- THE FEDERAL RESERVE ACT (APPROVED DECEMBER 23, 1913) AS AMENDED August 4, 1914; August 15, 1914; March 3, 1915 September 7, 1916; June 21, 1917; September 26, 1918 March 3, 1919; September 17, 1919; December 24, 1919 April 13, 1920 With an appendix containing certain sections of the following Acts of Congress which affect, directly or indirectly, the operations of Federal Reserve Banks and memlicr banks CLAYTON ANTI-TRUST ACT, approved October 15, 1914, as amended by Kern Amendment, approved May 15, 1916, as amended by the act approved May 26, 1920 AMENDMENT TO POSTAL SAVINGS ACT, approved May 18, 1916 FARM LOAN ACT, approved July 17, 1916 FIRST LIBERTY BOND ACT, approved April 24, 1917 SECOND LIBERTY BOND ACT, approved September 24, 1917 THIRD LIBERTY BOND ACT, approved April 4, 1918 WAR FINANCE CORPORATION ACT, approved April 5, 1918, as amended by the Victory Liberty Loan Act, approved March 3, 1919 AN ACT TO CONSERVE THE GOLD SUPPLY OF THE UNITED STATES, ETC., approved April 23, 1918 TRADING WITH THE ENEMY ACT, as amended by the act approved September 24, 1918 SECTION 5172, REVISED STATUTES, as amended by act of March 3,1919 SECTION 5200, REVISED STATUTES, as amended by act of Septem- ber 24, 1918, and act of October 22, 1919 SECTION 5202, REVISED STATUTES, as amended by War Finance Corporation Act, approved April 5, 1918, and act of October 22, 1919 SECTIONS 5208 AND 5209, REVISED STATUTES, as amended by act of September 26, 1918 REVENUE ACT OF 1918, approved February 24, 1919 TRANSPORTATION ACT OF 1920, approved February 28, 1920 APPROPRIATION ACT OF 1920, approved May 29, 1920 COMPILED UNDER DIRECTION OF THE FEDERAL RESERVE BOARD 3^ I S3 WASHINGTON GOVERNMENT PRINTING OFFICE 1920 I 1 SOUTHERN BRANCH UNIVERSITY of « LOS ANGELES, CALIF. -o FEDERAL RESERVE ACT. (Approved Dec. 23, 1913.) As amended Aug. 4, 1914 (38 Slat., 682, Chap. 225); Aug. 15, 1914 (38 Stat., 691, Chap. 252); Mar. 3, 1915 (38 Stat., 958, Chap. 93); Sept. 7, 1916 (39 Stat., 752, Chap. 461); June 21, 1917 (40 Stat., 232, Chap. 32); Sept. 26, 1918; Mar. 3, 1919; Sept. 17, 1919; Dec. 24, 1919; Apr. 13, 1920. An Act To provide for the establishment of Federal reserve banks, to furnish an elastic cm - rency, to afford means of rediscounting com- mercial paper, to establish a more effective supervision of banking in the United States, and for other purposes. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assemble! , 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 asso- ciation, and trust compaii}', 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 synony- mous 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 moan Federal reserve bank. FEDERAL RESERVE DISTRICTS. Sec. 2. As soon as practicable, the Secretary of the Treasury, the Secretary of Agriculture and the Comptroller of the Currency, acting as "The Reserve Bank Organi- zation Committee," shall designate not less than eight nor more than twelve cities to be known as Federal re- serve cities, and shall divide the continental United States, excluding Alaska, into districts, each district to contain only one of such Federal reserve cities. The de- termination of said organization committee shall not be subject to review except by the Federal Reserve Board when organized: Provided, That the districts shall be 3 7 THE FEDERAL RESERVE ACT. Sec. 2. apportioned with duo regard to the convenience and cus- tomary 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 be created by the Federal Reserve Board, not to exceed twelve hi all. Such districts shall be known as Federal reserve districts and may bo desig- nated by number. A majority of the organization com- mittee 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 be severally locatod. 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." Under regulations to be prescribed by the organization committee, every national banking association in the United States is hereby required, and every eligible bank in the United States and every trust company within the District of Columbia, is hereby authorized to signify in writing, within sixty days after the passage of this Act, its acceptance of the terms and provisions hereof. When the organization committee shall have designated the cities in which Federal reserve banks are to be organized, and fixed the geographical limits of the Federal reserve districts, every national banking association within that district shall be required within thirty days after notice from the organization committee, to subscribe to the capital stock of such Federal reserve bank in a sum equal to six per centum of the paid-up capital stock and surplus of such bank, one-sixth of the subscription to be payable on call of the organization committee or of the Federal Reserve Board, one-sixth within throe months and one- sixth within six months thereafter, and the remainder of the subscription, or any part thereof, shall bo subject to call when doomed necessary by the Federal Reserve Board, said payments to bo in gold or gold certificates. The shareholders of every Federal reserve bank shall be held individually responsible, equally and ratably, and not tec. 2. CHE FEDERAL RESERVE ACT. ono for another, for all contracts, debts, and engagements of such bank to the extent of the amount of their sub- scriptions to such stock at tho par value thereof in addi- tion 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 or- ganization committee or of the Federal Kcserve Board. Should any national banking association in the United States now organized fail within one year after the pas- sage of this Act to become a member bank or fail to com- ply 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 noncompliance 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 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 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 per- sonal or individual 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 tho judgment of the organization committee, insufficient to provide the amount of capital required therefor, then and in that event tho said organization committee may, under conditions and regulations to be prescribed by it, offer to public subscription at par such an amount of stock in said Federal reserve banks, or any one or more THE FEDEEAL RESERVE ACT. Sec. 2. of them, as said committee shall determine, subject to the same conditions as to payment and stock liability as provided for member banks. No individual, copartnership, or corporation other than a member bank of its district shall be permitted to subscribe for or to hold at any time more than $25,000 par value of stock in any Federal reserve bank. Such stock shall be known as public stock and may be trans- ferred on the books of the Federal reserve bank by the chairman of the board of directors of such bank. Should the total subscriptions by banks and the public to the stock of said Federal reserve banks, or 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 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 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 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 subscribed capital less than $4,000,000. The organiza- tion of reserve districts and Federal reserve cities shall not be construed as changing 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 or- ganization 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 Secretary of the Treasury, and the sum of $100,000, or so much thereof as may be necessary, is hereby appropriated, out of any moneys in the Treasury not otherwise appropriated, for the payment of such expenses. Secs. 3, 4. THE FEDERAL RESERVE ACT. BRANCH OFFICES. Sec requir c. 3. The Federal Reserve Board may permit or Asamendedtj ire any Federal reserve bank to establish branch June », i»i7 (« banks within the Federal reserve district in which it is located or within the district of any Federal reserve bank which may have been suspended. Such branches, subject to such rules and regulations as the Federal Re- serve Board may prescribe, shall be operated under the supervision of a board of directors to consist of not more than seven nor less than three directors, of whom a majority of one shall be appointed by the Federal reserve bank of the district, and the remaining directors by the Federal Reserve Board. Directors of branch banks shall hold office during the pleasure of the Federal Re- serve Board. FEDERAL RESERVE BANKS. Sec. 4. "When the organization committee shall have As amended by ii-i l-r^i i t • -ii- act approved established federal reserve districts as provided in sec- June 21, 1917 ao tion two of this Act, a certificate shall be filed with the32);' act a p.' ~. ■,-, , ., ~. , . proved Septem- Comptroller oi the Currency showing the geographical <*r 26, wis. limits of such districts and the Federal reserve city designated in each of such districts. The Comptroller of the Currency shall thereupon cause to be forwarded to each national bank located in each district, and to such other banks declared to be eligible by the organization committee which may apply therefor, an application blank in form to be approved by the organization com- mittee, which blank shall contain a resolution to be adopted by the board of directors of each bank executing such application, authorizing a subscription to the capi- tal 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 organi- zation committee shall designate any five banks of those whose applications have been received, to execute a cer- tificate of organization, and thereupon the banks so des- ignated 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 THE FEDERAL RESERVE ACT. Sec. -L 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 num- ber 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, trans- mitted 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. 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 employees as are not otherwise provided for in this Act, to define their duties, require bonds of them and fix the penalty thereof, and to dismiss at pleasure such offi- cers or employees. Sixth. To prescribe by its board of directors, by-laws not inconsistent 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. Sec. 4. THE FEDERAL RESERVE ACT. Eighth. 1 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 provisions of law as relate to the issue of circulating notes of national banks secured by bonds of the United States bearing the circulating priv- ilege, 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 busi- ness except such as is incidental and necessarily prelimi- nary to its organization until it has been authorized by the Comptroller of the Currency to commence business under the provisions of this Act. Every Federal reserve bank shall be conducted under the supervision and control of a board of directors. The board of directors shall perform the duties usually appertaining to the office of directors of banking associa- tions and all such duties as are prescribed by law. Said board shall administer the affairs of said bank fairly and impartially 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 discounts, 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. 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, agriculture or some other industrial pursuit. Class C shall consist of three members who shall be designated by the Federal Reserve Board. When the i See section 18. Also sec. 5 of act approved Apr. 23, 1918, appendix, p. 73, authorizing issuance of Federal Reserve Bank notes in any denominations (including $1 and $2) against security of United States certificates of indebtedness, or of United States one- year gold notes. 10 THE FEDERAL RESERVE ACT. Sec. 4. 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 orgar.ization committee shall exercise the powers and duties appertaining to the office of chairman in the organization of such Federal reserve bank. No Senator or Representative in Congress shall be a member of the Federal Reserve Board or an officer or a director of a Federal reserve bank. No director of class B shall be an officer, director, or employee of any bank. No director of class C shall be an officer, director, employee, or stockholder of any bank. Directors of class A and class B shall be chosen in the following manner: The Federal Reserve Board shall classify the member banks of the district into three general groups or divi- sions, designating each group by number. Each group shall consist as nearly as may be of banks of similar capitalization. Each member bank shall be permitted to nominate to the chairman of the board of directors of the Federal reserve bank of the district 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 member bank. Each member bank by a resolution of the board or by an amendment to its by-laws shall authorize its president, cashier, or some other officer to cast the vote of the mem- ber bank in the elections of class A and class B directors. Within fifteen days after receipt of the list of candi- dates the duly authorized officer of a member bank shall certify to the chairman his first, second, and other choices for director of class A and class B, respectively, upon a preferential ballot upon a form furnished by the chairman of the board of directors of the Federal reserve bank of the district. Each such officer 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. No officer or director of a member bank shall Sec. 4. THE FEDERAL RESERVE ACT. 11 be eligible to serve as a class A director unless nominated and elected by banks which are members of the same group as the member bank of which he is an officer or director. Any person who is an officer or director of more than one member bank shall not be eligible for nomination as a class A director except by banks in the same group as the bank having the largest aggregate resources of any of those of which such person is an officer or director. 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 voting, by adding together the first and second choices, he shall be declared 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 ap- pointed, pne of wh om-s-hall be deshru a Led -tw-^ftid-hoard- a s_ chair man of—the - board -of- di rectors of the ~FedeTair' reserve hfmk_jmd as "Inderal r^s^rv* 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 prem- ises of the Federal reserve bank. He shall make regular reports to the Federal Reserve Board and shall act as its official representative for the performance of the functions conferred upon it by this act. He shall receive an annual compensation to be fixed by the Federal Reserve Board and paid monthly by the Federal reserve bank to which he is designated. One of the directors of class C shall be appointed by the Federal Reserve Board as deputy chairman to exercise the powers of the chairman of the board when necessary. In case of the absence of the 12 THE FEDEBAL RESERVE ACT. Sbc. 4. chairman and deputy chairman, the third-class C director shall preside at meetings of the board. Subject to the approval of the Federal Reserve Board the Federal reserve agent shall appoint one or more, assistants. Such assistants, who shall be persons of tested banking experience, shall assist the Federal reserve agent in the performance of his duties and shall also have power to act in his name and stead during his absence or disability. The Federal Reserve Board shall require such bonds of the assistant Federal reserve agents as it may deem necessary for the protection of the United States. Assistants to the Federal reserve agent shall receive an annual compensation, to be fixed and paid in the same manner as that of the Federal reserve agent. Directors of Federal reserve banks shall receive, in addition to any compensation otherwise provided, a reasonable allowance for necessary 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 di- rectors 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 several districts as may be necessary to carry out the purposes of this Act, and may exercise the functions herein conferred upon the chairman of the board of directors of each Federal reserve bank pending the complete organization of such bank. At the first meeting of the full board of directors of each Federal reserve bank, it shall be the duty of the directors of classes A, B and C, respectively, to designate one of the members of each class whose term of office shall expire in one year from the first of January nearest to date of such mooting, 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. Thereafter every director of a Federal reserve bank; chosen as hereinbefore provided shall hold office for a term of throe 3^ears. 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. Sec. 5. THE FEDERAL RESERVE ACT. 13 STOCK ISSUES; INCREASE AND DECREASE OF CAPITAL. Sec. 5. The capital stock of each Federal reserve bank shall be divided into shares of $100 each. Tho out- standing capital stock shall bo increased from time to time as member banks increase their capital stock and surplus or as additional banks become members, and may bo decreased as member banks reduco their capital stock or surplus or cease to be members. Shares of the capital stock of Federal reserve banks owned by mombor banks shall not be transferred or hypothecated. When a member bank increases its capital stock or surplus, it shall thereupon subscribe for an additional amount of capital stock of the Federal reserve bank of its dis- trict equal to six per centum of the said increase, one- half of said subscription to be paid in the manner herein- before 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, paying 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 in- creased 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 pro- portionate amount of its holdings in the capital of said Federal reserve banK, and when a member bank volun- tarily 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 surrendered 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 14 THE FEDERAL RESERVE ACT. Secs. G, 7. any liability of such member bank to the Federal reserve bank. Sec. 6. If any member bank shall be declared insol- vent and a receiver appointed therefor, the stock held by it in said Federal reserve bank shall be canceled, with- out impairment of its liability, and all cash-paid sub- scriptions 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 bank to the Federal reserve bank, and the balance, if any, shall be paid to the re- ceiver 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 cer- tificate to the Comptroller of the Currency showing such reduction of capital stock and the amount repaid to such bank. DIVISION OF EARNINGS. as amended by Sec. 7. After all necessary expenses of a Federal March^ i!ii97 e 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 dividend shall be cumulative. After the aforesaid divi- dend claims have been fully met, the net earnings shall be paid to the United States as a franchise tax except that the whole of such net earnings, including those for the year ending December thirty-first, nineteen hundred and eighteen, shall be paid into a surplus fund until it shall amount to one hundred per centum of the subscribed capital stock of such bank, and that thereafter ten per centum of such net earnings shall be paid into the surplus. 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 Secretary 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. Sec. 8. THE FEDERAL RESERVE ACT. 15 Federal reserve banks, including the capital stock and surplus therein, and the income derived therefrom shall be exempt from Federal, State, and local taxation, except taxes upon real estate. Sec. 8. Section fifty-one hundred and fifty-four, United States 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 provisions 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 Comptroller of the Currency be converted into a national banking association, with any name approved by the Comptroller of the Currency: Provided, however, That said conversion shall not be in contravention of the State law. In such case the articles of association and organization certificate may be exe- cuted by a majority of the directors of the bank or bank- ing institution, and the certificate shall declare that the owners of fifty-one per centum of the capital stock have authorized the directors to make such certificate and to change or convert the bank or banking institution into a national association. A majority of the directors, after executing the articles of association and the organi- zation 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 associa- tion. The shares of any such bank may continue to be for the same amount each as they were before the con- version, 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 respects, as shall have been prescribed by the Federal Reserve Act and by the 16 THE FEDERAL RESERVE ACT. Sec. 9. national banking Act for associations originally organized as national banking associations. STATE BANKS AS MEMBERS. act S appr d oveI ^ec. ®* ^ n 7 DanK incorporated by special law of any stat e I 2 23 1 2 9 , 17 chap°^ ta ^ e » or organized under the general laws of any State 32,) or of the United States, desiring to become a member of the Federal Reserve System, may make application to the Federal Reserve Board, under such rules and regulations as it may prescribe, for the right to subscribe to the stock of the Federal reserve bank organized within the district in which the applying bank is located. Such application shall be for the same amount of stock that the applying bank would be required to subscribe to as a national bank. The Federal Reserve Board, subject to such conditions as it may prescribe, may permit the applying bank to become a stockholder of such Federal reserve bank. In acting upon such applications the Federal Reserve Board shall consider the financial condition of the apply- ing bank, the general character of its management, and whether or not the corporate powers exercised are con- sistent with the purposes of this act. Whenever the Federal Reserve Board shall permit the applying bank to become a stockholder in the Federal reserve bank of the district its stock subscription shall be payable on call of the Federal Reserve Board, and stock issued to it shall be held subject to the provisions of this act. All banks admitted to membership under authority of this section shall be required to comply with the reserve and capital requirements of this act and to conform to those provisions of law imposed on national banks which prohibit such banks from lending on or purchasing their own stock, which relate to the withdrawal or impairment of their capital stock, and which relates to the payment of unearned dividends. Such banks and the officers, agents, and employees thereof shall also be subject to the provisions of and to the penalties prescribed by section fifty-two hundred and nine of the Revised Statutes, 1 and shall bo required to mako reports of condition and of the payment of dividends to the Federal reserve bank of which they become a member. Not less than three of such reports shall be made annually on call of the Federal i For the text of section 5209 of the Revised Statutes, see Appendix, p. 79. Sec. 9. THE FEDERAL RESERVE ACT. 17 reserve bank on dates to be fixed by the Federal Reserve Board. Failure to make such reports within ten days after the date they are called for shall subject the offend- ing bank to a penalty of $100 a day for each day that it fails to transmit such report; such penalty to be collected by the Federal reserve bank by suit or otherwise. As a condition of membership such banks shall likewise be subject to examinations made by direction of the Fed- eral Reserve Board or of the Federal reserve bank by examiners selected or approved by the Federal Reserve Board. Whenever the directors of the Federal reserve bank shall approve the examinations made by the State author- ities, such examinations and the reports thereof may be accepted in lieu of examinations made by examiners selected or approved by the Federal Reserve Board: Pro- vided, however, That when it deems it necessary the board may order special examinations by examiners of its own selection and shall in all cases approve the form of the report. The expenses of all examinations, other than those made by State authorities, shall be assessed against and paid by the banks examined. 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 made pursuant thereto, it shall be within the power of the board after hearing to require such bank to surrender its stock in the Federal reserve bank and to forfeit all rights and privileges of membership. The Federal Reserve Board may restore membership upon due proof of compliance with the conditions imposed by this section. Any State bank or trust company desiring to withdraw from membership in a Federal reserve bank may do so, after six months' written notice shall hav« been filed with the Federal Reserve Board, upon the surrender and can- cellation of all of its holdings of capital stock in the Fed- eral reserve bank: Provided, however, That no Federal reserve bank shall, except under express authority of the Federal Reserve Board, cancel within the same calendar year more than twenty-five per centum of its capital stock for the purpose of effecting voluntary withdrawals during that year. All such applications shall be dealt with in the order in which they are filed with the board. 