the Federal Reserve Board;
Federal Reserve Board;
(c) to
(c) to
purchase from member banks and purchase from member banks and to
to sell, with or without its indorse sell, with or without its indorsement,
ment, bills of exchange arising out bills of exchange arising out of com
of commercial transactions, as here mercial transactions, as hereinbefore
inbefore (lefiried^-pft^ftWe-in-le+’ei^n
A fl* I V 1
I
vU iH1UlIHT\
.'k3 l.Ml *-t 7/TTt^11U1
TT
(d) to eseftene^-fts-requi^ed/rom time to time,
subject to review and determina
tion of the Federal Reserve Board,
ft-Fftte rates of discount to be charged
by sueh the Federal reserve bank for
each class of paper, which shall be
fixed with a view" of accommodating
the commerce e#-the-ee«nt-H¥ and
business; and (e) to establish ac
counts with other Federal reserve
banks for exchange purposes and,
with the consent oi the Federal
Reserve Board, to open and main
tain banking accounts in foreign
countries, appoint correspondents,
and establish agencies in such coun
tries wheresoever it may deem best
for the purpose of purchasing,
selling, and collecting fe^ei^n
bills of exchange, and to buy
and sell with or without its
indorsement, through such corre
spondents or agencies,
eign bills of exchange arising out of
actual
commercial
transactions
which have not exeeedin^ more
than ninety days to run and which
bear the signature of two or more
responsible parties.
defined; (d) to establish from time to
time, subject to review and determina
tion of the Federal Review Board,
rates of discount to be charged by the
Federal reserve banlc 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 con
sent of the Federal Reserve Board, to
open and maintain banking accounts
in foreign countries, appoint corre
spondents, and establish agencies in
such countries wheresoever it may
deem best for the purpose of pur
chasing, selling, and collecting bills
of exchange, and to buy and
sell with or without its indorse
ment, through such correspondents or
agencies, bills of exchange arising out
of actual commercial transactions
which have not more than ninety days
to run and which bear the signature o f
two or more responsible parties.
68
SECTION
16.
HOUSE B ILL .
P ASSED B Y SENATE.
CONFERENCE AGREEM ENT.
GOVERNM ENT DEPOSITS.
GOVERNMENT DEPOSITS.
0 0 V E R N M E N T DEPOSITS.
Se c .
15. Thafe-all The moneys
S e c . 16. That all moneys now
held in the general fund of the aew held in the general fund of the
Treasury except the five per centum Treasury, except the five per centum
fund for the redemption of outstand fund for the redemption of out
ing national-bank notes shall, upon standing national-bank notes and
the direction of the Secretary of the the funds provided in this Act for
Treasury, within twelve months the redemption of Federal reserve
after the passage of this Act, be notes shaH- may, upon the direction
deposited in Federal reserve banks, of the Secretary of the Treasury,
which banks shall act as fiscal agents
of the United States; and thereafter sag e -o f-t h is ■A e% be deposited in
the revenues of the Government Federal reserve banks, which banks
shall be regularly deposited in such shall, when required by the Secretary
banks, and disbursements shall be of the Treasury, shall act as fiscal
made by checks drawn against such agents of the United States; and
fcheyoaffce? the revenues of the Gov
deposits.
ernment or any part thereof shall
may be f effialftriy deposited in such
banks, ana disbursements shall may
be made by checks drawn against
such deposits.
No public funds of the Philippine
Islands, or of the postal savings, or
any Government funds, shall be de
posited in the continental United
States in any bank not belonging to
the system established by this Act:
Provided, however, That nothing in
this Act shall be construed to deny
the right of the Secretary of the
Treasury to use member banks as
depositories.
The Secretary of the Treasury
shall, subject kTthe approval of the
Federal Reserve Board, from time
to time, apportion the funds of the
Government among the said Federal
reserve banks, distributing them, as
far
as
practicable,
equitably
between different sections, and
may, at their joint discretion, charge
interest thereon and fix, from
29
month to month, a rate
which shall be regularly paid
by the banks holding such deposits:
Provided, That no Federal reserve
bank shall pay interest upon any
deposits except those of the United
States.
No Federal reserve bank shall
receive or credit deposits except
from the Government of the United
States, its own member banks, and,
to the extent permitted by this Act,
from other Federal reserve banks.
All domestic transactions of the
Federal reserve banks involving
loans made by such banks, redis
count operations or the creation of
deposit accounts shall be confined to
the Government and the depositing
and Federal reserve banks, with the
exception of the purchase or sale of
Government or State securities or
of gold coin or bullion.
twiUieft,
S ec . 15. The moneys held in the
general fund o f the Treasury, except
the five per centum fund for the re
demption o f outstanding nationalbank notes and the funds provided in
this Act for the redemption of Federal
reserve notes may, upon the direction
o f the Secretary o f 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 rrvay
be made by checks drawn against such
deposits.
No public funds of the Philippine
Islands, or of the postal savings, or
any Government funds, shall be de
posited in the continental United
States in any bank not belonging to
the system established by this Act:
Provided, however, That nothing in
this Act shall be construed to deny
the right of the Secretary of the
Treasury to use member banks as
depositories.
69
SECTION
HOUSE B IL L
17.
P ASSED B Y SENATE.
CONFERENCE AGREEMENT.
NOTE ISSUES.
NOTE ISSUES.
N O TE ISSUES.
S e c . 17. That Federal reserve
notes, to be issued at the discretion
of the Federal Reserve Board for
the purpose of making advances to
Federal reserve banks 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 receiva
ble for all taxes, customs, and other
ublic dues. They shall be reeemed in gold or lawful money on
demand at the Treasury Depart
ment of the United States, in the
city of Washington, District of
Columbia, or at any Federal reserve
bank.
S e c . 4? 16. That 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 herein
after set forth and for no other
purpose,
are
hereby
author
ized. The said notes shall be obli
gations of the United States and
shall be receivable by all national
and member banks and Federal re
serve banks and for all taxes, cus
toms, and other public dues.
They shall be redeemed in gold e?
lftwrtil—moRC}r 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*
upen-yefce-ef-ifes-difeefeey^ mako
application to the local Federal re
serve agent for such amount of the
Federal reserve notes hereinbefore
provided for as it may deefH—best
require. Such application shall be
accompanied with a tender to tho
local federal reserve agent of col
lateral in amount equal to the sum
of the Federal reserve notes thus
applied for and issued pursuant to
such application. The collateral
security thus offered shall be notes
and bills accepted for rediscount
under the provisions of section 44
13 of this act, and the Federal re
serve 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 accred
ited. The said Federal Reserve
Board shall be authorized at any
time to call upon a Federal reserve
bank for additional security to pro
tect the Federal reserve notes issued
to it.
S e c . 16. Federal reserve notes, to
be issued at the discretion o f the
Federal Reserve Board for the
purpose o f making advances to
Federal reserve banks through the
Federal reserve agents as herein
after set forth and for no other
purpose,
are
hereby
author
ized. The said notes shall be obli
gations o f the United States and
shall be receivable by all national
and member banks and Federal
reserve banks and for all taxes,
customs, and other public dues.
They shall be redeemed in gold on
demand at the Treasury Department
of the United States, in the city of
Washington, District of Columbia,
or in gold or lawful money at any
Federal reserve bank.
S
30
Any Federal reserve bank
may, upon vote of its direc
tors, make application to the local
Federal reserve agent for such
amount of the Federal reserve notes
hereinbefore provided for as it may
deem best. Such application shall
be accompanied with a tender to the
local Federal reserve agent of col
lateral in amount equal to the sum
of the Federal reserve notes thus ap
plied for and issued pursuant to
such application. The collateral se
curity thus offered shall be notes and
bills accepted for rediscount under
the provisions of section 14 of this
Act, and the Federal reserve agent
shall each day notify the Federal
Reserve Board of issues and with
drawals of notes to and by the Fed
eral reserve bank to which he is ac
credited. The said Federal Reserve
Board shall be authorized at any
time to call upon a Federal reserve
bank for additional security to pro
tect the Federal reserve notes issued
to it.
Any Federal reserve bank may
make application to the local Fed
eral reserve agent for such amount
of the Federal reserve notes herein
before provided for as it may
require. Such application shall be
accompanied unth a tender to the
local Federal reserve agent of col
lateral in amount equal to the sum
of the Federal reserve notes thus
applied for and issued pursuant to
such application.
The collateral
security thus offered shall be notes
and bills, accepted for rediscount
under the provisions of section
13 of this Act, and the Federal re
serve agent shall each day notify
the Federal Reserve Board o f all
issues and withdrawals o f Federal
reserve notes to and by the Federal
reserve bank to which he is accred
ited. The said Federal Reserve Board
[shall be author)zed] m a y at any
time £ to2 ca^ upon a Federal reserve
banlc for additional security to pro
tect the Federal reserve notes issued
to it.
70
SECTION
HOUSE B ILL .
Whenever any Federal reserve
bank shall pay out or disburse Fed
eral reserve notes issued to it as
hereinbefore provided, it shall seg
regate in its own vaults and shall
carry to a special reserve account on
its books gold or lawful money
equal in amount to thirty-three and
one-third per centum of the reserve
notes so paid out by it, such reserve
to be used for the redemption of said
reserve notes as presented; but any
Federal reserve bank so using any
part of such reserve to redeem
notes shall immediately carry
31
to said reserve account an
amount of gold or lawful
money sufficient to make said re
serve equal to thirtv-three and onethird per centum of its outstanding
Federal reserve notes.
Notes so
paid out shall bear upon their faces
a distinctive letter and serial num
ber, which shall be assigned by the
Federal Reserve Board to each Fed
eral reserve bank. Whenever Fed
eral reserve notes issued through
one Federal reserve bank shall be re
ceived by another Federal reserve
bank they shall be returned for re
demption to the Federal reserve
bank through which they were orig
inally issued, or shall be charged off
against Government deposits and
returned to the Treasury of the
United States, or shall be presented
to the said Treasury for redemption.
1 7 — Cont i nued.
P ASSED B Y SENATE.
CONFERENCE AGREEM ENT.
Every Federal reserve bank shall
Every Federal reserve bank shall
maintain reserves in gold or lawful maintain reserves in gold or lawful
money o f not less than thirty-five per money o f not less than thirty-five per
centum against its deposits and its centum against its deposits and r e
Federal reserve notes in actual circu s e r v e s i n g o l d o f n o t l e s s t h a n
lation, but the amount of gold in the FORTY PER CENTUM AGAINST its
Federal reserve bank together with the Federal reserve notes in actual circu
amount deposited by it with the Treas lation, f^but the amount o f gold in the
ury, shall be at least equal to forty Federal reserve bank together with the
per centum o f the Federal reserve amount deposited by it with the Treas
notes issued to said bank and in ac ury, shall be at least equal to forty
tual circulation and not offset by gold per centum o f the Federal reserve
or lawful money deposited with the notes issued to said bank and in
Federal reserve agent.
actual circulation] and not offset by
gold or lawful money deposited with
the Federal reserve agent.
