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SFP 23 1920
NOTICE TO SUBSCRIBERS OF THE
FEDERAL RESERVE MANUAL
-
\
The Federal Reserve Act and Sections 5208 and 5209 of the Re-
vised Statutes were amended by an Act approved September 26, 1918.
- We are, therefore, enclosing herewith loose leaf pages showing the
various sections amended by this Act which should be inserted in their
proper positions in your binder and the old sheets destroyed.
In other words, destroy the following pages now in your Manual:
ii, iii, 5–6, 7–8, 15–16, 17–18, 19–20, 21–22, 25–26, 27–28, 29–30, 31–32.
And insert in lieu thereof pages bearing like numbers, enclosed
herewith.
Several new Regulations covering the above amendments will be
issued by the Federal Reserve Board and just as soon as available, we
- will furnish our subscribers with the necessary pages for the Federal
Reserve Manual. -
We have in preparation a book entitled “HAND BOOK OF THE
FEDERAL RESERVE ACT,” a copy of which will be sent you as soon
as published. The book will contain practically the same information
as your Manual, but the alphabetical indexes will be considerably
enlarged upon and new paragraph numbers given the Act. We feel sure
you will appreciate this bound volume to supplement your loose leaf
Manual. Should you desire additional copies for your officers' desks
or for distribution as an advertising medium with the imprint of your
institution on the front cover, advise us and we will be pleased to quote
you special prices, for acceptance before we go to press, as our edition
must necessarily be limited owing to conservation Qf paper.
PUBLISHED BY NATIONAL BANK NEWS
Cornelius Baker, Manager,
119 South 4th Street, Philadelphia.





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SECTION 5200 REVISED STATUTES
Section 5200 of the Revised Statutes of the United States, as
amended by Section 6 of an Act entitled “Supplement to the Second
Liberty Bond Act,” approved September 24, 1918, reads as follows:
“Sec. 5200. The total liabilities of 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 mem-
bers thereof, 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, however,
That (1) the discount of bills of exchange drawn in good faith against
actually existing values, (2) the discount of commercial or business
paper actually owned by the person, company, corporation, or firm,
negotiating the same, and (3) the purchase or discount of any note or
notes secured by not less than a like face amount of bonds of the United
States issued since April 24, 1917, or certificates of indebtedness of
the United States, shall not be considered as money borrowed within
the meaning of this section; but the total liabilities to any association,
of any person or of any company, corporation, or firm, upon any note
or notes purchased or discounted by such association and secured by
such bonds or certificates of indebtedness, shall not exceed (except to
the extent permitted by rules and regulations prescribed by the Comp-
troller of the Currency, with the approval of the Secretary of the
Treasury)* 10 per centum of such capital stock and surplus fund of
such association.”
* Under the date of October 9, 1918, the Comptroller of the Currency, with the approval of the
Secretary of the Treasury, prescribed the following regulations: -
“Until July 1, 1919, or until such later date as the Comptroller of the Currency, with the approval
of the Secretary of the Treasury, may prescribe, any national bank may purchase or discount, pursuant
to general or specific authority conferred upon the officers of the bank by its board of directors, the
note or notes of a person, firm, company or corporation, maturing in not more than six months from the
date of such purchase or discount, in an amount in excess of 10% of the aggregate amount of the cap-
ital stock, actually paid in and unimpaired, and the unimpaired surplus fund of such bank, provided,
any such note or notes shall be directly secured by at least 105% of bonds or certificates of indebted-
ness of the United States issued since April 24, 1917: that is to say, there must be pledged as security
for each $100 so loaned at least $105 face value of Liberty Bonds or Certificates of Indebtedness. The
amount which a national bank may thus lend upon Liberty Bonds and certificates of indebtedness
under Section 5200 R. S., as amended September 24, 1918, and pursuant to this regulation, is in addi-
tion to other loans which such national bank is permitted to make, whether or not such other loans be
secured in whole or in part by Liberty Bonds or Certificates of Indebtedness.”
DIFFICULTIES IN REDISCOUNTING
The following appeared in the November 1, 1918, issue of the Federal Reserve
Bulletin:
“This legislation was not referred to the Federal Reserve Board for its consid-
eration and apparently through oversight provision was not made permitting Fed-
eral Reserve Banks to rediscount for member banks their full lines of paper secured
by Government obligations. Federal Reserve Banks are consequently obliged to
limit their rediscounts for any national bank to an amount for any one name not
exceeding 10% of the borrowing bank's capital and surplus. This matter has been
the subject of discussion between the Board and various Federal Reserve Banks
and the attention of the Board has been called to a circular recently issued by the
secretary of the New York State Bankers Association in which the suggestion was
made that banks obtain the consent of their borrowers, through a clause inserted
in the body of the note, to pledge separately the collateral against such notes. This
would enable the member banks to use bonds upon which they had made loans as
security for their own 15-day notes with the Federal Reserve Banks. There are
evident objections to the plan for the reason that many individuals may be unwilling
to give such permission to the bank from which they borrow on their bonds. The
question of obtaining additional legislation intended to correct the oversight in the
act of September 24 has accordingly been considered and it is expected that some
provision covering this point will be made in the near future.

i
-
a one
FEDERAL RE SERVE MANUAL
-
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
CONTENTS
PAGE
Amendments to the Federal Reserve Act Outlined . . . . . . . . . . . . . . #
Index to Federal Reserve Act as Amended . . . . . . . . . . . . . . . . . . . . v-xii
Complete Text of Federal Reserve Act as Amended . . . . . . . . . . . . 1–36
Amendment Approved August 4, 1914. . . . . . . . . . . . . . . . . . . . . . 35
Amendment of August 15, 1914,
and March 3, 1915, no longer in effect
Amendment Approved September 7, 1916.......... 16b-22a, 33-34
Amendment Approved June 21, 1917
4, 8, 1 1-13, 17-19, 22–27, 28a–29, 32
Amendment Approved September 26, 1918, 6-7, 16-16b, 25,28b,31-32
Kern Amendment Approved May 15, 1916 . . . . . . . . . . . . . . . . . . . 36
Section 5200 Revised Statutes as Amended September 24, 1918. . i
Sections 5208 and 5209 Revised Statutes as Amended
September 26, 1918, 37-38
The regular type indicates the original teact of the
Federal Reserve Act. The Bold Face type indicates
the actual changes in the various amendments. The
complete teact of the sections amended has been re-
printed in the amendments approved, but we have
shown only the actual changes from the original act
in bold face, and eliminated entirely the portions
which are no longer in effect. In other words, the
Federal Reserve Act as herein printed is as it is
effective.—September 26, 1918.
Copyright 1918, by National Bank News, Philadelphia


AMENDMENTS TO THE FEDERAL RESERVE ACT.
Approved August 4, 1914, Affecting Paragraph
Sec. 87. Emergency Currency Act... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165
Approved August 15, 1914, Affecting
Sec. 19. Reserves. Superseded by amendment of June 21, 1917.
Approved March 3, 1915, Affecting
Sec. 18. Acceptances—Giving banks permission, by authority of
Federal Reserve Board, to accept up to 100% of capital and surplus.
Omitted in amendment of September 7, 1916, but amendment of
June 21, 1917, contained practically the same matter. . . . . . . . . . . . . . . 92
Approved September 7, 1916, Affecting
Sec. 11. Reserves....... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Sec. 18. Collections by Federal Reserve Banks. . . . . . . . . . . . . . . . . . . . . . 88
Discount operations........ . . . . . . . . . . . . . . . . . . . . . . . .89–90, 95
Acceptances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91–92
Advances on promissory notes..... . . . . . . . . . . . . . . . . . . . . . . . . 93
National Banks as agents or brokers. . . . . . . . . . . . . . . . . . . . . . . 96
Drafts or bills of exchange to furnish dollar exchange. . . . . . . . . 97
Sec. 14. Foreign Correspondents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
Sec. 16. Note Issues. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
Sec. 24. Loans on Farm Lands or Real Estate. . . . . . . . . . . . . . . . . . . . . 153
Sec. 25. Foreign Branches and international or foreign banking. .155–162
Approved June 21, 1917, Affecting
Sec. 8. Branch Federal Reserve Banks... . . . . . . . . . . . . . . . . . . . . . . . ..15
Sec. 4. Chairman and Federal Reserve Agent. . . . . . . . . . . . . . . . . . . 43–44
Sec. 9. Membership of State Banks and Trust Companies. . . . . . . . 54–64
Sec. 18. Character of deposits in Federal Reserve Banks, and permit-
ting collection charges for exchange. . . . . . . . . . . . . . . . . . . . . . 88
Acceptances—permission granted to accept up to 100% of
capital and surplus. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
Sec. 14. Foreign Agencies and Correspondents ... . . . . . . . . . . . . . . . . . . 103
Sec. 16. Federal Reserve Banks permitted to exchange Federal reserve
notes for gold and gold certificates. . . . . . . . . . 107–109, 111–113
Gold Settlement Fuud. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121–123
Sec. 17. Deposit of Government Bonds. . . . . . . . . . . . . . . . . . . . . . . . . . . . 124
Sec. 19. Reserve requirements of member banks. . . . . . . . . . . . . . . . 134–142
Sec. 22. Limitations as to fees and benefits to Directors, Officers and
Employees of member banks. . . . . . . . . . . . . . . . . . . . . . . . . . . 150
Approved September 26, 1918, Affecting
Sec. 4. Election of Class A and Class B Directors . . . . . . . . . . . . . . . 38–41
Sec. 11 (k). Trust Company Powers for National Banks granted by
special permit from Federal Reserve Board . . . . . . . . . . . . . . . 83
Sec. 16. Denominations of Federal Reserve Notes. . . . . . . . . . . . . . . . . . 114
Sec. 19. Reserve Requirements of reserve and central reserve city
banks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137–138
Sec. 22. Penalties for loans or gratuities to bank examiners. . . . . . . . . . 149
Bank examiners not to perform other services for compensa-
tion and penalties for disclosing confidential information... 149
Limitations as to fees and benefits to officers, directors, em-
ployees or attorneys of member banks. . . . . . . . . . . . . . . . . . . 150
Directors or officers of member banks individually respon-
sible - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 151

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.
18 The said organization certificate shall be acknowledged before a
judge of some court of record or notary public; and shall be, together
with the acknowledgment thereof, authenticated by the Seal of such
court, or notary, transmitted to the Comptroller of the Currency, who
shall file, record and carefully preserve the same in his office.
Upon the filing of such certificate with the
19 Corporate powers. 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—
20 Corporate seal. First. To adopt and use a corporate seal.
Second. To have succession for a period
21. Twenty-year franchise. 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.
22 Contracts. Third. To make contracts.
Fourth. To sue and be sued, complain and
23 Court jurisdiction. defend, in any court of law or equity.
Fifth. To appoint by its board of directors
24 Appointment of officers such officers and employees as are not
and employees. 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 officers or employees.
Sixth. To prescribe by its board of directors, by-laws
25 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,
26 Incidental powers. or duly authorized officers or agents, all pow-
ers specifically granted by the provisions of this Act and such incidental
powers as shall be necessary to carry on the business of banking within
the limitations prescribed by this Act.
Eighth. Upon deposit with the Treas-
27 Federal bank circulation urer of the United States of any bonds
on government bonds. of the United States in the manner pro-
vided 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 con-
ditions 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 privilege, except that the issue of such notes shall not be
limited to the capital stock of such Federal reserve bank.

- But no Federal reserve bank shall trans-
28 Approval of Comptroller act any business except such as is inci-
to commence business. dental and necessarily preliminary to
its organization until it has been authorized by the Comptroller of the
Currency to commence business under the provisions of this Act.


r 5
Every Federal reserve bank shall be con-
29 Board of directors. ducted under the supervision and control of a
- board of directors.
The board of directors shall perform the duties usually appertaining
to the office of directors of banking associations and all such duties as are
prescribed by law.
Said board shall administer the affairs of said bank
30 Duties. 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 accommoda-
tions 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
31 Consist of 9 members hereinafter specified and shall consist of
divided into 3 classes. 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
32 A Directors. chosen by and be representative of the stock-hold-
ing banks.
Class B shall consist of three members, who at the
33 B Directors. 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
34 C Directors designated who shall be designated by the Federal
by Federal Reserve Board. Reserve Board. When the necessary sub-
scriptions 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 chair
man of the board to be selected. Pending the designation of such chair"
man, the organization committee shall exercise the powers and dutieſ
appertaining to the office of chairman in the organization of such Fedº
eral reserve bank. . . "
No Senator or Representative in
35 Ineligibility of Senators and Congress shall be a member of the
Congressmen for employment. Federal Reserve Board or an officer
or a director of a Federal reserve bank.
No director of class B shall be an officer,
36 Limitations of directors. director, or employee of any bank.
37 No director of class C shall be an officer, director, employee, or
stockholder of any bank.
38 Election of Class A and Directors of Class A and Class B shall
Class B directors. be chosen in the following manner: . .
39 The Federal Reserve Board shall classify the member banks of
the district into three general groups or divisions, designating each
group by number. Each group shall consist as nearly as may be of
banks of similar capitalization. Each member bank shall be per-
mitted 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 candi-
dates so nominated shall be listed by the chairman, indicating
by whom nominated, and a copy of said list shall, within fifteen
NoTE—Bold face type indicates changes and additions in amendment of September 26, 1918.
%

6
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 member
bank in the elections of Class A and Class B directors. -
Within fifteen days after receipt of the list
40 Eligibility of officers of candidates the duly authorized offi-
or directors of member cer of a member bank shall certify to the
banks. 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 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.
41 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
42 How declared in the column of first choice shall be declared
elected. 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 to-
gether 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 together in like manner, and the
candidate then having the highest number of votes shall be declared
elected. An immediate report of election shall be declared.
Class C directors shall be appointed
43 Chairman and “Federal re- by the Federal Reserve Board.
serve agent,” also deputy chair- They shall have been for at least
man. Appointment, qualifica- two years residents of the district
tions and duties. for which they are appointed, one
of whom shall be designated by said board as chairman of the board of
directors of the Federal reserve bank and as “Federal reserve agent.”
He shall be a person of tested banking experience, and in addition to his
duties as chairman of the board of directors of the Federal reserve bank
he shall be required to maintain, under regulations to be established by
the Federal Reserve Board, a local office of said board on the premises
of the Federal Reserve Bank. He shall make regular reports to the
Federal Reserve Board and shall act as its official representative for the
performance of the functions conferred upon it by this Act. 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
NoTE—Bold face type indicates changes and additions in amendment of September 26, 1918.