8881°— 20 2 18 THE FEDERAL RESERVE ACT. Sec. 9. Whenever a member bank shall surrender its stock hold- ings in a Federal reserve bank, or shall be ordered to do so by the Federal Reserve Board, under authority of law, all of its rights and privileges as a member bank shall thereupon cease and determine, and after due provision has been made for any indebtedness due or to become due to the Federal reserve bank it shall be entitled to a refund of its cash paid subscription with interest at the rate of one-half of one per centum per month from date of last dividend, if earned, the amount refunded in no event to exceed the book value of the stock at that time, and shall likewise be entitled to repayment of deposits and of any other balance due from the Federal reserve bank. No applying bank shall be admitted to membership in a Federal reserve bank unless it possesses a paid-up, unim- paired capital sufficient to entitle it to become a national banking association in the place where it is situated under the provisions of the national-bank act. Banks becoming members of the Federal Reserve Sys- tem under authority of this section shall be subject to % the provisions of this section and to those of this act which relate specifically to member banks, but shall not be subject to examination under the provisions of the first two paragraphs of section fifty-two hundred and forty of the Revised Statutes as amended by section twenty-one of this act. 1 Subject to the provisions of this act and to the regulations of the board made pursuant thereto, any bank becoming a member of the Federal Reserve System shall retain its full charter and statutory rights as a State bank or trust company, and may con- tinue to exercise all corporate powers granted it by the State in which it was created, and shall be entitled to all privileges of member banks: Provided, however, That no Federal reserve bank shall be permitted to discount for any State bank or trust company notes, drafts, or bills of exchange of any one borrower who is liable for borrowed money to such State bank or trust company in an amount greater than ten per centum of the capital and surplus of such State bank or trust company, but the discount of bills of exchange drawn against actually existing value and the discount of commercial or business paper actually owned by the person negotiating the same shall not be considered as borrowed money within the meaning of this i Amending section 21 of this act. Sacs. 10, 11. THE FEDERAL RESERVE ACT. 19 section. 1 The Federal reserve bank, as a condition of the discount of notes, drafts, and bills of exchange for such State bank or trust company, shall require a certifi- cate or guaranty to the effect that the borrower is not liable to such bank in excess of the amount provided by this section, and will not be permitted to become liable in excess of this amount while such notes, drafts, or bills of exchange are under discount with the Federal reserve bank. It shall be unlawful for any officer, clerk, or agent of any bank admitted to membership under authority of this section to certify any check drawn upon such bank unless the person or company drawing the check has on deposit therewith at the time such check is certified an amount of money equal to the amount specified in such check. Any check so certified by duly authorized officers shall be a good and valid obligation against such bank, but the act of any such officer, clerk, or agent in violation of this section may subject such bank to a forfeiture of its membership in the Federal Reserve System upon hearing by the Federal Reserve Board. 2 FEDERAL RESERVE BOARD. Sec. 10. A Federal Reserve Board is hereby created Asamendedby J act approved which shall consist of seven members, including the Sec- Mar - 3 > 1919 - retary of the Treasury and the Comptroller of the Cur- rency, who shall be members ex officio, and five members appointed by the President of the United States, by and with the advice and consent of the Senate. In selecting the five appointive members of the Federal Reserve Board, not more than one of whom shall be selected from any one Federal reserve district, the President shall have due regard to a fair representation of the different com- mercial, industrial and geographical divisions of the country. The five members of the Federal Reserve Board appointed by the President and confirmed as afore- said 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 i Amended by section 11 (m), as amended March 3, 1919. See post. p. 25. ' See section 5208, Revised Statutes, as amended by act of Sept. 26, 1918 (appendix, p. 79), for penalty for false certification of checks by officers of Federal Reserve Banks and national banks. 20 THE FEDERAL RESERVE ACT. Sec. 10 Comptroller of the Currency, receive the sum of $7,000 annually for his services as a member of said board. The Secretary of the Treasury and the Comptroller of the Currency 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. The appointive members of the Federal Reserve Board shall be ineligible during the time they are in office and for two years thereafter to hold any office, position, or em- ployment in any member bank, except that this restric- tion shall not apply to a member who has served the full term for which he was appointed. Of the five 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 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 within fifteen days after notice of appoint- ment make and subscribe to the oath of office. The Federal Reserve Board shall have power to levy semiannually upon the Federal reserve banks, in propor- tion to their capital stock and surplus, an assessment sufficient to pa}^ its estimated expenses and the salaries of its members and employees for the half year succeeding the levying of such assessment, together with any deficit carried forward from the preceding half year. The first meeting of the Federal Reserve Board shall bo held in Washington, District of Columbia, as soon as may be after tho passage of this Act, at a date to bo fixed by tho Reserve Bank Organization Committee. The Socretary of tho Treasury shall be ex officio chairman of the Federal Reserve Board. No member of the Federal Reserve Board shall bo 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 Secs. 10, 11. THE FEDERAL RESERVE ACT. 21 member of tho Fedoral Reserve Board he shall certify under oath to the Secretary of the Treasury that lie has complied with this requirement. Whenovor 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 happen on tho 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 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 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 bo 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 tho Comptroller of the Cur- rency and- shall perform his duties under the general directions of the Secretary of the Treasury. Sec. 11. The Federal Reserve Board shall be author- As amended by act approved ized and empowered: iSt" Vra 8 (a) To examine at its discretion the accounts, books A" ' : Sept. 26, r and affairs of each Federal reserve bank and of each &Pp roved Mar - 3> member bank and to require such statements and reports 22 THE FEDERAL RESERVE ACT. Sec. 11. as it may deem necessary. The said board shall publish once each week a statement showing the condition of each Federal reserve bank and a consolidated statement for all Federal reserve banks. Such statements shall show in detail the assets and liabilities of the Federal reserve banks, single and combined, and shall furnish full information regarding the character of the money held as reserve and the amount, nature and maturities of the paper and other investments owned or held by Federal reserve banks. (b) To permit, or, on the affirmative vote of at least five members of the Reserve Board to require Federal reserve banks to rediscount the discounted paper of other Federal reserve banks at rates of interest to be fixed by the Federal Reserve Board. (c) To suspend for a period not exceeding thirty days, and from time to time to renew such suspension for pe- riods not exceeding fifteen days, any reserve requirements specified in this Act: Provided, That it shall establish a graduated tax upon the amounts by which the reserve requirements of this Act may be permitted to fall below the level hereinafter specified: And provided further, That when the gold reserve held against Federal reserve notes falls below forty per centum, the Federal Reserve Board shall establish a graduated tax of not more than one per centum per annum upon such deficiency until the reserves fall to thirty-two and one-half per centum, and when said reserve falls below thirty-two and one-half per centum, a tax at the rate increasingly of not less than one and one-half per centum per annum upon each two and one- half per centum or fraction thereof that such reserve falls below thirty-two and one-half per centum. The tax shall be paid by the reserve bank, but the reserve bank shall add an amount equal to said tax to the rates of interest and discount fixed by the Federal Reserve Board. (d) To supervise and regulate through the bureau under the charge of the Comptroller of the Currency the issue and retirement of Federal reserve notes, and to prescribe rules and regulations under which such notes may bo delivered by the Comptroller to the Federal reserve agents applying therefor. (e) To add to the number of cities classified as reserve and central reserve cities under existing law in which national banking associations are subject to the reserve requirements set forth in section twenty of this Act; or Sec. 11. THE FEDERAL RESERVE ACT. 23 to reclassify existing reserve and centra] reserve eities or to terminate their designation as such. (f) To suspend or remove any officer or director cf any Federal reserve bank, the cause of such removal to be forthwith communicated in writing by the Federal Re- serve Board to the removed officer or director and to Baid bank. (g) To require the writing off of doubtful or worthless assets upon the books and balance sheets of Federal re- serve banks. (h) To suspend, for the violation of any of the provi- sions of this Act, the operations of any Federal reserve bank, to take possession thereof, administer the same dur- ing the period of suspension, and, when deemed advisable, to liquidate or reorganize such bank. (i) To requiro 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 rides and regulations nocessary 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, adminis- trator, registrar of stocks and bonds, guardian of estates, assignee, receiver, committee of estates of lunatics, or in any other fiduciary capacity in which State banks, trust companies, or other corporations which come into com- petition with national banks are permitted to act under the laws of the State in which the national bank is located. Whenever the laws of such State authorize or permit the exercise of any or all of the foregoing powers by State banks, trust companies, or other corporations which compete with national banks, the granting to and the exercise of such powers by national banks shall not be deemed to be in contravention of State or local law within the meaning of tins Act. National banks exercising any or all of the powers enu- merated in this subsection shall segregate all assets held in any fiduciary capacity from the general assets of the bank and shall keep a separate set of books and records showing in proper detail all transactions engaged in under 24 THE FEDERAL RESERVE ACT. Sec. 11. authority of this subsection. Such books and records shall be open to inspection by the State authorities to the same extent as the books and records of corporations organized under State law which exercise fiduciary pow- ers, but nothing in this Act shall be construed as author- izing the State authorities to examine the books, records, and assets of the national bank which are not held in trust under authority of this subsection. No national bank shall receive in its trust department deposits of current funds subject to check or the deposit of checks, drafts, bills of exchange, or other items for col- lection or exchange purposes. Funds deposited or held in trust by the bank awaiting investment shall be carried in a separate account and shall not be used by the bank in the conduct of its business unless it shall first set aside in the trust department United States bonds or other securities approved by the Federal Reserve Board. In the event of the failure of such bank the owners of the funds held in trust for investment shall have a hen on the bonds or other securities so set apart in addition to their claim against the estate of the bank. Whenever the laws of a State require corporations act- ing in a fiduciary capacity, to deposit securities with the State authorities for the protection of private or court trusts, national banks so acting shall be required to make similar deposits and securities so deposited shall be held for the protection of private or court trusts, as provided by the State law. National banks in such cases shall not be required to execute the bond usually required of individuals if State corporations under similar circumstances are exempt from this requirement. National banks shall have power to execute such bond when so required by the laws of the State. In any case in which the laws of a State require tliat a corporation acting as trustee, executor, administrator, or in any capacity specified in this section, shall take an oath or make an affidavit, the president, vice president, cashier, or trust officer of such national bank may take the necessary oath or execute the necessary affidavit. It shall be unlawful for any national banking associa- tion to lend any officer, director, or employee any funds held in trust under the powers conferred by this section. Any officer, director, or employee making such loan, or to whom such loan is made, may bo fined not more than Sec. 11. THE FEDERAL RESERVE ACT. 25 $5,000, or imprisoned not more than live years, or may be both fined and imprisoned, in the discretion of the court. In passing upon applications for permission to exercise the powers enumerated in this subsection, the Federal Reserve Board may take into consideration the amount of capital and surplus of the applying bank, whether or not such capital and surplus is sufficient under the cir- cumstances of the case, the needs of the community to be served, and any other facts and circumstances that seem to it proper, and may grant or refuse the application accordingly: Provided, That no permit shall be issued to any national banking association having a capital and surplus less than the capital and surplus required by State law of State banks, trust companies, and corpora- tions exercising such powers. (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 or regulation made in pursuance thereof: Provided, That nothing herein shall prevent the President from placing said employees in the classified service. (m) Upon the affirmative vote of not less than five of its members, the Federal Reserve Board shall have power to permit Federal reserve banks to discount for any member bank notes, drafts, or bills of exchange bearing the signature or endorsement of any one borrower in excess of the amount permitted by section nine and section thirteen of this Act, but in no case to exceed twenty per centum of the member bank's capital and surplus: Provided, however, That all such notes, drafts, or bills of exchange discounted for any member bank in excess of the amount permitted under such sections shall be secured by not less than a like face amount of bonds or notes of the United States issued since April twenty- fourth, nineteen hundred and seventeen, or certificates of indebtedness of the United States: Provided further, 26 THE FEDERAL RESERVE ACT. Secs. 12, 13. That the provisions of this subsection (m) shall not be operative after December thirty-first, nineteen hundred and twenty. FEDERAL ADVISORY COUNCIL. Sec. 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 pro- cedure, 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 through its officers, (1) to confer directly with the Federal Reserve Board on general business conditions; (2) to make oral or written representations 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. POWERS OF FEDERAL RESERVE BANKS. Asamendedby gee. 13. Any Federal reserve bank may receive from acta p proved _ J J Mar. 3, 1915 (38 an y of its member banks, and from the United States, * Stat., 958, chap. J _ ' Sew a ?$M"(39 deposits °f current funds in lawful money, national -bank stat., 752, chap notes, Federal reserve notes, or checks, and drafts, pay- 4(>l);act approved ' ' ' I J stat° 21 232 !n cha 40 a ^° u P on presentation, and also, for collection, maturing 32 )- notes and bills; or, solely for purposes of exchange or of 1 Under authority of War Finance Act, approved Apr. 5, 1918, as amended by act of Mar. 3, 1919, may receive deposits from War Finance Corporation. See appendix, p. 71. Sec. 13. THE FEDERAL RESERVE ACT. 27 collection, may receive from other Federal reserve banks deposits of current funds in lawful money, national-bank notes, or checks upon other Federal reserve banks, and checks and drafts, payable upon presentation within its district, and maturing notes and hills payable within its district; or, solely for the purposes of exchange or of collection, may receive from any nonmembcr bank or trust company deposits of current funds in lawful money, national-bank notes, Federal reserve notes, checks and drafts payable upon presentation, or maturing notes and bills: Provided, Such nonmember bank or trust company maintains with the Federal reserve bank of its district a balance sufficient to offset the items in transit held for its account by the Federal reserve bank: Provided, further, That nothing in this or any other section of this act shall be construed as prohibiting a member or nonmember bank from making reasonable charges, to be determined and regulated by the Federal Reserve Board, but in no case to exceed 10 cents per $100 or fraction thereof, based on the total of checks and drafts presented at any one time, for collection or payment of checks and drafts and remission therefor by exchange or otherwise ; but no such charges shall be made against the Federal reserve banks. Upon the indorsement of any of its member banks, which shall be deemed a waiver of demand, notice and protest by such bank as to its own indorsement exclu- sively, any Federal reserve bank may discount notes, drafts, and bills of exchange arising out of actual com- mercial transactions; that is, notes, drafts, and bills of exchange issued or drawn for agricultural, industrial, or commercial purposes, or the proceeds of which have been used, or are to be used, for such purposes, the Federal Reserve Board to have the right to determine or define the character of the paper thus eligible for discount, within the meaning of this Act. Nothing in this Act contained shall be construed to prohibit such notes, drafts, and bills of exchange, secured by staple agricultural products, or other goods, wares, or merchan- dise from being eligible for such discount; but such defi- nition 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 invest- ment securities, except bonds and notes of the Govern- ment of the United States. 1 Notes, drafts, and bills l Or bonds of the War Finance Corporation. See act approved Apr. 5, 1918, Appendix, p. 70. 28 THE FEDERAL RESERVE ACT. Sec. 13. admitted to discount under the terms of this paragraph must hare a maturity at the time of discount of not more than ninety days, exclusive of days of grace: 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, exclusive of days of grace, may be discounted in an amount to be limited to a percentage of the assets of the Federal reserve bank, to be ascertained and fixed by the Federal Reserve Board. The aggregate of such notes, drafts, and bills bearing the signature or indorsement of any one borrower, whether a 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 dis- count of bills of exchange drawn in good faith against actually existing values. 1 Any Federal reserve bank may discount acceptances of the kinds hereinafter described, which have a maturity at the time of discount of not more than three months' sight, exclusive of days of grace, and which are indorsed by at least one member bank. Any member bank may accept drafts or bills of exchange drawn upon it having not more than six months' sight to run, exclusive of days of grace, which grow out of transactions involving the importation or exportation of goods; or which grow out of transactions involving the domestic shipment of goods provided shipping documents conveying or securing title are at- tached at the time of acceptance; or which are secured at the time of acceptance by a warehouse receipt or other such document conveying or securing title covering readily marketable staples. No member bank shall accept, whether in a foreign or domestic transaction, for any one person, company, firm, or corporation to an amount equal at any time in the aggregate to more than ten per centum of its paid-up and unimpaired capital stock and surplus, unless the bank is secured either by attached documents or by some other actual security growing out of the same transaction as the acceptance; and no bank shall accept such bills to an amount equal at any time in the aggregate to more than one-half of its paid-up and unimpaired capital stock and surplus: Provided, however, That the Federal Reserve Board, 1 Amended by section 11 (m), as amended March 3, 1919. See ante, p. 25. Sec. 13. • THE FEDERAL, RESERVE ACT. 29 under such general regulations as it may prescribe, which shall apply to all banks alike regardless of the amount of capital stock and surplus, may authorize any member bank to accept such bills to an amount not exceeding at any time in the aggregate one hundred per centum of its paid-up and unimpaired capital stock and surplus: Provided further, That the aggregate of acceptances growing out of domestic transactions shall in no event exceed fifty per centum of such capital stock and surplus. Any Federal reserve bank may make advances to its member banks on their promissory notes for a period not exceeding fifteen days at rates to be established by such Federal reserve banks, subject to the review and determination of the Federal Reserve Board, provided such promissory notes are secured by such notes, drafts, bills of exchange, or bankers' acceptances as are eligible for rediscount or for purchase by Federal reserve banks under the provisions of this Act, or by the deposit or pledge of bonds or notes of the United States. 1 Section fifty-two hundred and two of the Revised Stat- utes 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 exceed- ing the amount of its capital stock at such time actually paid in and remaining undiminished by losses or otherwise, except on account of demands of the nature following: First. Notes of circulation. Second. Moneys deposited with or collected by the association. Third. Bills of exchange or drafts drawn against money actually on deposit to the credit of the association, or due thereto. Fourth. Liabilities to the stockholders of the associa- tion for dividends and reserve profits. Fifth. Liabilities incurred under the provisions of the Federal Reserve Act. Sixth. liabilities incurred under the provisions of the War Finance Corporation Act. 2 Seventh. Liabilities created by the indorsement of ac- cepted bills of exchange payable abroad actually owned by the indorsing bank and discounted at home or abroad. 2 The discount and rediscount and the purchase and sale by any Federal reserve bank of any bills receivable and 1 Or by bonds of War Finance Corporation. See sec. 13, War Finance Corporation Act, approved Apr. 5, 1918, appendix, p. 70. 2 These two subparagraphs were added to section 5202, Revised Statutes, by the War Finance Corporation Act, approved Apr. 5, 1918, and by the act of Oct. 22, 1919, re- spectively. See appendix, p. 78. 