Notes so paid
out shall bear upon their faces a dis
tinctive letter and serial number,
which shall be assigned by the Fed
eral Reserve Board to each Federal
reserve bank. Whenever Federal
reserve notes issued through one
Federal reserve bank shall be re
ceived by another Federal reserve
bank they shall be promptly returned
for credit or redemption to the Fed
eral reserve bank through which
they were originally issucd^-o r-shall
Notes so paid
out shall bear upon their faces a dis
tinctive letter and serial number,
which shall be assigned by the Fed
eral Reserve Board to each Federal
reserve bank.
Whenever Federal
reserve notes issued through one
Federal reserve bank shall be re
ceived by another Federal reserve
bank they shall be promptly returned
for credit or redemption to the Fed
eral reserve bank through which
they were originally issued.
\ ^ i/\ r >
rvjuuuxpown
•
atvty
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
No Federal reserve
No Federal reserve
bank shall pay out notes issued bank shall pay out notes issued
through another under penalty of a through another under penalty o f a
tax o f ten per centum upon the face tax o f ten per centum upon the face
71
SECTION
HOUSE B ILL .
17— Continued.
PASSED B Y SENATE.
so paid out. Notes presented for value of notes so paid out. Notes
redemption at the Treasury of the presented for redemption at the
United States shall be paid and re Treasury of the United States shall
turned to the Federal reserve banks be paid out o f the redemption fund
through which they were originally and returned to the Federal reserve
issued, and Federal reserve notes banks through which they were
received by the Treasury otherwise originally issued, and thereupon such
than for redemption shall be ex Federal reserve hank shall, upon de
changed for lawful money out of the mand of the Secretary of the Treas
five per centum redemption fund ury, reiniburse such redemption fund
hereinafter provided and returned in lavjful money or, if such Federal
as hereinbefore provided to the re reserve notes have been redeemed by
serve bank through which they the Treasurer in gold or gold certifi
were originally issued.
cates, then such funds shall be reim
bursed 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 re
main outstanding, maintain with the
Treasurer in gold an amount suffi
cient in the judgment of the Secretary
to provide for all redemptions to be
made by the Treasurer. Federal re
serve notes received by the Treas
ury, otherwise than for redemption,
shall may be exchanged for h w fel
money gold out of the iWe—pe?
eenfcum redemption fund hereinafter
provided and returned as-here+nfeefe^e-p-Fev-ided to the reserve bank
through which they were originally
issued, or they may be returned, to
such banlc 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 can
cellation and destruction.
The Federal Reserve Board shall
The Federal Reserve Board shall
have power, in its discretion, to re have-pewe-p—in- ks-d ise-Fefciefty-te re
quire Federal reserve banks quire each Federal reserve banks
32
to maintain on deposit in the bank to maintain on deposit in the
Treasury of the United Treasury of the United States a sum
States a sum in gold equal to five
per centum of such amount of Fed sufficient in the judgment of the Secre
eral reserve notes as may be issued tary of the Treasury for the redemp
to them under the provisions of this tion of sueh-arneufi^-oj the Federal
Act; but such five per centum shall reserve notes as-may—be issued to
be counted and included as part of
the thirty-three and one-third per Aefc such bank, but in no event lessthan
centum reserve hereinbefore re five per centum; but such five pet1
eewtum deposit of gold shall be count
quired.
ed and included as part of the thir
ty-three and one-third per centum
reserve hereinbefore required.
II. Rep. 1G3, G3-2------ 8
CONFERENCE AGREEMENT.
value o f notes so paid out. Notes
presented for redemption at the
Treasury of the United States shall
be paid out o f the redemption fund
ana returned to the Federal reserve
banks through which they were
originally issued, and thereupon such
Federal reserve banlc shall, upon de
mand of the Secretary of the Treas
ury, reimburse such redemption fund
in lawful money or, i f such Federal
reserve notes have been redeemed by
the Treasurer in gold or gold certifi
cates, then such funds shall be reim
bursed 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 re
main outstanding, maintain with the
Treasurer in gold an amount suffi
cient in the judgment of the Secretary
to provide for all redemptions to be
made by the Treasurer. Federal re
serve notes received by the Treasury,
otherwise than for redemption, may
be exchanged for gold out of the re
demption fund hereinafter provided
and returned to the reserve bank
through which they were originally
issued, or they may be returned to
such bank for the credit of the United
States. federal reserve notes unfit
fo r circulation shall be returned by
the Federal reserve agents to the
Comptroller of the Currency fo r can
cellation and destruction.
The Federal Reserve Board shall
require each Federal reserve ba,nlc to
maintain on deposit in the Treasury
of the United States a sum in gold
sufficient in the judgment o f the Secre
tary of the Treasury for the redemp
tion of the Federal reserve notes
issued to such bank but in no event
less than five per centum; but such
deposit of gold shall be count
ed and included as part o f the £ thir
ty-three and one-third'j f o r t y per
centum reserve hereinbefore required.
72
SECTION
HOUSE B IL L
The said board shall also
have the right to grant in whole or
in part or to reject entirely the aplication of any Federal reserve
ank for Federal reserve notes; but
to the extent and in the amount that
such application may be granted
the Federal Reserve Boara shall,
through its local Federal reserve
agent, deposit Federal reserve notes
with the 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 Fed
eral Reserve Board, which rate shall
not be less than one-half of one per
centum per annum, and the amount
of such Federal reserve notes so
issued to any such bank shall, upon
delivery, become a first and para
mount hen on all the assets of such
bank.
E
17— Continued.
PA SSE D B T SENATE.
CONFERENCE AGREEM EN T
The
The
said board shall afee have the right, board shall have the right, acting
acting through the Federal reserve through the Federal reserve agent, to
agent, to grant in whole or in part or grant in whole or in part or to reject
to reject entirely the application of entirely the application o f any Fed
any Federal reserve bank for Fed eral reserve bank fo r Federal reserve
eral reserve notes; but to the extent notes; but to the extent that such ap
ftftd-m- the- amount that such appli plication may be granted the Federal
cation may be granted the Federal Reserve Board shall, through its local
Reserve Board shall, through its Federal reserve agent, supply Fed
local Federal reserve agent, depesit eral reserve notes to the bank so ap
supply Federal reserve notes w-ith to plying, and such bank shall oe
the banks bank so applying, and such charged with the amount of such
bank shall be charged with the notes and shall pay such rate o f in
amount of such notes and shall pay terest on said amount as may be
such rate of interest on said amount established by the Federal Reserve
as may be established by the Fed Board, and the amount o f such
Federal reserve notes so is,sued to
eral Reserve Board,a
any such bank shallj upon delivery,
# and the amount together with such notes of such Federal
of such Federal reserve notes so reserve bank as may be issued under
issued to any such bank shall, section eighteen of this Act upon se
upon delivery, together with such curity of United States two per cen
notes of such Federal reserve bank tum Government bonds, become a Urst
as may be issued under section and paramount lien on all the assets
eighteen of this Act upon security o f such bank.
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
Any Federal reserve bank may at
any time reduce its liability for out at any time reduce its liability
standing Federal reserve notes by fo r outstanding Federal reserve notes
the-depesit-ej depositing, with the by depositing, with the Federal re
Federal reserve agent, its Federal re serve agent, its Federal reserve notes,
gold, gold certificates, or lawful money
serve notes, whethe^-isi
Any Federal reserve bank may at
any time reduce its liability for out
standing Federal reserve notes by
the deposit of Federal reserve notes,
whether issued to such bank or to
some other reserve bank, or lawful
money of the United States, UI Jfttirl vl llVy U/\ Tf TJU CQ lAv rlnl l v n“ C 1 1vJ * Tr
33
or gold bullion,with any Fed
eral reserve agent or with the
Treasurer of the United States, and
such reduction shall be accompanied
by a corresponding reduction in the
required reserve fund of lawful
money set apart for the redemption
of said notes and by the release of a
corresponding amount of the col
lateral security deposited with the areeFfe s peftding ■amount o f -the eolI
4* /\ wrt I
r iA A ii w i f tt
ri
f A / j _ ITT i f n
4- Y\ r%.
local Federal reserve agent.
I c J T O T fll 1
TT7T U U I J U J I T C u " T T D l l v l l ^
a
tificates, or lawful money of the United
States. Federal reserve notes so de
posited 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 Fed
eral reserve notes when offered by the
reserve bank o f which he is a director.
Upon the request o f the Secretary o f
o f the United States. Federal re
serve notes so deposited shall not be
reissued, except upon compliance
with the conditions o f an original
issue.
The Federal reserve agent shod
hold such gold, gold certificates, or
lawful money available exclusively
for exchange for the outstanding Fed
eral reserve notes when offered by the
reserve bank of which he is a director.
Upon the request o f the Secretary o f
73
SECTION
HOUSE B ILL .
Any Federal reserve bank may
at its discretion withdraw collateral
deposited with the local Federal
reserve agent for the protection of
Federal reserve notes deposited
with it and shall at the same time
substitute other collateral of equal
value approved by the Federal
reserve agent under regulations to
be prescribed by the Federal Re
serve Board.
17— Continued.
PA SSE D B Y SENATE.
the Treasury the Federal Reserve
Board shall require the Federal re
serve agent to transmit so much of
said gold to the Treasury o f the
United States as may be required
for the exclusive purpose of the re
demption o f such notes.
Any Federal reserve bank may at
its discretion withdraw collateral
deposited with the local Federal re
serve agent for the protection of its
Federal reserve notes deposited with
it and shall at the same time sub
stitute therefor other like collateral
of equal value amount ftpp?e¥ed-by
with the approval of the Federal re
serve agent under regulations to be
rescribed by the Federal Reserve
oard.
In order to furnish suitable notes
for circulation as Federal reserve
notes, the Comptroller of the Currency
shall, under the direction o f the Sec
retary 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 $1, $2, $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 o f the
Treasury under the provisions o f this
Act and shall bear the distinctive
numbers of the several Federal re
serve banks through which they are
issued.
When such notes have been pre
pared, 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 re
serve bank and shall be held for the
use of such bank subject to the order
of the Comptroller of the Currency
for their delivery, as provided by
this Act.
The plates and dies to be procured
by the Comptroller of the Currency
for the printing of such circulating
notes shall remain under his control
and direction, and the expenses neces
sarily 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 by the Federal reserve banks,
and the Federal Reserve Board shall
include in its estimate of expenses
levied against the Federal reserve
banks a sufficient amount to cover
the expenses herein provided for.
g
CONFERENCE AGREEM ENT.
the Treasury the Federal Reserve
Board shall require the Federal re
serve 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 unthdrav; collateral de
posited 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 regula
tions to be prescribed by the Federal
Reserve Board.
In order to furnish suitable notes
for circulation as Federal reserve
notes, the Comptroller of the Currency
shall, under the direction of the Sec
retary of the Treasury, cause plates
and dies to be engraved in the best
manner to quard against counterfeits
and fraudulent alterations, and shall
have printed therefrom and numbered
such quantities of such notes of the
denominations o f^ S l, $2,3 $5, $10,
$20, $50, $100, as may be required
to supply the Federal reserve banks.
Such notes shall be inform and tenor
as directed by the Secretary of the
Treasury under the provisions of this
Act and shall bear the distinctive
numbers of the several Federal re
serve banks through which they are
issued.
When such notes have been pre
pared, 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 re
serve bank and shall be held for
the use of such bank subject to the
order o f the Comptroller of the
Currency for their delivery, as pro
vided by this Act.