7
of the chairman of the board when necessary. In case of the ab-
sence of the chairman and deputy chairman, the third-class C
director shall preside at meetings of the board.
Subject to the approval of the Federal
44 Assistants to Federal Reserve Board, the Federal reserve
reserve agent. . agent shall appoint one or more as-
sistants. Such assistants, who shall be persons of tested banking
experience, shall assist the Federal reserve agent in the per-
formance 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 re-
ceive an annual compensation, to be fixed and paid in the same
manner as that of the Federal reserve agent.
Directors of Federal reserve banks
45 Compensation of directors, shall receive, in addition to any com-
officers and employees. pensation otherwise provided, a rea-
sonable 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
directors of Federal reserve banks for directors, officers or employees
shall be subject to the approval of the Federal Reserve Board.
The Reserve Bank Organization Commit-
46 Call meetings of bank tee may, in organizing Federal reserve
directors for organization banks, call such meetings of bank directors
purposes. 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
47 Tenure of office of directors. of directors of each Federal reserve
Filling of vacancies. bank, it shall be the duty of the
directors of classes A, B, and C, respectively, to designate one of the mem-
bers of each class whose term of office shall expire in one year from the
first of January nearest to date of such meeting, one whose term of office
‘shall expire at the end of two years from said date, and one whose term of
office shall expire at the end of three years from said date. Thereafter
every director of a Federal reserve bank chosen as hereinbefore pro-
vided shall hold office for a term of three years. Vacancies that may
occur in the several classes of directors of Federal reserve banks may be
filled in the manner provided for the original selection of such directors,
such appointees to hold office for the unexpired terms of their prede-
CeSSOTS.


STOCK ISSUES; INCREASE AND DECREASE OF CAPITAL
Sec. 5. The capital stock of each
48 Reserve bank stock. Shares, Federal reserve bank shall be di-
$100 each. Stock increased as vided into shares of $100 each. The
member banks increase or grow, outstanding capital stock shall be
and vice versa. Shares owned by increased from time to time as
member banks shall not be trans- member banks increase their capital
ferred or hypothecated. stock and surplus or as additional
banks become members, and may be de-
creased as member banks reduce their capital
Norr–Bold face type indicates matter added in amendment approved June 21, 1917. -
8
y
Section three hundred and twenty-four of
72 Jurisdiction of Comp- the Revised Statutes of the United States
troller of the Currency. shall be amended so as to read as follows:
There shall be in the Department of the Treasury a bureau charged with
the execution of all laws passed by Congress relating to the issue and
regulation of national currency secured by United States bonds and,
under the general supervision of the Federal Reserve Board,of all Federal
Reserve notes, the chief officer of which bureau shall be called the
Comptroller of the Currency and shall perform his duties under the
general directions of the Secretary of the Treasury.
Sec. 11. The Federal Reserve Board shall
73 Reserve Board shall be authorized and empowered:
examine reserve banks; (a) To examine at its discretion the ac-
make weekly reports of counts, books and affairs of each Federal
their condition. reserve bank and of each member bank and
to require such statements and reports as it may deem necessary. The
said board shall publish once each week a statement showing the con-
dition 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
74 Permit or require least five members of the Reserve Board to
rediscounts between re- require Federal reserve banks to rediscount
serve banks. 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 exceed-
75 Suspend reserve require- ing thirty days, and from time to time
ments for not over 30 days to renew such suspension for periods
and renewals of 15 days. not exceeding fifteen days, any reserve
Provided a graduated tax is requirements specified in this Act: Pro-
established upon amounts be- vided, That it shall establish a grad-
low specified level. uated 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
76 Supervise and regulate bureau under the charge of the Comp-
issue of reserve notes. troller of the Currency the issue and re-

15
tirement of Federal reserve notes, and to prescribe rules and regulations
under which such notes may be delivered by the Comptroller to the
Federal reserve agents applying therefor.
(e) To add to the number of cities classified
77 Add to, reclassify or as reserve and central reserve cities under
terminate reserve and cen- existing law in which national banking asso-
tral reserve cities. ciations are subject to the reserve require-
ments set forth in section twenty" of this Act; or to reclassify existing
reserve and central reserve cities or to terminate their designation as
such.
(f) To suspend or remove any officer or di-
78 Suspend or remove rector of any Federal reserve bank, the cause
officers or directors of of such removal to be forthwith communi-
reserve banks. cated in writing by the Federal Reserve Board
to the removed officer or director and to said bank.
(g) To require the writing off of doubtful or
79 Worthless assets worthless assets upon the books and balance
to be written off. sheets of Federal reserve banks.
(h) To suspend, for the violation of any
80 Suspend, administer or of the provisions of this Act, the opera-
liquidate any reserve bank. tions of any Federal reserve bank, to take
possession thereof, administer the same during the period of suspension,
and, when deemed advisable, to liquidate or reorganize such bank.
(i) To require bonds of Federal reserve
81 Make regulations— agents, to make regulations for the safe-
Require bonds. guarding 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 ser-
vices specified in this Act, and make all rules and regulations necessary
to enable said board effectively to perform the same.
82 General supervision (j) To exercise general supervision over said
over reserve banks. Federal reserve banks.
(#) To grant by special permit to nation-
83 Trust company powers al banks applying therefor, when not in
granted national banks ap- contravention of State or local law, the
plying therefor. 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 fidu-
ciary capacity in which State banks, trust companies, or other
corporations which come into competition with national banks,
are permitted to act under the laws of the State in which the
national bank is located.
1 This reference to Sec. 20 is an error in the Act. Reference should be Sec. 19.
NoTE—Bold face type indicates matter added in amendment approved September 26, 1918.
16
-
- Whenever the laws of such State
Contravention of State or authorize or permit the exercise of
local law defined. any or all of the foregoing powers by
State banks, trust companies, or other corporations which com-
pete with national banks, the granting to and the exercise of such
powers by national banks shall not be deemed to be in contra-
vention of State or local law within the meaning of this Act.
National banks exercising any or all
Assets held in fiduciary of the powers enumerated in this sub-
capacity to be segregated and section shall segregate all assets held
separate books and records in any fiduciary capacity from the
kept. general assets of the bank and shall
keep a separate set of books and records showing in proper detail
all transactions engaged in under 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 cor-
porations organized under State law which exercise fiduciary
powers, 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
Trust dept. not to receive funds its trust department deposits of
subject to check or items for col- current funds subject to check or
lection or exchange purposes. the deposit of checks, drafts, bills
of exchange, or other items for
collection 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 con-
duct 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
Lien on securities. owners of the funds held in trust for in-
vestment shall have a lien 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
Deposit of securities with corporations acting in a fiduciary
State authorities. 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 de-
posits 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
Bonds. 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.
NoTE–Bold face type indicates matter added in amendment approved September 26, 1918.
16A
In any case in which the laws of a State
Oaths or affidavits require that 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
Penalties for loaning banking association to lend any officer,
funds. 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 be fined not more than $5,000, or imprisoned not
more than five years, or may be both fined and imprisoned, in
the discretion of the court.

In passing upon applications for per-
Qualifications of banks to mission to exercise the powers enum-
exercise trust powers. erated 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 circumstances 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 corporations
exercising such powers.


(l) To employ such attorneys, experts,
84 Employ attorneys, experts assistants, clerks, or other employees
and assistants. as may be deemed necessary to con-
duct 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 hun-
dred 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
85 Permit member banks to not less than five of its members
carry in reserve banks reserves the Federal Reserve Board shall
required to be held in own have power, from time to time, by
vaults. general ruling, covering all dis-
tricts alike, to permit member banks to carry in the Federal
reserve banks of their respective districts any portion of their
reserves now required by section nineteen of this Act to be held
in their own vaults.
NoTE—Bold face type indicates amendments approved September 7, 1916, and September 26, 1918.
Paragraph 85 was added by amendment of September 7, 1916.
16B
|
FEDERAL ADVISORY COUNCIL.
86 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 procedure, and a majority of its members shall constitute a quorum
for the transaction of business. Vacancies in the council shall be filled
by the respective reserve banks, and members selected to fill vacancies,
shall serve for the unexpired term.
The Federal Advisory Council shall have power,
87 Powers of Ad- by itself or through its officers, (1) to confer di-
visory Council. rectly with the Federal Reserve Board on general
business conditions; (2) to make oral or written representations con-
cerning 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 dis-
tricts, 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.
Sec. 13. Any Federal reserve bank may
88 Character of deposits, receive from any of its member banks,
or for purposes of collec- and from the United States, deposits of
tion or exchange. Collec- current funds in lawful money, national-
tion charges permitted. bank notes, Federal reserve notes, or
checks, and drafts, payable upon presentation, and also, for collection,
maturing [notes and] bills; or, solely for purposes of exchange
or of 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 bills
payable within its districtſ; or, solely for the purposes of ex-
change or of collection, may receive from any nonmember 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: Pro-
vided, 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
NoTE–Bold face type indicates amendments approved September 7, 1916, and June 21, 1917. Matter
in brackets was added by amendment approved June 21, 1917. \

17
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 de-
termined 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 there-
for by exchange or otherwise; but no such charges shall be made
against the Federal reserve banks.] -
. Upon the indorsement of any of its member
89 May discount notes banks, which shall be deemed a waiver of
of member banks arising demand, notice and protest by such bank
out of actual commercial as to its own indorsement exclusively,
transactions. Six months’ any Federal reserve bank may discount
agricultural paper provi- notes, drafts, and bills of exchange arising
£ions. out of actual commercial transactions; that
is, notes, drafts, and bills of exchange issued or drawn for agricultural,
industrial, or commercial purposes, or the proceeds of which have been
used, or are to be used, for such purposes, the Federal Reserve Board
to have the right to determine or define the character of the paper thus
eligible for discount, within the meaning of this Act. Nothing in this
Act contained shall be construed to prohibit such notes, drafts, and bills
of exchange, secured by staple agricultural products, or other goods,
wares, or merchandise from being eligible for such discount; but such
definition shall not include notes, drafts, or bills covering merely in-
vestments or issued or drawn for the purpose of carrying or trading in
stocks, bonds, or other investment securities, except bonds and notes
of the Government of the United States. Notes, drafts, and bills ad-
mitted to discount under the terms of this paragraph must have a
maturity at the time of discount of not more than ninety days, exclu-
sive 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
90 Limit of notes of one bills bearing the signature or indorsement of
borrower rediscounted. any one borrower, whether a person,
company, firm, or corporation, rediscounted for any one bank shall at no
time exceed ten per centum of the unimpaired capital and surplus of
said bank; but this restriction shall not apply to the discount of bills of
exchange drawn in good faith against actually existing values.
Any Federal reserve bank may dis-
91 May discount acceptancer. count 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.
NoTE—Bold face type indicates amendments approved September 7, 1916, and June 21, 1917. Matter
in brackets was added by amendment approved June 21, 1917.
18
,
Any member bank may accept drafts
'92 Member bank may accept or bills of exchange drawn upon it
drafts and bills of exchange having not more than six months’
growing out of importation or sight to run, exclusive of days of
exportation transaction, or do- grace, which grow out of transac-
mestic shipments properly re- tions involving the importation or
cured. exportation of goods; or which
grow out of transactions involving the domestic shipment of
goods provided shipping documents conveying or securing title
are attached at the time of acceptance; or which are secured at
the time of acceptance by a warehouse receipt or other such doc-
ument 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 cap-
ital stock and surplus, unless the bank is secured either by at-
tached 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,
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 ac-
ceptances 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
93 Advances on promissory advances to its member banks on
notes properly secured. their promissory notes for a period
not exceeding fifteen days at rates to be established by such Fed-
eral 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.
NoTE—Bold face type indicates amendments of September 7, 1916, and June 21, 1917. Matter in
brackets added by amendment of June 21, 1917, which is practically the same as amendment of March 3,
1915, but omitted September 7, 1916.
19
Section fifty-two hundred and two of the Re-
94 Limitation of in- vised Statutes of the United States is hereby
debtedness of national amended so as to read as follows: No national
banks. banking association shall at any time be in-
debted, 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 association for divi-
dends 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.
The discount and rediscount and the
95 Operations subject to purchase and sale by any Federal reserve
restrictions of Board. bank of any bills receivable and of do-
mestic and foreign bills of exchange, and of acceptances authorized by
this Act, shall be subject to such restrictions, limitations, and regula-
tions as may be imposed by the Federal Reserve Board.
That in addition to the powers now
96 National banking asso- vested by law in national banking
ciation where population does associations organized under the
not exceed 5,000 may act as laws of the United States any such
agent or broker. association located and doing busi-
ness 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 pre-
NoTE—Bold face type indicates changes and additions in amendment of September 7, 1916.
id * As amended by the War Finance Corporation Act approved, April 5, 1918, which Act also pro-
W1CIeS:

“SEc. 13. That the Federal reserve banks shall be authorized, subject to the maturity limita-
tions of the Federal reserve Act and to regulations of the Federal Reserve Board, to discount the direct
obligations of member banks secured by such bonds of the Corporation and to rediscount 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 prevailing rates
for eligible commercial paper of corresponding maturity.
Any Federal reserve bank may, with the approval of the Federal Reserve Board, use any obliga-
tion 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: Provided, however, 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, in 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 inconsistent herewith, in respect to the acquisi-
tion 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 Federal reserve notes issued against the security of such obligations or paper.”
20
scribed 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 busi-
ness in said State, by soliciting and selling insurance and collect-
ing 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 principal 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 statement made by an assured in filing his application for
insurance.
Any member bank may accept.
97 Member banks may ac- drafts or bills of exchange drawn,
cept drafts or bills of exchange upon it having not more than three
to furnish dollar exchange. 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 dependencies 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 in
this paragraph for any one bank to an amount exceeding in the
aggregate ten per centum of the paid-up and unimpaired cap-
ital and surplus of the accepting bank unless the draft or bill of
exchange is accompanied by documents conveying or securing
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.
NoTE–Bold face type indicates changes and additions in amendment of September 7, 1916.
*Banks and bankers in the following countries have been authorized by the Federal Reserve
Board to draw drafts for the purpose of furnishing dollar exchange: Argentina, Bolivia, Brazil, Chile,
Colombia, Costa Rica, Ecuador, Nicaragua, Peru, Porto Rico, Santo Domingo, Uruguay, Venezuela
and Trinidad.