30 THE FEDERAL RESERVE ACT. ■ Sec. 13. of domestic and foreign bills of exchange, and of accept- ances authorized by this Act, shall be subject to such restrictions, limitations, and regulations as may be im- posed by the Federal Reserve Board. That in addition to the powers now vested by law in national banking associations organized under the laws of the United States any such association located and doing business in any place the population of which does not exceed five thousand inhabitants, as shown by the last preceding decennial census, may, under such rules and regulations as may be prescribed by the Comptroller of the Currency, act as the agent for any fire, life, or other insurance company authorized by the authorities of the State in which said bank is located to do business in said State, by soliciting and selling insurance and col- lecting premiums on policies issued by such company; and may receive for services so rendered such fees or commissions as may be agreed upon between the said association and the insurance company for which it may act as agent; and may also act as the broker or agent for others in making or procuring loans on real estate located within one hundred miles of the place in which said bank may be located, receiving for such services a reasonable fee or commission: Provided, however, That no such bank shall in any case guarantee either the prin- cipal or interest of any such loans or assume or guarantee the payment of any premium on insurance policies issued through its agency by its principal: And provided further, That the bank shall not guarantee the truth of any state- ment made by an assured in filing his application for insurance. Any member bank may accept drafts or bills of exchange drawn upon it having not more than three months' sight to run, exclusive of days of grace, drawn under regulations to be prescribed by the Federal Reserve Board by banks or bankers in foreign countries or depend- encies or insular possessions of the United States for the purpose of furnishing dollar exchange as required by the usages of trade in the respective countries, dependencies, or insular possessions. Such drafts or bills may be acquired by Federal reserve banks in such amounts and subject to such regulations, restrictions, and limitations as may be prescribed by the Federal Reserve Board: Provided, however, That no member bank shall accept such drafts or bills of exchange referred to this paragraph for any one bank to an amount exceeding in the aggregate ten per centum of the paid-up and unimpaired capital Sacs. 13, 14. THE FEDERAL RESERVE ACT. 31 and surplus of the accepting bank unless the draft or bill of exchange is accompanied by documents conveying or se- curing title or by some other adequate security: Provided further, That no member bank shall accept such drafts or bills in an amount exceeding at any time the aggregate of one-half of its paid-up and unimpaired capital and surplus. OPEN-MARKET OPERATIONS. Sec. 14. Any Federal reserve bank mav, under rules As amended bv , • . • ' act approved and regulations prescribed by the Federal Reserve Sept. 7,1916(39 ° -i ti • i Stat., 752, chap. Board, purchase and sell in the open market, at home or «i); act approved . i • t » t l • , . , June 21, 1917 (40 abroad, either irom or to domestic or foreign banks, stat., 232, chap. firms, corporations, or individuals, cable transfers and Apr- 13, 1920. bankers' acceptances and bills of exchange of the kinds and maturities by this Act made eligible for rediscount, with or without the indorsement of a member bank. Even' 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, giving therefor, when necessary, acceptable security, including the hypothe- cation 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 collec- tion of taxes or in anticipation of the receipt of assured revenues by any State, county, district, political subdivi- sion, or municipality in the continental United States, in- cluding irrigation, drainage and reclamation districts, such purchases to be made in accordance with rules and regula- tions 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 determination 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 and which, subject to the approval, review, and determination of the Federal Reserve Board, may be graduated or pro- gressed on the basis of the amount of the advances and discount accommodations extended by the Federal reserve bank to the borrowing bank. 32 THE FEDERAL RESERVE ACT. Secs. 14, 15. (e) To establish accounts with other Federal reserve banks for exchange purposes and, with the consent or upon the order and direction of the Federal Reserve Board and under regulations to be prescribed by said board, to open and maintain accounts in foreign coun- tries, appoint correspondents, and establish agencies in such countries wheresoever it may be deemed best for the purpose of purchasing, 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 (or acceptances) arising out of actual commer- cial transactions which have not more than ninety days to run, exclusive of days of grace, and which bear the signature of two or more responsible parties, and, with the consent of the Federal Reserve Board, to open and maintain banking accounts for such foreign correspond- ents or agencies. Whenever any such account has been opened or agency or correspondent has been appointed by a Federal reserve bank, with the consent of or under the order and direction of the Federal Reserve Board, any other Federal reserve bank may, with the consent and approval of the Federal Reserve Board, be permitted to carry on or conduct, through the Federal reserve bank opening such account or appointing such agency or correspondent, any transaction authorized by this section under rules and regulations to be prescribed by the board. GOVERNMENT DEPOSITS. Sec. 15. x The moneys held in the general fund of the Treasury, except the five per centum fund for the re- demption of outstanding national-bank notes and the funds provided in this Act for the redemption of Federal reserve notes may, upon the direction of the Secretary of the Treasury, be deposited in Federal reserve banks, which banks, when required by the Secretary of the Treasury, shall act as fiscal agents of the United States, 3 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 depos- ited in the continental United States in any bank not i This section in effect amended by Appropriation Act of 1920, approved May 29, 1920. Appendix, p. 82. 2 Under War Finance Corporation Act, approved Apr. 5, 1918, as amended by ah of Mar. 3, 1919, Federal Reserve Banks may also act as fiscal agents of the War Finance Corporation. Sec Appendix, p. 71. 1918. Sec. 16. THE -FEDERAL RESERVE ACT. 33 belonging to the system established by this Act: 1 Pro- vided, however, That nothing in this Act shall be construed to deny the right of the Secretary of the Treasury to use member banks as depositories. NOTE ISSUES. Sec. 16. Federal reserve notes, to be issued at the dis- As amended i>y ' act apjirnvcd cretion of the Federal Reserve Board for the purpose of sept. 7 1916 (39 l L Stat., 752, chap. making advances to Federal reserve banks through the fei); act approved ° to Juno 21, 1917 (40 Federal reserve agents as hereinafter set forth and for no stat., 232, chap. 32) . A ct ap- other purpose, are hereby authorized. The said notes F Q r 1 ° 8 ved Se P*« shall be obligations of the United States and shall be re- ceivable 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 col- lateral security thus offered shall be notes, drafts, bills of exchange, or acceptances acquired under the provisions of section thirteen of this act, or bills of exchange indorsed by a member bank of any Federal reserve district and purchased under the provisions of section fourteen of this act, or bankers' acceptances purchased under the pro- visions of said section fourteen, or gold or gold certifi- cates; but in no event shall such collateral security, whether gold, gold certificates, or eligible paper, be less than the amount of Federal reserve notes applied for. 2 The Federal reserve agent shall each day notify the Fed- eral Reserve Board of all issues and withdrawals of Fed- 1 Under section 7 of the act approved Apr. 24, 1917, sections of the act approved Sept. 24, 1917, and section 8 of the act approved Apr. 4, 1918, the proceeds of sale of Liberty bonds of the first, second, and third issues may be deposited in nonmember banks. See appendix, pp. 68, 69. The act of May 18, 1916, amending the Postal Sav- ings Act, authorizes the deposit of postal savings funds in nonmember banks. See appendix, p. 66. 2 Under section 13 of War Finance Corporation Act, approved Apr. 5, 1918, notes secured by War Finance Corporation bonds may be used to the same extent, as col- lateral, as notes secured by United States bonds. See appendix, p. 70. 8881°— 20 3+4 34 THE fedckai. i:i:seeve ACT. Sec. 16. eral reserve notes to and by the Federal reserve bank to which he is accredited. The said Federal Reserve Board may at any time call upon a Federal reserve bank for additional 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: Provided, however, That when the Federal reserve agent holds gold or gold certificates as collateral for Federal reserve notes issued to the bank such gold or gold certificates shall be counted as part of the gold reserve which such bank is required fee maintain against its Federal reserve notes in actual circulation. Notes so paid out shall bear upon then faces a distinctive letter and serial number which shall be assigned by the Federal Reserve Board to each Federal reserve bank. Whenever Federal reserve notes issued through one Fed- eral 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 or, upon direction of such Federal reserve bank, they shall be forwarded direct to the Treasurer of the United States to be retired. No Federal reserve bank shall pay out notes issued through another under penalty of a tax of ten per centum upon the face value of notes so paid out. Notes 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 thereupon 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 i:i gold or gold certificates, 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 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 Treasurer otherwise than for redemption may be ex- changed for gold out of the redemption fund hereinafter Sec. 1G. THE FEDERAL RESERVE ACT. 35 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 of the total amount of notos issued less the amount of gold or gold certificates held by the Federal reserve agent as collateral security; but such deposit 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 banks so applying, and such bank shall be charged with the amount of notes issued to it and shall pay such rate of interest as may be established by the Federal Reserve Board on only that amount of such notes which equals the total amount of its outstanding Federal reserve notes less the amount of gold or gold certificates held b}^ the Federal reserve agent as collateral security. Federal reserve notes 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 deposited shall not be reissued, except upon compliance with the conditions of an original issue. 36 THE FEDERAL RESERVE ACT. Sec. 16. The Federal reserve agent shall hold such gold, gold certificates, or lawful money available exclusively for exchange for the outstanding Federal reserve notes when offered by the reserve bank of which he is a director. Upon the request of the Secretary of the Treasury the -^ Federal Reserve Board shall require the Federal reserve agent to transmit to the Treasurer of the United States so much of the gold held by him as collateral security for Federal reserve notes as may be required for the exclusive purpose of the redemption of such Federal reserve notes, but such gold when deposited with the Treasurer shall be counted and considered as if collateral security on deposit with the Federal reserve agent. Any Federal reserve bank may at its discretion with- draw collateral deposited with the local Federal reserve agent for the protection of its Federal reserve notes issued to it and shall at the same time substitute therefor other collateral of equal amount with the approval of the Federal reserve agent under regulations to be pre- scribed by the Federal Reserve Board. Any Federal reserve bank may retire any of its Federal reserve notes by depositing them with the Federal reserve agent or with the Treasurer of the United States, and such Federal reserve bank shall thereupon be entitled to receive back the collateral deposited with the Federal reserve agent for the security of such notes. Federal reserve banks shall not be required to maintain the reserve or the re- demption fund heretofore provided for against Federal reserve notes which have been retired. Federal reserve notes so deposited shall not be reissued except upon compliance with the conditions of an original issue. All Federal reserve notes and all gold, gold certificates, and lawful money issued to or deposited with any Federal reserve agent under the provisions of the Federal reserve act shall hereafter be held for such agent, under such rules and regulations as the Federal Reserve Board may prescribe, in the joint custody of himself and tho Federal reserve bank to which he is accredited. Such agent and such Federal reserve bank shall be jointly liable for the safe-keeping of such Federal reserve notes, gold, gold certificates, and lawful money. Nothing herein contained, however, shall be construed to pro- hibit a Federal reserve agent from depositing gold or gold certificates with the Federal Reserve Board, to be held by such board subject to his order, or with the Sec. 16. THE FEDERAL RESERVE ACT. 37 Treasurer of the United States for the purposes author- ized by law. 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, S50, $100, $500, $1000, $5000, $10,000 as may bo 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 sub treasury or mint of the United States nearest the place of business of each Federal reserve bank and shall be held for the use of such bank subject to the order of the Comptroller of the Cur- rency 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 necessarily incurred in executing the laws relating to the procuring of such notes, and all other ex- penses 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 hereby extended to include notes herein provided for. Any appropriation heretofore made out of the general funds of the Treasury for engraving plates and dies, the purchase of distinctive paper, or to cover any other ex- pense 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 38 THE FEDERAL RESERVE ACT. Sec. 16. purposes of this Act, and should the appropriations here- tofore made be insufficient to meet the requirements of tli is 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 ap- propriated for the purpose of furnishing the notes afore- said : Provided, however, That nothing in this section con- tained shall be construed as exempting national banks or Federal reserve banks from their liability to reimburse the United States for any expenses incurred in printing and issuing circulating notes. Every Federal reserve bank shall receive on deposit at par from member banks or from Federal reserve banks checks and drafts drawn upon any of its depositors, and when remitted by a Federal reserve bank, checks and drafts drawn by any depositor m any other Federal reserve bank or member bank upon funds to the credit of said depositor in said reserve bank or member bank. Nothing herein contained shall be construed as prohibiting a member bank from charging its actual expense incurred in collecting and remitting funds, 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 im- posed 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 snch 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. That the Secretary of the Treasury is hereby authorized and directed to receive deposits of gold coin or of gold certificates with the Treasurer or any assistant treasurer of the United States when tendered by any Federal reserve bank or Federal reserve agent for credit to its or his account with the Federal Reserve Board. Tho Sec- retary shall prescribe by regulation the form of receipt to be issued by the Treasurer or Assistant Treasurer to the Federal reserve bank or Federal reserve agent making Secs. 16, 17. THE FEDERAL RESERVE ACT. 39 the deposit, and a duplicate of such receipt shall be delivered to the Federal Reserve Board by the Treasurer at Washington upon proper advices from any assistant treasurer that such deposit has been made. Deposits so made shall be held subject to the orders of the Federal Reserve Board and shall be payable in gold coin or gold certificates on the order of the Federal Reserve Board to any Federal reserve bank or Federal reserve agent at the Treasury or at the Subtreasury of the United States nearest the place of business of such Federal reserve bank or such Federal reserve agent: Provided, however, That any expense incurred in shipping gold to or from the Treasury or sub treasuries in order to make such payments, or as a result of making such payments, shall be paid by the Federal Reserve Board and assessed against the Federal reserve banks. The order used by the Fed- eral Reserve Board in making such payments shall be signed by the governor or vice governor, or such other officers or members as the board may by regulation prescribe. The form of such order shall be approved by the Secretary of the Treasury. The expenses necessarily incurred in carrying out these provisions, including the cost of the certificates or receipts issued for deposits received, and all expenses incident to the handling of such deposits shall be paid by the Federal Reserve Board and included in its assess- ments against the several Federal reserve banks. Gold deposits standing to the credit of any Federal reserve bank with the Federal Reserve Board shall, at the option of said bank, be counted as part of the lawful reserve which it is required to maintain against out- standing Federal reserve notes, or as a part of the reserve it is required to maintain against deposits. Nothing in this section shall be construed as amending section six of the act of March fourteenth, nineteen hun- dred, as amended by the acts of March fourth, nineteen hundred and seven, March second, nineteen hundred and eleven, and June twelfth, nineteen hundred and sixteen, nor shall the provisions of this section be construed to apply to the deposits made or to the receipts or certifi- cates issued under those acts. Sec. 17. So much of the provisions of section fifty-one ac^app^ed hundred and fifty-nine of the Revised Statutes of the ffi^ 191 ^* United States, and section four of the act of June twen- 32 ^ tieth, eighteen hundred and seventy-four, and section 40 THE FEDKKAJ. IM:Si. lt\'K ACT. 17,1*. eight of the act of -July twelfth, eighteen hundred and eighty-two, and of any other provisions of existing stat- utes as i-crjuiro that before any national banking asso>- ciaiion shall ho authorized t<> commence banking business it shall transfer and deliver to the. Treasurer .,!' the United States a stated amount of United States registered bonds, ;uh! so much of those, provisions or of any other provisions of existing statutes as require any national banking association now or hereafter organized to main- tain a minimum deposit of sueh bonds with the Treasurer is hereby repealed. REFUNDING BONDS. Sec. 18. After two years from the passage of this Act, and at any time during a period of twenty years there- after, any member bank desiring to retire the whole or any part of its circulating notes, may file with the Treasurer of the United States an application to sell for its account, at par and accrued interest, United States bonds securing circulation to be retired. The Treasurer shall, at the, end of each quarterly period, furnish the Federal Reserve Board with a list of such applications, and the Federal Reserve Board may, in its discretion, require, tin 1 Federal reserve banks to purchase such bonds from the banks whose applications have been filed with the Treasurer at least ten days before the end of any quarterly period at which the Federal Reserve Board may direct the purchase to be made: Provided, That Federal reserve banks shall not be permitted to purchase an amount to exceed Si! 5, 000, 000 of such bonds in anv one year, and which amount shall include, bonds acquired under section four of this Act by the Federal reserve bank. Prorvii'I furilr. i\ That the Federal Reserve Roard 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 capiial and surplus of all the Fed- eral reserve banks. Upon notice from t he Treasurer of the amount of bonds so sold for its account, each member bank shall duly assign and transfer, in writing, such bonds to Kite Federal reserve bank nurchasHig ihe 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 mem- Sec. 18. THE FEDERAL RESERVE ACT. 41 ber bank selling such bonds any balance duo after deduct- ing 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 permitted 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 cir- culating 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. 1 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 Treasury, 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, ap- proved by the Federal Reserve Board, the Secretary of the Treasury may issue, in exchange for United States two per centum gold bonds bearing the circulation privilege / but against which no circulation is outstanding, one- year gold notes of the United States without the circula- tion privilege, to an amount not to exceed one-half of the two per centum bonds so tendered for exchange, and thirty-year three per centum gold bonds without the circulation privilege for the remainder of the two per centum bonds so tendered : 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 Treasury 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 ex- change for such bonds, if so requested by the Secretary, and at each maturity of one-year notes so purchased by 1 Under act of Apr. 23, 1918, Federal reserve banks may issue Federal reserve bank notes in any denominations, including SI and S2, against the security of United States certificates of indebtedness to the extent permitted by that act. See appendix, pp. 73 and 74, sec. 5. I 42 THE FEDERAL RESERVE ACT. Secs. 18, 19. 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 firs-t instance, in exchange for the two per centum United States gold bonds; said obligation to purchase at maturity such notes shall continue in force for a period not to exceed thirty years. For the purpose of making the exchange herein pro- vided 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 Secre- tary is authorized and empowered to issue United States gold bonds at par, bearing three per centum interest payable thirty years from date of issue, such bonds to be of the same general tenor and effect and to be issued under the same general terms and conditions as the United States three per centum bonds without the circu- lation privdege now issued and outstanding. Upon application of any Federal reserve bank, ap- proved 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. BANK RESERVES. act^aTi^ove? Sec. 19. Demand deposits within the meaning of this Stat /im! 9 chip 8 A-ct shall comprise all deposits payable within thirty proved a j°une 2T days, and time deposits shall comprise all deposits paya- chip ( . 4 32)^ act ap- mo after thirty days, all savings accounts and certificates proved sept. 26, of r bank and no officer, director, Stat! 2 232 19 cihap! or employee thereof shall hereafter make any loan or p 2 roved C ^pt!2(t S raut an . v gratuity to an}' bank examiner. Any bank 191S - officer, director, or employee violating this provision shall be deemed guilty of a misdemeanor and shall be imprisoned not exceeding one year or fined not more than S3, 000. or both; 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 misde- meanor and shall be imprisoned 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. (b) No national bank examiner shall perform any other service for compensation while holding such office for any bank or officer, director, or employee thereof. No examiner, public or private, shall disclose the names of borrowers or the collateral for loans of a mem- ber 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 bank examiner violating the provisions of this subsection shall be im- prisoned not more than one year or fined not more than $5,000, or both. (c) Except as herein provided, any officer, director employee, or attorney of a member bank who stipulates for or receives or consents or agrees to receive any fee, commission, gift, or thing of value from any person, firm, or corporation, for procuring or endeavoring to procure for such person, firm, or corporation, or for any other person, firm, or corporation, any loan from or the pur- chase or discount of any paper, note, draft, check, or bill of exchange by such member bank shall be deemed guilty of a misdemeanor and shall be imprisoned not more than one year or fined not more than $5,000, or both. Sec. 22. THE FEDERAL RESERVE ACT. 47 (d) Any member bank may contract for, or purchase from, any of its directors or from any firm of which any of its directors is a member, any securities or other property, when (and not otherwise) such purchase is made in the regular course of business upon terms not less favorable to the bank than those offered to others, or when such purchase is authorized by a majority of the board of directors not interested in the sale of such securities or property, such authority to be evidenced by the affirmative vote or written assent of such directors: Provided, however, That when any director, or firm of which any director is a member, acting for or on behalf of others, sells securities or other property to a member bank, the Federal Reserve Board by regulation may, in any or all cases, require a full disclosure to be made, on forms to be prescribed by it, of all commissions or other considerations received, and whenever such director or firm, acting in his or its own behalf, sells securities or other property to the bank the Federal Reserve Board by regulation, may require a full disclosure of all profit realized from such sale. Any member bank may sell securities or other property to any of its directors, or to a firm of which any of its directors is a member, in the regular course of business on terms not more favorable to such director or firm than those offered to others, or when such sale is author- ized by a majority of the board of directors of a member bank to be evidenced by their affirmative vote or written assent: Provided, however, That nothing in this sub- section contained shall be construed as authorizing member banks to purchase or sell securities or other property which such banks are not otherwise authorized by law to purchase or sell. (e) No member bank shall pay to any director, officer, attorney, or employee a greater rate of interest on the deposits of such director, officer, attorney, or employee than that paid to other depositors on similar deposits with such member bank. (f ) If the directors or officers of any member bank shall knowingly violate or permit any of the agents, officers, or directors of any member bank to violate any of the provisions of this section or regulations of the board made under authority thereof, every director and officer participating in or assenting to such violation shall be held liable in his personal and individual capacity for all 48 XHE FEDERAL RESERVE ACT. Secs. 23, 24. damages which the member bank, its shareholders, or any other persons shall have sustained in consequence of such violation. Sec. 