The plates and dies to be procured
by the Comptroller of the Currency
for the printing o f such circulating
notes shall remain under his control
and direction, and the expenses neces
sarily incurred in executing the laws
relating to the procuring o f such notes,
and all other expenses incidental to
their issue and retirement, shall be
paid by the Federal reserve banks,
and the Federal Reserve Board shall
include in its estimate of expenses
levied against the Federal reserve
banks a sufficient amount to cover
the expenses herein provided for.
74
SECTION
HOUSE B ILL.
1 7— Conti nued.
PASSED B Y SEN ATE.
CONFERENCE AGREEM EN T.
The examination o f plates, dies,
bed pieces, and so forth, and regular
tions relating to such examination of
plates, dies, and so forth, of nationallank notes provided for in section
fifty-one hundred and seventy-four,
Revised Statutes, is hereby extended
to include Federal reserve notes herein
provided for.
Any appropriation heretofore made
out of the general funds of the Treas
ury for engraving plates and dies, the
purchase of distinctive paper, or to
cover any other expense in connection
with the printing of national-bank
notes or notes provided for by the
Act of May thirtieth, nineteen hun
dred 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 appropria
tions heretofore made be insuffi
cient 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 exempting national
banlcs or Federal reserve banks from
their liability to reimburse the Vnited
States for any expenses incurred in
printing and issuing circulating notes.
The examination of plates, dies9
bed pieces, and so iorth, and regulartions relating to such examination of
plates, dies, and so forth, of nationalbank notes provided for in section
fifty-one hundred and seventy-four
Revised Statutes, is hereby extended
to i nclude [ Federal reserve] notes here
in provided for.
Any appropriation heretofore made
out of the general funds oj the Treas
ury for engraving plates and dies, the
purchase of distinctive paper, or to
cover any other expense in connection
with the printing of national-bank
notes or notes provided for by the
Act of May thirtieth, nineteen hun
dred 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 appropria
tions heretofore made be insuffi
cient to meet the requirements o f
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 exempting national
banlcs or Federal reserve banks from
their liability to reimburse the United
States for any expenses incurred in
printing and issuing circulating notes.
W esew e—kawfe
deposit©**- ift-sa id—Fese-Fve-bftftk-1 -tsfc
It shall be the duty of every Fed
eral reserve bank to receive on de
posit, at par and without charge for
exchange or collection, checks and
drafts drawn upon any of its
depositors or by any of its depos
itors upon any other depositor and
checks and drafts drawn by any
Every Federal reserve bank shall
Every Federal reserve bank shall
reteive on deposit from member banks receive on deposit a t p a r from member
or from Federal reserve banks checks banlcs or from Federal reserve banks
and drafts drawn upon any of its ckecks and drafts drawn upon any of
depositors, and when remitted by its depositors, and when remitted by
a Federal reserve bank, checks and a Federal reserve bank, checks and
drafts drawn by any depositor in any drafts drawn by any depositor in any
other Federal reserve bank or other Federal reserve bank or
75
s : 1CTION
HOUSE BILL.
1 7 — C o n t i n m d.
PASSED B Y SENATE.
depositor in any other Federal re member bank upon funds to the
serve bank upon funds to the credit credit of said depositor in said
of said depositor in said reserve reserve bank or member bank.
bank last mentioned, nothing herein Nothing herein contained shall be
contained to be construed as pro construed as prohibiting a member
hibiting member banks from mak bank from making reasonable charges
ing reasonable charges to cover for checks and drafts so debited to its
actual expenses incurred in col account, or for collecting and remit
lecting and remitting funds for ting funds, or for exchange sold, to its
their patrons.
patrons. The Federal Reserve Board
may, by rule, fix the charges to be
collected by the member banks from
its patrons whose checks are cleared
through the Federal reserve bank and
the charge which may be imposed for
the service o f clearing or collection
rendered by the Federal reserve bank.
The Federal Re
serve Board shall make and pro
mulgate from time to time regula
tions governing the transfer of
funds at par among Federal
reserve banks, and may at
34
its discretion exercise the
functions of a clearing house
for such Federal reserve banks, or
may designate a Federal reserve
bank to exercise such functions,
and may also require4 each such
bank to exercise the functions of a
clearing house for its member banks.
The Federal Reserve Board shall
make and promulgate from time to
time regulations governing the
transfer of funds afc-pa? and charges
therefor among Federal reserve
banks and their branches, and may
at its discretion exercise the func
tions of a clearing house for such
Federal reserve banks, or may des
ignate a Federal reserve bank to
exercise such functions, and may
also require each such bank to exer
cise the functions of a clearing house
for its member banks.
SECTION
S e c . 18. That so much of the
provisions of section fifty-one hun
dred and fifty-nine of the Revised
Statutes of the United States, and
section four of the Act of June
twentieth, eighteen hundred and
seventy-four, and section eight of
the Act of July twelfth, eighteen
hundred and eighty-two, and of
any other provisions of existing
statutes, as require that before any
national banking association shall
be authorized to commence bank
ing business it shall transfer and
deliver to the Treasurer of the
United States a stated amount of
United States registered bonds be,
and the same is hereby, repealed.
CONFERENCE AGREEMENT.
member bank upon funds to the
credit of said depositor in said
reserve bank or member bank.
Nothing herein contained shall be con
strued as prohibiting a member bank
from £ making reasonable charges
for checks and drafts so debited to its
account, or f o r ] c h a r g i n g i t s a c
t u a l e x p e n s e i n c u r r e d i n collect
ing and remitting funds, or for
exchange sold to its patrons.
The
Federal Reserve Board £ may J s h a l l ,
by rule, fix the charges to be col
lected by the member banks from
its patrons whose checks are cleared
through the Federal reserve banlc and
the charge which may be imposed for
the service of clearing or collection
rendered by the Federal reserve bank.
The Federal Reserve Board shall
make and promulgate from time to
time regulations governing the trans
fer erf funds and charges therefor
among Federal reserve banks and
their branches, and may at its dis
cretion exercise the functions o f a
clearing house fi)r such Federal
reserve banks, or may designate a
Federal reserve bank to exercise such
functions, and may edso require each
such bank to exercise the functions of
a charing house for its member banks.
18.
S ec .
17. That so much of the
provisions of section fifty-one hun
dred 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
statute's as require that before
any national banking associa
tion shall be authorized to com
mence banking business it shall
transfer and d('.liver to the Treasurer
of the Tnited State's a stated
amount of Tnitt'd States registered
bonds be, and the same is hereby,
repealed.
Sec. 17. £ That s o ] So much o f the
pro vis io ns of sectio n -fifty-one hundred
and fifty-nine of the Revised Statutes
of the I ’nited States. and section four
erf th< Act of dune twentieth, eight
een hundred and seventy-four, and
section eight erf the Act o f July
twelfth, eighteen
hundred
and
eighty-two, and o f any other pro
visions of existing statutes as re
quire that before any natiemed
banking association shall be author
ized to commence banking business it
shall transfer and deliver to the
Treasurer of the United States a
s1ai<d amount of United States regis
tered bond*, \J>e, anel the samej is
hereby, repeated.
76
SECTION
HOUSE B ILL .
REFUNDING BONDS.
19.
P A SSE D B Y SENATE.
l/\ W T T \ a
znsruii37iiiv7 Tuui“
i/o»
T IT W n rT \ T T \T \ T n
CONFERENCE AGREEM EN T.
RE FU N D IN G BONDS.
Section 18 stricken out and the following
substituted:
S e c . 19. That upon application
the Secretary of the Treasury shall
exchange the two per centum bonds
of the United States bearing the
circulation privilege deposited by
any national banting association
with the Treasurer of the United
States as security for circulating
notes for three per centum bonds 01
the United States without the cir
culation privilege, payable after
twenty years from date of issue,
and exempt from Federal, State,
and municipal taxation both
35
as to income and principal.
No national bank shall, in
any one year, present two per cen
tum bonds for exchange in the
manner hereinbefore provided to
an amount exceeding five per cen
tum of the total amount of bonds
on deposit with the Treasurer by
said bank for circulation purposes.
Should any national bank fail in
any one year to so exchange its full
quota of two per centum bonds
under the terms of this Act, the
Secretary of the Treasury may per
mit any other national bank or
banks to exchange bonds in excess
of the five per centum aforesaid in
an amount equal to the deficiency
caused by the failure of any one or
more banks to make exchange in
any one year, allotment to bo made
to applying banks in proportion to
their holdings of bonds. At the
expiration of twenty years from
tho passage of this Act every holder
of United States two per centum
bonds then outstanding shall re
ceive payment at par and accrued
interest. After twenty years from
the date of the passage of this Act
national-bank notes still remaining
outstanding shall be recalled and
redeemed by the national banking
associations issuing tho same within
a period and under regulations to
be prescribed by tho Federal Re
serve Board, and notes still remain
ing in circulation at the end of such
period shall be secured by an equal
amount of lawful money to be de
posited in the Treasury of tho
United States by the banking
associations originally issuing such
notes. Meanwhile every national
bank may continue to apply
for and receive circulating
36
notes from tho Comptroller
of tho Currency based upon
Sec. 18. After two years from the
Sec. 18. A ny member bank desir
ing to retire the whole or any passage of this Act, and at any time
part o f its circulating notes may during a period of twenty years there
Hie with the Treasurer o f the United after, any member bank desiring to
States an application to sell fo r its retire the whole or any part o f its cir
account, at par and interest, United culating notes, may Hie with the Treas
States bonds securing circulation to urer of the United States an applica
tion to sell for its account, at par and
be retired.
accrued interest, United States bonds
securing circulation to be retired.
The Treasurer shall, at the end of
The Treasurer shall, at the end of
each quarterly period, furnish the each quarterly period, furnish the
Federal Reserve Board with a list o f Federal Reserve Board with a list o f
such applications, and the Federal such applications, and the Federal
Reserve Board may, in its discretion, Reserve Board may, in its discretion,
require the Federal reserve banks to require the Federal reserve banks to
purchase such bonds from the banks purchase such bonds from the banks
whose applications have been filed whose applications have been -filed
with the Treasurer at least ten days with the Treasurer at least ten days
before the end o f any quarterly period before the end of any quarterly period
at which the Federal Reserve Board at which the Federal Reserve Board
may direct the purchase to be made. may direct the purchase to be made:
Upon notice from the Treasurer of Provided, That Federal reserve
the amount o f bonds so sold fo r its banks shall not be permitted to pur
account, each member bank shall chase an amount to exceed $25,000,duly assign and transfer, in writing, 000 of such bonds in any one year,
such bonds to the Federal reserve bank and vjhich amount shall include bonds
purchasing the same, and such Fed acquired under section four of this
eral reserve bank shall thereupon de Act by the Federal reserve bank.
posit lawful money with the Treasurer Provided further, That the Federal
o f the United States fo r the purchase Reserve Board shall allot to each
price o f such bonds, and the Treasurer Federal reserve banJc such propor
shall pay to the member bank selling tion o f such bonds as the capital and
such bonds any balance due after de surplus o f such bank shall bear to the
ducting a sufficient sum to redeem its aggregate capital and surplus o f all
outstanding notes secured by such the Federal reserve banks.
bonds, which notes shall be canceled
Upon notice from the Treasurer of
and permanently retired when re the amount o f bonds so sold for its
deemed.
account, each member bank shall
duly assign and transfer, in writing,
such bonds to the Federal reserve
banlc purchasing the same, and such
Federal reserve bank shall, there
upon, deposit lawful money with the
Treasurer o f the United States for the
purchase price o f such bonds, and the
Treasurer shall pay to the member
bank selling such bonds any balance
due after deducting a sufficient sum
to redeem its outstanding notes se
cured by such bonds, which notes
shall be cancelled and permanently
retired when redeemed.