21
OPEN-MARKET OPERATIONS.
Sec. 14. Any Federal reserve bank
98 Reserve bank may pur- may, under rules and regulations pre-
chase and fell in open market. Scribed by the Federal Reserve Board,
purchase and sell in the open market, at home or abroad, either from or
to domestic or foreign banks, firms, corporations, or individuals, cable
transfers and bankers' acceptances and bills of exchange of the kinds
and maturities by this Act made eligible for rediscount, with or without
the indorsement of a member bank.
Every Federal reserve bank shall have
99 Powers of reserve power: -
banks—Deal in gold
- (a) To deal in gold coin and bullion at
CO171, etc.
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 hypothecation of United
States bonds or other securities which Federal reserve banks are author-
ized to hold; -
(b) To buy and sell, at home or abroad,
100 Deal in government bonds and notes of the United States, and
or municipal bonds. bills, notes, revenue bonds, and warrants
with a maturity from date of purchase of not exceeding six months,
issued in anticipation of the collection of taxes or in anticipation of the
receipt of assured revenues by any State, county, district, political sub-
division, or municipality in the continental United States, including
irrigation, drainage and reclamation districts, such purchases to be made
in accordance with rules and regulations prescribed by the Federal
Reserve Board; -
- (c) To purchase from member banks and to
101 Buy and fell bills sell, with or without its indorsement, bills of
of exchange. exchange arising out of commercial transac-
tions, as hereinbefore defined;

(d) To establish from time to time, subject to
102 Establish rates review and determination of the Federal Reserve
of discount. Board, rates of discount to be charged by the
Federal reserve bank for each class of paper, which shall be fixed with a
view of accommodating commerce and business;
(e) To establish accounts with other Fed-
103 Open accounts with eral reserve banks for exchange purposes
each other and in foreign and, with the consent [or upon the order
countries. and direction] of the Federal Reserve
Board [and under regulations to be prescribed by said board,
to open and maintain accounts in foreign countries, appoint corres-
pondents, 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 indorsement,
through such correspondents or agencies, bills of exchange (or accept-
ances) arising out of actual commercial transactions which have not
NotE—Bold face type indicates amendments approved September 7, 1916, and June 21, 1917. Matter
in brackets was added by amendment approved June 21, 1917.
22
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 correspondents 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.
104. Sec. 15. The moneys held in the general fund of the Treasury,
except the five per centum fund for the redemption of outstanding
national-bank notes and the funds provided in this Act for the redemp-
tion of Federal reserve notes may, upon the direction of the Secretary of
the Treasury, be deposited in Federal reserve banks, which banks, when
required by the Secretary of the Treasury, shall act as fiscal agents of
the United States;" and the revenues of the Government or any part
thereof may be deposited in such banks, and disbursements may be
made by checks drawn against such deposits.
No public funds of the Philippine
105 Government funds not to be Islands, or of the postal savings, or
deposited with nonmember banks. any Government funds, shall be de-
posited in the continental United States in any bank not belonging to
the system established by this Act:* Provided, however, That nothing in
this Act shall be construed to deny the right of the Secretary of the
Treasury to use member banks as depositories.
NoTE—Bold face type indicates amendments approved September 7, 1916, and June 21, 1917. Matter
in brackets was added by amendment approved June 21, 1917.
1 Section 15 of the War Finance Corporation Act provides that all net earnings of the Corpora-
tion not required for its operations shall be accumulated as a reserve fund which, upon direction of
the board of directors, with approval of the Secretary of the Treasury, may be deposited in member
banks of the Federal Reserve System, or in any of the Federal reserve banks. The Federal Reserve
banks are authorized to act as depositaries for and as fiscal agents of the Corporation in the general
performance of the powers conferred by this title.
* The First Liberty Bond Act and the Second Liberty Bond Act as amended authorize the Sec-
retary to deposit proceeds of sale of bonds, certificates of indebtedness and war-savings certificates
and arising from the payment of income and excess profits or war profits taxes, in non-member banks
under certain circumstances.
22A
NOTE ISSUES.*

Sec. 16. Federal reserve notes, to be
106. Board to isſue. Federal issued at the discretion of the Federal
reſerve notes to reserve banks. Reserve Board for the purpose of
making advances to Federal reserve banks through the Federal reserve
agents as hereinafter set forth and for no other purpose, are hereby
authorized. The said notes shall be obligations of the United States
and shall be receivable by all national and member banks and Federal
reserve banks and for all taxes, customs, and other public dues. They
shall be redeemed in gold on demand at the Treasury Department of
the United States, in the city of Washington, District of Columbia, or
in gold or lawful money at any Federal reserve bank.
Any Federal reserve bank may make applica-
107 Reserve banks to tion to the local Federal reserve agent for such
receive notes upon fil- amount of the Federal reserve notes herein-
ing proper security. before provided for as it may require. Such ap-
plication shall be accompanied with a tender to the local Federal reserve
agent of collateral in amount equal to the sum of the Federal reserve
notes thus applied for and issued pursuant to such application. The
collateral security thus offered shall be notes, 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 provisions of said section fourteen, [or gold or gold
certificates; 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.] The Federal reserve
agent shall each day notify the Federal Reserve Board of all issues and
withdrawals of Federal reserve notes to and by the Federal reserve bank
to which he is accredited. The said Federal Reserve Board may at any
time call upon a Federal reserve bank for additional security to protect
the Federal reserve notes issued to it.

Note—Beld face, type indicates amendments approved September 7, 1916, and June 21, 1917. Matter
in brackets was added by amendment approved June 21, 1917.
* The Silver Act, approved April 23, 1918, provides:
“SEC. 5. That in order to prevent contraction of the currency, the Federal reserve banks may be
either permitted or required by the Federal Reserve Board, at the request of the Secretary of the Treas-
ury, 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 de-
posit 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 indebted-
ness 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 certificates of indebted-
ness 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 the Treasury
shall pay off and cancel any United States certificates 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 notes, after deducting the amount of the tax
upon such Federal reserve bank notes so secured.”
22B

--
contained, however, shall be construed to prohibit 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 Treasurer of the United States for the purposes
authorized by law.
In order to furnish suitable notes for
114 Printing and denomina- circulation as Federal reserve notes,
tions of 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 num-
bered such quantities of such notes of the denominations of $5, $10,
$20, $50, $100 ($500, $1,000, $5,000, $10,000) as may be required to
supply the Federal reserve banks. Such notes shall be in form and
tenor as directed by the Secretary of the Treasury under the provisions
of this Act and shall bear the distinctive numbers of the several Federal
reserve banks through which they are issued.

When such notes have been prepared, they shall
115 Custody of un- be deposited in the Treasury, or in the sub-
issued notes. 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
116 Comptroller to have cus- the Comptroller of the Currency for
tody of dies and plates. the printing of such circulating notes
shall remain under his control and direction, and the expenses necessarily
incurred in executing the laws relating to the procuring of such notes,
and all other expenses incidental to their issue and retirement, shall
be paid by the Federal reserve banks, and the Federal Reserve Board
shall include in its estimate of expenses levied against the Federal re-
º banks a sufficient amount to cover the expenses herein provided
OT.
117 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
118 Existing appropriations out of the general funds of the Treas-
for note printing made avail- ury for engraving plates and dies, the
able. purchase of distinctive paper, or to
cover any other expense in connection with the printing of national-
bank notes or notes provided for by the Act of May thirtieth, nineteen
hundred and eight, and any distinctive paper that may be on hand at
the time of the passage of this Act may be used in the discretion of the
Secretary for the purposes of this Act, and should the appropriations
heretofore made be insufficient to meet the requirements of this Act in
addition to circulating notes provided for by existing law, the Secretary

NotE—Bold face type indicates matter added in amendments approved June 21, 1917, and September
26, 1918. Matter in brackets added by amendment approved September 26, 1918.

25
is hereby authorized to use so much of any funds in the Treasury not
otherwise appropriated for the purpose of furnishing the notes aforesaid:
Provided, however, That nothing in this section contained shall be con-
strued 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 de-
119 Clearing house posit at par from member banks or from Federal
functions. reserve banks checks and drafts drawn upon any
of its depositors, and when remitted by a Federal reserve bank, checks
and drafts drawn by any depositor in any other Federal reserve bank or
member bank upon funds to the credit of said depositor in said reserve
bank or member bank. Nothing herein contained shall be construed as
prohibiting a member bank from charging its actual expense incurred in
collecting and remitting funds, or for exchange sold to its patrons. The
Federal Reserve Board shall, by rule, fix the charges to be collected by
the member banks from its patrons whose checks are cleared through the
Federal reserve bank and the charge which may be imposed for the
service of clearing or collection rendered by the Federal reserve bank.
The Federal Reserve Board shall make
120 Transfer of funds, etc. and promulgate from time to time regu-
lations governing the transfer of funds and charges therefor among
Federal reserve banks and their branches, and may at its discretion
exercise the functions of a clearing house for such Federal reserve
banks, or may designate a Federal reserve bank to exercise such func-
tions, 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
121 Secretary of Treas- hereby authorized and directed to re-
wry authorized to receive ceive deposits of gold coin or of gold
deposits of gold coin or certificates with the Treasurer or any
gold certificates. 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. The Secretary 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 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 subtreasuries 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

NoTE—Bold face type indicates matter added in amendment approved June 21, 1917. .
26
º
y
the Federal reserve banks. The order used by the Federal Re-
serve 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
122 Expenses of gold set- carrying out these provisions, includ-
tlement fund. ing the cost of the certificates or re-
ceipts issued for deposits received, and all expenses incident to
the handling of such deposits shall be paid by the Federal Re-
serve Board and included in its assessments against the several
Federal reserve banks.
- Gold deposits standing to the credit
123 Gold deposits counted of any Federal reserve bank with the
as lawful reserve. 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 outstanding Federal
reserve notes, or as a part of the reserve it is required to main-
tain against deposits.
Nothing in this section shall be construed as amending
section six of the act of March fourteenth, nineteen hundred,
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 certificates issued under those acts.
Sec. 17. So much of the provisions of
124 Repeal of bond require- section fifty-one hundred and fifty-nine
ments of national banks. of the Revised Statutes of the United
States, and section four of the Act of June twentieth, eighteen hundred
and seventy-four, and section eight of the Act of July twelfth, eighteen
hundred and eighty-two, and of any other provisions of existing statutes
as require that before any national banking association shall be author-
ized to commence banking business it shall transfer and deliver to the
Treasurer of the United States a stated amount of United States reg--
istered bonds, and so much of those provisions or of any other
provisions of existing statutes as require any national banking;
association now or hereafter organized to maintain a minimum,
deposit of such bonds with the Treasurer is hereby repealed.
* REFUNDING BONDS.
Sec. 18. After two years from the pas-
125 Retirement of national sage of this Act, and at any time during a
bank circulation. period of twenty years thereafter, any
member bank desiring to retire the whole or any part of its circulating
notes, may file with the Treasurer of the United States an application to
sell for its account, at par and accrued interest, United States bonds
securing circulation to be retired.
The Treasurer shall, at the end of each
126 Reserve Board may quarterly period, furnish the Federal Re-
require reserve banks to serve Board with a list of such applications,
NoTE—Bold face type indicates matter added in amendment approved June 21, 1917.

27

purchase bonds. and the Federal Reserve Board may, in its
discretion, require the 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 $25,000,000 of such bonds in any one year, and which
amount shall include bonds acquired under section four of this Act by
the Federal reserve bank.
Provided further, That the Federal Reserve
127 Bond; allotted Board shall allot to each Federal reserve bank
to reserve banks. such proportion of such bonds as the capital
and surplus of such bank shall bear to the aggregate capital and surplus
of all the Federal reserve banks.
Upon notice from the Treasurer of the amount
128 Transfer of bonds of bonds so sold for its account, each member
to reserve banks. bank shall duly assign and transfer, in writing,
such bonds to the Federal reserve bank purchasing the same, and such
Federal reserve bank shall, thereupon, deposit lawful money with the
Treasurer of the United States for the purchase price of such bonds, and
the Treasurer shall pay to the member bank selling such bonds any
balance due after deducting a sufficient sum to redeem its outstanding
notes secured by such bonds, which notes shall be canceled and per-
manently retired when redeemed.