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 obli- gations, or with knowledge of such impending 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 otherwise have against those in whose names such shares are registered at the time of such failure. LOANS ON FARM LANDS. ac A t S app" d o e vod ^ec. ^- ^ n y na tional banking association not situ- itat 752 91 chat? fc* 6 ^ m a central reserve city may make loans secured ^n. by improved and unencumbered farm land situated within its Federal reserve district or within a radius of one hundred .miles of the place in which such bank is located, irrespective of district lines, and may also make loans secured by improved and unencumbered real es - tate lo cated within one hundred miles of the place in which such bank is located, irrespective of district lines; but no loan made upon the security of such farm land shall be made for a longer time than five years, and no loan made upon the security of such real estate as dis- tinguished from farm land shall be made For a longer time than one year nor shall the amount of any such loan, whether upon such farm land or upon such real estate, exceed fifty per centum of the actual value of the property offered as security. Any such bank may make such loans, whether secured by such farm land or such real estate, in an aggregate sum equal to twenty- five per centum of its capital and surplus or to one-third of its time deposits and such banks may continue here- after as heretofore to receive time deposits and to pay interest on the same. SE( 25. THE FEDEKAL RESERVE ACT. 49 The Federal Reserve Board shall have power from time to time to add to the list of cities in which national hanks shall not he permitted to make loans secured upon real estate in the manner described in this section. FOREIGN BRANCHES. Sec. 25. Any national banking association possessing As amended by a capital and surplus of $1,000,000 or more may file appli- Sept. ?, i»i cation with the Federal Reserve Board for permission to *5i);'actapprov©a exercise, upon such conditions and under such regulations as may be prescribed by the said board, either or both of the following powers: First. To establish branches in foreign countries or dependencies or insular possessions of the United States for the futherance of the foreign commerce of the United States, and to act if required to do so as fiscal agents of the United States. Second. To invest an amount not exceeding in the aggregate ten per centum of its paid-in capital stock and surplus in the stock of one or more banks or corporations chartered or incorporated under the laws of the United States or of any State thereof, and principally engaged in international or foreign banking, or banking in a depend- ency or insular possession of the United States either directly or through the agency, ownership, or control of local institutions in foreign countries, or in such depend- encies or insular possessions. Until January 1, 1921, any national banking associa- tion, without regard to the amount of its capital and sur- plus, may file application with the Federal Reserve Board for permission, upon such conditions and under such regulations as may be prescribed by said board, to invest an amount not exceeding in the aggregate 5 per centum of its paid-in capital and surplus in the stock of one or more corporations chartered or incorporated under the laws of the United States or of any State thereof and, regardless of its location, principally engaged in such phases of international or foreign financial operations as may be necessary to facilitate the export of goods, wares, or merchandise from the United States or any of its dependencies or insular possessions to any foreign coun- try: Provided, however, That in no event shall the total investments authorized by this section by any one national bank exceed 10 per centum of its capital and surplus. 8881°— 20— 4 50 THE FEDERAL RESERVE ACT. Sec. 25. Such application shall specify the name and capital of the banking association filing it, the powers applied for, and the place or places where the banking or financial operations proposed are to be carried on. The Federal Reserve Board shall have power to approve or to reject such application in whole or in part if for any reason the granting of such application is deemed inexpedient, and shall also have power from time to time to increase or decrease the number of places where such banking opera- tions may be carried on. Every national banking association operating foreign branches shall be required to furnish information con- cerning the condition of such branches to the Comptroller of the Currency upon demand, and every member bank investing in the capital stock of banks or corporations described above shall be required to furnish information concerning the condition of such banks or corporations to the Federal Reserve Board upon demand, and the Federal Reserve Board may order special examinations of the said branches, banks, or corporations at such time or times as it may deem best. Before any national bank shall be permitted to purchase stock in any such corporation the said corporation shall enter into an agreement or undertaking with the Federal Reserve Board to restrict its operations or conduct its business in such manner or under such limitations and re- strictions as the said board may prescribe for the place or places wherein such business is to be conducted. If at any time the Federal Reserve Board shall ascertain that the regulations prescribed by it are not being complied with, said board is hereby authorized and empowered to institute an investigation of the matter and to send for persons and papers, subpoena witnesses, and administer oaths in order to satisfy itself as to the actual nature of the transactions referred to. Should such investigation result in establishing the failure of the corporation in question, or of the national bank or banks which may be stockholders therein, to comply with the regulations laid down by the said Federal Reserve Board, such national banks may be required to dispose of stock holdings in the said corporation upon reasonable notice. 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 Sbc --"' the federal reserve act. 51 transfer to its genera] Ledger the profit or Loss accrued at each branch as a separate item. Any director or other officer, agent, or employee of any member bank may, with the approval of the Federal Un- serve Board, be a director or other officer, agent, or em- ployee of any such bank or corporation above men- tioned in the capita] stock of which such member bank shall have invested as hereinbefore provided, without being subject to the provisions of section eight of the Act approved October fifteenth, nineteen hundred and fourteen, entitled "An Act to supplement existing Jaws against unlawful restraints and monopolies, and for other purposes." 1 BANKING CORPORATIONS AUTHORIZED TO DO FOREIGN BANKING BUSINESS. Sec. 25 (a). Corporations to be organized for the Added by Act . L . & Of Dec. 24, 1919. purpose of engagmg m international or foreign banking or other international or foreign financial operations, or in banking or other financial operations in a dependency or insular possession of the United States, either directly or through the agency, ownership, or control of local in- stitutions in foreign countries, or in such dependencies or insular possessions as provided by this section, and to act when required by the Secretary of the Treasury as fiscal agents of the United States may be formed by any number of natural persons, not less in any case than five. Such persons shall enter into articles of association which shall specify in general terms the objects for which the association is formed and may contain any other pro- visions not inconsistent with law which the association may see fit to adopt for the regulation of its business and the conduct of its affairs. Such articles of association shall be signed by all of the persons intending to participate in the organization of the corporation and, thereafter, shall be forwarded to the Federal Reserve Board and shall be filed and pre- served in its office. The persons signing the said articles of association shall under their hands, make an organ- ization certificate which shall specifically state: First. The name assumed by such corporation, which shall be subject to the approval of the Federal Reserve Board. 1 Tiie Clayton Act. For text see appendix, p- 64. 52 THE FEDERAL RESERVE ACT. Sec. 25a. Second. The place or places where its operations are to be carried on. Third. The place in the United States where its home office is to be located. Fourth. The amount of its capital stock and the num- ber of shares into which the same shall be divided. Fifth. The names and places of business or residence of the persons executing the certificate and the number of shares to which each has subscribed. Sixth. The fact that the certificate is made to enable the persons subscribing the same, and all other persons, firms, companies, and corporations, who or which may thereafter subscribe to or purchase shares of the capital stock of such corporation, to avail themselves of the ad- vantages of this section. The persons signing the organization certificate shall duly acknowledge the execution thereof before a judge of some court of record or notary public, who shall cer- tify thereto under the seal of such court or notary, and thereafter the certificate shall be forwarded to the Federal Reserve Board to be filed and preserved in its office. Upon duly making and filing articles of association and an organization certificate, and after the Federal Reserve Board has approved the same and issued a permit to begin business, the association shall become and be a body corporate, and as such and in the name designated therein shall have power to adopt and use a corporate seal, which may be changed at the pleasure of its board of directors ; to have succession for a period of twenty years unless sooner dissolved by the act of the shareholders owning two-thirds of the stock or by an Act of Congress or unless its franchises become forfeited by some violation of law; to make contracts; to sue and be sued, complain, and defend in any court of law or equity; to elect or appoint directors, all of whom shall be citizens of the United States; and, by its board of directors, to appoint such officers and employees as may be deemed proper, define their authority and duties, require bonds of them, and fix the penalty thereof, dismiss such officers or em- ployees, or any thereof, at pleasure and appoint others to fill their places; to prescribe, by its board of directors, by-laws not inconsistent with law or with the regulations of the Federal Reserve Board regulating the manner in which its stock shall be transferred, its directors elected Sec.25*u THE FEDERAL EESEEVE ACT. 53 or appointed, its officers and employees appointed, its property transferred, and the privileges granted to it by law exercised and enjoyed. Each, corporal ion so organized shall have power, under such rules and regulations as the Federal Reserve Board may prescribe: (a) To purchase, sell, discount, and negotiate, with or without its indorsement or guaranty, notes, drafts,, checks, bills of exchange, acceptances, including bankers' acceptances, cable transfers, and other evidences of indebtedness; to purchase and sell, with or without its indorsement or guaranty, securities, including the obligations of the United States or oi any State thereof but not including shares of stock in any corporation except as herein provided ; to accept bills or drafts drawn upon it subject to such limitations and restrictions as the Federal Reserve Board may impose; to issue letters of credit; to purchase and sell coin, bullion, and exchange ; to borrow and to lend money; to issue debentures, bonds, and promissory notes under such general conditions as to security and such limitations as the Federal Reserve Board may prescribe, but in no event having liabdities outstanding thereon at any one time exceeding ten times its capital stock and surplus; to receive deposits outside- of the United States and to receive only such deposits within the United States as may be incidental to or for the purpose of carrying out transactions in foreign coun- tries or dependencies or insular possessions of the United States; and generally to exercise such powers as are inci- dental to the powers conferred by this Act or as may be usual, in the determination of the Federal Reserve Board, in connection with the transaction of the business of banking or other financial operations in the countries, colonies, dependencies, or possessions in which it shall transact business and not inconsistent with the powers specifically granted herein. Nothing contained in this section shall be construed to prohibit the Federal Reserve Board, under its power to prescribe rules and regulations, from limiting the aggregate amount of liabilities of any or all (dasses incurred by the corporation and <>i:< standing at any one time. Whenever a corporation organized under this section receives deposits in the Tinted States authorized by this section it shall carry reserves in sueh amounts as the Federal Reserve Board may prescribe, but in no event less than 10 per centum of its deposits. 54 THE FEDERAL RESERVE ACT. Sec. 25a. (b) To establish and maintain for the transaction of its business branches or agencies in foreign countries, their dependencies or colonies, and in the dependencies or insular possessions of the United States, at such places as may be approved by the Federal Reserve Board and under such rules and regulations as it may prescribe, including countries or dependencies not specified in the original organization certificate. (c) With the consent of the Federal Reserve Board to purchase and hold stock or other certificates of owner- ship in any other corporation organized under the pro- visions of this section, or under the laws of any foreign country or a colony or dependency thereof, or under the laws of any State, dependency, or insular possession of the United States but not engaged in the general business of buying or selling goods, wares, merchandise or commodities in the United States, and not transacting any business in the United States except such as in the judgment of the Federal Reserve Board may be inci- dental to its international or foreign business: Pro- vided, however, That, except with the approval of the Federal Reserve Board, no corporation organized here- under shall invest in any one corporation an amount in excess of 10 per centum of its own capital and surplus, except in a corporation engaged in the business of bank- ing, when 15 per centum of its capital and surplus may be so invested: Provided further, That no corporation organized hereunder shall purchase, own, or hold stock or certificates of ownership in any other corporation organized hereunder or under the laws of any State which is in substantial competition therewith, or which holds stock or certificates of ownership in corporations which are in substantial competition with the purchasing corporation. Nothing contained herein shall prevent corporations organized hereunder from purchasing and holding stock in any corporation where such purchase shall be necessary to prevent a loss upon a debt previously contracted in good faith; and stock so purchased or acquired in cor- porations organized under this section shall within six months from such purchase be sold or disposed of at public or private sale unless the time to so dispose of same is extended by the Federal Reserve Board. No corporation organized under this section shall carry on any part of its business in the United States Sbc. 25a. THE FEDERAL RESERVE ACT. 55 except such as, in the judgment of the Federal Reserve Board, shall be incidental to its international or foreign business: And provided further, That except such as is incidental and preliminary to its organization no such corporation shall exercise any of the powers conferred by this section until it has been duly authorized by the Federal Reserve Board to commence business as a cor- poration organized under the provisions of this section. No corporation organized under this section shall engage in commerce or trade in commodities except as specifically provided in this section, nor shall it either directly or indirectly control or fix or attempt to control or fix the price of any such commodities. The charter of any corporation violating this provision shall be sub- ject to forfeiture in the manner hereinafter provided in this section. It shall be unlawful for any director, officer, agent, or employee of any such corporation to use or to conspire to use the credit, the funds, or the power of the corporation to fix or control the price of any such commodities, and any such person violating this provision shall be liable to a fine of not less than $1,000 and not exceeding $5,000 or imprisonment not less than one year and not exceeding five years, or both, in the discretion of the court. No corporation shall be organized under the provisions of this section with" a capital stock of less than $2,000,000, one-quarter of which must be paid in before the corpora- tion may be authorized to begin business, and the remainder of the capital stock of such corporation shall be paid in installments of at least 10 per centum on the whole amount to which the corporation shall be limited as frequently as one installment at the end of each succeeding two months from the time of the commence- ment of its business operations until the whole of the capital stock shall be paid in. The capital stock of any such corporation may be increased at any time, with the approval of the Federal Reserve Board, by a vote of two-thirds of its shareholders or by unanimous consent in writing of the shareholders without a meeting and without a formal vote, but any such increase of capital shall be fully paid in within ninety days after such approval; and may be reduced in like manner, provided that in no event shall it be less than $2,000,000. No corporation, except as herein provided, shall during the 56 THE FEDERAL RESERVE ACT. Sec. 25a. time it shall continue its operations withdraw or permit to be withdrawn, either in the form of dividends or otherwise, any portion of its capital. Any national banking association may invest in the stock of any cor- poration organized under the provisions of this section, but the aggregate amount of stock held in all corporations engaged in business of the kind described in this section and in section 25 of the Federal Reserve Act as amended shall not exceed 10 per centum of the subscribing bank's capital and surplus. A majority of the shares of the capital stock of any such corporation shall at all times be held and owned by citizens of the United States, by corporations the con- trolling interest in which is owned by citizens of the United States, chartered under the laws of the United States or of a State of the United States, or by firms or companies, the controlling interest in which is owned by citizens of the United States. The provisions of section 8 of the act approved October 15, 1914, entitled "An act to supplement existing laws against unlawful re- straints and monopolies, and for other purposes," as amended by the acts of May 15, 1916, and September 7, 1916, shall be construed to apply to the directors, other officers, agents, or employees of corporations organized under the provisions of this section: Provided, however, That nothing herein contained shall' (1) prohibit any director or other officer, agent or employee of any member bank, who has procured the approval of the Federal Reserve Board from serving at the same time as a director or other officer, agent or employee of any corporation organized under the provisions of this section in whose capital stock such member bank shall have invested; or (2) prohibit any director or other officer, agent, or employee of any corporation organized under the pro- visions of this section, who has procured the approval of the Federal Reserve Board, from serving at the same time as a director or other officer, agent or employee of any other corporation in whose capital stock such first- mentioned corporation shall have invested under the provisions of this section. No member of the Federal Reserve Board shall be an officer or director of any corporation organized under the provisions of this section, or of any corporation en- gaged in similar business organized under the laws of Sec. 25a. -JHE FEDERAL RESKIIVK ACT. 57 any State, nor hold stock in any such corporation, and before entering upon his duties as a member of the Federal Reserve Board he shall certify mule;' oath to the Secretary of the Treasury that he has complied with this requirement. Shareholders in any corporation organized under the provisions of this section shall be liable for the amount of their unpaid stock subscriptions. No such corpora- tion shall become a member of any Federal reserve bank. Should any corporation organized hereunder violate or fail to comply with any of the provisions of this sec- tion, all of its rights, privileges, and franchises derived herefrom may thereby be forfeited. Before any such corporation shall be declared dissolved, or its rights, privileges, and franchises forfeited,, any noncompliance with, or violation of such laws shall, however, be deter- mined and adjudged by a court of the United States of competent jurisdiction, in a suit brought for that purpose in the district or territory in which the home office of such corporation is located,, which suit shall be brought by the United States, at the instance of the Federal Reserve Board or the Attorney General. Upon adjudi- cation of such noncompliance or violation, each director and officer who participated in, or assented to, the illegal act or acts, shall be liable in his personal or individual capacity for all damages widen the said corporation shall have sustained in consequence thereof. Xo dissolution shall take away or impair any remedy against the cor- poration, its stockholders, or officers for any liability or penalty previously incurred. Any such corporation may go into voluntary lit j ni- dation and be closed by a vote of its shareholders owning two-thirds of its stock- Whenever the Federal Reserve Board shall become satisfied of the insolvency of any such corporation, it may appoint a receiver who shall take possession of all of the property and assets of the corporation and exerrcisfli the same rights, privileges, powers, and authority with respect thereto as are now exercised by receivers of national banks appointed by the Comptroller of the Currency of the United States: Provided, however, That the assets of the corporation subject to the laws of other countries or jurisdictions shall be dealt with in accordance with the terms of such laws. 58 THE FEDERAL RESERVE ACT. Sec. 25a. Every corporation organized under the provisions of this section shall hold a meeting of its stockholders an- nually upon a date fixed in its by-laws, such meeting to be held at its home office in the United States. Every such corporation shall keep at its home office books con- taining the names of all stockholders thereof, and the names and addresses of the members of its board of di- rectors, together with copies of all reports made by it to the Federal Reserve Board. Every such corporation shall make reports to the Federal Reserve Board at such times and in such form as it may require; and shall be subject to examination once a year and at such other times as may be deemed necessary by the Federal Reserve Board by examiners appointed by the Federal Reserve Board, the cost of such examinations, including the compensa- tion of the examiners, to be fixed by the Federal Reserve Board and to be paid by the corporation examined. The directors of any corporation organized under the provisions of this section may, semiannually, declare a dividend of so much of the net profits of the corporation as they shall judge expedient; but each corporation shall ? before the declaration of a dividend, carry one-tenth of its net profits of the preceding half year to its surplus fund until the same shall amount to 20 per centum of its capital stock. Any corporation organized under the provisions of this section shall be subject to tax by the State within which its home office is located in the same manner and to the same extent as other corporations organized under the laws of that State which are transacting a similar char- acter of business. The shares of stock in such corporation shall also be subject to tax as the personal property of the owners or holders thereof in the same manner and to the same extent as the shares of stock in similar State corporations. Any corporation organized under the provisions of this section may at any time within the two years next pre- vious to the date of the expiration of its corporate existence, by a vote of the shareholders owning two- thirds of its stock, apply to the Federal Reserve Board for its approval to extend the period of its corporate existence for a term of not more than twenty years, and upon certified approval of the Federal Reserve Board such corporation shall have its corporate existence for Sue. 25a. THE FEDERAL RESERVE ACT. 59 such extended period unless sooner dissolved by the act of the shareholders owning two-thirds of its stock, or by an Act of Congress or unless its franchise becomes for- feited by some violation of law. Any bank or banking institution, principally engaged in foreign business, incorporated by special law of any State or of the United States or organized under the gen- eral laws of any State or of the United States and having an unimpaired capital sufficient to entitle it to become a corporation Under the provisions of this section may, by the vote of the shareholders owning not less than two- thirds of the capital stock of such bank or banking asso- ciation, with the approval of the Federal Reserve Board, be converted into a Federal corporation of the kind authorized by this section with any name approved by the Federal Reserve Board: Provided, however, That said con- version shall not be in contravention of the State law. In such case the articles of association and organization 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 at least two-thirds of the capital stock have authorized the directors to make such certificate and to change or convert the bank or banking institution into a Federal corporation. A majority 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 Federal corporation. The shares of any such corporation 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 corporation until others are elected or appointed in accordance with the provisions of this section. When the Federal Reserve Board has given to such corporation a certificate that the provisions of this section have been complied with, such corporation and all its stockholders, officers, and employees, shall have the same powers and privileges, and shall be subject fo the same duties, liabilities, and regulations, in all respects, as shall have been