The Federal reserve banks pur
The Federal reserve banks pur
chasing such bonds shall be required chasing such bonds shall be permitted
to take out an amount o f circulating to take out an amount o f circulating
notes equal to the amount o f national- notes equal to the par value o f such
bank notes outstanding against such bonds.
bonds.
Upon the deposit with the Treas
Upon the deposit with the Treasurer
of the Unitea States bonds so 'pur urer of the United States o f bonds
chased, or any bonds with the arcu- so purchased, or any bonds with the
77
SECTION
19— Continued.
HOUSE B ILL .
PASSED B Y SENATE.
CONFERENCE AGREEMENT.
the deposit of two per centum
bonds or of any other bonds bearing
the circulation privilege; but no
national bank shall be permitted
to issue other circulating notes ex
cept such as are secured as in this
section provided or to issue or to
make use of any substitute for such
circulating notes in the form of
clearing-house loan certificates, cash
ier’s checks, or other obligation.
lating 'privilege acquired under section
four of this Act, any Federal reserve
bank making such deposit in the man
ner provided by existing law shall be
entitled to receive from the Comp
troller of the Currency circulating
notes in blank, registered and coun
tersigned as provided by law, equal in
amount to the par value of the bonds so
deposited. Such notes shall be the
obligations of the Federal reserve
bank procuring same, and shall be in
form prescribed by the Secretary of the
Treasury, and to the same tenor and
effect as national-bank notes now pro
vided by law. They shall be issued
and redeemed under the same terms
and conditions as national-bank notes.
United States bonds bought by a
Federal reserve bank against which
there are no outstanding nationalbank notes may be exchanged at the
Treasury for one-year gold notes bear
ing three per centum interest. In
case of such exchanqe for one-year
notes the reserve bank shall be bound
to pay such notes and to receive in
payment thereof new three per centum,
one-year Treasury gold notes year by
year for the period of twenty years.
circulating privilege acquired under
section four of this Act, any Federal
reserve bank making such deposit in
the manner provided by existing law,
shall be entitled to receive from the
Comptroller of the Currency circulat
ing notes in blank, registered and
countersigned as provided by law,
equal in amount to the par value o f
the bonds so deposited. Such notes
shall be the obligations o f the Federal
reserve bank procuring the same, and
shall be in form prescribed by the
Secretary of the Treasury, and to the
same tenor and effect as nationalbank 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 Fed
eral Reserve Board, the Secretary o f
the Treasury may issue, in exchange
for United States two per centum gold
bonds bearing the circulation privi
lege, but against which no circulation
is outstanding, one year gold notes o f
the United States without the circu
lation 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 o f the two per centum
bonds so tendered, provided, that at
the time of such exchange the Federal
reserve bank obtaining' such one year
gold notes shall enter into an obliga
tion with the Secretary of the Treasurg binding itself to purchase from
the United States for gold at the ma
turity of such one year notes, an
amount equal to those delivered in
exchange for such bonds, i f so re
quested by the Secretary, anH at each
maturity o f one year notes so pur
chased 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 obli
gation to purchase at maturity such
notes shall continue in force for a
period not to exceed thirty years.
For the purpose o f making the ex
change herein provided fo r, the Sec
retary o f the Treasury is authorized
to issue at par Treasury notes in
coupon or registered form as he may
78
SECTION
HOUSE B IL L .
19 — C o n t i n u e d .
P A SSED B Y SENATE.
CONFERENCE AGREEM EN T.
prescribe in denominations o f one
hundred dollars, or any multiple
thereof, bearing interest at the rate
o f three per centum per annum,
payable quarterly, such Treasury
notes to be payable not more than
one year from the date o f their
issue in gold coin o f the present
standard value, and to be exempt as
to principal and interest from the
payment o f all taxes and duties o f 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 fo r the
same purpose, the Secretary is au
thorized and empowered to issue
United States gold bonds at par, bear
ing three per centum interest payable
thirty years from date o f issue, such
bonds to be o f the same general tenor
and, effect and to be issued under the
same general terms and conditions as
the United States three per centum
bonds without the circulation privi
lege now issued and outstanding.
Upon application o f 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.
SECTION
BAN K RESER VES.
20.
BA N K RESER VES.
S ec. 19. Demand liabilities within
the meaning of this Act shall comprise
ail liabilities maturing or payable
within thirty days, and time deposits
shall comprise all d<posits payable
after thirty days, and all sarings ac
counts and certificates of dt posit
which are subject to not less than
thirty days1 notice, before payment.
Sec. 19. Demand Zlieibilitiesjj d e
within the meaning o f this Act
shall comprise all pliabilities maturing
(>/*] d e p o s i t s payable within thirty
days, and time deposits shall comprise
all deposits payable after thirty days,
and all savings accounts and- certifi
cates of deposit which are subject to
not less fhan thirty days’ notice before
paynu nt.
When the Secretary o f the Treasury
When the Secretary of the Treasury
shall have officially announced, in shall have officially announced, in
such manner as he may elect, the estab such manner as he may elect, the estab
lishment of a Federal reserve bank in lishment of a Federal reserve bank in
any district, every subscribing mem any district, every subscribing mem
ber bank shall establish and -maintain ber bank shall establish and maintain
reserves as follows:
reserves as follows:
S e c . 20. That from and after the
date when the Secretary of the
Treasury shall have officially an
nounced, in such manner as he may
elect, the fact that a Federal reserve
bank has been established in any
designated district, every banking
association within said district
which shall have subscribed for
stock in such Federal reserve bank
shall be required to establish and
maintain reserves as follows:
(a) If a country bank as defined
(a) A bank not in a reserve or cen
by existing law, it shall hold and tral reserve city as now or hereafter
maintain a reserve equal to twelve defined shall hold and 'maintain re
per centum of the aggregate amount serves equal to twelve per centum of
of its deposits, not including savings the aggregate amount of its dent and
B AN K RE SE R V E S.
p o s it s
(a)
A bank not in a reserve or cen
tral reserve city as now or hereafter
defined shall hold and maintain re
serves equal to twelve per centum o f
the aggregate amount of its demand
79
SECTION
HOUSE B ILL .
deposits hereinafter provided for.
Five-twelfths of such reserve shall
consist of money which national
banks may under existing law count
as legal reserve, held actually in the
bank’s own vaults; and for a period
of fourteen months from the date
aforesaid at least three-twelfths and
thereafter at least five-twelfths of
such reserve shall consist of a
37
credit balance with the Fed
eral reserve bank of its dis
trict. The remainder of the twelve
per centum reserve hereinbefore
2 0 — Continued.
P ASSED B Y SENATE.
CONFERENCE AGREEMENT.
liabilities and five per centum o f its I'liabilities J d e p o s i t s and five pey
centum of its time deposits, asfollows:
time deposits, as follows:
In its vaults for a period of twentyIn its vaults for a period offtwentyfour months after said date four- four'J t h i r t y - s i x months after said
twelfths thereof
date [ four-twelfths] f i v e - t w e l f t h s
thereof a n d p e r m a n e n t l y t h e r e
after
In the Federal reserve banlc of its
district, for a period of six months
after said date, two-twelfths, and for
each succeeding six months an addi
tional one-twelfth} until five-twelfths
have been so deposited, which shall be
the amount permanently required.
FOUR-TW ELFTH S.
In the Federal reserve bank o f iU
district, for a period
tw elve
months after said date, two-twelfths,
and for each succeeding six months
an additional one-twelfth, until fivetwelfths have been so deposited, which
shall be the amount permanently
required.
For a period of [twenty-four']|
t h ir t y - s ix
months after said date
the balance of the reserves may be
held in its own vaults, or in the
Federal reserve bank, or in n a t i o n a l
banks in reserve or central reserve
cities as now defined by law.
After said £ twenty-four] t h i r t y s ix
months' period said reserves,
other than those hereinbefore required
to be held in the v a u l t s o f t h e
For a period of twenty-four months
required may, for a period of thirtysix months from and after the date after said date the balance of the re
fixed by the Secretary of the Treas- serves may be held in its own vaults,
uiy as"hereinbefore provided, con or in the Federal reserve banlc, or in
sist of balances due from national banlcs in reserve or central reserve
banks in reserve or central reserve cities as now defined by law.
cities as now defined by law. From
and after a date thirty-six months
After said twenty-four months1 pe
subsequent to the date fixed by the riod said reserves, other than those
Secretary of the Treasury as herein hereinbefore required to be held in the
before provided the said remainder reserve bank, shall be held in the
of the twelve per centum reserve vaults of the member bank or in the M EM BER BA N K AND IN THE F E D E R A L
required of each country bank shall Federal reserve bank, or in both, at reserve bank, shall be held in the
consist either in whole or in part of its option.
vaults of the member bank or in the
reserve money in the bank’s own
Federal reserve bank, or in both, at
vaults or of credit balance with the
[ i& s * ] t h e option o f t h e m e m b e r
Federal reserve bank of its district.
BAN K .
(b)
If a reserve city bank as de (6)
A bank in a reserve city, as now (ib) A bank in a reserve city, as now
fined by existing law, it shall hold or hereafter defined, shall hold and or hereafter defined, shall hold and
and maintain, for a period of sixty maintain reserves equal to fifteen per maintain reserves equal to fifteen per
days from the date fixed by the centum of the aggregate amount of its centum of the aggregate amount of its
Secretary of the Treasury as herein dem and liabilities and five per centum demand [ liabilities] d e p o s i t s and
before provided, a reserve equal to of its time deposits, as follows:
:five per centum of its time deposits, as
twenty per centum of the aggregate
follows:
amount of its deposits, not including
In its vaults f o r a p e r i o d o f
In its vaults six-fifteenths thereof.
savings deposits hereinafter pro
t h ir t y - s ix
m onths
after
s a id
vided for, and permanently there
d a t e six-fifteenths thereof, a n d p e r
after eighteen per centum. At least
m anently
TH EREA FTE R F IV E -F IF one-half of such reserve shall consist
TEENTHS
of money which national banks may
In the Federal reserve bank of its
In the Federa1 reserve bank of its
under existing law count as legal district fo r a period of six months district for a period of [ s i x ]
reserve, held actually in the bank’s after the date aforesaid at least three- t w e l v e months after the date afore
own vaults.
After sixty days fifteenths, and for each succeeding six said at least three-fifteenths, and
from the date aforesaid, and for a months an additional one-fifteenth, for each succeeding six months an
period of one year, at least three- until six-fifteenths have been so de additional one-fifteenth, until sixeighteenths and permanently there posited, which shall be the amount fifteenths have been so deposited,
after at least five-eighteenths of permanently required.
which shall be the amount per
such reserve shall consist of a credit
manently required.
balance with the Federal
FOR A PERIOD OF T H IR T Y -SIX
38
reserve bank of its district.