129 The Federal reserve banks purchasing such bonds shall be per-
mitted to take out an amount of circulating notes equal to the par value
of such bonds.
Upon the deposit with the Treasurer of
130 Circulating notes issued the United States of bonds so pur-
equal to par value of bonds de- chased, or any bonds with the circulat-
posited. ing privilege acquired under section
four of this Act, any Federal reserve bank making such deposit in the
manner provided by existing law, shall be entitled to receive from the
Comptroller of the Currency circulating notes in blank, registered and
countersigned as provided by law, equal in amount to the par value of
the bonds so deposited. Such notes shall be the obligations of the
Federal reserve bank procuring the same, and shall be in form prescribed
by the Secretary of the 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
131 Two per cent. gold bonds reserve bank, approved by the Fed-
exchanged for one-year gold eral Reserve Board, the Secretary of
notes and 30-year 3 per cent. the Treasury may issue, in exchange
gold bonds. for United States two per centum
gold bonds bearing the circulation privilege, but against which no circu-
lation is outstanding, one-year gold notes of the United States without
the circulation privilege, to an amount not to exceed one-half of the

28
two per centum bonds so tendered for exchange, and thirty-year three
per centum gold bonds without the circulation privilege for the re-
mainder 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 exchange for such bonds, if so requested by the Secretary, and at
each maturity of one-year notes so purchased by such Federal reserve
bank, to purchase from the United States such an amount of one-year
notes as the Secretary may tender to such bank, not to exceed the
amount issued to such bank in the first instance, in exchange for the
two per centum United States gold bonds; said obligation to purchase
at maturity such notes shall continue in force for a period not to exceed
thirty years.
-- For the purpose of making the exchange
132 Treasury notes and herein provided for, the Secretary of the
U. S. gold bonds author- Treasury is authorized to issue at par
ized. 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 pro-
vided by this Act, as well as from taxes in any form by or under State,
municipal, or local authorities. And for the same purpose, the
Secretary is authorized and empowered to issue United States gold
bonds at par, bearing three per centum interest, payable thirty years
from date of issue, such bonds to be of the same general tenor and effect
and to be issued under the same general terms and conditions as the
United States three per centum bonds without the circulation privilege
now issued and outstanding.
- Upon application of any Federal reserve bank, ap-
133 Secretary to proved by the Federal Reserve Board, the Secre-
make exchange. tary may issue at par such three per centum bonds
in exchange for the one-year gold notes herein provided for.
BANK RESERVES.
Sec. 19. Demand deposits within the mean-
134 Demand and time ing of this Act shall comprise all deposits
deposits defined. payable within thirty days, and time de-
posits shall comprise all deposits payable after thirty days, all savings
accounts and certificates of deposit which are subject to not less than
thirty days' notice before payment, and all postal savings deposits."

Note—Bold face type indicates matter added in amendment approved June 21, 1917.
1 Government deposits other than postal savings deposits not subject to reserve requirements
Sec. 7, Act approved April 24, 1917.
28A
Every bank, banking association, or
135 Reserve requirements trust company which is or which be-
of member banks. comes a member of any Federal re-
serve bank shall establish and maintain reserve balances with
its Federal reserve bank as follows:
(a) If not in a reserve or central reserve city,
136 Country banks. as now or hereafter defined, it shall hold
and maintain with the Federal reserve bank of its district an
actual net balance equal to not less than seven per centum of
the aggregate amount of its demand deposits and three per
centum of its time deposits.
(b) If in a reserve city, as now or here-
137 Reserve city banks. after defined, it shall hold and main-
tain with the Federal reserve bank of its district an actual net
balance equal to not less than ten per centum of the aggregate
amount of its demand deposits and three per centum of its time
deposits: [Provided, however, That if located in the outlying dis-
tricts of a reserve city or in territory added to such a city by the
extension of its corporate charter, it may, upon the affirmative
vote of five members of the Federal Reserve Board, hold and
maintain the reserve balancess pecified in paragraph (a) hereof.]*
(c) If in a central reserve city, as
138 Central reserve city banks. now or hereafter defined, it shall
hold and maintain with the Federal reserve bank of its district
an actual net balance equal to not less than thirteen per centum
of the aggregate amount of its demand deposits and three per
centum of its time deposits: [Provided, however, That if located
in the outlying districts of a central reserve city or in territory
added to such city by the extension of its corporate charter, it
may, upon the affirmative vote of five members of the Federal
Reserve Board, hold and maintain the reserve balances speci-
fied in paragraphs (a) or (b) hereof.]* -
NoTE—Bold face type indicates amendment approved June 21, 1917, and September 26, 1918. Matter
in brackets was added by amendment approved September 26, 1918.
*Acting in accordance with these provisions of the law, the Board has voted that it will not attempt to
define such outlying sections in cities in districts other than Boston and New York, but that it will give
consideration to individual applications received from such banks as may feel entitled to a change of reserve
requirements, pursuant to the terms of the new law, such applications to show location of bank, capital,
surplus and profits, and deposits, the latter divided as follows: Individual deposits and collection account
of local banks and trust companies, and deposits of out of town banks; applications when completed to be
submitted through and accompanied by recommendation of the Federal Reserve agent. It has further been
voted that Federal Reserve agents be authorized to submit direct to the Federal Reserve Board general appli-
cations in behalf of all such banks in their respective districts without awaiting individual action of banks
concerned. -
The Federal Reserve Bank of New York on October 30, 1918, sent the following letter to member banks
in reserve and central reserve cities in District No. 2:
The Federal Reserve Board, pursuant to the provisions of section 19 of the Federal Reserve Act, as
amended by the act of September 26, 1918, has approved a recommendation with respect to outlying districts
of central reserve and reserve cities in this district and the reserves to be carried by banks located therein, as
follows:
Albany, N. Y., and Buffalo, N. Y. No change to be made in the status of Albany and Buffalo as
reserve cities, and all member banks located therein will be subject to the reserve requirements of paragraph
“b” of section 19, namely, 10% of aggregate demand deposits and 3% of time deposits.
New York City. Member banks located in the borough of Manhattan or located in other boroughs and
having branch offices in Manhattan will be subject to the reserve requirement of paragraph “c” of section 19,
namely, 13% of aggregate demand deposits and 3% of time deposits.
Member banks located in the boroughs of Brooklyn and Brona will be subject to the reserve requirements:
of paragraph “b” of section 19, namely, 10% of aggregate demand deposits and 3% of time deposits.
Member banks located in the boroughs of Richmond and Queens will be subject to the reserve requirements
of paragraph “a” of section 19, namely, 7% of aggregate demand deposits and 3% of time deposits.
28B
No member bank shall keep on deposit with
139 Deposits with non- any State bank or trust company which
member banks. is not a member bank a sum in excess of
ten per centum of its own paid-up capital and surplus. No member
bank shall act as the medium or agent of a nonmember bank in applying
for or receiving discounts from a Federal reserve bank under the pro-
visions of this Act, except by permission of the Federal Reserve 3 ,
The required balance carried by a mem-
140 Balances in reserve ber bank with a Federal reserve bank may,
banks may be checked under the regulations and subject to such
against. penalties as may be prescribed by the Fed-
eral Reserve Board, be checked against and withdrawn by such member
bank for the purpose of meeting existing liabilities: Provided, however,
That no bank shall at any time make new loans or shall pay any divi-
dends unless and until the total balance required by law is fully restored.
In estimating the balances required by this
141 How to estimate Act, the net difference of amounts due to and
balances. from other banks shall be taken as the basis
for ascertaining the deposits against which required balances with
Federal reserve banks shall be determined.
National banks, or banks organized
142 Banks outside continental under local laws, located in Alaska
United States. or in a dependency or insular
possession or any part of the United States outside the continental
United States may remain nonmember banks, and shall in that event
maintain reserves and comply with all the conditions now provided by
law regulating them; or said banks may, with the consent of the Re-
serve Board, become member banks of any one of the reserve districts,
and shall in that event take stock, maintain reserves, and be subject to
all the other provisions of this Act.
Sec. 20. So much of sections two
143 Five per cent. redemption and three of the Act of June twentieth,
fund no longer reserve. eighteen hundred and seventy-four,
entitled “An Act fixing the amount of United States notes, providing
for a redistribution of the national-bank currency, and for other pur-
poses,” as provides that the fund deposited by any national banking
association with the Treasurer of the United States for the redemption
of its notes shall be counted as a part of its lawful reserve as provided
in the Act aforesaid, is hereby repealed. And from and after the pas-
sage of this Act such fund of five per centum shall in no case be counted
by any national banking association as a part of its lawful reserve.
BANK EXAMINATIONS.
144 Sec. 21. Section fifty-two hundred and forty, United States Re-
vised Statutes, is amended to read as follows:
The Comptroller of the Currency, with the
Examiners to examine approval of the Secretary of the Treasury,
every member at least shall appoint examiners who shall examine
NoTE—Bold face type indicates matter added in amendment approved June 21, 1917.
29

twice a year. every member bank' at least twice in each
Examinations by State calendar year and oftener if considered neces-
authorities may be ac- sary: Provided, however, That the Federal
cepted. Reserve Board may authorize examination by
the State authorities to be accepted in the case
of State banks and trust companies and may at any time direct the
holding of a special examination of State banks or trust companies that
are stockholders in any Federal reserve bank. The examiner making
the examination of any national bank, or of any other member bank,
shall have power to make a thorough examination of all the affairs of
the bank and in doing so he shall have power to administer oaths and
to examine any of the officers and agents thereof under oath and shall
make a full and detailed report of the condition of said bank to the Comp-
troller of the Currency.
The Federal Reserve Board, upon the rec-
145 Salaries to be paid ommendation of the Comptroller of the
examiners and expenses Currency, shall fix the salaries of all bank
assessed upon banks examiners and make report thereof to
examined. Congress. The expense of the examina-
tions herein provided for shall be assessed by the Comptroller of
the Currency upon the banks examined in proportion to assets or re-
sources held by the banks upon the dates of examination of the various
banks. e
In addition to the examinations made and
146 Reserve banks may conducted by the Comptroller of the Cur-
make special examina- rency, every Federal reserve bank may,
tions of its member banks. with the approval of the Federal reserve
agent or the Federal Reserve Board, provide for special examination
of member banks within its district. The expense of such examinations
shall be borne by the bank examined. Such examinations shall be so
conducted as to inform the Federal reserve bank of the condition of its
member banks and of the lines of credit which are being extended by
them. Every Federal reserve bank shall at all times furnish to the
Federal Reserve Board such information as may be demanded concern-
ing the condition of any member bank within the district of the said
Federal reserve bank.
No bank shall be subject to any visitatorial
147 Visitatorial powers. powers other than such as are authorized by
law, or vested in the courts of justice or such as shall be or shall have
been exercised or directed by Congress, or by either House thereof or by
any committee of Congress or of either House duly authorized.

The Federal Reserve Board shall, at
148 Examination of reserve least once each year, order an examina-
banks at least once a year. tion of each Federal reserve bank, and
upon joint application of ten member banks the Federal Reserve Board
shall order a special examination and report of the condition of any
Federal reserve bank.
63 1 Except banks admitted to membership in the system under authority of Section 9, see paragraph
30

- - - - - (a) No member bank, and no officer,
149 Penalties for loans or director, or employee thereof shall here:
gratuities to bank examiners.after make any loan or grant any gratuity.
to any bank examiner. Any bank officer,
director, or employee violating this provision shall be deemed guilty
of a misdemeanor and shall be imprisoned not exceeding one year or
fined not more than $5,000, 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.
Penalties for bank from any bank examined by him or from an
examiners. officer, director, or employee thereof shall be
deemed guilty of a misdemeanor 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 there-
after be disqualified from holding office as a national bank examiner.
(b) No national bank examiner shall,
Examiners to perform no perform any other service for compensa-
other services for compensa- tion while holding such office for any
tion. bank or officer, director, or employee
thereof.
No examiner, public or private, shall dis-
Penalties for disclosing close the names of borrowers or the col-
names of borrowers or col- lateral for loans of a member bank to
lateral for loans. 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 author-
ized. Any bank examiner violating the provisions of this subsection
shall be imprisoned not more than one year or fined not more than
$5,000, or both.
(c) Except as herein provided, any
150 Penalties for receiving officer, director, employee, or attor-
certain fees, commissions, ney of a member bank who stipu-
gifts, etc. lates 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 purchase 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.
(d) Any member bank may contract
Limitations under which for, or purchase from, any of its di-
bank may transact in securi- rectors or from any firm of which
ties or other property with any of its directors is a member, any
directors of firm of which a securities or other property, when
member. (and not otherwise) such purchase is
made in the regular course of business upon terms not less fav-
orable 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
Note—Bold face type indicates changes and additions in amendment of September 26, 1918.


31
authority to be evidenced by the affirmative vote or written as-
sent of such directors: Provided, however, That when any direc-
tor, 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 pre-
scribed by it, of all commissions or other considerations received,
and whenever such director or firm, acting in his or its own be-
half, 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
Sales of securities or other property to any of its directors, or
other property. 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 authorized by a majority of the board of di-
rectors of a member bank to be evidenced by their affirmative
vote or written assent: Provided, however, That nothing in this
subsection 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 di-
Interest allowed rector, officer, attorney, or employee a
officers, etc. 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
151 Directors or officers of member bank shall knowingly vio-
banks individually respon- late or permit any of the agents, offi-
sible. cers, 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 dam-
ages which the member bank, its shareholders, or any other
persons shall have sustained in consequence of such violation.
Sec. 23. The stockholders of every
152 Responsibility of stock- national banking association shall be
holders of national banks. 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 bank-
ing association who shall have transferred their shares or registered the
transfer thereof within sixty days next before the date of the failure of
such association to meet its obligations, or with knowledge of such
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.
Notc.—Bold face type indicates changes and additions in amendment of September 26, 1918.
32
2.
M
REVISED STATUTES.
Amended by Act Approved September 26, 1918.
- SEC. 5208. It shall be unlawful for any
Penalties for falsely cer— officer, director, agent, or employee of
tifying checks. any Federal reserve bank, or of any mem-
ber bank as defined in the Act of December twenty-third, nineteen hun-
dred and thirteen, known as the Federal reserve Act, to certify any
check drawn upon such Federal reserve bank or member bank unless the
person, firm, or corporation drawing the check has on deposit with
such Federal reserve bank or member bank, 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 bank; but the act of any officer,
director, agent, or employee of any such Federal reserve bank or member
bank in violation of this section shall, in the discretion of the Federal
Reserve Board, subject such Federal reserve bank to the penalties
imposed by section 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 fifty-two hundred and thirty-four, Revised Statutes, and
shall, in the discretion of the Federal Reserve 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 employee of any Federal reserve bank or mem-
ber bank who shall willfully violate the provisions of this section, or
who shall resort to any device, or receive any fictitious obligation, di-
rectly 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.