prescribed by this section for cor- porations originally organized hereunder. Every officer, director, clerk, employee, or agent of any corporation organized under this section who embezzles, abstracts, or willfully misapplies any of the moneys, funds, 60 THE FEDERAL RESERVE ACT. Sec. 25a. credits, securities, evidences of indebtedness or assets of any character of such corporation; or who, without au- thority from the directors, issues or puts forth any certifi- cate of deposit, draws any order or bill of exchange, makes any acceptance, assigns any note, bond, debenture, draft, bill of exchange, mortgage, judgment, or decree; or who makes any false entry in any book, report, or statement of such corporation with intent, in either case, to injure or defraud such corporation or any other company, body politic or corporate, or any individual person, or to deceive any officer of such corporation, the Federal Reserve Board, or any agent or examiner appointed to examine the affairs of any such corporation; and every receiver of any such corporation and every clerk or employee of such receiver who shall embezzle, abstract, or willfully misapply or wrongfully convert to his own use any moneys, funds, credits, or assets of any character which may come into his possession or under his control in the execution of his trust or the performance of the duties of his employment; and every such receiver or clerk or emplo} T ee of such re- ceiver who shall, with intent to injure or defraud any per- son, body politic or corporate, or to deceive or mislead the Federal Reserve Board, or any agent or examiner ap- pointed to examine the affairs of such receiver, shall make any false entry in any book, report, or record of any mat- ter connected with the duties of such receiver; and every person who with like intent aids or abets any officer, di- rector, clerk, employee, or agent of any corporation or- ganized under this section, or receiver or clerk or employee of such receiver as aforesaid in any violation of this sec- tion, shall upon conviction thereof be imprisoned for not less than two years nor more than ten years, and may also be fined not more than $5,000, in the discretion of the court. Whoever being connected in any capacity with any cor- poration organized under this section represents in any way that the United States is liable for the payment of any bond or other obligation, or the interest thereon, is- sued or incurred by any corporation organized hereunder, or that the United States incurs any liability in respect of any act or omission of the corporation, shall be pun- ished by a fine of not more than $10,000 and by imprison- ment for not more than five years. Secs. 26, 27. THE FEDERAL RESERVE ACT. 61 Sec. 26. All provisions of law inconsistent with or super- sede! by any of the provisions of this Act arc to that extent and to that extent only hereby repeated : Provided, Nothing in this Act contained shall be construed fco 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 main- tain the parity of all forms of money issued or coined hy the United States, to refund the puhlic 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. Sec. 27. The provisions of the Act of May thirtieth, ac^appfov^ nineteen hundred and eight, authorizing national stAt', 4 682, 91 chap 8 . currency associations, the issue of additional national- 225) ' 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 hundred and fourteen, are hereby extended to June thirtieth, nine- teen hundred and fifteen, and sections fifty-one hundred and fifty-three, fifty-one hundred and seventy-two, 1 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 rcenacted 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 tht. average amount of such of their notes in circulation as are based upon the deposit of such securities, and afterwards an additional i Amended as to section 5172, Revised Statutes, by act approved March 3, 1919. See appendix. p. 76. 62 THE FEDERAL RESERVE ACT. Secs. 27, 28. tax rate of one-half of one per centum per annum for ea:h 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: Provided further , That whenever in his judgment he may deem it desirable, the Secretary of the Treasury shall have power to suspend the limitations imposed by section one and section three of the Act referred to in this section, which prescribe that such additional circulation secured otherwise than by bonds of the United States shall be issued only to Na- tional banks having circulating notes outstanding secured by the deposit of bonds of the United States to an amount not less than forty per centum of the capital stock of such banks, and to suspend also the conditions and limitations of section five of srid Act except that no bank shall be permitted to issue circulating notes in excess of one hun- dred and twenty-five per centum of its unimpaired capital and surplus. He shall require each bank and currency association to maintain on deposit in the Treas- ury of the United States a sum in gold sufficient in his judgment for the redemption of such notes, but in no event less than five per centum. He may permit National banks, during the period for which such provisions are suspended, to issue additional circula- tion under the terms and conditions of the Act referred to as herein amended: Provided further, That the Secre- tary of the Treasury, in his discretion, is further author- ized to extend the benefits of this Act to all qualified State banks and trust companies, which have joined the Federal reserve system, or which may contract to join within fifteen days after the passage of this Act. Sec. 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 formation of associations; but no such reduction shall be allowable which will reduce the capital of the association below the amount required for its outstanding circula- tion, 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 ap- proved by the said Comptroller of the Currency and by the Federal Reserve Board, or by the organization com" Sues. 29, 30. THE FEDERAL RESERVE ACT. (io* mittee pending the organization of the Federal Reserve Board. Sec. 29. If any clause, sentence, paragraph, or part of this Act shall for any reason be adjudged by any court of competent jurisdiction to be invalid, such judgment shall not affect, impair, or invalidate the remainder of this Act, but shall be confined in its operation to the clause, sen- tence, paragraph, or part thereof directly involved in the controversy in which such judgment shall have been rendered. Sec. 30. The right to amend, alter, or repeal this Act is hereby expressly reserved. APPENDIX. Provisions of other Acts of Congress which affect Federal Reserve Banks and member banks of the Federal Re- serve System. CLAYTON ANTI-TRUST ACT, APPROVED OCTOBER 15, 1914, AS AMENDED BY THE KERN AMENDMENT, APPROVED MAY 15, 1916, AS AMENDED BY THE ACT APPROVED MAY 26, 1920. 1 Sec. 8. That from and after two years from the date of the approval of this Act no person shall at the same time be a director or other officer or employee of more than one bank, banking association, or trust company organ- ized or operating under the laws of the United States, either of which has deposits, capital, surplus, and undi- vided profits aggregating more than $5,000,000; and no private banker or person who is a director in any bank or trust company organized and operating under the laws of a State, having deposits, capital, surplus, and undi- vided profits aggregating more than $5,000,000, shall be eligible to be a director in any bank or banking associa- tion organized or operating under the laws of the United States. The eligibility of a director, officer, or employee under the foregoing provisions shall be determined by the average amount of deposits, capital, surplus, and un- divided profits as shown in the official statements of such bank, banking association, or trust company filed as pro- vided by law during the fiscal year next preceding the date set for the annual election of directors, and when a director, officer, or employee has been elected or selected in accordance with the provisions of this Act it shall be lawful for him to continue as such for one year thereafter under said election or employment. No bank, banking association, or trust company organ- ized or operating under the laws of the United States, in any city or incorporated town or village of more than two nundred thousand inhabitants, as shown by the last preceding decennial census of the United States, shall have as a director or other officer or employee any private banker or any director or other officer or employee of any other bank, banking association, or trust company located » Amended by sec. 25 of Federal Reserve Act, as amended Sept. 7, 1916; and amended by act approved Dec. 24, 1919, amending the Federal Reserve Act, as to corporations engaged in foreign banking and financial operations. See ante, pp. 51 and 56. 64 APPENDIX. G5 in the same place: Provided, That nothing id this section shall apply to mutual savings banks not having a capital stock represented by shares: Provided further, That a director or other officer or employee of such bank, 1. unk- ing association, or trust company may be a director or other officer or employee of not more than one other bank or trust company organized under the laws of the United States or any State where the entire capita! sloe]-: of one is owned by stockholders in the other: And provided ther, That nothing contained in this section shall forbid a dire, tor of class A of a Federal reserve bank, as in the Federal Reserve Act, from being an officer or direc- tor, or both an officer and director, in one member bank: And provided further, That nothing in this Act shall pro- hibit any private banker or any officer, director, or em- ployee of any member bank or class A director of a Fed- eral reserve bank, who shall first procure the consent of the Federal Reserve Board, which board is hereby authorized, at its discretion, to grant, withhold, or re- voke such consent, from being an officer, director, or employee of not more than two other banks, banking associations, or trust companies, whether organized under the laws of the United States or any State, if such other bank, banking association, or trust company is not in substantial competition with such banker or member bank. The consent of the Federal Reserve Board may be pro- cured before the person applying therefor has been elected as a class A director of a Federal reserve bank or as a director of any member bank. :j: * * * # When tmy person elected or chosen as a director or officer or selected ;is an employee of any bank or other corporation subject to the provisions of this Act is eligi- ble at the time of his election or selection to act for such bank or other corporation in such capacity his eligibility to act in such capacity shall not be affected and he shall not become or be deemed amenable to any of the pro- visions hereof by reason of any change in the affairs of such bank or other corporation from whatsoever cause, whether specifically excepted, by any of the provisions hereof or not, Until the expiration of one year from the date of his election or employment. 8881°— 20 5 60 APPENDIX. DEPOSIT OF POSTAL SAVINGS FUNDS IN MEMBER OR NONMEMBER BANKS. Section 2 of the Postal Savings Act, approved June 25, 1910, as amended by the Act approved May 18, 1916. * * * * * postal savings funds received under the provisions of this Act shall be deposited in solvent banks, ther organized under National or State laws, and ember banks or not of the Federal Reserve established by the Act approved December twenty-third, nineteen hundred and thirteen, being sub- to National or State supervision and examina- tion * * *. The funds received at the postal sav- ing's depository offices in each city, town, village, and other locality shall be deposited in banks located therein (substantially in proportion to the capital and surplus of each such bank) willing to receive such deposits under the terms of this Act and the regulations made by authority thereof: Provided, however, If one or more member banks of the Federal Reserve System established by the Act approved December twenty-third, nineteen hundred and thirteen, exists in the city, town, village, or locality where the postal savings deposits are made, such deposits shall be placed in such qualified member banks substan- tially in proportion to the capital and surplus of each such bank, but if such member banks fail to qualify to receive such deposits, then any other bank located therein may, as hereinbefore provided, qualify and receive the same. If no such member bank and no other qualified bank exists in any city, town, village, or locality, or if none where such deposits are made will receive such deposits on the terms prescribed, then such funds shall be deposited under the terms of this Act in the bank most convenient to sueh locality. * * *." DEPOSIT OF FUNDS OF FARM LAND BANKS IN MEMBER, BANKS— FEDERAL RESERVE BANKS AND MEMBER BANKS AUTHORIZED TO BUY AND SELL FARM LOAN BONDS. done 5, 6, 13, and 27 of the Farm Loan Act, approved July 17, L916. Sec. 5. — 9p 9|C •!• *f» 5(s At Least twenty-ftye per centum of thai part of the capita] of any Federal land bank for which stock is out- APPENDIX. 67 standing in the name of national farm loan associations shall be held in quick assets, and may consist of cash in the vaults of said land bank, or in deposits in member banks of the Federal reserve system, or in readily market- able securities which are approved under rules and regu- lations of the Federal Farm Loan Board: Provided, That not less than five per centum of such capital shall bo invested in United States Government bonds. GOVERNMENT DEPOSITARIES. Sec. 6. That all Federal land banks and joint stock land banks organized under this Act, when designated for that purpose by the Secretary of the Treasury, shall be depositaries of public money, except receipts from cus- toms, under such regulations as may be prescribed by said Secretary; and they may also be emploj^ed as financial agents of the Government; and they shall perform all such reasonable duties, as depositaries of public money and financial agents of the Government, as may be required of them. And the Secretary of the Treasury shall require of the Federal land banks and joint stock land banks thus designated satisfactory security, by the deposit of United States bonds or other- wise, for the safekeeping and prompt payment of the public money deposited with them, and for the faithful performance of their duties as financial agents of the Government. No Government funds deposited under the provisions of this section shall be invested in mort- gage loans or farm loan bonds. POWERS OF FEDERAL LAND BANKS. Sec. 13. That every Federal land bank shall have power, subject to the limitations and requirements of this Act — ***** Fifth. To deposit its securities, and its current funds subject to check, with any member bank of the Federal Reserve System, and to receive interest on the same as may be agreed. INVESTMENT IN FARM LOAN BONDS. Sec. 27. That farm loan bonds issued under the pro- visions of this Act by Federal land banks or joint stock land banks shall be a lawful investment for all fiduciary 68 APPENDIX. and trust funds, and may be accepted as security for all public deposits. Any member bank of the Federal Reserve System may buy and sell farm loan bonds issued under the authority of this Act. Any Federal reserve bank may buy and sell farm loan bonds issued under this Act to the same extent and sub- ject to the same limitations placed upon the purchase and sale by said banks of State, county, district, and munici- pal bonds under subsection (b) of section fourteen of the Federal Reserve Act approved December twenty-third, nineteen hundred and thirteen. DEPOSIT OF PROCEEDS OF SALE OF LIBERTY BONDS. Section 7 of the First Liberty Bond Act, approved April 24, 1917. 1 Sec. 7. That the Secretary of the Treasury, in his dis- cretion, is hereby authorized to deposit in such banks and trust companies as he may designate the proceeds, or any part thereof, arising from the sale of the bonds and cer- tificates of indebtedness authorized by this Act, or the bonds previously authorized as described in section four of this Act, and such deposits may bear such rate of interest and be subject to such terms and conditions as the Secretary of the Treasury may prescribe: Provided, That the amount so deposited shall not in any case exceed the amount withdrawn from any such bank or trust com- pany and invested in such bonds or certificates of indebt- edness plus the amount so invested by such bank or trust company, and such deposits shall be secured in the man- ner required for other deposits by section fifty-one hun- dred and fifty-three, Revised Statutes, and amendments thereto: Provided further, That the provisions of section fifty-one hundred and ninety-one of the Revised Statutes, as amended by the Federal Reserve Act and the amend- ments thereof, with reference to the reserves required to be kept by national banking associations and other member banks of the Federal Reserve System, shall not apply to deposits of public moneys by the United States in designated depositaries. 'This section in effect amends section 15, Federal Reserve Act, which relates to Go verument deposits; also section 19 which prescribes reserve requirements of member banks APPENDIX. 69 DEPOSIT OF PROCEEDS OF SALE OF LIBERTY BONDS. Section 8 of the Second Liberty Bond Act, approved September 24, 1917. 1 Sec. 8. That the Secretary of the Treasury, in bis discretion, is hereby authorized to deposit, in such incor- porated banks and trust companies as he may designate, the proceods, or any part thereof, arising from the sale of the bonds and certificates of indebtedness and war- savings certificates authorized by this Act, and such deposits shall bear such rate or rates of interest, and shall be secured in such manner, and shall be made upon and subject to such terms and conditions, as tho Secret,-! i y of the Treasury may from time to time prescribe: Pro- vided, That tho provisions of section fifty-one hundred and ninety-one of the Revised Statutes, as amended by the Federal Reserve Act, and the amendments thereof, with reference to the reserves required to be kept by national banking associations and other member banks of the Federal Reserve System, shall not apply to deposits of public moneys by the United States in designated depositaries. The Secretary of the Treasury is hereby authorized to designate depositaries in foreign countries, with which shall be deposited all public money which it may be necessaiy or desirable to have on deposit in such countries to provide for current disbursements to the military and naval forces of the United States and to the diplomatic and consular and other representatives of the United States in and about such countries until six months after the termination of the war between the United States and the Imperial German Government, and to prescribe the terms and conditions of such deposits, DEPOSIT OF PROCEEDS OF SALE OF LIBERTY BONDS. Section 8 of the Third Liberty Bond Act, approved April 4, 1918. 2 Sec. 8. That the Secretary of the Treasury, in his dis- cretion, is hereby authorized to deposit, in such incor- porated banks and trust companies as he may designate, the proceeds, or any part thereof, arising from the sale of 1 This section in effect amends section 15, Federal Reserve Act, which relates to Government deposits; also section 19 which prescribes reserve requirements of member banks. 2 This section further amends section 15, Federal Reserve Act, which relates to Gov- ernment deposits, and section 1C, which prescribes reserves of member banks. 70 APPENDIX. the bonds and certificates of indebtedness and war-savings certificates authorized by this Act, and arising from the payment of income and excess profits taxes, and such deposits shall bear such rate or rates of interest, and shall be secured in such manner, and shall bo made upon and subject to such terms and conditions as the Secretary of the Treasury may from time to time prescribe: Pro That the provisions of section fifty-one hundred and ninety-one of the Revised Statutes, as amended by the Federal Reserve Act, and the amendments thereof, with reference to the reserves required to be kept by national banking associations and other member banks of the Federal Reserve System, shall not apply to deposits of public moneys by the United States in designated de- depositaries. The Secretary of the Treasury is hereby authorized to designate depositaries in foreign countries with which shall be deposited all public money which it may be necessary or desirable to have on deposit in such countries to provide for current disbursements to the military and naval forces of the United States and to the diplomatic and consular and other representatives of the r 1 1 ii ed States in and about such countries until six months after the termination of the war between the United States and the Imperial German Government, and to prescribe the terms and conditions of such deposits. PURCHASE AND DISCOUNT BY FEDERAL RESERVE BANKS OF OBLIGATIONS SECURED BY BONDS OF WAR FINANCE CORPORATION— FEDERAL RESERVE NOTES ISSUED AGAINST SECURITY OF SUCH OBLI- GATIONS. Section 13 of War Finance Corporation Act, approved April 5, 1918. 1 Sec 13. That the Federal reserve banks shall be au- thorized, subject to tho maturity limitations of the Fed- eral Reserve Ad and to regulations of the Federal Ro- se] i Board, to discount the direct obligations of member banks secured by such bonds of the Corporation and to count eligible paper secured by such bonds and indorsed by a member bank. No discount or rediscount under this section shall be granted at a less interest charge than one per centum per annum above the prevail- ing rates for eligible commercial paper of corresponding mat urity. 1 This section in effect amends sections 13 and 16, Federal Reserve Act. APPENDIX. 71 Any Federal reserve bank may, with the approval of the Federal Reserve Board, use any obligation or paper so acquired for any purpose for which it is authorized to use obligations or paper secured by bonds or notes of the United States not bearing the circulation privilege: Pro- vided, hoivever, That whenever Federal reserve notes are issued against the security of such obligations or paper the Federal ^Reserve Board may make a special interest charge on such notes, which, m the discretion of the Fed- eral Reserve Board, need not be applicable to other Federal reserve notes which may from time to time be issued and outstanding. All provisions of law, not in- consistent herewith, in respect to the acquisition by any Federal reserve bank of obligations or paper secured by such bonds or notes of the United States, and in respect to Federal reserve notes issued against the security of such obligations or paper, shall extend, in so far as applicable, to the acquisition of obligations or paper secured by the bonds of the Corporation and to the Fed- eral reserve notes issued against the security of such obligations or paper. DEPOSIT OF FUNDS OF WAR FINANCE CORPORATION IN MEMBER BANKS OR FEDERAL RESERVE BANKS- FEDERAL RESERVE BANKS AS DEPOSITARIES AND FISCAL AGENTS OF WAR FINANCE CORPORATION, Section 15 of War Finance Corporation Act, approved April 5, 1918, as amended by Victory liberty Loan Act approved March 3, 1919. * Sec 15. That all net earnings of the Corporation not required for its operations shall be accumulated as a reserve fund until such time as the Corporation liquidates under the terms of this title. Such reserve fund shall, upon the direction of the board of directors, with the approval of the Secretary of the Treasury, be invested in bonds and obligations of the United States, issued or converted after September 24, 1917, or upon like direction and approval may be deposited in member banks of the Federal Reserve System, or in any of the Federal reserve banks, or be used from time to time, as well as any other funds of the Corporation, in the purchase or redemption of any bonds issued by the Corporation. The Federal reserve banks are hereby authorized to act as depositaries for and as fiscal agents of the Corporation in the general » This section in effect amends sections 13 and 1G of the Federal Reserve Ait, 72 APPENDIX. performance of the powers conferred by this title. Begin- ning twelve months after the termination of the war, the date of such termination to be fixed by a proclamation of the President of the United States, the directors of the Corporation shall proceed to liquidate its assets and to wind up its affairs, but the directors of the Corporation, in their discretion, may, from time to time, prior to such date, sell and dispose of any securities or other property acquired by the Corporation. Any balance remaining after the payment of all its debts shall be paid into the Treasury of the United States as miscellaneous receipts, and thereupon the Corporation shall be dissolved. MELTING OF SILVER DOLLARS— ISSUE OF $1 AND $2 FEDERAL RESERVE BANK NOTES. The Pittman Act, approved April 23, 1918. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the Secretary of the Treasury is hereby authorized from time to time to melt or break up and to sell as bullion not in excess of three hundred and fifty million standard silver dollars now or hereafter held in the Treasury of the United States. Any silver certificates which may be outstanding against such standard silver dollars so melted or broken up shall be retired at the rate of $1 face amount of such certificate for each standard silver dollar so melted or broken up. Sales of such bullion shall be made at such prices not less than $1 per ounce of silver one thousand fine and upon such terms as shall be established from time to time by the Secretary of the Treasury. Sec. 2. That upon every such sale of bullion from time to time the Secretary of the Treasury shall imme- diately direct the Director of the Mint to purchase in the United States, of the product of mines situated in the United States and of reduction works so located, an amount of silver equal to three hundred and seventy- one and twenty-five hundredths grains of pure silver in respect of every standard silver dollar so melted or broken up and sold as bullion. Such purchases shall be made in i This act iii effect amends sections 4 ami 16 of the Federal Reserve Act. APPKXDIX. 