MONTHS AFTER SAID DATE THE BA L
The remainder of the reserve
ANCE OF THE RESERVE MAY BE HELD
in this paragraph required may, for
IN ITS OW N VAU LTS, OR IN THE
a period of thirty-six months from
F ederal reserve ban k , or
in
and after the date fixed by the Sec
N ATION AL BANKS IN RESERVE OR
retary of the Treasury as herein
C ENTRAL RESER VE CITIES AS NOW
before provided, consist of balances
DEFINED BY LA W .
due from national banks in central
reserve cities as now defined by law.
H. Rep. 163,63—2------ 9
80
SECTION
HOUSE B IL L
2 0— Continued
P ASSED B Y SENATE.
CONFERENCF AGREEM ENT
After said twenty-four months'
From and after a date thirty-six
After said £'twenty-four] t h i r t y months subsequent to the date period all of said reserves, except s i x months' period all of said re
fixed by the Secretary of the Treas ihose hereinbefore required to be held serves, except those hereinbefore re
ury as hereinbefore provided, the permanently in the Federal reserve quired to be held permanently in the
said remainder of the#eighteen per bank, shall be held in its vaults or in VAULTS OF TH E M EM B E R B A N K AND
centum reserve required of each the Federal reserve bank, or in both, i n t h e Federal reserve bank, shall
reserve city bank shall consist at its option.
be held in its vaults or in the Federal
reserve bank, or in both. at [ i t e j
either in whole or in part of reserve
money in the bank’s own vaults or
TH E option OF THE M EM BE R B A N K .
of credit balance with the Federal
reserve bank of its district.
A bank in a central reserve city, (c)
A bank in a central reserve city,
(c)
If a central reserve city bank (c)
as defined by existing law, it shall as now or hereafter defined, shall as now or hereafter1 defined, shall
hold and maintain for a period of hold and maintain a reserve equal to hold and maintain a reserve equal to
sixty days from the date fixed by eighteen per centum of the aggregate eighteen per centum o f the aggregate
the Secretary of the Treasury as amount of its demand liabilities and amount o f its demand [ liabilities]
hereinbefore provided a reserve five per centum of its time deposits, as d e p o s i t s and five per centum o f its
time deposits, as follows:
equal to twenty per centum of the follows:
In its vaults six-eighteenths thereof.
In its vaults six-eighteenths thereof
aggregate amount of its deposits,
In the Federal reserve bank fo r a
In the Federal reserve bank [ for a
not including savings deposits here
inafter provided for, and perma period of six months after the date period o f six months after the date
nently thereafter eighteen per cen aforesaid at least three-eighteenths, aforesaid at least three-eighteenths,
tum. At least one-half of such re and permanently thereafter six- and permanently thereafter sixeighteenths'^ s e v e n - e i g h t e e n t h s .
serve shall consist of money which eighteenths.
The balance of said reserves sha7l
The balance o f said reserves shall
national banks may under existing
law count as legal reserve, held be held in its own vaults or in the Fed be held in its own vaults or in the Fed
eral reserve bank, at its option.
actually in the bank’s own vaults. eral reserve bank at its option.
Any Federal reserve bank may
A ny Federal reserve bank may
After sixty days from the date afore
said, and thereafter for a period of receive from the member banks as receive from the member banks as
one year, at least three-eighteenths reserves, not exceeding one half reserves, not exceeding one-half of
and permanently thereafter at least of each installment, eligible paper each installment, eligible paper as
five-eighteenths of such reserve shall as described in section fourteen prop described in section fourteen prop
consist of a credit balance with the erly indorsed and acceptable to the said erly indorsed and acceptable to the
said reserve bank.
Federal reserve bank of its dis reserve bank.
trict. The remainder of the
39
eighteen per centum reserve
required of each central re
serve city bank shall consist either
in whole or in part of reserve money
actually held m its own vaults or
of credit balance wTith the Federal
reserve bank of its district.
I f a State bank or trust company is
I f a State bank or trust company is
required by the law of its State to required by the lav: o f its State to
keep its reserves either in its own keep its reserves either in its own
vaults or with another State bank or vaults or with another State bank or
trust company, such reserve deposits trust company, such reserve deposits
so kept in such State bank or trust so kept in such State bank or trust
company shall be construed, within company shall be construed, within
the meaning of this section as i f they the meaning o f this section, as i f they
were reserve deposits in a national were reserve deposits in a national
bank in a reserve or central reserve banlc in a reserve or central reserve
city for a period of three years after city for a period o f three years after
the Secretary of the Treasury shall the Secretary of the Treasury shall
have officially announced the estab have officially announced the estab
lishment of a Federal reserve banlc in lishment o f a Federal reserve bank in
the district in which such State bank the district in which such State bank
or trust company is situate. Except or trust company is situate. Except
as thus provided no member bank as thus provided, no member bank
shall keep on deposit with any non shall keep on deposit with any non
member bank a sum in excess of ten member banlc a sum in excess o f ten
per centum of its own paid-up capital per centum o f its own paid-up capital
and surplus. No member banlc shall and surplus. No member bank shall
act as the medium or agent o f a non act as the medium or agent o f a non
member bank in applying for or member bank in applying fo r or
receiving discounts from a Federal receiving discounts from a Federal
81
SECTION
HOUSE B ILL.
20 — C o n t i n u e d .
PASSED B Y SENATE.
reserve bank under the provisions oj
this Act.
CONFERENCE AGREEMENT.
reserve bank under the provisions of
this Act e x c e p t b y p e r m i s s i o n o p
THE FEDERAL R ESER V E BOARD.
The reserve carried by a member
bank with a Federal reserve bank
may, under the regulations and sub
ject to such penalties as may be
prescribed by the Federal Reserve
Board, be checked against and with
drawn by such member bank for
the purpose o f meeting existing lia
bilities: Provided, however, That no
bank shall at any time make new
loans or shall pay any dividends un
less and until the total reserve re
quired by law is fully restored.
The reserve carried by a mem
ber 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 with
drawn by such member bank fo r
the 'purpose of meeting existing lia
bilities: Provided, however, That no
bank shall at any time make new
loans or shall pay any dividends un
less and until the total reserve re
quired by law is fully restored.
IN ESTIM ATING THE RESERVES
REQU IRED BY TH IS ACT, THE N ET
BALANCE OF AMOUNTS DUE TO AND
FROM
OTHER
BANKS
SHALL BE
TA K E N AS THE BASIS FOR ASCER
TA IN IN G
THE
DEPOSITS AGAINST
WHICH RESERVES SHALL BE D ETE R
M INED.
B A L A N C E S I N RESER VE
BAN K S DUF. TO M EM BER BAN K S
SH ALL, TO TH E E X T E N T H EREIN
PRO VID ED , BE COUNTED AS
RE
SERVES.
United States 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 Ihe 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.
SECTION
S ec . 21. That so much of sections
two and three of the Act of June
twentieth, eighteen hundred and
seventy-four, entitled “ An Act fix
ing the amount of United States
notes, providing for a redistribu
tion of the national bank currency,
and for other purposes,” as provides
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 afore
said, be, and the same is hereby,
repealed. And from and after the
assage of this Act such fund of
ve per centum shall in no case be
counted by any national banking
association as a part of its lawful
reserve.
[ United States^ n a t i o n a l 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 o f
the reserve districts, and shall, in that
event, take stock, maintain reserves,
and be subject to all the other provisions of this Act.
21.
Sec. 20. So much of sections two
S e c . S i 20. Thafc-se So much of
sections two and threo of the Act of and three of the Act o f June twenrJune twentieth, eighteen hundred tieth, eighteen hundred and seventyand seventy-four, entitled “ An Act four, entitled 11An Act fixing the
fixing the amount of United States amount of United States notes, pro
notes, providing for a redistribution viding for a redistribution o f the
of the national-bank currency, and national bank currency and for
for other purposes,” as provides other purposes,” as provides that
that the fund deposited by any na the fund deposited by any national
tional banking association with the banking association with the Treas
Treasurer of the United States for urer of the United States fo r the
the redemption of its notes shall bo redemption of its notes shall be
counted as a part of its lawful re counted as a part of its lawful reserve as provided in the Act afore serve as provided in the Act afore
said, be, and the same is hereby, re said is hereby repealed. And from
pealed. And from and after the and after the passage of this Act such
passage of this Act such fund of fund of five per centum shall in no
five per centum shall in no case be case be counted by any national bank
counted by any national banking ing association as a part of its lawful
association as a part of its lawful reserve.
reserve.
82
SECTION
BOUSE B ILL.
22.
PA SSED B Y SENATE.
CONFERENCE AGREEM EN T
The Senate amendment proposed to elimi
nate this section.
Sec. 2£. That every Federal re
serve bank shall at all times have
on Hand in its own vaults, in gold
or la\frfiil money, a sum equal to
hot less than thirty-three and onethird per centum of its outstanding
demand liabilities.
The Federal Reserve Board may
notify any Federal reserve bank
Vhose lawful reserve shall be below
the amount required to be kept on
hand, to make good such reserve;
and if such bank shall fail for thirty
days thereafter so to make good its
lawful reserve, the Federal Reserve
Board may appoint a receiver to
toind up the business of said bank.
e ?-law-fal -me nejFj-a
oquftl-fce-fiefc
qrihese lawful-reserve-shall be belew
SECTION
40
B AN K EXAM IN ATION S.
B A N K EXAM INATION S.
S e c . 23. T h at tho exam ination of
the affairs of every national banking
association authorized by existing
aw shall take place at least twice in
each calendar year and as much
oftener as the Federal Reserve
Board shall consider necessary in
prder to furnish a full and complete
knowledge of its condition. The
Secretary of the Treasury may,
however, at any time direct the
holding of a special examination.
The person assigned to the making
of such examination of the affairs of
kny national banking association
shall have power to call together a
quorum of the directors of such asso
ciation, who shall, under oath, state
to such examiner the character and
circumstances of such of its loans or
discounts as he may designate; and
from and after the passage of this
Act all bank examiners shall receive
fixed salaries, the amount whereof
shall be determined by the Federal
Reserve Board and annually re
ported to Congress. But the ex
pense of the examinations herein
provided for shall be assessed by the
Federal Reserve Board upon the
Associations examined in propor
tion to assets or resources held by
such associations upon a date during
the year in which such examinations
kre held to be established by the
Federal Reserve Board. The Comp
troller of the Currency shall so ar
range the duties of national-bank
'examiners that no two successive
fcxaminations of any association
{
23.
S e c.
c\
Q&21. Tkat-fche-examift&fcieft
in f
c
\
r* i ry/\ r l
k r r-A V i flf ^
c l 3 o U U T « l t J I L I I I C CU 0 j I v7 T T E C C t U V U A r a t T
ing -law Every member bank shall
feake plaee be examined by the Comp
troller of the Currency at least twice
in each calendar year and as much
oftener as the Federal Reserve
Board shall consider necessary.y-k*
erder fee -furnish-a-full-and-complete
Secretary—ef—the—Treasury The
Federal Reserve Board may authorize
examinations by the State authori
ties to be accepted in the case of
State banks and trust companies
and may? - hew ever? at any time
direct tne holding of a special ex
amination. The person assigned
to- the making of- s uch the exam
ination e#—the—a fe k s of any nabank shall have power to call to
gether a quorum of the directors of
such assoeiatien bank, who shall,
under oath, state to such examiner
the character and circumstances of
such of its loans or discounts as he
the-amounfc-w-hereef- shall - be dete fBtine d b v fehe. The F ederal Reserve
Board shallfix the salaries of all bank
examiners and annually reported
make report thereof to Congress.