37
i
|
SEC. 5209. Any officer, director,
Penalties for embezzlement, agent, or employee of any Federal
abstraction or willful misappli- reserve bank, or of any member bank
cation of funds, etc. 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 certificate 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 of such Federal
reserve bank or member bank, with intent in any case to injure or de-
fraud such Federal reserve bank or member bank, or any 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 Comp-
troller 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, pur-
loins, or willfully misapplies 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 misdemeanor, 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 misdemeanor and upon con-
viction in any district court of the United States shall be fined not more
than $5,000 or imprisoned for not more than five years, or both, in the
discretion of the court.
;
!
i
*
/
*

38
º II. I. º' -—-
32, 2 . Jºy
F27 7 so
* | Federal Reserve Manual
Published by National Bank News
co R N E L I Us BAKER, Manager . .
119 South Fourth St., Philadelphia - tº:
-
Subscription, $7.50 per annum Renewal, $3.00
(Loose-leaf Binder and Service) (Service)
CONTENTS
º `--
Page
Index to Regulations of Federal Reserve Board. . . . . . One
Alphabetical Index to Regulations. . . . . . . . . . . . Two—Six
Regulations with Analysis. . . . . . . . . . . . . . . . Seven—Thirty
Amendments to the Federal Reserve Act Outlined. . . . . iii
Alphabetical Index to Federal Reserve Act
as Amended. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . v–xii
complete Text of Federal Reserve Act as
Amended
Copyright, 1917, by Cornelius Baker
7-17

\ KEEP IN FRONT OF MANUAL

}
REGULATIONS
ISSUED BY THE
FEDERAL
RESERVE BOARD
June 22, 1917
COMPLETE TEXT
ANALYSIS AND INDEX
Rediscounts under section 13,
Regulation A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Open market purchases of bills of exchange, trade
acceptances, and bankers' acceptances under sec- .
tion 14,
Regulation B. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acceptance by member banks of drafts drawn to
furnish dollar exchange,
Regulation C. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Time deposits and savings accounts,
Regulation D. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchase of warrants (see also Appendix, p. thirty),
Regulation. E . . . . . . . . . . . . . . . . .* - - - - - - - - - - - - - -
Trust powers of national banks,
Regulation F. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loans on farm land and other real estate,
Regulation G. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Membership of State banks and trust companies,
Regulation H. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Increase or decrease of capital stock of Federal
Reserve Banks,
Regulation I. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Check clearing and collection,
Regulation J. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Twenty-five
... Twenty-six
Copyright, 1917, by National Bank News, Philadelphia.
Alphabetical Index of Regulations Issued by
the Federal Reserve Board
Acceptance Page
Bankers'. . . . . . . . . . . . . . . . . . . . . . 10–13
By member banks. . . . . . . . . . . . . 14–15
Definition of... . . . . . . . . . . . . . . . 10, 13
Discount of... . . . . . . . . . . . . . . . . 10–11
Domestic... . . . . . . . . . . . . . . . . . . 10–13
Drafts or bills of exchange drawn
against shipments. . . . . . . . . . . . . . . 1
Drawn by . . . . . . . . . . . . . . . . . . . . 10–15
Eligible for purchase. . . . . . . . . . . 12–13
Eligible for rediscount. . . . . . . . . . 10–11
Foreign. . . . . . . . . . . . . . . . . . . . . . . 10–14
Maturity of... . . . . . . . . . . . . . . . . 10, 13
Of drafts drawn to furnish dollar
exchange. . . . . . . . . . . . . . . . . . . . . . 15
Open-market purchases. . . . . . . . . 11–13
Purchase of... . . . . . . . . . . . . . . . . 11–13
Secured by.... . . . . . . . . . . . . . . . . 10–13
Trade... . . . . . . . . . . . . . . . . . . . 9, 11–12
Accounts
Checks in process of collection. .27–29
Open. . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Resulting from transactions. . . ... 10, 13
Savings. . . . . . . . . . . . . . . . . . . . . . . . . . 16
Stock, of banks........ . . . . . . . . . . . 25
Administrator
Banks may act as....... . . . . . . . . . . 19
Agent
Reserve Bank acts as......... . . . . . 29
Agreement
With acceptor...... . . . . . . . . . . . . . . 13
Agricultural Paper
Eligible for rediscount. . . . . . . . . . . . . 9
Maturity of...... . . . . . . . . . . . . . . . . 9
Application
File, for decrease of capital stock or
surplus. . . . . . . . . . . . . . . . . . . . . . . . 25
For membership by State bank or
trust company. . . . . . . . . . . . . . . . . . 23
For rediscount......... . . . . . . . . . . . 8
For special permit as executor and
trustee. . . . . . . . . . . . . . . . . . . . . . . . 19
For surrender and cancellation of
stock. . . . . . . . . . . . . . . . . . . . . . . . . .
Provisions of, for rediscount. . . . . . . 8
To accept drafts drawn to furnish
dollar exchange. . . . . . . . . . . . . . . . . 15
To accept drafts or bills against ship-
ments. . . . . . . . . . . . . . . . . . . . . . . . . 14
Bankers’ Acceptance Page
Definition of... . . . . . . . . . . . . . . . 10, 13
Discount of... . . . . . . . . . . . . . . . . 10–11
Documents attached to...... . . . 10–13
Domestic..... . . . . . . . . . . . . . 10–11, 13
Drawn under credit. . . . . . . . . . . . . . . 10
Eligible for purchase. . . . . . . . . . . . . . 13
Eligible for rediscount.... . . . . . . 10–11
Evidence of eligibility. . . . . . . . . . 11, 13
Foreign. . . . . . . . . . . . . . . . . . . . . . . 10–13
Indorsed by..... . . . . . . . . . . . . . . 10–13
Maturity of......... . . . . . . . . . . 10, 13
Open-market purchases......... 12–13
Secured by..... . . . . . . . . . . . . . . . 10–13
Statutory provisions. . . . . . . . . . . 10–11
Banks
Check clearing and collection... .26–29
Make real estate loans.......... 20–22
Membership of State . . . . . . . . . . 22–25
Restrictions of... . . . . . . . . . . . . . . . . . 20
Separate departments. . . . . . . . . . . . . 19
Separate ledgers. . . . . . . . . . * * * * * * * * * 19
Special permit....... . . . . . . . . . . . . . 19
Trust powers of... . . . . . . . . . . . . 19–20
Bill of Exchange (See Notes, Drafts,
Trade Acceptances)
Conditions of purchase. . . . . . . . . 11–12
Definition of . . . . . . . . . . . . . . . . . . . 9, 12
Drawn against shipments of goods, 14
Drawn to furnish dollar exchange
, 14–15
Eligible for purchase........... 11–13
Eligible for rediscount............. 7
Evidence of eligibility... . . . . . . . . 9, 13
Not eligible. . . . . . . . . . . . . . . . . . . . . . 8
Offered for rediscount... . . . . . . . . . . 7
Open-market purchases......... 11–12
Provisions of acceptance........ 14–15
Statutory requirements....7, 11, 14–15
Bonds
Of municipalities. . . . . . . . . . . . . . 17–18
Books and Bookkeeping
Check clearing and collection... .27–29
Regarding stock accounts.......... 25
Trust department of banks......... 19
Borrower
Statement of.............. . . . . . . . . 8
Capital
Accept drafts to percentage of...14–15
Forms of certificates. . . . . . . . . . . 25–26
TWO

Capital, Cont. Page
Increase or decrease of . . . . . . . . . . . . 25
Loans based on..... . . . . . . . . . . . . . . 21
Of State banks. . . . . . . . . . . . . . . . . . . 23
Rediscount to percentage of . . . . . . 7, 9
Warrants purchased to percentage
1
Certificate
Affixed by acceptor. . . . . . . . . . . . 11, 13
Decrease of stock. . . . . . . . . . . . . . . . . 25
Increase of stock......... . . . . . . . . . 25
Of approval to State banks. . . . . . . . 23
Of deposit. . . . . . . . . . . . . . . . . . . . . . . 16
Of eligibility for rediscount... . . . . . . 8
Time. . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Checks
Clearing and collection of . . . . . . . 26–29
Cost of collection of... . . . . . . . . . . . . 29
Credit entry made of... . . . . . . . . . . .27
Drawn on. . . . . . . . . . . . . . . . . . . . . . . . 27
In process of collection. . . . . . . . . . . . 28
Schedule of time required to collect, 29
Check Clearing and Collection
For nonmember banks. . . . . . . . . . 26–29
Clearing House
Federal Reserve Bank as . . . . . . 26–29
Commodity Paper
Demand Page
Deposits. . . . . . . . . . . . . . . . . . . . . . . . . 16
Waiver of... . . . . . . . . . . . . . . . . . . . . . . 19
Deposits
Certificate of... . . . . . . . . . . . . . . . . . . 16
Demand. . . . . . . . . . . . . . . . . . . . . . . . . 16
Time, and savings accounts. . . . . . . . 16
Warrants purchased to percentage
- - - - - - - - - - - - - - - - - - - - - - - - - -
Discount (See Rediscount)
Documents
To be attached to Acceptances..13–15
To be attached to Bankers’ Accept-
anceS. . . . . . . . . . . . . . . . . . . 10–11, 13
To be attached to commodity paper, 10
Dollar Exchange
Acceptance of drafts drawn to fur-
nish. . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Acquire drafts drawn to furnish. . . .11
Banks or bankers who can draw to
furnish. . . . . . . . . . . . . . . . . . . . . . . . 15
Drafts or bills of exchange drawn to
furnish. . . . . . . . . . . . . . . . . . . . . 13, 15
Drafts (See Notes and Bill of Exchange)
Acceptance of... . . . . . . . . . . . . . . . . . 15
Definition of . . . . . . . . . . . . . . . . . . . . . 9
Definition of . . . . . . . . . . . . . . . . . . ... , 9 Drawn against shipments of goods. .14
Eligible for rediscount at special Drawn to furnish dollar exchange 11, 15
rates. . . . . . . . . . . . . . . . . . . . . . . . . 10 Eligible for rediscount. . . . . . . . . . . . 7–9
Rediscount of... . . . . . . . :... . . . . . . . }} | Not eligible............ . . . . . . . . . 8
Suspension of commodity rate, 10 Provisions of maturity. . . . . . . . . . . . . 7
Credit Files Statutory provisions. . . . . . . . . . . . . . 7
Of member banks relating to bor-
TOWeſ.S. . . . . . . . . . . . . . . . . . . . . . . . . 8 || Examinations
Of State banks. . . . . . . . . . . . . . . . . . . 24
Decrease Of trust departments of banks...... 20
Of capital stock. . . . . . . . . . . . . . . . . . 25
Definition of Examiners
Banker's acceptance. . . . . . . . . . . . 10, 13 Appointed by... . . . . . . . . . . . . . . . . . 20
Bill of Exchange...... . . . . . . . . . . 9, 12 Duties of... . . . . . . . . . . . . . . . . . . . . . 20
Check. . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Of State banks. . . . . . . . . . . . . . . . . . . 24
Commodity Paper. . . . . . . . . . . . . . . . 9
Demand deposits. . . . . . . . . . . . . . . . . 16 || Executor
Draft. . . . . . . . . . . . . . . . . . . . . . . . . . . 3. Application to act as... . . . . . . . . . . . 19
Existence. . . . . . . . . . . . . . . . . . . . . . 7. 12 Restrictions of... . . . . . . . . . . . . . . . . . 19
Goods. . . . . . . . . . . . . . . . . . . . . . . y Statutory provisions. . . . . . . . . . . . . . 19
Municipality. . . . . . . . . . . . . . . . . . . . . 17
Net funded indebtedness. . . . . . . . . . . 30 -
Non-default. . . . . . . . . . . . . . . . . . . . . . 30 | Existence
Promissory Note. . . . . . . . . . . . . . . . . . 8 Definition of... . . . . . . . . . . . . . . . . . . 30
Savings àº; ulturai Paper... . . 1;
Six Months’ Agricultural Paper. . . . .
Time certificate of deposit. . . . . . . . . 16 Farm Land -
Time deposits, open accounts... . . . .16 Eligible as security. . . . . . . . . . . . . . . . 21
Trade Acceptance. . . . . . . . . . . . . . . 9, 12 Loans on. . . . . . . . . . . . . . . . . . . 20–22
º Warrant. . . . . . . . . . . . . . . . . . . . . . . . . 17 Where situated. . . . . . . . . . . . . . . . 20–21
Three