73 accordance with the then existing regulations of the Mint and at the fixed price of $1 per ounce of silver thousand fine, delivered at the option of the Director of the Mint at New York, Philadelphia, Denver, or San Francisco. Such silver so purchased may be resold for any of the purposes here i pecified in section : of this Act, under rules and regulations to be established by the Secretary of the Treasury, and an; of such silver so purchased over and above the require- ments for such purposes, shall be coined into standard silver dollars or held for the purpose of such coin. and silver certificates shall be issued to the amount of such coinage. The net amount of silver so purchased, after making allowance for all resales, shall not exceed at any one time the amount needed to coin an aggregate- number of standard silver dollars equal to the aggregate number of standard silver dollars theretofore melted or broken up and sold as bullion under the provisions of this Act, but such purchases of silver shall continue until ' the net amount of silver so purchased, after making allowance for all resales, shall be sufficient to coin there- from an aggregate number of standard silver dollars equal to the aggregate number of standard silver dollars theretofore so melted or broken up and sold as bullion. Sec. 3. That sales of silver bullion under authority of this Act may be made for the purpose of conserving the existing stock of gold in the United States, of facilitating the settlement in silver of trade balances adverse to the United States, of providing silver for subsidiary coinage and for commercial use, and of assisting foreign govern- ments at war with the enemies of the United States. The allocation of any silver to the Director of the Mint for subsidiary coinage shall, for the purposes of this Act, be regarded as a sale or resale. Sec. 4. That the Secretary of the Treasury is author- ized, from any moneys in the Treasury not otherwise appropriated, to reimburse the Treasurer of the United s for the difference between the nominal or face value of all standard silver dollars so melted or broken up and the value of the silver bullion, at $1 per ounce of silver one thousand fine, resulting from the melting or breaking up of such standard silver dollars. Sec. 5. That in order to prevent contraction of the currency, the Federal reserve banks may be either per- mitted or required by the Federal Reserve Board, at 74 APPENDIX. the request of the Secretary of the Treasury, to issue Federal reserve bank notes, in any denominations (including denominations of $1 and $2) authorized by the Federal Reserve Board, in an aggregate amount not exceeding the amount of standard silver dollars melted or broken up and sold as bullion under authority of this Act, upon deposit as provided by law with the Treasurer of the United States as security therefor, of United States certificates of indebtedness, or of United States one-year gold notes. The Secretary of the Treasury may, at his option, extend the time of payment of any maturing United States certificates of indebtedness deposited as security for such Federal reserve bank notes for any period not exceeding one year at any one extension and may, at his option, pay such certificates of indebtedness prior to maturity, whether or not so extended. The deposit of United States certificates of indebtedness by Federal reserve banks as security for Federal reserve bank notes under authority of this Act shall be deemed to constitute an agreement on the part of the Federal reserve bank making such deposit that the Secretary of the Treasury may so extend the time of payment of such certificates of indebtedness beyond the original maturity date or beyond any maturity date to which such certifi- cates of indebtedness may have been extended, and that the Secretary of the Treasury may pay such certificates in advance of maturity, whether or not so extended. Sec. 6. That as and when standard silver dollars shall be coined out of bullion purchased under authority of this Act, the Federal reserve banks shall be required by the Federal Reserve Board to retire Federal reserve bank notes issued under authority of section five of this Act, if then outstanding, in an amount equal to the amount of standard silver dollars so coined, and the Secretary of Treasury shall pay off and cancel any United States ificates of indebtedness deposited as security for Federal reserve bank notes so retired. Sec. 7. That the tax on any Federal reserve bank notes issued under authority of this Act, secured by the deposit of United States certificates of indebtedness or United States one-year gold notes, shall be so adjusted that the net return on such certificates of indebtedness, or such one-year gold notes, calculated on the face value thereof, shall be equal to the net return on United States two per cent bonds, used to secure Federal reserve bank APPENDIX. 75 notes, after deducting the amount of the tax upon such Federal reserve bank notes so secured. Sec. 8. That except as herein provided, Federal reserve bank notes issued under authority of this Act, shall be subject to all existing provisions of law relating to Federal reserve bank notes. Sec. 9. That the provisions of Title VII of an Act approved June fifteenth, nineteen hundred and seven- teen, entitled "An Act to punish acts of interference with the foreign relations, the neutrality, and the foreign commerce of the United States, to punish espionage, and better to enforce the criminal laws of the United States, and for other purposes," and the powers conferred upon the President by subsection (b) of section five of an Act approved October sixth, nineteen hundred and seven- teen, known as the " Trading with the Enemy Act," shall, in so far as applicable to the exportation from or shipment from or taking out of the United States of silver coin or silver bullion, continue until the net amount of silver required by section two of this Act shall have been purchased as therein provided. Approved, April 23, 1918, RESTRICTIONS ON TRANSACTIONS IN FOREIGN EXCHANGE. Section 5 (b) of the Trading with the Enemy Act, approved October 6, 1917, as amended by the Act approved September 24, 1918. Sec. 5. That subdivision (b) of section 5 of the Trading with the Enemy Act be, and hereby is, amended to read as follows : "(b) That the President may investigate, regulate, or prohibit, under such rules and regulations as he may prescribe, by means of licenses or otherwise, any transac- tions in foreign exchange and the export, hoarding, melt- ing, or earmarkings of gold or silver coin or bullion or cur- rency, transfers of credit in any form (other than credits relating solely to transactions to be executed wholly within the United States), and transfers of evidences of indebtedness or of the ownership of property between the United States and any foreign country, whether enemy, ally of enemy, or otherwise, or between residents of one or more foreign countries, by any person within the United States; and, for the purpose of strengthening, sustaining, and broadening the market for bonds and cer- tificates of indebtedness of the United States, of prevent- ing frauds upon the holders thereof, and of protecting 76 APPENDIX. such holders, he may investigate and regulate, by means of lieenses or otherwise (until the expiration of two years after the date of the termination of the present war with the Imperial German Government, as fixed by his procla- mation), any transactions in such bonds or certificates by or between any person or persons: Provided, That nothing contained in this subdivision (b) shall be con- strued to confer any power to prohibit the purchase or sale for cash, or for notes eligible for discount at any Federal Reserve Bank, of bonds or certificates of indebted- ness of the United States; and he may require any person engaged in any transaction referred to in this subdivision •to furnish, under oath, complete information relative thereto, including the production of any books of account contracts, letters or other papers, in connection therewith in the custody or control of such person either before or after such transaction is completed." Section 5172, Revised Statutes, as amended by the Act approved March 3, 1919, amending the Federal Reserve Act. 1 Sec. 5172. That in order to furnish suitable notes for circulation, 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 counterfeiting and fraudulent alterations, and shall have printed therefrom and numbered such quantity of circulating notes in blank, or bearing en- graved signatures of officers as herein provided, of the denominations of $1, $2, $5, $10, $20, $50, $100, $500, and $1,000, as may be required to supply the associations entitled to receive the same. Such notes shall express upon their face that they are secured by United States bonds deposited with the Treasurer of the United States, by the written or engraved signatures of the Treasurer and Register, and by the imprint of the seal of the Treasury; and shall also express upon their face the promise of the association receiving the same to pay on demand, attested by the written or engraved signatures of the president or vice president and cashier; and shall bear such devices and such other statements and shall be in such form as the Secretary of the Treasury shall, by regulation, direct. i This act in effect amends section 27 of the Federal Reserve Act. See ante, p. 61. app] 77 Section 5200, Revised Statutes, as amended by the Act of September 24, 1918, and the Act of October 22, 1919. Sec. 5200. The total liabilities to any association of any person or of any company, corporation, or firm for money borrowed, including in the liabilities of a company or firm the liabilities of the several members ther shall at no time exceed 10 per centum of the amount of the capital stock of such association, actually paid in and unimpaired, and 10 per centum of its unimpaired surplus fund: Provided, ;■ That (1) the discount of bills of exchange drawn in good faith against actually existing values, including drafts and bills of exchange secured by shipping documents conveying or securing title to goods shipped, and including demand obligations when secured by documents covering commodities in actual process of shipment, and also including bankers' acceptances of the kinds described in section 13 of the Federal Reserve Act, (2) the discount of commercial or business paper actually owned by the person, company, corporation, or firm ne- gotiating the same, (3) the discount of notes secured by shipping documents, warehouse receipts, or other such documents conveying or securing title covering readily marketable nonperishable staples, including live stock, when the actual market value of the property securing the obligation is not at any time less than 115 per centum of the face amount of the notes secured by such docu- ments and when such propertj' is fully covered by insur- ance, and (4) the discount of any note or notes secured by not less than a like face amount of bonds or notes of the United States issued since April 24, 1917, or certificates of indebtedness of the United States, shall not be con- sidered as money borrowed within the meaning of this section. The total liabilities to any association, of any person or of any corporation, or firm, or company, or the several members thereof upon any note or notes pur- chased or discounted by such association and secured by bonds, notes, or certificates of indebtedness as described in (4) hereof shall not exceed (except to the extent per- mitted by rules and regulations prescribed by the Comp- troller of the Currency, with the approval of the Secre- tary of the Treasury) 10 per centum of such capital stock and surplus fund of such association and the total liabil- ities to any association of any person or of any corpora- tion, or firm, or company, or the several members thereof 78 APPENDIX. for money borrowed, including the liabilities upon notes secured in the manner described under (3) hereof, event transactions (1), (2), and (4), shall not at any time ex- ceed 25 per centum of the amount of the association's paid-in and unimpaired capital stock and surplus. The exception made under (3) hereof shall not apply to the notes of any one person, corporation or firm or company, or the several members thereof for more than six months in any consecutive twelve months. SECTION 5202, REVISED STATUTES, AS AMENDED BY WAR FINANCE CORPORATION ACT AND THE ACT OF OCTOBER 22, 1919. Sec. 5202. 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 otherwise, except on account of demands of the nature following : First. Notes of circulation. Second. Moneys deposited with or collected by the association. Third. Bills of exchange or drafts drawn against money actually on deposit to the credit of the association, or due thereto. Fourth. Liabilities to the stockholders of the associa- tion for dividends and reserve profits. Fifth. Liabilities incurred under the provisions of the Federal Reserve Act. Sixth. Liabilities incurred under the provisions of the War Finance Corporation Act. Seventh. Liabilities created by the indorsement of accepted bills of exchange payable abroad actually owned by t Lie indorsing bank and discounted at home or abroad. Sections 5208 and 5209, Revised Statutes, as amended by the Act of September 26, 1918. Sec. 5208. It shall be unlawful for any officer, director, agent, or employee of any Federal rexer\ e bank, or of any member bank as defined in the .Vet of December twenty- third, nineteen hundred and thirteen, known as the Federal Act, to certify any check drawn upon such Federal reserve bank or member bank; unless the person, firm, or corporation drawing the check has oh deposit with such Federal reserve bank or member bank, APPENDIX. 79 at the times such check is certified, an amount of money not less than the amount specified in such check. Any check so certified by a duly authorized officer, director, agent, or employee shall be a good and valid obligation against such Federal reserve bank or member bunk ; but the act of any officer, director, agent, or employee of any such Federal reserve bank or member bank in violation of this section shall, in the discretion of the Federal Re- serve Board, subject such Federal reserve bank to the penalties imposed by section eleven, subsection (h), of the Federal reserve Act, and shall subject such member bank if a national bank to the liabilities and proceedings on the part of the Comptroller of the Currency provided for in section fiftj^-two hundred and thirth-four, Revised Statutes, and shall, in the discretion of the Federal Re- serve Board, subject any other member bank to the penalties imposed by section nine of said Federal reserve Act for the violation of any of the provisions of said Act. Any officer, director, agent, or emplo3 T ee of any Federal reserve bank or member bank who shall willfully violate the provisions of this section, or who shall resort to any device, or receive any fictitious obligation, directly or collaterally, in order to evade the provisions thereof, or who shall certify a check before the amount thereof shall have been regularly entered to the credit of the drawer upon the books of the bank, shall be deemed guilty of a misdemeanor and shall, on conviction thereof in any district court of the United States, be fined not more than $5,000, or shall be imprisoned for not more than five years, or both, in the discretion of the court. Sec. 5209. Any officer, director, agent, or employee of any Federal reserve bank, or of any member bank as defined in the Act of December twenty-third, nineteen hundred and thirteen, known as the Federal reserve Act, who embezzles, abstracts, or willfully misapplies any of the moneys, funds, or credits of such Federal reserve bank or member bank, or who, without authority from the directors of such Federal reserve bank or member bank, issues or puts in circulation any of the notes of such Federal reserve bank or member bank, or who, without such authority, issues or puts forth any certifi- cate of deposit, draws any order or bill of exchange, makes any acceptance, assigns any note, bond, draft, bill of exchange, mortgage, judgment, or decree, or who makes any false entry in any book, report, or statement 80 APPENDIX. of such Federal reserve bank or member bank, with intent in any case to injure or defraud such Federal re- serve bank or member bank, or an} T other company, body politic or corporate, or any individual person, or to deceive any officer of such Federal reserve bank or member bank, or the Comptroller of the Currency, or any agent or examiner appointed to examine the affairs of such Federal reserve bank or member bank, or the Federal Reserve Board; and every receiver of a national banking association who, with like intent to defraud or injure, embezzles, abstracts, purloins, or willfully mis- applies any of the moneys, funds, or assets of his trust, and every person who, with like intent, aids or abets, any officer, director, agent, employee, or receiver in any violation of this section shall be deemed guilty of a misde- meanor, and upon conviction thereof in any district court of the United States shall be fined not more than $5,000 or shall be imprisoned for not more than five years, or both, in the discretion of the court. Any Federal reserve agent, or any agent or employee of such Federal reserve agent, or of the Federal Reserve Board, who embezzles, abstracts, or willfully misapplies any moneys, funds, or securities intrusted to his care, or without complying with or in violation of the provisions of the Federal reserve Act, issues or puts in circulation any Federal reserve notes shall be guilty of a misde- meanor and upon conviction in any district court of the United States shall be fined not more than $5,000 or im- prisoned for not more than five years, or both, in the discretion of the court. WAR STAMP TAXES— CHECKS, DRAFTS, AND PROMIS- SORY NOTES. Sections 1100, 1101, and 1102 of Revenue Act of 1918, approved February 24, 1919. TITLE XI.— STAMP TAXES. Sec. 1100. That on and after April 1, 1919, there shall be levied, collected, and paid, for and in respect of the several bonds, debentures, or certificates of stock and of indebtedness, and other documents, instruments, mat- ters, and things mentioned and described in Schedule A of. this title, or for or in respect of the vellum, parchment, or paper upon which such instruments, matters, or things, or any of them, are written or printed, by any person APPENDIX. 81 who makes, signs, issues, sells, removes, consigns, or ships the same, or for whose use or benefit II are made, signed, issued, sold, removed, consigned, or ship- ped, the several taxes specified in such schedule. The taxes imposed by this section shall, in the case of any article upon which a corresponding stamp tax is now imposed by law, be in lieu of such tax. Sec. 1101. That there shall not be taxed under this title any bond, note, or other instrument, issued by the United States, or by any foreign Government, or by any State, Territory, or the District of Columbia, or local subdivision thereof, or municipal or other corporation exercising the taxing power; or any bond of indemnity required to be filed by any person to secure payment of any pension, allowance, allotment, relief, or insurance by the United States; or stocks and bonds issued by co- operative building and loan associations which are or- ganized and operated exclusively for the benefit of their members and make loans only to their shareholders, or by mutual ditch or irrigating companies. Sec. 1102. That whoever— (a) Makes, signs, issues, or accepts, or causes to be made, signed, issued, or accepted, any instrument, document, or paper of any kind or description whatso- ever without the full amount of tax thereon being duly paid ; (b) Consigns or ships, or causes to be consigned or shipped, by parcel post any parcel, package, or article without the full amount of tax being duly paid; (c) Manufactures or imports and sells, or offers for sale, or causes to be manufactured or imported and sold, or offered for sale, any pla} T ing cards, package, or other article without the full amount of tax being duly paid : (d) Makes use of any adhesive stamp to denote any tax imposed by this title without canceling or obliterat- ing such stamp as prescribed in section 1104; Is guilty of a misdemeanor and upon conviction 1 hereof shall pay a fine of not more than $100 for each offense. Schedule A. — Stamp Taxes. 6. Drafts or checks (payable otherwise than at sight or on demand) upon, their acceptance or delivery within the United States whichever is prior, promissory notes, except bank notes issued for circulation, and for each 8881°— 20 6 82 APPENDIX. renewal of the same, for a sum not exceeding SI 00, 2 cents; and for each additional $100, or fractional part thereof, 2 cents. This subdivision shall not apply to a promissory note secured by the pledge of bonds or obligations of the United States issued after April 24, 1917, or secured by the pledge of a promissory note which itself is secured by the pledge of such bonds or obligations: Provided, That in either case the par value of such bonds or obliga- tions shall be not Less than the amount of such note. STJBTREASTTRIES ABOLISHED— TRANSFER OF CERTAIN FUNCTIONS TO FEDERAL RESERVE BANKS. Appropriation Act, approved May 29, 1920. Section 3595 of the Revised Statutes of the United States, as amended, providing for the appointment of an Assistant Treasurer of the United States at Boston, New York, Philadelphia, Baltimore, New Orleans, Saint Louis, San Francisco, Cincinnati, and Chicago, and all laws or parts of laws so far as they authorize the establish- ment or maintenance of offices of such Assistant Treas- urers or of Subtreasuries of the United States are hereby repealed from and after July 1, 1921 ; and the Secretary of the Treasury is authorized and directed to discontinue from and after such date or at such earlier date or dates as he may deem advisable, such subtreasuries and the exercise of all duties and functions by such assistant treasurers or then offices. The office of each assistant treasurer specified above and the services of any officers or other employees assigned to duty at his office shall terminate upon the discontinuance of the functions of that office by the Secretary of the Treasury. The Secretary of the Treasury is hereby authorized, in his discretion, to transfer any or all of the duties and functions performed or authorized to be performed by the assistant treasurers above enumerated, or their offices, to the Treasurer of the United States or the mints or assay offices of the United States, under such rules and regulations as he may prescribe, or to utilize any of the Federal reserve banks acting as depositaries or fiscal agents of the United States, for the purpose of perform- ing any or all of such duties and functions, notwithstand- ing the limitations of section 15 of the Federal reserve Act. as amended, or any other provisions of law: Provided, That if any moneys or bullion, constituting part of the APPENDIX. 83 trust funds or other special funds heretofore required by lav.' to be kept in Treasury offices, shall be deposited with any Federal reserve hank, then such moneys or bullion shall by such hank be kept separate and distinct from the assets, funds, and securities of the Federal reserve hank and he held in the joint custody of the Federal reserve agent and the Federal reserve hank : Provided furtln r, Thai nothing in this section shall be construed to deny the right of the Secretary of the Treasury to use member banks as depositaries as heretofore authorized by law. The Secretary of the Treasury is hereby authorized to assign any or all the rooms, vaults, equipment, and safes or space in the buildings used by the sub treasuries to any Federal reserve hank acting as fiscal agent of the United Stat' - ADVICE AND ASSISTANCE OF FEDERAL RESERVE BOARD WITH RESPECT TO LOANS TO RAILROADS. Section 210 of the Transportation Act of 1920, approved February 28, 1920. Sec. 210. (a) For the purpose of enabling carriers by railroad subject to the Interstate Commerce Act properly to serve the public during the transition period imme- diately following the termination of Federal control, any such carrier may, at any time after the passage of this Act and before the expiration of two years after the termination of Federal control, make application to the Commission for a loan from the United States, setting forth the amount of the loan and the term for which it is desired, the purpose of the loan and the uses to which it will be applied, the present and prospective ability of the applicant to repay the loan and meet the requirements of its obligations in that regard, the character and value of the security offered, and the extent to which the public convenience and necessity will be served. The applica- tion shall be accompanied by statements showing such facts and details as the Commission may require with respect to the physical situation, ownership, capitaliza- tion, indebtedness, contract obligations, operation, and earning power of the applicant, together with such other facts relating to the propriety and expediency of granting the loan applied for and the ability of the applicant to make good the obligation, as the Commis- sion may deem pertinent to the inquiry. (b) If the Commission, after such hearing and investi- gation, with or without notice, as it may direct, finds 84 APPENDIX. that the making, in whole or in part, of the proposed loan by the United States is necessary to enable the applicant properly to meet the transportation needs of the public, and that the prospective earning power of the applicant and the character and value of the security offered are such as to furnish reasonable assurance of the applicant's ability to repay the loan within the time fixed therefor, and to meet its other obligations in connection with such loan, the Commission may certify to the Secretary of the Treasury its findings of fact and its recommendations as to: the amount of the loan which is to be made; the time, not exceeding five years from the making thereof, within which it is to be repaid; the character of the security which is to be offered "therefor; and the terms and conditions of the loan. (c) Upon receipt of such certificate from the Commis- sion, the Secretary of the Treasury, at any time before the expiration of twenty-six months after the termina- tion of Federal control, is authorized to make a loan, not exceeding the maximum amount recommended in such certificate, out of any moneys in the revolving fund provided for in this section. All such loans shall bear interest at the rate of 6 per centum per annum, payable semiannually to the Secretary of the Treasury and to be placed to the credit of the revolving fund provided for in this section. The time, not exceeding five years from the making thereof, within which such loan is to be repaid, the security which is to be taken therefor, which shall be adequate to secure the loan, the terms and condi- tions of the loan, and the form of the obligation to be entered into, shall be prescribed by the Secretary of the Treasury. (d) The Commission or the Secretary of the Treasury may call upon the Federal Reserve Board for advice and assistance with respect to any such application or loan. (e) There is hereby appropriated out of any moneys in the Treasury not otherwise appropriated the sum of $300,000,000, which shall be used as a revolving fund for the purpose of making the loans provided for in this section, and for paying the judgments, decrees, and awards referred to in subdivision (e) of section 206. (f) A carrier may issue evidences of indebtedness to the United States pursuant to this section without the authorization or approval of any authority, State or Federal, and without compliance with any requirement, State or Federal, as to notification. INDEX. A. Acceptance of terms of Federal Reserve Ad b> uational and Statebanks. pp.4, 5 e< . 