But the The expense of the exami
nations herein provided for shall be
assessed by authority of the Federal
Reserve Board upon the asseei-
B A N K E X A M IN A T IO N S.
Section 21 was stricken out and the fol
lowing inserted:
21. [ That section'J S e c
fifty-two hundred and forty,
United States Revised Statutes, C f o j
is amended to read as follows:
The Comptroller o f the Currency,
with the approval o f the Secretary o f
the Treasury, shall appoint examiners
who shall examine every member bank
at least twice in each calendar year
and oftener i f considered necessary:
Provided, however, That the Federal
Reserve Board may authorize exam
ination by the State authorities to be
accepted in the case o f State banks
and trust companies and may at any
time direct the holding o f a\ special
examination o f State banks or trust
companies that are stockholders in
any Federal reserve bank.
The
examiner making the examination o f
any national bank, or o f any other
member bank, shall have power to
make a thorough examination o f all
the affairs o f the bank and in doing
so he shall have power to administer
oaths and to examine any o f the
officers and agents therein under
oath and shall \make a full and de
tailed report o f the condition o f said
bank to the Comptroller o f the Cur
rency.
The Federal Reserve Board, upon
the* recommendation o f the Comp
troller o f the Currency, shall fix the
salaries o f all bank examiners and
make report thereof to Congress.
The expense o f the examinations herein
provided fo r shall be assessed by the
S ec.
tio n
83
SECTION
23 — C o n t i n u e d .
HOUSE B ILL.
PA SSE D B Y SENATE.
CONFERENCE AGREEMENT.
shall b© made by the same examiner.
aliens banks examined in proportion
to assets or resources held by such
Comptroller o f the Currency upon
the banks examined in proportion to
assets or resources held by the banks
upon the dates o f examination o f the
various banks.
ftsseeiatiefts banks upon i
^
n U ft 1
I
/s m n l r A . h t r f h A
ri ^ i v > a /v t r
riwu
sriniTT^uu
int®K“ UT
»*tniu
amines the dates when the various
banks are examined.
In addition to the examinations
41
In addition to the exam
In addition to the examinations
inations made and conducted made and conducted by the Comp made and conducted by the Comp
by the Comptroller of the Currency, troller of the Currency, every Fed troller o f the Currency , every Federal
every Federal reserve bank may, eral reserve bank may, with the reserve bank may, with the approval
with the approval of the Federal approval of the Federal reserve o f the Federal reserve agent or the
Reserve Board, arrange for special agent or of the Federal Reserve Federal Reserve Board, provide for
or periodical examination of the Board, a^aftge provide for special special examination o f member banks
member banks within its district. &p—pefiedieftl examination of the within its district. The expense o f
Such examination shall be so con member banks within its district. such examinations shall be borne by
ducted as to inform the Federal Such examination shall be so con the bank examined. Such examina
reserve bank under whose auspices ducted as to inform the Federal re tions shall be so conducted as to inform
it is carried on of the condition of serve bank under whose auspices it the Federal reserve bank o f the condi
its member banks and of the lines is carried on of the condition of its tion o f its member banks and o f the
of credit which are being extended member banks and of the lines of lines o f credit which are being ex
by them. Every Federal reserve credit which are being extended by tended by them. Every Federal re
bank shall at all times furnish to them. Every Federal reserve bank serve bank shall at all times furnish
tho Federal Reserve Board such shall at all times furnish to the Fed to the Federal Reserve Board such in
information as may be demanded eral Reserve Board such informa formation as may be demanded con
by the latter concerning the con tion as may be demanded by the cerning the condition o f any member
dition of any national banking asso latter concerning the condition of bank within the district o f the said
Federal reserve bank.
ciation located within the district
of the said Federal reserve bank.
leeafced member bank within the dis
No bank shall be subject to any
trict of the said Federal reserve visitatorial powers other than such as
bank.
are authorized by law, or vested in
No bank shall be subject to any the courts o f justice or such as shall
visitorial powers other than such as be or shall have been exercised or di
are authorized by law, or vested in the rected by Congress, or by either House
courts of justice, or such as shall be thereof or by any committee o f Congress
or shall have been exercised or directed o r o f either House duly authorized.
by Congress, or either House thereof\
or any committee thereof.
The Federal Reserve Board shall
The Federal Reserve Board shall,
as often as it deems best, and in
at least once each year, order an ex
any case not less frequently than
amination o f each Federal reserve
four times each year, order an
bank, and upon joint application of
1
yyj t: i/ \ r n v l _
/v
i),QQ i n .
examination of national banking tJTUU
v l
llcTtJTUlXttt
UHHlV n l j ;
(TOTOtJTCC
ten member banks the Federal Reserve
.
t l A n d _1
T
associations in reserve cities. Such tJTC7tll3
Board shall order a special examina
examinations shall show in detail
tion and report o f the condition o f any
the total amount of loans made by
Federal reserve bank.
each bank on demand, on time, and
the different classes of collateral
held to protect the various loans,
and the lines of credit which are
being extended by them. The Fed
The Federal Re
eral Reserve Board shall, at least serve Board shall, at least once each
once each year, order an examina year, order an examination of each
tion of each Federal reserve bank, Federal reserve bank, and upon joint
and upon joint application of ten application of ten member banks
member banks the Federal Reserve the Federal Reserve Board shall
Board shall order a special exam order a special examination and
ination and report of the conditon report of the condition of any Fed
of any Federal reserve bank.
eral reserve bank.
i
84
SECTION
HOUSE B IL L
42
S e c . 24. That no national
bank shall hereafter make
any loan or grant any gratuity to
any examiner of such bank. Any
bank offending against this provi
sion shall be deemed guilty of a mis
demeanor and shall be fined not
more than $5,000, and a further
sum equal to the money so loaned
or gratuity given; and the officer or
officers of a bank making such loan
or granting such gratuity shall be
likewise deemed guilty of a misde
meanor and each shall be fined not
to exceed $5,000.
Any examiner
accepting a loan or gratuity from
any Tbank examined by him shall be
deemed guilty of a misdemeanor and
shall be fined not more than $5,000,
and a further sum equal to the
money so loaned or gratuity given;
and snail forever thereafter be dis
qualified from holding office as a
national-bank examiner. No na
tional-bank examiner shall perform
any other service for compensation
while holding such office.
24.
P A SSE D B Y SENATE.
CONFERENCE AGREEM EN T.
Sec.22. No memberbank or any offi
cer, director, or employee thereof shall
hereafter make any loan or grant any
gratuity to any bank examiner£ ofsuch
banlc'J. Any bank officer, director, or
employee violating this provision shall
be deemed guilty o f a misdemeanor and
shall be imprisoned not exceeding
one year orfined not more than $5,000,
or both; and may be fined a fu r
ther 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
sliall be deemed guilty o f a misde
meanor and shall be imprisoned not
shall be-fi«ed-net- fee-exeeed-85^000r exceeding one year or fined not more
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 than $5,000, or both; and maybe fined
both; midi fined a further sum equal a further sum equal to the money so
to the money so loaned or gratuity loaned or gratuity given; and shallfor
given; and shall forever thereafter ever thereafter be disqualified from
be disqualified from holding office holding office as a national-bank ex
as a national-bank examiner. No aminer. No national-bank examiner
national-bank examiner shall per shall perform any other service for
form any other service for compen compensation while holding such office
sation while holding such office for -for any bank or officer, director, or
any bank or officer, director, or em employee thereof.
ployee thereof
S e c . 24 22. That-ne-national No
member bank or any officer, director,
or employee thereof shall hereafter
make any loan or grant any gratuity
to any examiner of such bank.
Any bank officer, director, or em
ployee o ffending--affa insfc violating
this provision shall be deemed guilty
of a misdemeanor and shall be im
prisoned not exceeding one year or
fined not more than $5,000, or both;
and fined a further sum equal to the
money so loaned or gratuity given-*
e f— ftfty— fee— (ether— than-----a
legitimate—fee—paid—an—atterney-
by or-en-behalf ef-a-ftatienal-bftftk-el
No officer or director of a national
bank shall receive or be beneficiary,
either directly or indirectly, of any
fee (other than a legitimate fee paid
an attorney at law for legal serv
ices), commission, gift, or other
consideration for or on account of
any loan, purchase, sale, payment,
exchange, or transaction with re
spect to stocks, bonds, or other
investment securities or notes, bills
of exchange, acceptances, bankers’
bills, cable transfers, or mortgages
made by or on behalf of a
43
national bank of which ho is
such officer or director.
Other than the usual salary or di
Other than the usual salary or di
rector’s fee paid to any officer, di rector's fee paid to any officer, di
rector, or employee of a member bank rector, or employee o f a member bank
and other than a reasonable fee paid and other than a reasonable fee paid
by said bank to such officer, director, by said bank to such officer, director,
or employee for services rendered to or employee for services rendered to
such bank, no officer, director, em such bank, no officer, director, em
ployee, or attorney of a member bank ployee, or attorney of a member bank
shall be a beneficiary of or receive, shall be a beneficiary of or receive,
directly or indirectly, any fee, com directly or indirectly, any fee, com
mission, gift, or other consideration mission, gift, or other consideration
for or in connection with any trans for or in connection with any trans
action or business of the bank. No action or business of the bank. No
examiner, public or private, shall dis examiner, public or private, shall dis
close the names of borrowers or the close the names of borrowers or the
collateral for loans of a member bank collateral for loans of a member bank
85
SECTION
24— Continued.
PASSED B Y SENATE.
HOUSE B IL L
CONFERENCE AGREEMENT.
to other than the proper officers of such to other than the proper officers of such
lank without first having oltained the lank without first having oltained the
express permission in writing from express permission in writing from
the Comptroller o f the Currency, or the Comptroller of the Currency, or
from the loard of directors of such from the Board of Directors of such
lank, except when ordered to do so by a lank, except when ordered to do so ly a
court of competent jurisdiction, or by court of competent jurisdiction, or ly
direction of the Congress of the United direction of the Congress of the United
States, or either House thereof, or any States, or o f either House thereof\ or
committee thereof.
any committee o f c o n g r e s s o r o f
E ITH ER HOUSE £ thereof 1 DULY AU
THORIZED.
Any
person violating any provision of
this section shall be punished by a
fine of not exceeding $5,000 or by
imprisonment not exceeding five
years, or both such fine and impris
onment, in the discretion of the
court having jurisdiction.
Except so far as already provided
in existing laws this provision shall
not take (Sect until six months after
the passage of this Act.
Any person vio
lating any provision o*f this section
shall be punished by a fine of not
exceeding $5,000 or by imprison
ment not exceeding five-years one
year, or both 9**eh—
and—im~
U
T T Il^
iC lH i
l/ \ r \
TTT t T J jC t T C C T V / l i •
Except so far as already provided
in existing laws this provision shall
not take effect until si-x months sixty
days after the passage of this Act.