-
File Page
Application by liquidating agent... .26
Application by receiver. . . . . . . . . ... .25
Application for decrease of capital
stock. . . . . . . . . . . . . . . . . . . . . . . . . . 25
Application of State bank for mem-
bership. . . . . . . . . . . . . . . . . . . . . . . . 23
Certificate of reduction of Federal
Reserve Bank stock... . . . . . . . . . . 26
Financial Statement
Acceptor shall furnish. . . . . . . . . . 12–13
Must be on file..... . . . . . . . . . . . . . . 8
Waived if..... . . . . . . . . . . . . 8–9, 12, 13
Goods
Definition of... . . . . . . . . . . . . . . . . 7, 12
Secured by pledge of... . . . . . . . . . 8, 12
Shipments of... . . . . . . . . . . . . 10–11, 13
Storage of... . . . . . . . . . . . . . . . . . . . . 13
Increase
Of Capital stock. . . . . . . . . . . . . . . . . . 25
Indorsement
For rediscount. . . . . . . . . . . . . . . . . . . . 7
Of Bankers’ acceptances . . . . . . . . 10, 13
Of Trade acceptances. . . . . . . . . . . . . 12
Insolvency
Of member banks. . . . . . . . . . . . . . . . . 25
Lands
Loans on farm..... . . . . . . . . . . . . 20–22
Liquidation
Of member banks...... . . . . . . . . . . . 26
Live Stock
Bills based on.... . . . . . . . . . . . . . . . . 9
Loans
Eligible security for. . . . . . . . . . . . . . . 21
Rimitations on. . . . . . . . . . . . . . . . 20–22
Maturity of....................20–22
Maximum amount of... . . . . . . . . . . . . 21
Not to be made when reserves. . . . . 28
On farm lands. . . . . . . . . . . . . . . . . 20–22
On real estate. . . . . . . . . . . . . . . . . . 20–22
Purchase or discount of... . . . . . . . . . 22
Restrictions on. . . . . . . . . . . . . . . . . . . 21
Statement attached. . . . . . . . . . . . . . . 22
Statutory requirements. . . . . . . . . 20–21
Membership
Of State banks. . . . . . . . . . . . . . . . 23–25
Qualifications for. . . . . . . . . . . . . . . . . 23
Mortgage
Farm loans. . . . . . . . . . . . . . . . . . . . . . 21
Municipality
Definition of... . . . . . . . . . . . . . . . . . . 17
Net funded indebtedness... . . . . . . . . 30
Warrants of... . . . . . . . . . . . . . . . . 17–19
Net Funded Indebtedness
Definition of... . . . . . . . . . . . . . . . . . . 30
Non-Default
Definition of... . . . . . . . . . . . . . . . . . . 30
Nonmember Banks
Check clearing and collection... .26–29
Notes
Application for rediscount of . . . . . . . 8
Eligible for rediscount. . . . . . . . . . . . . 7
Maturity of... . . . . . . . . . . . . . . . . . . . 7
Proceeds used for... . . . . . . . . . . . . . . . 7
Promissory. . . . . . . . . . . . . . . . . . . . . . . 8
Rediscount of... . . . . . . . . . . . . . . . . 7–8
Statutory provisions - - - - - - - - - - - - - - 7
Notice
Withdrawal time deposits and sav-
ings accounts....... . . . . . . . . . . . . 16
Open-Market Purchases
Bankers’ Acceptances. . . . . . . . . . . . . 13
Bills of Exchange eligible. . . . . . . 11–12
Character of paper eligible. . . . . . 11–12
Statutory provisions. . . . . . . . . . . . . . 11
Trade acceptances eligible . . . . . . . . . 12
Paper
Commodity. . . . . . . . . . . . . . . . . . . . 9–10
Six Months’ Agricultural. . . . . . . . . . 9
Penalty
For not maintaining reserves. . . . . . . 28
Postal savings deposits
Included in demand deposits. . . . . . . . 16
Powers
Of State banks and trust companies, 24
Promissory Notes
Definition of . . . . . . . . . . . . . . . . . . . . . 8
Eligible for rediscount. . . . . . . . . . . . 7–8
Rediscount of... . . . . . . . . . . . . . . . . . 8
Statement of borrower. . . . . . . . . . . . 8–9
Purchase of Warrants
Regulations for... . . . . . . . . . . . . . 17–19
Restriction of . . . . . . . . . . . . . . . . . 17–19
Statutory requirements. . . . . . . . . . . . 17
Rate #
Suspension of commodity. . . . . . . . . . 10
Real Estate
Eligible as security.... . . . . . . . . . 21–22
Loans on. . . . . . . . . . . . . . . . . . . . . 20–22
Loans to have statement attached, 22
New loans on. . . . . . . . . . . . . . . . . . . . 22
Where located..... . . . . . . . . . . . . 20–21
Receiver -
For insolvent member banks... . . . .25

Rediscount Page
Application for. . . . . . . . . . . . . . . . . . . . 8
Bankers’ Acceptances. . . . . . . . . . 10–11
Bills of Exchange. . . . . . . . . . . . . . . . . 9
Commodity Paper. . . . . . . . . . . . . 9–10
Drafts. . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Evidence of eligibility for . . . . . . 8, 9, 11
Notes. . . . . . . . . . . . . . . . . . . . . . . . . . -
Paper eligible for. . . . . . . . . . . . . . . . . 7
Promissory notes. . . . . . . . . . . . . . . . 8–9
Six Months’ Agricultural Paper. . . . . 9
Trade Acceptances. . . . . . . . . . . . . . . . 9
Under Section 13. . . . . . . . . . . . . . 7–11
Registrar
Banks as, of stocks and bonds... 19–20
Restrictions of....... . . . . . . . . . . . . . 20
Regulations
Acceptance by member banks...14–15
Acceptance of drafts or bills against 14
shipments. . . . . . . . . . . . .
Bankers’ Acceptances. . . . . . . . . . 10–13
Bills of Exchange. . . . . . . . . . . . 9, 11–12
Check Clearing and Collection, 26–29
Commodity Paper. . . . . . . . . . . . . 9–10
Decrease of Capital Stock. . . . . . . 25–26
Dollar Exchange. . . . . . . . . . . . . . . . . . 15
Drafts drawn to furnish dollar ex-
change. . . . . . . . . . . . . . . . . . . . . . . . 15
Farm Loans. . . . . . . . . . . . . . . . . . . 20–22
Increase of Capital Stock. . . . . . . . . . 25
Loans on Farm Land and other
Real Estate..... . . . . . . . . . . . . 20–22
Membership of State banks. . . . . 22–25
National Banks as executors and
trustees. . . . . . . . . . . . . . . . . . . . . 19–20
Notes, Drafts and Bills of Ex-
change. . . . . . . . . . . . . . . . . . . . . . . 7–9
Open-Market Purchases. . . . . . . . 11–13
Promissory Notes. . . . . . . . . . . . . . . . 8–9
Purchase of Warrants. . . . . . . . . . 17–19
Real Estate Loans. . . . . . . . . . . . . 20–22
Rediscounts under Section 13 . . . . 7–11
Six Months’ Agricultural Paper... . . . 9
Time Deposits and Savings Ac-
counts. . . . . . . . . . . . . . . . . . . . . . . . . 16
Trade Acceptances. . . . . . . . . . . . . . 9, 12
Trust Companies eligible for mem-
bership . . . . . . . . . . . . . . . . . . . . 22–25
Trust Powers of National Banks, 19–20
Reports
Of State Banks and trust companies, 25
Reserves
Can be checked against. . . . . . . . . . . . 28
Items in process of collection not
counted as... . . . . . . . . . . . . . . . . . . . . 28
Penalty for not maintaining.. . . . . . .28
Requirements as to. . . . . . . . . . . . . . . 28
Restrictions
Of Banks as executors and trus-
tees. . . . . . . . . . . . . . . . . . . . . . . . -
Restrictions, Cont. Page
Of State banks and trust com-
panies. . . . . . . . . . . . . . . . . . . . . . . . . 24
Purchase of Warrants... . . . . . . . 17–19
Revocation
Of permit to act as fiduciary. . . . . . . 20
Savings Accounts
Definition of . . . . . . . . . . . . . . . . . . . . . 16
Statutory requirements. . . . . . . . . . . . 16
Schedule
Of time required to collect checks.. .29
Shipping Documents
Attached to Commodity Paper. . .9–10
Securing title. . . . . . . . . . . . . . . . . . 12–13
To be attached. . . . . . . . . . . . . . . . 10–11
Shipments
Drafts or bills of exchange drawn
against. . . . . . . . . . . . . . . . . . . . . . . . 14
Six Months’ Agricultural Paper
Definition of . . . . . . . . . . . . . . . . . . . . . 9
Rediscount of . . . . . . . . . . . . . . . . . . . . 9
State Banks
Application for membership. . . . . . . . 23
Capital required by . . . . . . . . . . . . . . . 23
Eligible for membership. . . . . . . . 22–23
Examination of . . . . . . . . . . . . . . . . . . . 24
Powers and restrictions of... . . . . . . . . 24
Reports of... . . . . . . . . . . . . . . . . . . . . 25
State Laws
Banks and trust companies incor-
porated under. . . . . . . . . . . . . . . 22–24
Not to be contravened by trust de-
partment of banks. . . . . . . . . . . . . . 20
Statement
For open market purchases. . . . . 12–13
Of Borrower. . . . . . . . . . . . . . . . . . . . . . 8
Signed by officers making real es-
tate loans....... . . . . . . . . . . . . . . . 22
Waived....... . . . . . . . . . . . . . . . . . . 8–9
Statutory Provisions
Acceptance by Member Banks... 14–15
Acceptance of drafts drawn against
shipments......... . . . . . . . . . . . . . 1
Bankers’ Acceptances. . . . . . . . . . . . . 10
Check Clearing and Collection. .26–27
Drafts drawn to furnish Dollar Ex-
change. . . . . . . . . . . . . . . . . . . . . . . . 15
Loans on Farm Land and other
Real Estate. . . . . . . . . . . . . . . . . 20–21
Membership of State Banks and
Trust Companies. . . . . . . . . . . . . . . 22
Open-Market Purchases. . . . . . . . . . . 11
Purchase of Warrants. . . . . . . . . . . . . 17
Rediscounts under Section 13. . . . . . 7

Statutory Provisions, Cont. Page
Time Deposits and Savings A*,
counts. . . . . . . . . . . . . . . . . . . . . . . . .
Trust Powers of National Banks... 19
Stock
Capital..... . . . . . . . . . . . . . . . . . . 25–26
Capital, required of State banks. . . .23
Surrender of . . . . . . . . . . . . . . . . . . 25–26
Suspension
Of Commodity rate. . . . . . . . . . . . . . . 10
Surplus (See Capital)
Taxes
Municipal warrants against. . . . . 17–18
Time Certificate of Deposit
Definition of... . . . . . . . . . . . . . . . . . . 16
Time Deposits
Amount of loans based on . . . . . . . . . 21
Definition of... . . . . . . . . . . . . . . . . . . 16
Regulations on... . . . . . . . . . . . . . . . . 16
Statutory requirements. . . . . . . . . . . . 16
Trade Acceptances
Definition of... . . . . . . . . . . . . . . . . 9, 12
Documents attached. . . . . . . . . . . . . . 1
Evidence of eligibility. . . . . . . . . . . 9, 12
Open-Market Purchases. . . . . . . . . . . 12
Rediscount of... . . . . . . . . . . . . . . . . . 9
Trust Companies Page
(See State Banks)....... . . . . . . .22–25
Trust Department
Of banks acting as fiduciaries... . . . . 19
Trust Funds
Provisions for keeping. . . . . . . . . . . . . 19
Trustees
Application to act as... . . . . . . . . . . . 19
Banks as . . . . . . . . . . . . . . . . . . . . . 19–20
Restrictions. . . . . . . . . . . . . . . . . . . 19–20
Statutory provisions. . . . . . . . . . . . . . 19
Waiver
Of demand, notice and protest...... 19
Warrants
Definition of... . . . . . . . . . . . . . . . . . . 17
Eligible for purchase. . . . . . . . . . . 17–19
Limit of purchase of . . . . . . . . . . . . . . 18
Of municipalities. . . . . . . . . . . . . . 17–19
Purchase of... . . . . . . . . . . . . . . . . 17–19
Withdrawal
Of time deposits and savings ac-
counts. . . . . . . . . . . . . . . . . . . . . . . . . 16

Six
REGULATIONS
ISSUED BY
THE FEDERAL RESERVE BOARD
JUNE 22, 1917
e REGULATION A
(Superseding Regulation A of 1916)
ANALYSIS
REDISCOUNTS UNDER SECTION 13.
A—Notes, Drafts, and Bills of Exchange.
I. GENERAL STATUTORY PROVISIONS.
Any Federal Reserve Bank may discount
for any of its member banks any note, draft, or
bill of exchange provided—
(a) It has a maturity at the time of discount
of not more than 90 days, exclusive of days
of grace; but if drawn or issued for agricultural
purposes or based on live stock, it may have
a maturity at the time of discount of not more
than six months, exclusive of days of grace.
(b) It arose out of actual commercial trans-
actions; that is, it must be a note, draft, or bill
of exchange which has been issued or drawn
for agricultural, industrial, or commercial pur-
poses, or the proceeds of which have been used
or are to be used for such purposes.
(c) It was not issued for carrying or trading
in stocks, bonds, or other investment securities,
except bonds and notes of the Government of
the United States.
(d) The aggregate of notes, drafts, and bills
bearing the signature or indorsement of any
one borrower, whether a person, company,
firm, or corporation rediscounted for any one
member bank shall at no time exceed 10 per
cent of the unimpaired capital and surplus
of such bank; but this restriction shall not apply
to the discount of bills of exchange drawn in
good faith against actually existing values.
(e) It is indorsed by a member bank.
(f) It conforms to all applicable provisions
of this regulation.
II. GENERAL CHARACTER OF NOTES, DRAFTS,
AND BILLS OF EXCHANGE ELIGIBLE.
The Federal Reserve Board, exercising its
statutory right to define the character of a
note, draft, or bill of exchange eligible for re-
discount at a Federal Reserve Bank, has
determined that—
(a) It must be a note, draft, or bill of ex-
change the proceeds of which have been used
or are to be used in producing, purchasing,
carrying, or marketing goods" in one or more
of the steps of the process of production,
manufacture, or distribution.
REDISCOUNTS UNDER SECTION 13.
A—Notes, Drafts, and Bills of Exchange.
I. GENERAL STATUTORY PROVI-
SIONS.
May be discounted if
(a) Has maturity at time of dis-
count of not more than 90 days.
(1) Exclusive of days of grace,
(2) Agricultural p a per , 6
months.
(b) Arose out of actual commercial
transactions.
(c) Not issued for carrying or
trading in stock, bonds, or
other investment securities,
(1) ɺpt bonds and notes of
(d) Aggregate of one borrower
rediscounted for member bank
not to exceed 10% of its un-
impaired capital and surplus,
(1) Not to apply to discount
of bills of exchange drawn
in good faith,
(e) Indorsed by member bank.
(f) Conforms to provisions of this
regulation.
II. GENERAL CHARACTER OF PAPER
ELIGIBLE.
(a) Proceeds used in producing,
purchasing, carrying or mar-
keting goods. ,
* When used in this regulation the word “goods” shall be construed to
ºf include goods, wares, merchandise, or agricultural products, including live stock.