2 Acceptances, i Foreign Banking ( !orporations p. 53, sec. 25 (a) (a) Limitations on amount of, for any one person b; member banks in foreign and domestic transactions p. '.I*, sec. I:; Limitations on transactions to furnish dollar exchange p. 30, sec. 13 Member banks in foreign and domestic transactions p. 2s. sec. L3 Member banks to furnish dollar exchange p. 30, sec. 13 Purchase of, by Federal 1 U • erve Banks p. 31, sec. 14 Rediscount of, by Federal Reserve Banks p. 28, sec 13 Acceptances, trade, rediscount of, by Federal Reserve Banks p. 28, sec. 13 Acts amended, repealed, or otherwise referred to by Federal Reserve Act: Act of June 20, 1874 p. 39, sec. 17 : p. 4 I . sec. 20 Act of July 12, 1882. p. 40, sec. 17 Act of Jan. 16, 1883 p. 25 sec. 11 (1) Act of Mar. 14, 1900 p. 39, sec. 16; p. 61, sec. 26 Act of Mar. 4, 1907 p. 39, sec. 16 Act of May 30, 1908 p. 37, sec. 16; p. 61 , sec 27 Act of Mar. 2, 1911 p. 39, sec. 16 Act of Oct. 15, 1914 p. 51, sec. 25 Act of June 12, 1916 p. 39, sec. 16 United States Revised Statutes, sec. 321 p. 21, sec. 10 United States Revised Statutes, sec. 5143 p. 62, sec. 28 United States Revised Statutes, sec. 5153 p. 61, sec. 27 United States Revised Statutes, sec. 5154 p. 15, 'see. 8 United States Revised Statutes, sec. 5 1 59 p. 39, sec. 17 United States Revised Statutes, sec. 51 72 p. 61 , sec. 27; p. 76 United States Revised Statutes, sec. 5174 p. 37, sec. 16 United States Revised Statutes, sec. 5191 p. 61 , sec. 27 United States Revised Statutes, sec. 5202 p. 29, sec. 13; p. 78 United States Revised Statutes, sec. 5209 p. 16, sec. 9; p. 78 United States Revised Statutes, sec. 5214 p. 61, sec. 27 United States Revised Statutes, sec. 5240 p. IS. sec. 9; p. 44, sec. 21 United States Statutes at Large, vol. 22. p. 403 p. 25, sec. 11 (1) Acts published in appendix: Act of Juno 25, 1910 p. 66 Act of Oct. 15, 1914 p. 64 Act of May 15, 1016 p. 65 Act of May 18, 1916..... p. 66 Act of July 17, L916 p. 66 Act of Apr. 24, 1017 p. 68 Act of Sent. 24, Mil 7 ! p. 69 Act of Oct, 6, 1917 '. p. 75 Act, of Apr. 4, 1918 ' p. 69 85 86 INDEX. Acts published in Appendix — Continued. Act of Apr. 5, 1918 p. 70 Act of Apr. 23, 1918 p. 72 Act of Sept. 24, 1918 pp. 75, 77 Act of Sept. 26, 1918 p. 78 Act of Feb. 24, 1919 p. 80 Act of Mar. 3. 1919. amending Bee. 5172, Revised Statutes p. 76 Act of Mar. 3, 1919, amending War Finance Corporation Act p. 71 Act of Oct. 22, 1919 pp. 77, 78 Art of Feb. 28, 1920 p. 83 Act of May 26, 1920 p. 65 Act of May 29, 1920 p. 82 Appropriation Act of 1920 p. 82 Clayton Antitrust Act p. 64 Farm Loan Act p. 66 First Liberty Bond Act p. 68 Gold supply, act to conserve -. p. 72 Kern amendment to Clayton Act p. 65 Pittman Act p. 72 Postal Savings Act, amendment to p. 66 Revenue Act of 1918 p. 80 Second Liberty Bond Act p. 69 Third Liberty Bond Act p. 69 Trading-with-the-enemy Act p. 75 Transportation Act of 1920 p. 83 United States Revised Statutes, sec. 5172 p. 76 United States Revised Statutes, sec. 5200 p. 77 United States Revised Statutes, sec. 5202 p. 78 United States Revised Statutes, sec. 5208 p. 78 United States Revised Statutes, sec. 5209 p. 79 War Finance Corporation Act p. 70 Actually existing values, restrictions on amount of paper discounted do not apply to bills drawn against p. 18, sec. 9; p. 28, sec. 13; p. 77 Advances to member banks on 15-day promissory notes p. 29, sec. 13 Agencies, establishment of, by — Federal Reserve Banks p. 32, sec. 14 Foreign Banking Corporations p. 54, sec. 25 1 Reserve. (See Federal Reserve Agents.) Agents, right of national banks to act as, for insurance companies, and in procuring loans on real estate p. 30, sec. 13 Agricultural paper, rediscount of p. 28, sec L3 Alaska, national banks in, may join system or remain nonmembers. . . p. 44, s< Amendments, right to amend, alter, or repeal expressly reserved p. 63, sei Applications: .lcellation by State banks of stock in Federal Reserve Banks., p. 17, sec. 9 Fslablishment of foreign branches by national banks p. 49, sec. 25 Federal Reserve notes p. 33, sec. 16 Fiduciary powers by national banks p. 23, sec. 11 (k) Member banks, application for stock in Federal Reserve Banks, p. 7, see. !: p. L3, sec. 5; p. 16, sec. 9 Appropriation Act of 1920: Federal Reserve Banks, transfer of certain functions to p. 82 Sub treasuries abolished p. 82 Assessments. (See Federal Reserve Banks.) Assistants to Federal Reserve Agents p. 12, sec. 4 INDEX. 87 B. Balances: Reserve required by member banks p. 42, sec. 19 Clearing member banks with Federal Reserve Banks to offset items in transit p. 27, sec. 13 Banks (sa also Federal Reserve Banks; Foreign Banking Corporations; Nfember banks; State banks; National bank Alaska and other dependencies, banks in may remain nonmember banks p. 44, sec. 19 Conversion of, into Foreign Banking Corporations p. 59, sec. 25 a ) Conversion of, into national banks p. 15, sec. 8 Definition of term " bank " p. 3, sec. 1 Bankers' acceptances. (Se( Acceptances.) Banking corporations. (See Foreign Banking Corporations.) Banking corporations, conversion of, into Foreign Banking Corpora- tions p. 59, sec. 2 Bank examiner. (See Examiners.) Board: Definition of term " Board " p. 3, sec. 1 Federal Reserve. (See Federal Reserve Board.) Bonds: Circulation privilege, Federal Reserve Banks required to pur- chase bonds bearing p. 40, sec. 18 Deposit requirements of national banks repealed p. 39, sec. 17 Exchange of 2 per cent for 3 per cent p. 41, sec. 18 Federal Reserve Agents p. 23, sec. 11 (i) Federal Reserve Banks, purchase of, by, in open market p. 31, sec. 14 (b) Limitation on amount to be purchased by Federal Reserve Banks, p. 40, sec. 18 Notes taken out against bonds purchased p. 41, sec. 18 Officers and employees of Federal Reserve Banks p. 8, sec. 4 Rediscount of paper secured by, issued since April 24, 1917. . . p. 25, sec. 11 (m) Refunding p. 40, sec. 18 Repurchase of 1-year bonds from year to year p. 41, sec. 18 Revenue bonds, purchase of, by Federal Reserve Banks p. 31, sec. 14 War-stamp tax inapplicable to paper secured by United States bonds issued since April 24, 1917 p. 82 Branches: Federal Reserve Banks p. 7, sec. 3 Foreign Banking Corporations p. 54, sec. 25 (a) National banks p. 49, sec. 25 Brokers procuring real estate loans, national banks as p. 30, sec. 13 Business of Foreign Banking Corporations, restrictions on p. 55, sec. 25 (a) C. Capital stock. (See Stock.) Central reserve cities: I llassification by Federal Reserve Board p. 22, sec. 11 (e); p. 49, sec. 24 Previous status not changed P- 6, sec. 2 Certificates of indebtedness, rediscount of paper secured by. .• p. 25, sec. 11 (m) Certification of checks against insufficient funds, illegality of p. 19, sec. 9; p. 78 Civil service, employees of Federal Reserve Board not subject to. . . p. 25, sec. 11 (1) Clayton Act: Application of, to directors of Foreign Banking Corporations; ex- ceptions P- 56, sec. 25 a 58 INDEX. Clayton Act — Continued. Application of, to directors of member banks holding stock in State Foreign Banking Corp, , rations p. 51, sec. 25 Text of act p. 64 Clearing bouse: Federal Reserve Bank to act as p. 38, sec. 16 Federal Reserve Board may act as p. 38, sec. 16 Federal Reserve Board to fix cbarges p. 38. Collections: gesfor p. 27, see. 13; p. Deposits with Federal Reserve Banks for p. 26, sec. 13 Expenses of p. 38, sec. 16 ( lollateral notes of member banks p. 29, se Commercial paper, rediscount of p. 27. sec. 13 Commissions for procuring loans forbidden p. 46, sec. 22 (c) Comptroller of Currency: Amendment to act creating office p. 21, sec. 10 Authorizing Federal Reserve Banks to commence business p. 9, sec. 4 Ex officio member of Federal Reserve Board p. 19, sec. 10 Conversion: State bank into national bank p. 15, sec. 8 State corporations principally engaged in foreign business into Foreign Banking Corporations p. 59, sec. 25 (a) D. Deficienciesinreservesof Federal Reserve Banks, graduated tax upon. p. 22, sec. 11 (c) Deficiencies in reserves of member banks p. 43. sec. 19 Definitions: Bank p. 3, sec. 1 Board p. 3, sec. 1 Demand deposits p. 42, sec. 19 District p. 3. sec. 1 Member bank p. 3, sec. 1 National bank p. 3, sec. 1 National banking association p. 3, sec. 1 Reserve bank p. 3, sec. 1 Time deposits p. 42, see. 19 I demand deposits, definition of p. 42. sec. I 9 Dependencies: Foreign Banking Corporations may carry on business in p. 51 , sec. 25 (a) National banks in, may remain nonmembers p. 44, sec. 19 Deposits (see also Government depofi Demand p. 42 sec. 19 Federal Reserve Banks, deposits accepted by p. 26. sec. L3 Postal savings funds p. 42, sec. 1 9; p. 66 Proceeds of sale of bonds and certificates of indebtedness pp. 68, 69 Reserve against. (See Resen e.) Time p. 42, sec. 19 Deputy chairman of Board, appointment and duties p. 1 1, sec. 4 Directors Branch banks of Federal Reserve Banks p. 7. sec. 3 Federal Reserve Banks- Classification p. 9, sec. 4 Class A and Class B directors, metliod of election p. 10, sec. 4 Class C directors, appointment of pp. 10, 11, sec. 4 INDEX. 89 Directors— Continued. Federal Reserve Banks — Continued. Duties in ,u< neral p. 9, sec. 4 Qualifications of pp. 9, LO, 11 sec. 4 Removal of Salaries, expenses, etc., ol p. 12. sec. 4 Selection of, method ' ' ss A, B, and C pp. 10, 11, sec. 4 Senators and Representath es, ineligibility of p. 10, sec. ! Suspension of, by Fed< ral Reserve Hoard p. 23, sec. 1 1 (0 Term of office p. 12. sec. 1 Vacancies to be filled p. 12, sec. 4 Foreign Banking Corporations. (See Foreign • orpora- tions; Direct • Member banks — Connivance of directors of, with directors of other member banks, prohibited p. 47', sec. 22 (f) Disclosure of profits in sales by directors of p. -(d) Fees or commission prohibited p. 46, .-•■•. 22 (c) Foreign Banking Corporations, directors of member banks may serve as directors of p. 51, Bee. 25 Interlocking directorates prohibited p. 64 Member of Federal Reserve Board ineligible p. 20, sec. 10 Penalty for accepting fees or commissions t>. 46, sec. 22 (c) Preferential interest rate on deposits of directors prohibited, p. 47, sec. 22 (e) Purchases by bank from p. 47, sec. 22 (d) National banks — Personal liability of directors of, for noncompliance with the act p. 5, sec. 2 Interlocking directorates prohibited p. 64 Discounts (see also Rediscounts): Exception to limitations on, as prescribed by sees. 9 and 13... p. 25, sec. 11 (m) limitations on discounts of any one borrower. . . p. 18, sec. 9; p. 25, sec. 11 (m); p. 28, sec. 13 Member bank can not act as agent for nonmember bank to obtain discounts p. 43, sec. 19 Promissory notes of member banks secured by paper eligible for rediscount p. 29; sec. 13 Rates of . (See Discount and interest rat Discount and interest rates: Federal Ad via »ry < 'ouncil may recommend p. 26, sec. 12 Federal Reserve Bank may establish p. 31, sec. 14 Federal Reserve Board may review and determine., p. 29, sec. I ►; p. 31, sec. 1 I • Graduated or progressed rates p. 31, sec. 14 Tax on deficiency in reserves of Federal Reserve Ban',.- against notes must be added to p. 22, sec. 11 c) Discount transactions by Federal Reserve Banks: Acceptances to furnish dollar exchange p. 30, ■ Member bank acceptances p. 28, sec. 13 Member bank promissory notes secured b) eligible paper p. 29 Notes, drafts, and bills arising out of actual commercial I tions— 90-day maturjfy p. 27, e Notes, drafts, and bills drawn for agricultural purposes — 6 months' maturity p. 28, sec. 13 sec. 25 (a) sec. 25 a p. 5, sec. 2 p. 5, sec. 2 p. 5, sec. 2 90 INDEX. Dissolution: Foreign Banking Corporations — Failure to comply with act p . Survival of remedies and penalties p. National banks — Effect of Failure to comply with act Survival of remedies and penalties District: Definition of term "district" p. 3, sec. 1 Federal Reserve. (See Federal Reserve district.) Dividends: Federal Reserve Banks p. 14. sec . 7 Foreign Banking Corporations, declaration of p. 58, sec. 25 (a) Member banks not to pay when reserves are deficient p. 44, sec . 19 Division of earnings of Federal Reserve Banks p. 14, sec. 7 Dollar exchange, acceptance by member banks to provide p. 30, sec. 13 E. Earnings of Federal Reserve Banks, division of p. 14 , sec . 7 Edge Act. (See Sec. 25 (a), Federal Reserve Act.) Edge corporations. (See Foreign Banking Corporations. ) Elections of directors of Federal Reserve Banks p. 10, sec. 4 Embezzlement by — Officers, directors, agents, or employees of Federal Reserve Banks or member banks, or by receivers of insolvent national banks. . p. 79 Officers, directors, agents, clerks, employees, examiners, or re- ceivers of Foreign Banking Corporations pp. 59, 60, sec. 25 (a) Emergency currency, limitations of, act of May 30, 1908, extended to June 30, 1915 p. 61, sec. 27 Examinations: Expenses of p. 17, sec. 9; p. 45, sec. 21 Federal Reserve Banks p. 21, sec. 11 (a) ; p. 45, sec. 21 Foreign Banking Corporations, by Federal Reserve Board p. 58, sec. 25 (a) Member banks, by Federal Reserve Board p. 21, sec. 11 (a) Member banks, general provision concerning p. 17, sec. 9; p. 44, sec. 21 Special examinations by Federal Reserve Bank of member banks. . p. 17, sec. 9; p. 45. sec. 21 Special examinations of foreign branches of national banks and State foreign banking corporations p. 50, sec. 25 State member banks pp. 17, 18; sec. 9 State examinations may be accepted p. 17, sec. 9; p. 44, sec. 21 Examiners: Accepting loan or gratuity prohibited p. 46, sec. 22 (a) Appointment of p. 44, sec. 21 Disclosure of confidential information, penalty p. 46, sec. 22 (b) Disqualification of p. 46, sec. 22 (a) Loans and gratuities must no1 !>c made to p. 46, sec. 22 i a) Penalty for accepting loan < >r gratuil y p. 46, sec. 22 I a) Penalty for disclosure of confidential information p. 46, sec. 22 (a) Powers p. 45, sec. 21 Salary p. 45, sec. 21 Exception to limitation on total outstanding liabilities of national banks p. 29, sec. 13; p. 78 1KDEX. 91 Exchange charges pp. 26,27, sec. L3 Exchange of 2 per cent gold bonds for L-year gold notes and 30-year 3 per cent gold bonds p. II. sec, IS Exemption of Federal Reserve Banks from taxation p. L5, Bee. 7 otion of notes secured by Liberty bonds from stamp tax p. 82 F. Raise entryin books of Foreign Banking* orporations, penalty p- .'""■ Farm land banks p. 66 lands, loans en p. tS, sec. 24 Farm Loan Act p. 66 Farm loan bonds, Federal Resen e Banks may invest in p. (j8 Federal Advisory Council, general powers and dn1 tea of. p. 26, Bee. L2 Federal Reserve Agent: Appointment p. 11, sec. 4 •ht nuts p. 12. sec. 4 Bond p. 23, sec. LI (i) Compensation p. 11, sec. 4 Deposits by, with Federal Reserve Board or Treasurer of I'm States p. r;6, sec. 16 Deposits with, Federal Reserve A ct requirement p. 36, sec. 16 Duties in general p. U, sec. 4 Federal Reserve notes, holding money for redemption of p. 36, sec. 10 Notice to board of issuance and withdrawal of Federal Reserve notes p. 33, sec. 16 Qualifications p. 11, see. 4 Redeposit of money with Board or Treasurer p. 36, sec. 16 Reports to Federal Reserve Board p. 11, sec. 4 Federal Reserve bank notes: Authorization and method of issue p. 9, sec. 1 ; p. 41, sec. 18 Denominations of $1 and $2 p. 74 Expenses of printing and issuing p. 38, sec. 16 General provisions concerning p. 9, sec. 4 ; p. 41 , sec. 18 Issue p. 41, see. 18; p. 74 Lien on assets of bank p. 35, sec. 16 Obligations cf Federal Reserve Bank p. 41 , sec IS Redemption of p. 41, sec. 18 Federal Reserve Banks: ice of chairman or deputy chairman p. 11, sec. 4 ants with other Federal Reserve Banks p. 32, Bee. I I Advances to member banks on 15-day promissory notes p. 29, sec. 13 Administration of affairs of, must be lair and without discrimina- tion to member banks ]>• !», see. 4 Alaska and dependencies ami possessions, hanks in may become nbers p W, sec. l r > Application for stock in p.7,sec.4; p. L3,sec.5; p. L6f asments upon, by Federal Reserve Board for expenses p. 20, sec. L0 Authority to commence business p. '•' Hoard of directors (see oho Directors) p. 9, sec. 4 Branch hanks P- 7, sec. 3 tl stock, amount of required p. 6, Certificate to commence business p. 9, see. 4 Certifying checks drawn against insufficient funds ]>. 78 ( hairman of board of directors p. 1 1 ■ sec. 4 92 INDEX. Federal Reserve Banks — Continued. Clearing and collection charges regulated by Federal Reserve Board p. 38, sec. 16 Clearing checks p. 38, sec. 16 Collection charges against, prohibited p. 27, sec. 13 ( ollections p. 2G, sec. 13 ( Jorporate powers p. 8, sec. 4 Deficiency in reserves, graduated tax upon p. 22, sec. 11 (c) Definition of term "reserve bank " p. 1 . sec. 1 Deposits p. 26, sec. 13 ; p. 71 Deputy chairman of board of directors p. 11, sec. 4 Directors. (See Directors.) Discount of paper of member banks Becured by bonds of War Finance Corporation p. 70 Disccunts for member banks- General provisions concerning pp. 27, 28, sec. 13 Limitations upon for any one borrower p. 18, sec. 9; p. 25, sec. 11 (m); p. 28, sec. 13 Discrimination for or against member banks prohibited p. 9, sec. 4 Dividends p. 14, sec. 7 Division of earnings p. 14, sec. 7 Doubtful assets, Board may require writing off of p. 23, sec. 11 (g) Earnings, distribution of p. 14, sec. 7 Embezzlement, etc., from p. 79 Exemption from taxation p. 15, sec. 7 Farm-loan bonds, may invest in p. 67 Fiscal agents, shall act as, when required p. 32, sec. 15; p. 71 Forfeiture of membership in p. 17, sec. 9 Foreign accounts p. 32, sec. 14 Foreign agencies p. 32, sec. 14 Foreign Banking Corporations can not become members of p. 57, sec. 25 (a) Franchise tax p. 14, sec. 7 Government depositories, may act as p. 32, sec. 15 Insolvency of p. 14, sec. 7 Member banks, information to be furnished Federal Reserve Board concerning condition of p. 45, sec. 21 Officers, suspension of, by Federal Reserve Board p. 23, sec. 11 (f) Open-market operations (see also Federal Reserve Banks; Powers), p. 31, sec. 14 Organization p. 7, sec. 4 Powers p. 8, sec. 4; p. 26, sec. 13; p. 31, sec. 14 Advances to member banks on 15-day promissory notes p. 29, sec. 13 Discount notes, drafts, and bills of exchange pp. 27, 28, 30, sec. 13 Dollar exchange, discount or purchase of drafts drawn to furnish p. 30, sec. 13 Establish discount rates p. 31, sec. 14 Open-market operations p. 31 , sec. 14 Buy and sell United States bonds and notes, revenue bonds, and warrants p. 31, sec. 14 Buy and sell bills of exchange arising out of commercial transactions p. 31, sec. 14 Buy and sell cable transfers, bankers' acceptances, and bills of exchange p. 31, sec. 14 Deal in gold coin and bullion p. 31, sec. 14 Open accounts in foreign countries and establish agencies p. 32, sec. 14 Receive items for deposit, collection, or exchange, p. 26, sec. 13; p. 38, sec. 16 INDEX. 03 Federal Reserve Banks — Continued. Purchase of obligations secured I of War Finance I orpo- rai ion p. 70 Purchase of bonds bearing circulation privilege, limitations upon amount in any one year p. in. sec. 1 3 Rediscounts. S( ' Sim, Special examinations ibers p. 45, sec. 21 Stock, (See Stock.) Supervision by Federal Reserve Board p. 23, sec. II (j) Surplus fund p. 14, sec. 7 Suspension of operations of, by Fed eral Reser . e ! !< >i <•>] _ p. 23, sec. 11 (h ) Suspension or removal of officers and d irectors p. 23, sec. 11 (f) Taxation, exemption from p. 15, sec. 7 War Finance Corporation — Deposit of funds p. 71 Fiscal agents of p. 71 Weekly statement of condition of, by Federal Reserve Board... p. 22, sec. 11 (a) Writing off doubtful assets p. 23, sec. 11 (g) Federal Reserve Board: Advice and assistance of, with respect to loans to railroads under Transportation Act of 1920 p. 83 Allotment of refunding bonds p. 40, sec. 18 Annual report p. 21, sec. 10 Applications for cancellation of stock p. 1 7, sec. 9 Assessments against Federal Reserve Banks to pay expenses p. 20, sec. 10 Chairman, Secretary of Treasury ex officio p. 20, sec. 10 Clas3 C directors, appointment of, by p. 11, sec. 4 Clearing house, may act as p. 38, sec. 16 Deposits with Secretary of Treasury subject to order of p. 38, sec. 16 Designation or requirement of Federal Reserve Bank to act as clearing house p. 38, sec. 16 Ex officio members p. 19, sec. 10 Expenses p. 20, sec. 10 Expenses of handling deposits with Secretary of the Treasury p. 39, sec. 16 Expenses of money shipments p. 39, sec. 16 Farm loans, limitations on p. 48, sec. 24 Federal Reserve Agent, appointment of, by p. 11, sec. 4 Federal Reserve notes, regulation of issue p. 35, sec. 1 6 Governor, appointment and duties p. 20, sec. 10 Insolvency of Foreign Banking Corporation, appointment of receiver on p. 57, sec. 25 i a) Members p. 19, sec. 10 Appointment pp. 19, 20, sec. 10 Expenses pp. 19, 20, sec. 10 Ineligibility of, for other office or employment in member banks, Federal Reserve Ban] - or Foreign Bankic rations p. 20, sec. JO; p. 56, sec. 25 (a) Qualifications pp. L9, 20, 21, sec. L0; p. 57, sec. 25 (a) Salary pp. 19, 20, sec. 10 Term of office p. 20, sec. 10 Vacancies, appointment of, by President to fill p. 21, sec. 10 Organization and operation of, general provisions regarding.. pp. L9, 20, 21, sec. 10 Permission of, to serve two or more banks p. 65 94 INDEX. Federal Reserve Board — Continued. Powers of p. 21. sec. 1 1 Agricultural paper, may fix amount which a Federal Reserve Bank may discount p. 28, sec. 1 3 Character of paper eligible under section 13 for discount with Federal Reserve Banks, may determine and define p. 27, sec. 13 Doubtful or worthless assets, may require writing off p. 23, sec. 11 (g) Employment of attorneys, assistants, etc p. 25, sec. 11(1) Examination of accounts, books, affairs of Federal Reserve Banks and member banks p. 21, sec. 11 (a) Federal Reserve notes, supervise issue and retirement of . . p. 22, sec. 11 (d) Fiduciary powers may grant to national banks by special permit p. 23, sec. 11 (k) Rediscount by Federal Reserve Bank of member banks' paper of any one borrower in excess of limitations imposed by sec- tions 9 and 13, may permit p. 25, sec. 11 (m) Rediscount of paper of other Federal Reserve Banks, may require p. 22, sec. 11 (b) Reserve requirements, may suspend for 30 days; tax imposed on suspension p. 22, sec. 11 (c) Reserve and central reserve cities, may add to or reclassify, p. 22, sec. 11 (e) Rules and regulations, may prescribe (see also Rides and Regulations) p. 23, sec. 11 (i) Statements and reports, general, may require p. 21, sec. 11 (a) Statement in detail of each Federal Reserve Bank; shall pub- lish each week; contents p. 22, sec. 11 (a) Supervision of Federal Reserve Banks p. 23, sec. 11 (j) Suspension of officers or directors of Federal Reserve Banks, p. 23, sec. 11 ( I) Powers in conflict with those of Secretary of Treasury p. 21, sec. 10 Railroads, loans to, under Transportation Act of 1920, advice and assistance of, in respect to p. 83 Readjustment of districts p. 4, sec. 2 Rediscount of paper discounted by Federal Reserve Banks, may require p. 22, sec. 11 (h) Regulations. (See Rules and Regulations.) Removal of Federal Reserve Bank officers or directors p. 23, sec. 11 (f) Report of, annual p. 21, sec. 10 Representatives in Congress ineligible p. 10, sec. 4 Review of organization committee's determinations p. 3, sec. 2 Secretary of Treasury, conflict of power between Secretary and Federal Reserve Board p. 21, sec. 10 Senators ineligible p. 10, Bee. 4 Staff, employment and expenses of p. 25, sec. 11 (1) Supervision of Federal Reserve Banks p. 23, sec. 11 (j) Supervision of foreign accounts of Federal Reserve Banks p. 32, sec. i 1 Suspension of resen e requirements p. 22, sec. 11 (c) Trust powers granted by p. 23, sec. 11 (k) Vacancies, how filled p. 21, sec. 10 Vice governor p. 20, sec. 10 Weekly statement of condition of Federal Reserve Banks p. 22, sec. 11 (a) Federal Reserve cities, designation of p. 3, sec. 2 Federal Reserve districts, ereation, apportionment, and readjustment of pp. 3, 4, sec. 2 INDEX. 