SECTION
S e c . 25. That from and after the
passage of this Act the stockholders
of every national banking associa
tion shall be held individually re
sponsible for all contracts, debts,
and engagements of such associa
tion, each to the amount of his
stock therein, at the par value
thereof in addition to the amount
invested in such stock. The stock
holders in any national banking
association who shall have trans
ferred their shares or registered the
transfer thereof within sixty days
next before the date of the? failure
of such association to meet its
obligations shall be liable to the
same extent as if they had made no
such transfer; but this provision
shall not be construed to affect in
any way any recourse which such
shareholders might otherwise have
against those in whose names such
shares are registered at the time of
such failure.
Section fiftv-onc hun
dred and fifty-one, Revised Statutes
of the United States, is hereby re
enacted except in so far as modified
by this section.
fliii-l UI w
-fctv
4.
T
tilT □
1' VH -
» 5 C C t ;t (7 1 1 7
Except [s o far'J as [ alreadyj pro
vided in existing lav;s, this provision
shall not take effect until sixty days
after the passage of this A ct
25.
sto "holders of every national bank
ing association shall be held indi
vidually responsible for all contracts,
debts, and engagements of such asso
ciation, each to the amount of his
stock therein, at the par value
thereof in addition to the amount
invested in such stoc k. The stock
holders in any national banking
association who shall have trans
ferred their shares or registered the
transfer thereof within sixty days
next before the date of the failure of
such association to meet its obliga
tions, 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 lialility; but this provi
sion shall not be construed to affect
in any way any recourse which such
shareholders might otherwise have
against those in whoso names such
shares arc registered at the time of
such failure.
tr o tt
Any person vio
lating any provision o f this section
shall le punished ly a fine of not
exceeding 85,000 or ly imprisonment
not exceeding one year} or loth.
Sec. 23. The stockholders o f every
national lanking association shall le
held individually responsible for all
contracts, delts, 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 stock
holders in any national lanking as
sociation who shall have transferred
their shares or registered the trans
fer thereof within sixty days next lefore the date o f the failure o f such as
sociation to meet its obligations, or
with knowledge o f such impending
failure, shall le liable to the same ex
tent as if they had made no such trans
fe r , to the extent that the subsequent
transferee fails to meet such liability;
but this provision shall not le con
strued to affect in any v:ay any re
course which such shareholders might
otherwise have against those in whose
names such shares are registered at
the time of such failure.
86
SECTION
44
26,
HOUSE B IL L .
P A SSED B Y SENATE.
LO AN$ ON FARM LANDS.
LOANS ON FARM LANDS.
S e c . Q& 2/f.. That any Any na
S e c . 26. That any national bank
ing association not situated in a re tional banking association not sit
serve city or central reserve city uated in a gesorve- e&y-e*1 central
may make loans secured by im- reserve city may make loans secured
)roved and unencumbered farm by improved and unencumbered
and, but no such loan shall be made farm land, situated within its Fed
for a longer time than twelve eral reserve district, but no such loan
months, nor for an amount exceed shall be made for a longer time than
ing fifty per centum of the actual frw-elvo-months five years, nor for an
value of the property offered as se amount exceeding fifty per centum
curity; and such property shall be of the actual value of the property
situated within the Federal reserve
district in which the bank is located.
Any such bank may make such
loans in an aggregate sum equal to
twenty-five per centum of its capi may make such loans in an aggre
gate sum equal to twenty-five per
tal and surplus.
centum of its capital and surplus,
or to one-third of its time deposits,
and such banks may continue here
after as heretofore to receive time
deposits and to pay interest on the
same.
The Federal Reserve Board shall
The Federal Reserve Board shall
have power from time to time to add have power from time to time to add
to the list of cities in which national to the list of cities in which national
banks shall not be permitted to banks shall not be permitted to
make loans secured upon real estate make loans secured upon real estate
in the manner described in this sec in the manner described in this
section.
tion.
!
CONFERENCE AGREEM EN T.
L O A N S O N F A R M L ANDS .
8 e c : 2 4 . Any national banking as
sociation not situatedin a ( 'reserve city
or J central reserve city may makeloans
secured by improved and unencum
bered farm land, situated within its
Federal reserve district, but no such
loan shall be made fo r a longer time
than five years, nor fo r an amount
exceeding fifty per centum o f the actual
value of the property offered as secur
ity. Any suchoarik may make such
loans in an aggregate sum equal to
twenty-five per centum o f its capital
and surplus or
to one-third o f its
time deposits and such banks may
continue hereafter as heretofore to
receive time deposits and to pay in
terest on the same.
The Federal Reserve Board shall
have power from time to time to add
to the list of cities in which national
banks shall not be permitted to make
loans secured upon real estate in the
manner described in this section.
87
SECTION
27.
The Senate eliminated this section and th e House conferees agreed
HOUSE B ILL .
SAVINGS DEPARTM ENT.
S e c . 27. That any national banking association may, subsequent to a date one year after the organization
of the Federal Reserve Board, make application to the Comptroller of the Currency for permission to open a
savings department. Such application shall set forth that tne directors of said national Dank have by a ma
jority vote apportioned a specified percentage of their paid-in capital and surplus to said savings de45
partment ana to that end have segregated specified assets for the uses of said department, or that cash
capital for the said savings department has been obtained by subscription to additional issues of the
capital stock of said national bank: Provided, That the capital thus set apart for the uses of the proposed sav
ings department aforesaid shall in no case be less than $15,000, or than a sum equal to twenty per centum of
the paid-up capital and surplus of the said national bank.
In making the application aforesaid any national banking association may further apply for power to
act as trustee for mortgage loans subject to the conditions and limitations herein prescribed or to be estab
lished as hereinafter provided.
Whenever the Comptroller of the Currency shall have approved any such application as hereinbefore pro
vided, he shall so inform the applying bank, and thereafter it shall be authorized to receive savings deposits
as so defined, and the organization and business conducted or possessed by said bank at the time of making
said application, except such as has been specifically segregated for the savings department, and subsequent
expansions thereof shall be known as the commercial department of the said bank. The said departments
shall, to all intents and purposes, be separate and distinct institutions save and except
46
as hereinafter expressly provided. The capital, surplus, deposits, securities, investments, and other
property, effects, and assets of each of said departments shall, in no event, be mingled with those
of the other department, or used, either in whole or in part, to pay any of the deposits of the other department
until all of the deposits of its own department have been fully paid and satisfied. National banks may in
crease or diminish their capital stock in the manner now provided by law, but whenever such general increase
or reduction of the capital stock of any national bank operating upon the provisions of this section shall be
made such increase or reduction shall be apportioned between the commercial and savings departments of the
said bank as its board of directors shall proscribe, notice of such increase or reduction, and of the apportionment
thereof, being forthwith given to the Comptroller of the Currency; and any such national bank may increase
or diminish the capital already apportioned to either its savings or commercial department to an extent not
inconsistent with tne provisions of this section, notifying the Comptroller of the Currency as hereinbefore pro
vided. The savings department for which authority has been solicited and granted shall have control of the
cash or assets apportioned to it as hereinbefore provided, and shall be organized under rules and regulations
to be prescribed by the Comptroller of the Currency.
47
Both the savings and commercial departments so created shall, however, be under the control and
direction of a single board of directors and of the general officers of said bank.
All business transacted by the commercial department of any such national bank shall be in every respect
subject to the limitations and requirements provided in the national banking Act as modified by this Act,
and such business shall henceforward be known as commercial business.^
The savings department of each such national bank shall be authorized to accumulate and loan the funds
of its depositors, to receive deposits of current funds, to purchase securities authorized by the Federal Reserve
Board, to loan any funds in its possession upon real estate or other authorized security, and to collect the same
with interest, and to declare and pay dividends or interest upon its deposits. The Federal Reserve Board is
hereby authorized to exempt the savings departments of national banking associations from any and every
restriction upon classes or kinds of business laid down in the national banking Act, and it shall be the duty
of the said board within one year after its organization to prepare and publish rules and regulations for the
conduct of business by such savings departments. The said regulations shall require every national
48
bank wThich shall conduct a savings department and a commercial department to segregate in its own
vaults the cash and assets belonging to such departments respectively and shall prescribe the general
forms of separate books of account to be used by each such department for its exclusive and individual use.
The regulations aforesaid shall further specify the period of notice for the withdrawal of deposits made in the said
savings department and shall forbid the acceptance of deposits by one department of such national bank from
the other department of such bank. The Federal Reserve Board shall make and publish at its discretion lists
of securities, paper, bonds, and other forms of investment, which the savings departments of national banks
shall be authorized to buy or loan upon; and said lists need not be uniform throughout the United States, but
shall be adapted to the conditions of business in different sections of the country.
It shall be the duty of every national bank to maintain, with respect to all deposit liabilities of its savings
department, a reserve in money w~hich may under existing law be counted as reserve, equal to not less than five
per centum of the total deposit liabilities of such department, and every national bank authorized to
49
maintain a savings department is hereby exempted from the reserve requirements of the national banking
Act and of this Act in respect to the said deposit liabilities of its savings department, except as in this
section provided. Every regulation made in pursuance of this section shall be duly published, and also posted
in every member bank having a savings department.
Every officer, director, or employee o f any member bank who shall knowingly or willfully violate any of
the provisions of this section, or any of the regulations of the Federal Reserve Board, or of the Comptroller
of the Currency, made under and by virtue of the provisions of this section shall be guilty of a felony, and on
conviction thereof shall be punished by a fine not exceeding $5,000 or by imprisonment not exceeding two
years, or both, in the discretion of the court.
H. Rep. 163, 63-2------ 10
88
SECTION
2 8*
HOUSE B ILL .
P A SSED B Y SENATE
CONFERENCE AGREEM ENT.
FOREIGN BRANCHES.
FOREIGN BRANCHES.
FO RE IC N BRA NCHES.
Seo. 28. That any national bank
ing association possessing a capital
of $1,000,000 or more may file appli
cation with the Federal Reserve
Board, upon such conditions and
under such circumstances as may be
prescribed by the said board, for the
purpose of securing authority to es
tablish branches in foreign countries
for the furtherance of the foreign
commerce of the United States and
to act, if required to do so, as fiscal
agents of the United States. Such
application shall specify, in addi
tion to the name and capital
50
of the banking association
filing it, the foreign country
or countries or the dependencies of
the United States where the banking
operations proposed are to be ear
ned on and the amount of capital
set aside by the said banking associ
ation filing such application for the
conduct of its foreign business at
the branches proposed by it to be
established in foreign countries.
The Federal Reserve Board shall
have power to approve or to reject
such application, if in its judgment,
the amount of capital proposed to
be set aside for the conduct of for
eign business is inadequate or if for
other reasons the granting of such
application is deemed inexpedient.
S e c . 08 25. Thafc Any national
banking association possessing a
capital and surplus of $1,000,000 or
more may file application with the
Federal Reserve Board, upon such
conditions and under such ei^eufiBr
sfcftftees regulations as may be pre
scribed by the said board, for the
purpose' of securing authority to
establish branches in foreign coun
tries or dependencies o f the United
States for the furtherance of the
foreign commerce of the United
States and to act, if required to do
so, as fiscal agents of the United
States.