O. See page 18 Seven
REGULATION A
ANALYSIS
(b) It must not be a note, draft, or bill of
exchange the proceeds of which have been used
or are to be used for permanent or fixed in-
vestments of any kind, such as land, buildings,
or machinery.
(c) It must not be a note, draft, or bill of
exchange the proceeds of which have been used
or are to be used for investments of a purely
speculative character.
(d) It may be secured by the pledge of goods
or collateral, provided it is otherwise eligible.
III. APPLICATIONS FOR REDISCOUNT.
All applications for the rediscount of notes,
drafts, or bills of exchange must contain a
certificate of the member bank, in form to be
prescribed by the Federal Reserve Bank, that,
to the best of its knowledge and belief, such
notes, drafts, or bills of exchange have been
issued for one or more of the purposes men-
tioned in II (a).
IV. PROMISSORY NOTES.
(a) Definition.—A promissory note, within
the meaning of this regulation, is defined as
an unconditional promise, in writing, signed by
the maker, to pay, in the United States, at a
fixed or determinable future time, a sum certain
in dollars to order or to bearer.
(b) Evidence of eligibility and requirement of
statements.-A Federal Reserve Bank must be
satisfied by reference to the note or otherwise
that it is eligible for rediscount. Compliance
of a note with II (b) may be evidenced by a
statement of the borrower showing a reasonable
excess of quick assets over current liabilities.
The member bank shall certify in its applica-
tion whether the note offered for rediscount has
been discounted for a depositor or another
member bank or whether it has been purchased
from a nondepositor. It must also certify
whether a financial statement of the borrower
is on file.
Such financial statements must be on file
with respect to all notes offered for rediscount
which have been purchased from sources other
than a depositor or a member bank. With
respect to any other note offered for rediscount,
if no statement is on file, a Federal Reserve
Bank shall use its discretion in taking the steps
necessary to satisfy itself as to eligibility. It
is authorized to waive the requirement of a
statement with respect to any note discounted
by a member bank for a depositor or another
member bank—
(1) If it is secured by a warehouse, terminal,
or other similar receipt covering goods in
storage;
Not eligible if proceeds used for,
(b) Permanent or fixed invest-
ments,
(c) Investments of purely specu-
lative character.
(d) May be secured by pledge of
goods or collateral.
III. APPLICATION FOR REDIS-
COUNT.
Must contain certificate that paper
has been issued for purposes men-
tioned in II (a).
IV. PROMISSORY NOTES.
(a) Definition.
(b) Evidence of eligibility and
requirement of statements.
Member bank shall certify in ap-
plication whether:
1. Note has been discounted for
(a) Depositor,
(b) Another member bank or
(c) Purchased from nondeposi-
tor.
2. Financial statement of bor-
rower is on file.
(a) Must be on file with respect
to all notes purchased from
other than depositor or
member bank.
(b) Statement waived if dis-
counted for depositor or
member bank if
(1) Secured by warehouse,
terminal or other re-
ceipt covering goods in ,
storage. -
Eight


REGULATION A
ANALYSIS
(2) If the aggregate of obligations of the
borrower rediscounted and offered for redis-
count at the Federal Reserve Bank is less
than a sum equal to 10 per cent of the paid-
in capital of the member bank and does not
exceed $5,000.
V. DRAFTS, BILLS OF EXCHANGE, AND TRADE
ACCEPTANCES.
(a) Definition.—A draft or bill of exchange,
within the meaning of this regulation, is de-
fined as an unconditional order in writing,
addressed by one person to another, other than
a banker as defined under B (b), signed by the
person giving it, requiring the person to whom
it is addressed, to pay, in the United States, at
a fixed or determinable future time, a sum cer-
tain in dollars to the order of a specified per-
son; and a trade acceptance is defined as a
draft or bill of exchange drawn by the seller on
the purchaser of goods sold and accepted by
such purchaser.
(b) Evidence of eligibility.—A Federal Re-
serve Bank shall take such steps as it deems
necessary to satisfy itself as to the eligibility
of the draft or bill offered for rediscount, unless
it presents prima facie evidence thereof or
bears a stamp or certificate affixed by the ac-
ceptor or drawer showing that it is a trade
acceptance.
WI. SIX MONTHS' AGRICULTURAL PAPER.
(a) Definition.—Six months' agricultural
paper, within the meaning of this regulation,
is defined as a note, draft, bill of exchange, or
trade acceptance drawn or issued for agricul-
tural purposes, or based on live stock; that is,
a note, draft, bill of exchange, or trade accept-
ance the proceeds of which have been used, or
are to be used, for agricultural purposes, in-
cluding the breeding, raising, fattening, or
marketing of live stock, and which has a matur-
ity at the time of discount of not more than
six months, exclusive of days of grace.
(b) Eligibility.—To be eligible for redis-
count six months' agricultural paper, whether a
note, draft, bill of exchange, or trade accept-
ance, must comply with the respective sections
of this regulation which would apply to it if
its maturity were 90 days or less.
VII. COMMODITY PAPER.
(a) Definition.—Commodity paper within
the meaning of this regulation is defined as a
note, draft, bill of exchange, or trade accept-
ance accompanied and secured by shipping
documents or by a warehouse, terminal, or
other similar receipt covering approved and
readily marketable, nonperishable staples prop-
erly insured.
(2) Aggregate of obligations
of borrower is less than
10% of paid-in capital
of member bank, and
not over $5000.
W. DRAFTS, BILLS OF EXCHANGE,
AND TRADE ACCEPTANCES.
(a) Definition of
1. Draft or bill of exchange.
2. Trade acceptance.
(b) Evidence of eligibility.
Reserve Bank to take necessary
steps to satisfy itself
(1) Unless it presents prima facie
evidence it is a trade accept-
ance.
VI. SIX MONTHS' AGRICULTURAL
PAPER.
(a) Definition.
(b) Eligibility. Same require-
ments as 90-day paper.
VII. COMMODITY PAPER.
(a) Definition.
Nine
.
:
º
-
REGULATION A
ANALYSIS
(b) Eligibility.—To be eligible for rediscount
at the special rates authorized to be estab-
lished for commodity paper, such a note, draft,
bill of exchange, or trade acceptance must also
comply with the respective sections of this
regulation applicable to it, must conform to the
requirements of the Federal Reserve Bank re-
lating to shipping documents, receipts, insur-
ance, etc., and must be a note, draft, bill of
exchange, or trade acceptance on which the
rate of interest or discount—including com-
mission—charged the maker, does not exceed
6 per cent per annum.
(c) Suspension of commodity rate.—As the
special rate on commodity paper is intended to
assist actual producers during crop-moving
periods and is not designed to benefit specula-
tors, the Board reserves the right to suspend the
special rates herein provided whenever it is
apparent that the movement of crops, which this
rate is intended to facilitate, has been practically
completed.
B—Bankers’ Acceptances.
(a) General statutory provisions.—Any
Federal Reserve Bank may discount for any of
its member banks bankers’ acceptances which
have a maturity at the time of discount of not
more than three months’ sight, exclusive of
days of grace, which are indorsed by at least
one member bank, and which grow out of
transactions involving the importation or ex-
portation of goods; or, which grow out of
transactions involving the domestic shipment
of goods, provided shipping documents are
attached at the time of acceptance; or, which
are secured at the time of acceptance by a ware-
house receipt or other such document conveying
or securing title covering readily marketable
staples. Any Federal Reserve Bank may also
acquire drafts or bills of exchange drawn on
member banks by banks or bankers in foreign
countries or dependencies or insular possessions
of the United States for the purpose of furnish-
ing dollar exchange.
(b) Definition.—A banker's acceptance within
the meaning of this regulation is defined as a
draft or bill of exchange of which the acceptor
is a bank or trust company, or a firm, person,
company, or corporation engaged in the busi-
ness of granting bankers’ acceptance credits.
(c) Eligibility.—To be eligible for rediscount
the bill must have been drawn under a credit
opened for the purpose of conducting, or settling
accounts resulting from, a transaction or trans-
actions involving (1) the shipment of goods
between the United States and any foreign
country, or between the United States and
any of its dependencies or insular possessions,
or between foreign countries, or (2) the domes-
(b) Eligibility. To be eligible for
rediscount at special rates
must
1. Comply with sections of
this regulation applicable.
2. Conform to requirements
relating to shipping docu-
ments, receipts, insurance,
etc. -
3. Rate of interest including
commission not to exceed
6%.
Suspension of commodity rate.
Board reserves right to sus-
pend special rates when it is
apparent movement of crops
has been practically completed.
B—Bankers’ Acceptances.
(a) General Statutory Provisions.
May discount when
1. Have maturity at time of
discount of not more than
3 months, exclusive of days
of grace,
2. Indorsed by at least one
member bank,
3. Grow out of transactions
involving
(a) Importation or expor-
tation of goods,
(b) Domestic shipments,
provided documents are
attached at acceptance,
Or
4. Secured at acceptance by
warehouse receipt or other
document securing title to
readily marketable staples.
Reserve Bank may acquire drafts
or bills of exchange drawn on
members by banks or bankers in
foreign countries or possessions of
U. S. for purpose of furnishing
dollar exchange.
(b) Definition.
(c) Eligibility. To be eligible for
discount must be
1. Drawn under credit opened
for purpose of taking care
of transactions involving
(1) Shipment of goods be-
tween U. S. and foreign
countries, U. S. and
possessions, or foreign
countries.

-*
:
-
-
*
:
:
:
- Ten
\
*
REGULATION A
ANALYSIS
tic shipment of goods, provided shipping
documents are attached at the time of accept-
ance; or it must be a bill which is secured at
the time of acceptance by a warehouse receipt
or other such document conveying or securing
title covering readily marketable staples. Any
Federal Reserve Bank may also acquire
drafts or bills drawn by a bank or banker in a
foreign country or dependency or insular
possession of the United States for the pur-
pose of furnishing dollar exchange and ac-
cepted by a member bank in accordance with
the provisions of Regulation C, page fourteen.
Such drafts or bills may be acquired prior to ac-
ceptance provided they have the indorsement
of a member bank.
(d) Evidence of eligibility.—A Federal Re-
serve Bank must be satisfied, either by reference
to the acceptance itself or otherwise, that it is
eligible for rediscount. Satisfactory evidence
of eligibility may consist of a stamp or certifi-
cate affixed by the acceptor in form satis-
factory to the Federal Reserve Bank.
(2) Domestic shipments of
goods with documents
attached, or
2. Secured by warehouse re-
ceipt or document securing
title to readily marketable
staples.
Reserve Bank may also acquire
drafts or bills
1. Drawn for purpose of fur-
nishing dollar exchange,
2. Accepted by member bank
in accordance with Reg. C.
3. May be acquired prior to
acceptance provided has
member bank indorsement.
(d) Evidence of Eligibility.
Satisfactory evidence may consist
of stamp or certificate affixed by
acceptor.
O REGULATION B
(Superseding Regulation B of 1916.)
ANALYSHS
Open-Market Purchases of Bills of Exchange,
Trade Acceptances, and Bankers’ Acceptances
Under Section 14.
I. GENERAL STATUTORY PROVISIONS.
Section 14 of the Federal Reserve Act per-
mits Federal Reserve Banks under rules and
regulations to be prescribed by the Federal
Reserve Board to purchase and sell in the open
market from banks, firms, corporations, or
individuals, bankers’ acceptances and bills of
exchange of the kinds and maturities made
eligible by the Act for rediscount, with or
without the indorsement of a member bank.
II. GENERAL CHARACTER OF BILLS AND AC-
CEPTANCES ELIGIBLE.
The Federal Reserve Board, exercising its
statutory right to regulate the purchase of
bills of exchange and acceptances, has deter-
mined that a bill of exchange or acceptance, to
be eligible for purchase by Federal Reserve
Banks under section 14—
(a) Must not have been issued for carrying
or trading in stocks, bonds, or other invest-
ment securities, except bonds and notes of the
Government of the United States.
Open-Market Purchases of Bills
of Exchange, Trade Acceptances
and Bankers’ Acceptances under
Section 14.
I. GENERAL STATUTORY PRO-
VISIONS.
Section 14 permits Reserve Banks
to purchase and sell paper eligible
for rediscount with or without
indorsement of member bank.
II. GENERAL CHARACTER OF BILLS
AND ACCEPTANCES ELIGIBLE.
(a) Must not have been issued for
carrying or trading in stocks,
bonds, etc.,
1. ɺpt bonds and notes of

O See page 20. Eleven
REGULATION B
ANALYSIS
(b) Must not be a bill the proceeds of which
have been used or are to be used for perma-
nent or fixed investments of any kind, such
as land, buildings, or machinery, or for invest-
ments of a merely speculative character.
(c) Must have been accepted by the drawee
prior to purchase by a Federal Reserve Bank
unless it is accompanied and secured by ship-
ping documents or by a warehouse, terminal, or
other similar receipt conveying security title.
(d) May be secured by the pledge of goods1
or collateral, provided it is otherwise eligible.
In addition to the above general require-
ments, each bill of exchange and trade accept-
ance purchased under the terms of this regu-
lation must also conform to the more specific
requirements set forth under III, and each
banker's acceptance must also conform to the
more specific requirements set forth under IV.
III. BILLS OF EXCHANGE AND TRADE ACCEPT-
ANCES.
(a) Definition.—A bill of exchange, within
the meaning of this regulation, is defined as
an unconditional order in writing, addressed
by one person to another, other than a banker
as defined under IV (a), signed by the person
giving it, requiring the person to whom it is
addressed, to pay, in the United States, at a
fixed or determinable future time, a sum cer-
tain in dollars to the order of a specified
person; and a trade acceptance is defined as a
bill of exchange drawn by the seller on the
purchaser of goods sold, and accepted by
such purchaser.
(b) Eligibility.—To be eligible for purchase
the bill must have arisen out of an actual
commercial transaction, domestic or foreign;
that is, it must be a bill which has been issued
or drawn for agricultural, industrial, or com-
mercial purposes or the proceeds of which have
been used or are to be used for the purpose of
producing, purchasing, carrying or marketing
goods in one or more of the steps of the process
of production, manufacture, or distribution.
It must have a maturity at time of purchase
of not more than ninety days, exclusive of
days of grace.
(c) Evidence of eligibility.—A Federal Re-
serve Bank shall take such steps as it deems
necessary to satisfy itself as to the eligibility
of the bill offered for purchase, unless it pre-
sents prima facie evidence thereof or bears a
stamp or certificate affixed by the acceptor or
drawer showing that it is a trade acceptance.
(d) Statements.-Unless indorsed by a mem-
ber bank, a bill is not eligible for purchase
until a satisfactory statement has been fur-
nished of the financial condition of one or more
of the parties thereto.
(b) Must not be bill proceeds used
for permanent or fixed invest-
ments or investments of merely
speculative character.