95 Federal Reserve notes: Additional security may be required p. 34, Bee. L6 Application for, may be granted in whole or in part pp. 33, 35, Bee. 16 Bonds of War Finance Corporation, pa per secured by, as collateral security for Federal Reserve notes p. 71 Cancellation and destruction p. 35, sec. 16 Collateral security |. sec. 16; p. 71 Custody pending issue pp. 36, 37, sec. 16 Custody of plates and dies p. 37, sec. 16 Denominations of p. 37, sec. 16 Description of pp. 33, 3 !. 37, sec. 16 Deposits against p. 35, sec. lti Deposits with Treasurer to cover redemptions p. 34, sec. i (I Discretion of Board to granl application for issue pp. 33, 35, sec. 1(5 Distinctive letter and number p. 34, sec. 16 Engraving and printing p. 37, sec. 16 Exchange of, for gold coin or bullion p. 31, sec. 14 Expenses of issue and retirement p. 37, sec. 16 Interest on p. 35, sec. 10; p. 71 Issue of p. 22, sec. 11 ; pp. 33-38, sec. 16 Lien on assets of bank p. 35, sec. 1 6 Notice to Board of issues and withdrawals p. 33, sec. 16 Obligation of United States p. 33, sec. 16 Paying out by Federal Reserve Bank other than issuing bank, prohibited p. 34, sec. 16 Plates and dies p. 37, sec. 16 Power of bank to issue p. 9, sec. I Purposes for which issued p. 33, sec. 16 Rate of interest on p. 35, sec. 16 Redemption of pp. 34, 36, sec. 16 Redemption fund p. 35, sec. 16 Reduction of liability for •. p. 35, sec. 16 Reserve against, what may be counted as pp. 34, 35, 39, - Retirement of p. 22, sec. 11 (d); pp. 34, 35, 36, sec. 16 Return or retirement by another Federal Reserve Bank p. 34, sec. 16 Status as currency p. 33, - Supervision and control of issue and retirement p. 22, sec. 11 (d) Tax on deficiency in gold reserve p. 22, sec. 11 (c) Withdrawal of collateral p. 36, sec. 16 Fiduciary powers of national banks p. 23, sec. 11 k i Fiscal agents of the United States: Federal Reserve Banks shall act as p. 32, sec. 15 Foreign Banking * Jorporations shall act as p. 51, see. Foreign accounts, Federal Reserve Banks p. 32, sec. 14 Foreign agencies: Federal Reserve Banks p. 32, sec. 14 Foreign Banking Corporations p. 54, sec. 25 i a (b) Foreign banking corporations, national banks may invest in stock of. p. 49, 50, sec. 25 Foreign Banking Corporations: Acceptances, power to make p. 53, sec. 25 Agencies, establishment of foreign p. 54, sec. 25 (a) (b) Banking corporations, foreign, conversion of, into p. 59, sec. Branches, establishment of foreign p. 54, see 25 96 INDEX. Foreign Banking Corporations — Continued. Business of, can not carry on in United States except such as is incidental to foreign business pp. 54, 55, sec. 25 (a) Business, permit to begin pp. 52, 55, sec. 25 (a) < lapital stock — Increase of p. 55, sec. 25 (a) Method of payment p. 55, sec. 25 (a) Minimum required p. 55, sec. 25 (a) Ownership of majority of shares p. 56, sec. 25 (a) Clayton Act, application of p. 56, sec. 25 (a) Commerce or trade in commodities prohibited except as specifically provided; penalty p. 55, sec. 25 (a) Conversion of State corporations into p. 59, sec. 25 (a) Corporate existence, extension of p. 58, sec. 25 (a) Deposits in United States, nature of, allowed p. 53, sec. 25 (a) (a) Directors- Clayton Act, applicability of p. 56, sec. 25 (a) Dividends, declaration of, by 1 p. 58, sec. 25 (a) Election of p. 52, sec. 25 (a) Liability of, in personal capacity for participation in violations of act p. 57, sec. 25 (a) Members of Federal Reserve Board may not act as p. 56, sec. 25 (a) Qualifications, must be citizens of United States p. 52, sec. 25 (a) Unlawful acts of, penalties pp. 55, 59, 60, sec. 25 (a) Dissolution of p. 59, sec. 25 (a) Dividends, declaration of p. 58, sec. 25 (a) Embezzlement of funds by officers, directors, or employees; penalty pp. 59, 60, sec. 25 (a) Examination of, by Federal Reserve Board p. 58, sec. 25 (a) Extension of corporate existence p. 58, sec. 25 (a) False entry in books of, penalty p. 60, sec. 25 (a) Federal Reserve Board, member of may not act as director of. . . p. 56, sec. 25 (a) Foreign branches and agencies, establishment of p. 54, sec. 25 (a) (b) Insolvency of p. 57, sec. 25 (a) Liabilities, limitations upon p. 53, sec. 25 (a) (a) Liability of directors in personal capacity for participation in viola- tions of act p. 57, sec. 25 (a) Limitations upon — Commerce or trade in commodities p. 55, sec. 25 (a) Liabilities outstanding p. 53, sec. 25 (a) (a) Ownership of stock in corporations competing "with p. 54, sec. 25 (a) (c) Ownership of stock in any other one corporation p. 54, sec. 25(a) (c) Price control of commodities prohibited p. 55, sec. 25 (a) Stock, amount of, which national banks may invest in p. 56, sec. 25 (a) Total liabilities, of all classes, subject to regulation of Board p. 53, sec. 25 (a) (a) Loss upon debts contracted in good faith, purchase of stock in corporation to prevent p. 54, sec. 25 (a) National banks may invest in stock of p. 56, sec. 25 (a) Organization of p. 51, sec. 25 (a) Ownership of shares of stock p. 56, sec. 25 (a) Ownership of stock of other foreign banking corporations, limita- tions upon p. 54, sec. 25 (a) (c) INDEX. 97 Federal Banking Corporations— Continm id. Penalties and forfeitures — Embezzlement of funds pp. 59, 60, sec. 25 (a) Failure to comply with terms of act p. 57, sec. 25 (a) False entry in books p. 60, sec. 25 (a) Representations that United States is liable for obligations of p. 60, sec. 25 (a) Unauthorized issue of obligations of p. 60, sec. 25 (a) Permit to begin business pp. 52, 55, sec. 25 (a) Powers, corporate p. 52, sec. 25 (a) Powers of— Establishment of foreign branches and agencies p. 54, sec. 25 (a) (b) General banking p. 53, sec. 25 (a) (a) Purchase of stock in other corporations p. 54, sec. 25 (a) (c) Price control of commodities prohibited; penalty p. 55, sec. 25 (a) Purposes of corporation p. 51, sec. 25 (a) Reports to Federal Reserve Board p. 58, sec. 25 (a) Representations that United States is liable for obligations of; penalty p. 60, sec. 25 (a) Reserves, amount required against deposits in United States, p. 53, sec. 25 (a) (a) Rules and regulations of Federal Reserve Board, subject to. pp. 53, 54, sec. 25 (a) Shareholders — Liability of p. 57, sec. 25 (a) Majority of, to be United States citizens p. 56, sec. 25 (a) Meetings of p. 58, sec. 25 (a) Stock- National banks may invest in p. 56, sec. 25 (a) Ownership of majority of shares of p. 56, sec. 25 (a) Taxation of p. 58, sec. 25 (a) Transfer of p. 52, sec. 25 (a) Surplus fund p. 58, sec. 25 (a) Taxation of p- 58, sec. 25 (a) Unauthorized issue of obligations of; penalty p. 60, sec. 25 (a) Foreign branches of national banks, general provisions concerning, pp. 49, 50, sec. 25 Foreign exchange, restrictions on transactions in p. 75 Forfeitures. (See Penalties and forfeitures.) Franchise tax on Federal Reserve Banks p. 14, sec. 7 G. Gold, export, hoarding, melting, or earmaking of p. 75 Gold reserve: Secretary of Treasury to maintain p. 61, sec. 26 Tax on deficiency p. 22, sec. 11 (c) Gold settlement fund pp. 38, 39, sec. 16 Gold supply, act to conserve p. 72 Government deposits: In farm land banks p. 67 In Federal Reserve Banks p- 32, sec. 15 In foreign countries p. 70 In joint-stock land banks p. 67 In member banks P- 32, sec. 15 Nature of permitted in Federal Reserve Banks p. 32, sec. 15 Postal savings funds P- 32, sec. L5; p. 66 Proceeds of sales of bonds and certificates of indebtedness j>]>. 68, 69 Graduated discount rates P- 31, sec. 14 8881°— 20 7 98 INDEX. I. Inconsistent laws repealed p. 61, sec. 26 Insolvency of Foreign Banking < 'orporat ions p. 57, sec. 25 (a) Insular possessions, national banks in, may remain nonmembers p. 44, sec. 19 Insurance agents, national banks may act as p. 30, sec. 13 Interlocking bank directorates p. 64 Interest rates. (See Discount and interest rates.) Invalidity of part of act not to invalidate all p. 63, sec. 29 Investment by national banks in foreign banking corporations p. 49, sec. 25 K. Kem Amendment, Clayton Anti-Trust Act, as amended by p. 65 L. Liabilities of Foreign Banking Corporations, limitations upon., p. 53, sec. 25 (a) (a) Liabilities of national banks, limitation upon p. 77 Liberty bonds, deposits of proceeds pp. 68 . 69 Liberty bonds, rediscount of paper secured by p. 25, sec. 11 (m) Liberty Bond Acts: First p. 68 Second p. 69 Third p. 69 Lien on assets of Federal Reserve Banks to secure Federal Reserve notes p. 35, sec. I <; Limitations upon : Acceptances to furnish dollar exchange p. 30, sec 13 Acceptances by member banks for any one person p. 28, sec 13 Deposits by member banks with nonmember banks p. 43, sec. 19 Exceptions on limitations of total liabilities of national banks, p. 29, sec. 13; p. 78 Foreign Banking Corporations. (See Foreign Banking Corpora- tions: Limitations upon.) National banks, indebtedness of p. 29, sec. 13 ; p. 78 National banks, loans by, to one person, firm, corporation, etc.. . p. 77 National banks, loans by, on farm and real estate p. 48, sec. 24 Rediscount by Federal Reserve Bank of paper of any one borrower . p. 18, sec. 9 ; p. 25, sec. 11 (m); p. 28, sec 13 State banks, rediscounts for, by Federal Reserve Banks p. 18, sec. 9 Ijoans : Commission for procuring, prohibited p .46, sec. 22 (c) Examiners p. 46, sec. 22 (a) Farm lands p. 48, sec. 24 Real estate p. 18, sec. 24 Trust funds, to officers, directors, and employees of national banks, prohibited p. 24, sec. 11 (k) M. Member banks: Acceptances by pp. 28, 30, sec 13 Advances to on 15-day promissory notes p. 29, sec. 13 Annual reports by State member banks p. 17, sec 9 Application for stock in Federal Reserve Banks p. 7, sec ! ; p. 13, sec. 5; p. 16, sec. 9 Cancellation of stock in Federal Reserve Banks upon insolvency. p. 14, sec. 6 Certification of checks drawn against insufficient funds, illegality of p. 19, sec 9; p. 78 INDEX. 99 Member banks — Continued. Deficiencies in reserves of p. 43, sec. 19 Definition of term "member bank" p. 3, sec. I Deposits of Federal land banks ]>. 67 Deposits of. with nonmember banks, limitations upon p. 43, sec L9 Deposits of War Finance Corporation p. 71 I tiscounte for pp. 27, 28, sec. 13 Discounts, procuring by bribery, illegality of p. 46, sec. 22 (c) Dollar exchange p. 30, sec. 13 Embezzlement, etc., from p. 79 Examinations of, by Federal Reserve Board p. 44, sec. 21 ; p. 21, sec. 11 (a) Exchange charges, may make reasonable p. 27, sec. 13 Farm loan bonds, may deal in p. 68 Fees or commissions to officers or directors for loans prohibited. . p. 46, sec. 22 (c) Forfeiture of membership p. 1 7, sec. 9 Increasing capital stock must increase holdings of Federal Reserve Bank stock p. 13, sec. 5 Insolvency 14, sec. 6 Interest on deposits of officers, directors, or employees p. 47, sec. 22 (e^ Limitations on amount of deposits with nonmember banks p. 43, sec. 19 Loans or gratuities to bank examiners prohibited p. 46, sec. 22 (a) National banks, limitation on total indebtedness; exceptions, p. 29, sec. 13; p. 78 Nonmember banks shall not act as medium for, in securing dis- counts p. 43, sec. 19 Officers and employees may serve foreign branches p. 51, sec. 25 Promissory notes, 15-day, secured by paper eligible for rediscount, p. 29, sec. 13 Purchases from directors p. 47, sec. 22 (d) Reports by State member banks, penalty for failure to render, pp. 16, 17, sec. 9 Reserve balance, may be checked against; limitations imposed . . . p. 43, sec. 19 Reserve requirements p. 42, sec. 19 Reserves, shall not make new loans when not maintained p. 44, sec. 19 Sale of bonds securing notes to be retired p. 40, sec. 18 State banks as members, general provisions concerning pp. 16-19, sec. 9 Stock in Federal Reserve Banks not to be transferred p. 13, sec. 5 Surrender of stock in Federal Reserve Banks — Rights, privileges, etc., cease upon p. 18, sec. 9 When required p. 13, sec. 5 Yisitorial powers to which subject 45, sec. 21 N. National banks: Agent for fire and life insurance and for procuring loans on real estate: Limitations upon p. 30, sec. 13 Administrator, may act as p. 23, sec. 11 (k) Application for stock in Federal Reserve Bank p. 7, sec. 4; p. 16, sec. 9 Bond-deposit requirements repealed p. 39, sec. 17 Bonds of, when acting in fiduciary capacities p. 24, sec. 11 (k) Brokers to procure real estate loans, may act as p. 30, sec. 13 Capital and surplus necessary to establish trust department p. 25, sec. 11 (k) ( ommittees of estates of lunatics, may act as p. 23, sec. 11 (k) Conversion of State banks into p. 15, sec. 8 Definition of term " National bank " p. 3, sec. 1 Deposits of securities with State authorities p. 24, sec. 11 (k) Deposits of trust funds p. 24, sec. 11 (k) Dissolution for noncompliance with Act p. 5, sec. 2 100 INDEX. National banks— Continued. Executor, may act as p. 23, sec. 11 (k) Failure to accept terms of act, penalty p. 5, sec. 2 Failure to become member bank, penalty p. 5, sec. 2 Federal Reserve Banks, subscription to stock of, method of pay- ment p. 4, sec 2 p. IS, sec. 5; p. 16, sec. 9 Fiduciary powers p. 23, ser. 11 (k) Foreign Banking Corporation, national banks may invest in stock of p. 56, sec. 25 (a) Foreign banking corporation, directors may act as directors in p. 51, sec. 25 Foreign branches. (See Foreign branches i p. 49, sec. 25 Funds held in trust p. 24, sec. 11 (k) Guardian, may act as p. 23, sec. 11 (k) Indebtedness limited: exceptions p. 29, sec. 13: p. 78 Insular possessions, national banks in, may remain nonmembers. . p. 44, sec. 19 Insurance agent or broker, may act as p. 30. sec. 13 Interlocking directorates p. 51, sec. 25: p. 64 Investment of, in foreign banking corporations p. 49, sec. 25 Lien to secure trusts p. 24. sec. 11 (k) Limitation on total indebtedness of p. 29, sec. 1 3 Loans of trust funds to officers, directors, or employees p. 24, sec. 11 (k) Loans on farm lands and real estate p. 48, sec. 24 Loans to one person, firm, corporation, etc p. 77 Oath as fiduciary p. 24, sec. 11 (k) Penalty for failing to accept terms of Act p. 5, sec. 2 Personal liability of stockholders . p. 48, sec. 23 Personal liability of directors for noncompliance with the Act p. 5, sec. 2 Receiver, may act as p. 23, sec. 11 (k) Redemption fund for note reserve, repealed p. 44, sec. 20 Reduction of capital stock p. 62, sec. 28 Registrar of stocks and bonds, may act as p. 23, sec. 11 (k) Segregation of assets 'when operating trust department p. 23, sec. 11 (k) Stockholders liability for debts of p. 48, sec. 23 Subscription to capital stock of Federal Reserve Banks, method of payment p. 4, sec. 2: p. 13, sec. 5: p. 16, sec. 9 Survival of remedies and penalties againsl p. 5, sec. 2 Time deposits, may receive and pay interest on p. 48, sec. 24 Transfer of shares before failure p. 48, sec. 23 Trust department p. 23, sec. II (k) National banking association, definition of term p. 3, sec. 1 Nonmember banks, limitations upon amount of deposits with p. 43, sec. 19 Nonmember banks, member bank shall not act as medium for in securing discounts p. 43, sec. 19 Notes. (See. Federal Reserve notes: Federal Reserve bank notes.) (). Open-market operations, general provisions concerning p. 31, sec. 14 Organization committee. (See Reserve Bank organization committee. | Organization of: Federal Reserve Banks p. 7, sec. 4 Federal Reserve Board pp. 19, 20, 21, sec. 10 Foreign Banking ( 'orporations p. 51, sec. 25 (aj INDEX. 101 P. Penalties and forfeitures: Certifying checks drawn against insufficient funds p. 19, sec. 9; p. 78 Deficient reserves of Federal Reserve Banks p. 22, sec. 1 1 (c) Discounts, procuring by bribery p. 46, sec Embezzlement from Federal Reserve Banks or member hanks. . . p. 7!) Examiners — Accepting loans or gratuities p. 46, sec. 22 (a) Disclosing confidential information p. 4G, sec. 22 (b) Foreign Banking Corporations. (See Foreign Banking Corpora- tion; Penalties and forfeitures.) Loans by trust department of national banks to officers, directors, etc., prohibited p. 24, sec. 11 (k) Paying out notes of one Federal Reserve Bank by another p. 34, sec. 16 State member bank reports, failure to make p. 16. sec. 9 Survival of remedies against dissolved corporations on account of. p. 5, sec. 2 Violations of Act p. 5, sec. 2 Pittman Act p. 72 Postal Savings Act, amendment to p. 66 Postal savings funds, deposit of p. 66 Powers of Federal Reserve Board. (See Federal Reserve Board, Powers of.) Powers of Foreign Banking Corporations pp. 52, 53, 54, sec. 25 (a) Private bankers, eligibility of, as directors of member banks and Foreign Banking Corporations p. 65 Progressive discount rates p. 31, sec. 14 Promissory notes of member banks, advances on p. 29, sec, 13 Public moneys: Deposit in Federal land banks and joint-stock land banks p. 67 Deposit in foreign countries p. 70 Reserves against pp. 68, 69 Public stock of Federal Reserve Banks p. 5, 6, sec. 2 Purposes of Foreign Banking Corporations p. 51, sec. 25 (a ) R. Railroad loans, advice and assistance of Federal Reserve Board as to . . . p. 83 Rates of discount and interest. (See Discount and interest rates.) Real estate loans: National banks may make p. 48, sec. 24 National banks may act as brokers to procure 30, sec. 13 Receivers of insolvent national banks, embezzlement, etc. , by p. 80 Redemption fund for Federal Reserve notes p. 35, sec. 16 Rediscounts (see also Discounts): Acceptances p. 28, sec. 13 Agricultural paper p. 27, sec. 13 Discounted paper of other Federal Reserve Banks p. 22, sec. 11 (b) Limitations on amount discounted for any one borrower p. 18, sec. 9; p. 25, see. II (in); p. 28, sec. 13 Paper secured by bonds of War Finance Corporation p. 70 Paper secured by Liberty bonds or certificates of indebtedness, p. 25, see. II m) Paper subject to pp. 27-28, sec. 13 Regulation by Federal Reserve Board p. 22, sec. 11 (b); p. 27, sec. 13 Suspension of limitations as to paper secured by Liberty bonds or certiticates of indebtedness p. 25, sec. II m) 102 INDEX. Refunding bonds p. 40, sec. 18 Remedies, survival against dissolved bank p. 5, sec. 2 Repayment of deposits upon withdrawal of State banks p. 18, sec. 9 Repeal, right to amend, alter, or repeal expressly reserved. p. 63, sec. 30 Reports by : Federal Reserve Board. (See Federal Reserve Board.) Foreign Banking Corporations p. 58, sec. 25 (a) State member banks pp. 16, 17, sec. 9 Reserves : Banks in Alaska, dependencies, or possessions p. 44, sec. 19 Deposit of public moneys pp. 68, 69 Federal Reserve Bank — Against deposits ^. pp. 34, 39, sec. 16 Against Federal Reserve notes pp. 34, 35, 39, sec. 16 Gold deposited as collateral for notes may be counted as part of p. 34, sec. 16: see p. 36, sec. 16 ( iold redemption fund may be counted as part of p. 35, sec. 16 Gold settlement fund may be counted as part of p. 39, sec. 16 Tax upon delinquencies p. 22, sec. 11 (c) Foreign Banking Corporations, reserves against deposits received in United States p. 53, sec. 25 (a) Member banks — Computation of balances p. 44, sec. 19 ! H'posits of public moneys p. 68, 69 Reserve requirements pp. 42, 43, sec. 19 Suspension of reserve requirements by Federal Reserve Board, p. 22. sec. 11 (c) Reserve bank, definition of term p. 3, sec. 1 Reserve Bank Organization Committee pp. 3, 4, 5, 6, sec. 2; pp. 7, 12, sec. 4 Reserve and central reserve cities: Classification by Federal Reserve Board p. 22, sec. 11 (e); p. 48, sec. 24 Previous status not changed p. 6. sec. 2 Revenue Act of 1918 p. 80 Revised Statutes, United States. (See Acts amended, etc. i Rules and regulations, Federal Reserve Board authorized to make concerning — Acceptances by member banks, limitations on aggregate amount of, may be partially waived p. 29, sec. 13 Agreements by State foreign banking corporations in which national banks hold stock p. 50, sec. 25 ( barges for collections p. 27, sec. 13; p. 38, sec. Hi ( lharacter of paper eligible under section 13 for rediscount p. 27, sec. 13 Dollar exchange: drafts drawn for the purpose of furnishing p. 30, sec. 13 Federal Reserve Banks — Discount and rediscount and purchase and sale of bills receiv- able, bills of exchange and acceptances p. 29, sec. 13 < • iterations of Branches of p. 7, sec. 3 Transfer of stock of P- 6, sec. 2 Federal reserve notes, gold, etc., deposited with Federal Reserve Agents and held jointly by such agents and Federal Reserve Bank .- p. 36, sec. 16 Foreign agencies of Federal Reserve Banks, other Federal Re- serve Banks may transact business through p. 32, sec. 14 Foreign accounts and agencies of Federal Reserve Banks p. 32, sec. 14 Foreign Banking ( lorporations, powers of p. 53, sec. 25 (a) INDEX. 103 Rules and regulations, Federal Reserve Board authorized to ma concerning — < 'ontinued . General authority to make I>. 23, see II (i) National banks, operation of foreign branches and purchase of stock in foreign banking corporal ions p. -I!), see. 25 Open-market operations — Purchase and sale of eligible paper l>. 31 . see. i-i Purchase of United States bonds and notes and municipal warrants p. 31, Bee. I I Reserve balances of member banks may be checked against and withdrawn p. 43. Substitution of collateral against Federal Reserve notes p. 36, see it, Transfer of funds between Federal Reserve Banks p. 38, see. it; S. Salaries of Board's employees, etc., shall be fixed in advance i>. 25, sec. li h Secretary of Treasury : Deposits with, by Federal Reserve Bank or Agent ]>. 38, see Hi Ex officio member of Federal Reserve Board p. 19, sec. 10 Gold reserve to be maintained by p. 61, sec. 26 Management of United States stock p. 6, Bee. 2 Shareholders, individual liability for debts of: Federal Reserve Banks p. 4, sec. 2 Foreign Banking Corporations. (See Foreign Banking Corpora- tion; Shareholders.) National banks p. 48, sec. 23 Silver coinage p. 72 Silver export p. 75 Stamp taxes p. 80 State banks : Annual report of member banks pp. 16, 17. see. 9 Application for stock in Federal Reserve Banks, method of pay- ment ]>. 13. sec. 5; p. 16, sec. i) Cancellation of stock in Federal Reserve Banks p. 17 sec. 9 Certification of checks against insufficient funds, illegality of. p. L9, sec. 9; p. 78 Conversion of into national banks p. 15, sec. 8 Eligibility for membership p. 16, sec. 9 Examination (see also Examinations) p. 17, sec. 9; p. 21, sec. II (a); p. 11. sec. 21 Examinations, not subject to requirements of section 2] p. L8, see. 9 Membership in Federal Reserve System — Conditions of membership pp. 16, 17. 18, sec. 9; p. 13 sec. 5 Forfeiture of membership p. 17. Bee. 9 Qualifications for pp. H>. 18, see. 9 Withdrawal from membership p. 17, see. 9 Reorganization of into national banks p. 15, sec. 8 Reports of condition of P- 16, see. 9 Retention of powers under State charters p. L8, sec. 9 State examinations may be accepted p. 17, see. 9; p. II. Bee. 23 Subject to provisions and penalties of Revised Statutes 5209, upon becoming members p- !, ». Bee. 9 Subject to reserve requirements on becoming members p. Hi. see. it ] 04 INDEX. State banks — Continued. Subject to sections of Federal Reserve Act applicable to member banks; but not subject to section 21 p. 18, sec. 9 Subscription to stock in Federal Reserve Banks p. 1 6, sec. 9 Withdrawal from membership, condition of p. 17, sec. 9 Stock: Federal Reserve Banks — Application by new members for stock of subsequent to or- ganization of system p. 13, sec. 5; p. 16, sec. 9 Calls on subscriptions p. 4, sec. 2 Cancellations, limitation on, in any one year p. 17, sec. 9 General provisions concerning p. 13, sec. 5 Increase and decrease of p. 13, sec. 5 Insolvency of member bank, cancellation of stock held by. . . p. 14, sec. 6 National banks must subscribe p. 4, sec. 2 New members, subscription to stock of required p. IS, sec. 5 Public stock — Limitations on holding ' p. 6, sec. 2 Subscription to p. 5, sec. 2 Reduction in p. 14, sec. 6 Shares owned by member banks not to be transferred p. 13, sec. 5 Subscription to — By national banks p. 4, sec. 2; p. 7, sec. 4 By public p. 5, sec. 2 By State banks p. 16, sec. 9 Payment on p. 4, sec. 2; p. 13, sec. 5; p. 16, sec. 9 Surrender of, upon reduction of capital or liquidation of mem- ber banks p. 13, sec. 5 Transfer of, restriction upon p. 6, sec. 2 United States stock p. 6, sec. 2 Voting power p. 6, sec. 2 Foreign Banking Corporations. (See Foreign Banking Corpora- tions; Capital stock; Stock.) Member banks — Increase p. 13, sec. 5 Reduction p. 13, sec. 5 National banks — Reduction p. 62, sec. 28 Transfer of, before failure p. 48, sec. 23 Stockholders. (See Shareholders.) Subtreasuries: Abolishment of, under Appropriation Act of 1920 p. 82 Certain functions transferred to Federal Reserve Banks p. 82 Suspension of officers and directors of Federal Reserve Banks p. 23, sec. 11 (f) Suspension of operations of Federal Reserve Banks p. 23, sec. 11 (h) Surplus fund: Federal Reserve Banks p. 14, sec. 7 Foreign Banking Corporations p. 58, sec. 25 (a) T. Tax, stamp p. 80 Tax upon delinquencies in reserve p. 22, sec. 1 1 (c) Taxation: federal Reserve Banks exempt from p. 15, sec. 7 Foreign Banking Corporations subject to p. 58, sec. 25 (a) INDEX. 105 Time deposits, delinition of p 12, sec. 19 Trade acceptances, rediscount of by Federal Reserve Banks p. 28, ee< L3 Trading with the Enemy A< i p. 75 Transportation Act of L920, advice and assistance of Federal Resi Board with respect to loans to railroads p. 83 Trust powers of national banks p, 23, sec. | | (k) Two per cent gold bonds exchangeable for one-j ear gold notes and j ear 3 per cent gold bonds p. II. sec. 18 U. United States bonds and notes: I-oans to member banks on security of p. 29, - Purchase of, by Federal Reserve Banks p. 31, sec. 14 (b) Rediscounts of paper secured by p. 27, sec. 13 United States stock p. 6, sec. 2 V. Validity of certified checks drawn against insufficient funds p. 78 W. War Finance < orporation: Bonds, purchase and discount by Federal Reserve Banks of obli- gations secured by p. 70 Deposits of funds with Federal Reserve Banks and member banks. p. 71 Fiscal agents. Federal Reserve Banks as, for p 71 War Finance Corporation Act p. 70 War-stamp taxes p. 80 o -9 c*2 UNIVERSITY OF CALIFORNIA LIBRARY Los Angeles This book is DUE on the last date stamped below. A' A 8 1983 ™ AUG14K 3S DlSCHARgE-HRl DEC 9 1982 M OEC 9 Form L9-1 1 6>»-e,"62 (D1237s8 ) Hi JUM 14 1989 3 1158 00789 6417 UC SOUTHERN REGIONAL LIBRARY FACILITY AA 001 108 647