Such application shall
specify, in addition to the name and
capital of the banking association
Sec. 25. A ny national banking as
sociation possessing a capital and sur
plus o f SI ,000,000 or more may file
application with the Federal Reserve
Board, upon such conditions and un
der such regulations as may be pre
scribed by the said board, fo r the pur
pose o f securing authority to establish
branches in foreign countries or de
pendencies o f the United States fo r
the furtherance o f the foreign com
merce o f the United States, and to act,
i f required to do so, as fiscal agents o f
Every national banking associa
tion which shall receive authority
to establish branches in foreign
countries shall be required at all
times to furnish information con
cerning the condition of such
branches to the Comptroller of the
Currency upon demand, and the
Federal Reserve Board may order
special examinations of the said
foreign branches at such time or
times as it may deem best. Every
such national banking association
shall conduct the accounts of each
foreign branch independently of the
accounts of other foreign branches
established by it and of its home
office, and shall at the end of each
fiscal period transfer to its general
ledger the profit or loss accruing at
each such branch aB a separate
item.
United-States 'place or places wThere
the banking operations proposed are
to be carried on and the amount of
capital set aside by the said banking
association filing such application for
the conduct of its foreign business
at the branches proposed by it to
be established in le^eign-eouBtoies
such place or places. The Federal
Reserve Board shall have power to
approve or to reject such applica
tion if, in its judgment, the amount
of capital proposed to be set aside
for the conduct of foreign business
is inadequate or if for other reasons
the granting of such application is
deemed inexpedient.
Every national banking associa
tion which shall receive authority
to establish foreign branches m feiigfi—eeuntoies shall be required at
all times to furnish information
concerning the condition of such
branches to the Comptroller of the
Currency upon demand, and the
Federal Reserve Board may order
special examinations of the said
foreign branches at such time or
times as it may deem best. Every
such national banking association
shall conduct the accounts of each
foreign branch independently of the
accounts of other foreign branches
established by it and of its home
office, and shall at the end of each
fiscal period transfer to its general
ledger the profit or loss accruing at
each Stteh branch as a separate
item.
the. United States. Such application
shall specify, in addition to the name
and capital o f the banking association
flin g it, the place or places where the
banking operations proposed are to be
carried on, and the amount o f capital
set aside [ by the said banking associa
tion filing such application J for the
conduct o f its foreign business [ a / the
branches proposed by it to be estab
lished in such place or places J. The
Federal Reserve Board shall have
power to approve or to reject such
application if, in its judgment, the
amount o f capital proposed to be set
aside fo r the conduct o f foreign busi
ness is inadequate, or i f fo r other rea
sons the granting o f such application
is deemeci inexpedient.
Every national banking associa
tion which shall receive authority to
establish foreign branches shall be re
quired at all times tofurnish informertion concerning the condition of such
branches to the Comptroller o f the
Currency upon demand, and the
Federal Reserve Board may order
special examinations of the said
foreign branches at such time or
times as it may deem best. Every
such national banking association
shall conduct the accounts o f each
foreign branch independently o f the
accounts of other foreign branches
established by it and o f its home office,
and shall at the end of each fiscal
period transfer to its general ledger
the profit or loss accruing at each
branch as a separate item.
89
SECTION
29.
HOUSE B ILL .
P ASSED B Y SENATE.
CONFERENCE AGREEM ENT.
S e c . 29. That all provisions
of law inconsistent with or
superseded by any of the provisions
of this Act be, and the same are
hereby, repealed: Provided, That
nothing in this Act contained shall
be construed to repeal the parity
provision or provisions contained
m an Act approved March four
teenth, nineteen hundred, entitled
“ An Act to define and fix the
standard of value, to maintain the
parity of all forms of money issued
or coined by the United States, to
refund the public debt, and for
other purposes.”
S e c . 89 26. T-hat-alt All provi
sions of law inconsistent with or
superseded by any of the provisions
Sec. 26. All 'provisions o f law
inconsistent with or superseded by
any o f the provisions o f this Act
are to that extent and to that ex
tent only hereby repealed: Provided,
Nothing in this Act contained shall be
construed to repeal the parity 'provi
sion or provisions contained m an
Act approved March fourteenth, nine
teen hundred, entitled “ An Act to
define and fix the standard of value,
to maintain the parity of all forms
of money issued or coined by the
United States, to refund the public
debt, and for other purposes,” and
the Secretary of the Treasury may
for [such purposes, o r J t h e p u r p o s e
51
are to that extent and to that extent only
hereby* repealed: Prwidedy That
nefchiftgr Nothing in this Act con
tained shall be construed to repeal
the parity provision or provisions
contained in an Act approved March
fourteenth, nineteen hundred, enti
tled “ An Act to define and fix the
standard of value, to maintain the
parity of all forms of money issued or
coined by the United States, to re
fund the public debt, and for other
urposes,” and the Secretary o f the
1reasury may fo r such 'purposes, or OF M AIN TAIN IN G SUCH PA R IT Y AND
to strengthen the gold reserve, borrow to strengthen the gold reserve, borrow
gold on the security of United States gold on the security of United States
bonds or for one-year notes bearing bonds AUTHORIZED B Y SECTION TW O
interest at a rate of not to exceed OF THE ACT LAST R EFERR ED TO Orfor
three per centum 'per annum, or sell one-year g o l d notesbearinginterest at
the same i f necessary to obtain gold. a rate of not to exceed three per cen
When the funds o f the Treasury on tum per annum, o r sell the same i f
hand justify, he may purchase and necessary to obtain gold. When the
retire such outstanding bonds and funds of the Treasury on hand justify,
notes.
he may purchase and retire such out
standing bonds and notes.
?
NEW
SECTIONS.
Sec. 27. The provisions of the Act
o f May thirtieth, nineteen hundred
and eight, authorizing national cur
rency associations, the issue of addi
tional national-bank circulation, and
creating a National Monetary Com
mission, which expires by limitation
under the terms of such Act on the
thirtieth day of June, nineteen hun
dred and fourteen, are hereby extended
to June thirtieth, nineteen hundred
and fifteen, and sections fifty-one
hundred and fifty-three, fifty-one
hundred and seventy-two, fifty-one
hundred and ninety-one, and fiftytwo hundred and fourteen of the
Revised Statutes o f the United
States, which were amended by the
Act of May twentieth, nineteen
hundred and eight, are hereby re
enacted to read as such sections read
prior to May twentieth, nineteen
hundred and eight, subject to such
amendments or modifications as are
prescribed in this act: Provided,
however, That section nine of said
Act is hereby amended so as to change
so much of the tax rates fixed in said
section by making the portion appli
cable thereto read as follows:
Sec. 27. The provisions o f the Act
o f May thirtieth, nineteen hundred
and eight, authorizing national cur
rency associations, the issue o f addi
tional national-bank circulation, and
creating a National Monetary Com
mission, which expires by limitation
under the terms of such Act on the
thirtieth day of June, nineteen hun
dred andfourteen, are hereby extended
to June thirtieth, nineteen hundred
and fifteen, and sections fifty-one
hundred and. fifty-three, fifty-one
hundred and seventy-two, fifty-one
hundred and ninety-one, and fiftytwo hundred and fourteen of the
lievised Statutes of the United
States, which were amended by the
Act of May [ twentieth]| t h i r t i e t h ,
nineteen hundred and eight, are hereby
reenacted to read as such sections
read prior to May [ twentiethJ
t h ir t ie t h ,
nineteen hundred arid
eight, subject to such amendments
or modifications as are prescribed in
this Act: Provided, however, That
section nine of [said]| t h e Act f i r s t
REFERRED TO IN THIS SECTION is
hereby amended so as to change [s o
much o f j the tax rates fixed in said
[s ectio n ] a c t by making the portion
applicable thereto read as follows:
90
NEW
SE C T IO N S — Continued.
PA SSED B 7 SENATE.
HOTJSI B IL L
" National banking associations
having circulating notes secured other
wise than by bonds oj the United
States, shall pay for the first three
months a tax at the rate oi three per
centum per annum upon the average
amount of such oj their notes in cir
culation as are based upon the deposit
oj such securities j 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 oj six per centum per annum
upon the average amount oj such
notes.1'
Sec. 28. Section fijty-one hundred
and forty-three of the Revised Statutes
is hereby amended and reenacted to
read as follows: “ Any association
jormed under this title may, by the
vote oj shareholders owning twothirds oj its capital stock, reduce its
capital to any sum not below the
amount required by this title to
authorize the formation of associa
tions; but no such reduction shall be
allowable which will reduce the capi
tal of the association below the amount
required for its outstanding circula
tion, nor shall any reduction be made
until the amount oj the proposed re
duction has been reported to the Comp
troller oj the Currency and such re
duction has been approved by the
said Comptroller oj the Currency and
by the Federal Reserve Board, or by
the organization committee pending
the organization oj the Federal Re
serve Board.”
Sec. 29. I f any clause, sentence,
paragraph, or fart of this Act shall
fo r any reason be adjudged by any
court o f competent jurisdiction to be
invalid, such judgment shall not
affect, impair, or invalidate the re
mainder of this Act, but shall be con
fined in its operation to the clause,
sentence, paragraph, or part thereof
directly involved in the controversy in
which such judgment shall have been
rendered.
SECTION
CONFERENCE AGREEM EN T.
£!l,JNational banking associations
having circulating notes secured other
wise than by bonds of the United
States, shall pay for the first three
months a tax at the rale oj three per
centum per annum upon the average
amount oj such oj their notes in cir
culation as are based upon the deposit
oj such securities, ana afterwards an
additional tax rate oj one-half of one
per centum per annum for each month
until a tax oj six per centum per
annum is reached, and thereafter
such tax of six per centum per annum
upon the average amount of such
notes.
Sec. 28. Section fijty-one hundred
and forty-three oj the Revised Statutes
is hereby amended and reenacted to
read as follows: [ ‘ 1] Any association
formed under this title may, by the
vote of shareholders owning twothirds of its capital stock, reduce its
capital to any sum not below the
amount required by this title to
authorize the formation of associa
tions; but no such reduction shall be
allowable which will reduce the capi
tal of the association below the amount
required for its outstanding circula
tion, nor shall any reduction be made
until the amount of the proposed re
duction has been reported to the Comp
troller oj the Currency and such re
duction has been approved by the
said Comptroller of the Currency and
by the Federal Reserve Board, or by
the organization committee pending
the organization oj the Federal Re
serve Board. [ ” ]
Sec. 29. I f any clause, sentence,
paragraph, or part o f this Act shall
for any reason be adjudged by any
court o f competent jurisdiction to be
invalid, such judgment shall not
affect, impair, or invalidate the re
mainder o f this Act, but shall be con
fined in its operation to the clause,
sentence, paragraph, or part thereof
directly involved in the controversy in
which such judgment shall have been
rendered.
30.
Sec. SO. The right to amend, alter,
S e c . 30. That the The right
S e c . 30. That the right to amend,
alter, or repeal this Act is hereby to amend, alter, or repeal this Act or repeal this Act is hereby expressly
reserved.
is hereby expressly reserved.
expressly, reserved.
Passed the House of Represent
atives September 18, 1913.
Attest:
SOUTH TRIMBLE,
Clerk.
@FedFRASER