(c) Must have been accepted by
drawee prior to purchase.
1. Unless accompanied and
secured by shipping docu-
ments, Or
2. Warehouse, term in a l or
other receipt conveying se-
curity title.
(d) May be secured by pledge of
goods or collateral, if otherwise
eligible.
III. BILLS OF EXCHANGE AND
TRADE ACCEPTANCES.
(a) Definition of
1. Bill of Exchange.
2. Trade acceptance.


(b) Eligibility.
1. Must have arisen out of
actual commercial transac-
tion.
2. Must have maturity when
purchased of not more than
90 days.
(c) Evidence of eligibility.
Reserve Bank to satisfy itself
as to eligibility $}}
1. Unless presents prima facie
evidence it is a trade... ac-
ceptance.

(d) Statements. Unless indorsed
by member bank, bill not
eligible until satisfactory
financial statement is fur-
nished.
1 When used in this regulation the word “goods” shall be construed to includ
goods, wares, merchandise, or agricultural products, including live stock. -
Twelve
REGULATION B ANALYSIS
IV. BANKERS’ ACCEPTANCES. IV. BANKERS’ ACCEPTANCES.
(a) Definition.—A bankers’ acceptance, with- | (a) Definition.
in the meaning of this regulation, is a bill
of exchange of which the acceptor is a bank or
trust company, or a firm, person, company, or
corporation engaged in the business of granting
bankers’ acceptance credits. - - ---
(b) Eligibility—To be eligible for purchase, (b) Fligibility. -
the bill which must have a maturity at time 1. Must have maturity at
of purchase of not more than three months, purchase of not more than
exclusive of days of grace, must have been 3 months.
drawn under a credit opened for the purpose of
conducting, or settling accounts resulting from,
a transaction or transactions involving—
(1) The shipment of goods between the 2. Must be drawn under credit
United States and any foreign opened for purpose of tak-
country, or between the United ing care of transactions
States and any of its dependencies involving
or insular possessions, or between (a) Foreign shipment of
foreign countries, or goods
(2) The shipment of goods within the (b) Shipment within U. S.
United States, provided the bill at provided bill is accom-
the time of its acceptance is accom- panied by shipping doc-
panied by shipping documents, or uments, or
(3) The storage within the United States (c) Storage within U. S. of
of readily marketable goods, pro- re a dily marketable
vided the acceptor of the bill is goods, provided accep-
secured by warehouse, terminal, or tor is secured by proper
other similar receipt, or receipt, or
(4) The storage within the United States (d) Storage within U. S. of
of goods which have been actually goods actually sold, pro-
sold, provided the acceptor of the vided secured by pledge
bill is secured by the pledge of such of such goods.
goods; 3. Or must be drawn by foreign
or it must be a bill drawn by a bank or banker bank or banker for purpose
in a foreign country or dependency or insular of furnishing dollar ex-
possession of the United States for the purpose change.
of furnishing dollar exchange. In this latter
case the bank or banker drawing the bill must
be in a country, dependency, or possession
whose usages of trade have been determined
by the Federal Reserve Board to require the
drawing of bills of this character.
(c) Evidence of eligibility.—A Federal Re- | (c) Evidence of eligibility.
serve Bank must be satisfied either by reference 1. Satisfactory evidence may
to the acceptance itself, or otherwise, that it is consist of stamp or certifi-
eligible for purchase. Satisfactory evidence of cate affixed by acceptor.
eligibility may consist of a stamp or certificate 2. No evidence required with
affixed by the acceptor, in form satisfactory to respect to bill accepted by a
the Federal Reserve Bank. No evidence of national bank.
eligibility is required with respect to a bill
accepted by a national bank.
(d) Statements.-Bankers’ acceptances, other (d) Statements.
than those accepted or indorsed by member Unless accepted or indorsed by
banks, shall be eligible for purchase only after member bank, eligible only
the acceptor has furnished a satisfactory state- 1. After acceptor furnishes sat-
ment of financial condition in form to be isfactory financial state-
approved by the Federal Reserve Board and ment and
has agreed in writing with a Federal Reserve 2. Agrees to inform concern-
Bank to inform it upon request concerning ing transactions underlying
2. the transactions underlying such acceptances. such acceptances.

Thirteen

O REGULATION C
(Superseding Regulation C of 1916.)
ANALYSIS
Acceptance by Member Banks of Drafts and
Bills of Exchange
A—I. STATUTORY PROVISIONS.
Under the provisions of the fifth paragraph
of section 13 of the Federal Reserve Act, as
amended by the acts of September 7, 1916, and
June 21, 1917, any member bank may accept
drafts or bills of exchange drawn upon it, having
not more than six months’ sight to run, exclu-
sive of days of grace, which grow out of transac-
tions 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 attached 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. This
paragraph limits the amount which any bank
shall accept for any one person, company, firm,
or corporation, whether in a foreign or domestic
transaction, to an amount not exceeding at
any time, in the aggregate, more than 10 per
centum of its paid-up and unimpaired capital
stock and surplus. This limit, however, does
not apply in any case where the accepting bank
is secured either by attached documents or
by some other actual security growing out of
the same transaction as the acceptance. The
law also provides that any bank may accept
such bills up to an amount not exceeding at any
time, in the aggregate, more than one-half of
its paid-up and unimpaired capital stock and
surplus; or, with the approval of the Federal
Reserve Board, up to an amount not exceeding
at any time, in the aggregate, more than 100
per centum of its paid-up and unimpaired
capital stock and surplus. In no event, how-
ever, shall the aggregate amount of acceptances
growing out of domestic transactions exceed
50 per centum of such capital stock and surplus.
II. REGULATIONS.
1. Under the provisions of the law referred
to above the Federal Reserve Board has deter-
mined that any member bank, having an unim-
paired surplus equal to at least 20 per centum
of its paid-up capital, which desires to accept
drafts or bills of exchange drawn for the
purposes described above, up to an amount not
exceeding at any time, in the aggregate, 100
per centum of its paid-up and unimpaired
capital stock and surplus, may file an applica-
tion for that purpose with the Federal Reserve
Board. Such application must be forwarded
through the Federal Reserve Bank of the dis-
trict in which the applying bank is located.
2. The Federal Reserve Bank shall report
to the Federal Reserve Board upon the stand-
ing of the applying bank, stating whether the
business and banking conditions prevailing
A—DRAWN AGAINST DOMESTIC OR
FOREIGN SHIPMENTS OF GOODS
OR SECURED BY WAREHOUSE
RECEIPTS COVERING READILY
MARKETABLE STAPLES.
I.
STATUTORY PROVISIONS.
1. Member bank may accept drafts
or bills of exchange drawn upon
it which
(a) Have not more than 6
II.
months’ sight to run
(b) Grow out of transactions
(c)
(d)
(e)
involving
1. Importation or exporta-
tion of goods,
. Domestic shipments of
goods, provided shipping
documents securing title
attached
Or secured by warehouse re-
ceipt or other document
covering readily market-
able staples.
Amount accepted for one
party not to exceed 10%
of paid-up and unimpaired
capital stock and surplus,
1. Does not apply where
accepting bank is secured
by attached documents
or by actual security
growing out of same
transaction as acceptance.
Aggregate amount accepted
not to exceed 9% of such
capital and surplus,
1. Except with approval
of Board 100% of capital
and surplus may be
accepted.
2. Acceptances growing out
of domestic transactions
never to exceed 50%.
REGULATIONS.
1. Member banks having unim-
paired surplus equal to 20%
of its paid-up capital, may file
application with Board through
its Reserve Bank to accept up to
100% of capital and surplus.
. Reserve Bank to report to
Board upon applying bank.
O See page 20, paragraph 97. Fourteen
REGULATION C
ANALYSIS
in its district warrant the granting of such
applications.
3. The approval of any such application may
be rescinded upon 90 days’ notice to the bank
affected.
B—I. STATUTORY PROVISIONS.
Section 13 of the Federal Reserve Act also pro-
vides that 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.
No member bank shall accept such drafts
or bills of exchange for any one bank to an
amount exceeding in the aggregate 10 per
centum of the paid-up and unimpaired capital
and surplus of the accepting bank unless the
draft or bill of exchange is accompanied by
documents conveying or securing title or by
some other adequate security. No member
bank shall accept such drafts or bills in an
amount exceeding at any time in the aggregate
one-half of its paid-up and unimpaired capital
and surplus. This 50 per cent limit is separate
and distinct from and not included in the limits
placed upon the acceptance of drafts and bills
of exchange as described under section A of this
regulation.
II. REGULATIONS.
Any member bank desiring to accept drafts
drawn by banks or bankers in foreign coun-
tries or dependencies or insular possessions of
the United States for the purpose of furnishing
dollar exchange shall first make an application
to the Federal Reserve Board setting forth the
usages of trade in the respective countries,
dependencies, or insular possessions in which
such banks or bankers are located.
If the Federal Reserve Board should deter-
mine that the usages of trade in such countries,
dependencies, or possessions require the grant-
ing of the acceptance facilities applied for, it
will notify the applying bank of its approval
and will also publish in the Federal Reserve
Bulletin the name or names of those countries,
dependencies, or possessions in which banks
or bankers are authorized to draw on member
banks whose applications have been approved
for the purpose of furnishing dollar exchange.
The Federal Reserve Board reserves the
right to modify or on 90 days’ notice to revoke
its approval either as to any particular member
bank or as to any foreign country or depend-
ency or insular possession of the United States
in which it has authorized banks or bankers
to draw on member banks for the purpose of
furnishing dollar exchange.
3. Approval of application may be
rescinded upon 90 days' notice.
B—ACCEPTANCE OF DRAFTS OR
BILLS OF EXCHANGE DRAWN
FOR THE PURPOSE OF CREAT-
ING DOLLAR EXCHANGE.
I. STATUTORY PROVISIONS.
1. Member bank may accept drafts
or bills of exchange
(a) Having not more than 3
months’ sight to run
(b) Drawn by foreign bank or
banker
(c) For purpose of furnishing
dollar exchange.
2. No bank shall accept such
drafts or bills
(a) For any one bank to amount
exceeding 10% of its paid-
up capital and surplus,
(1) Unless accompanied by
documents securing title
or other adequate secur-
ity.
(b) In amount exceeding at
any time one-half of its
paid-up capital and surplus.
(1) This limit separate and
distinct from limits de-
scribed under section A.
II. REGULATIONS.
1. Member bank shall make appli-
cation to Board setting forth
usages of trade in countries
where banks or bankers are
located.
2. If Board determines countries
require the granting of accept-
ance facilities, it will
(a) Notify applying bank of its
approval
(b) Publish in Federal Reserve
Bulletin the names of coun-
tries in which banks or
bankers are authorized to
draw on member banks
whose applications have
been approved.
3. Board reserves right to modify
or revoke its approval.

Fifteen
O REGULATION D
(Superseding Regulation D of 1916.)
ANALYSIS
Time Deposits and Savings Accounts.
Section 19 of the Federal Reserve Act pro-
vides, in part, as follows:
Demand deposits, within the meaning of this
act, shall comprise all deposits payable within
30 days, and time deposits shall comprise all
deposits payable after 30 days, and all savings
accounts and certificates of deposit which are
subject to not less than 30 days' notice before
payment, and all postal savings deposits.
TIME DEPOSITS, OPEN ACCOUNTS.
The term “time deposits, open accounts”
shall be held to include all accounts, not evi-
denced by certificates of deposit or savings
pass books, in respect to which a written con-
tract is entered into with the depositor at the
time the deposit is made that neither the whole
nor any part of such deposit may be withdrawn
by check or otherwise, except on a given date
or on written notice given by the depositor a
certain specified number of days in advance,
in no case less than 30 days.
SAVINGS ACCOUNTS.
The term “savings accounts” shall be held
to include those accounts of the bank in respect
to which, by its printed regulations, accepted
by the depositor at the time the account is
opened—
(a) The pass book, certificate, or other
similar form of receipt must be
presented to the bank whenever a
deposit or withdrawal is made, and
(b) The depositor may at any time be
required by the bank to give notice
of an intended withdrawal not less
than 30 days before a withdrawal
is made.
TIME CERTIFICATES OF DEPOSIT.
A “time certificate of deposit” is defined as
an instrument evidencing the deposit with a
bank, either with or without interest, of a cer-
tain sum specified on the face of the certificate
payable in whole or in part to the depositor or
on his order—
(a) On a certain date, specified on the
certificate, not less than 30 days
after the date of the deposit, or
(b) After the lapse of a certain specified
time subsequent to the date of the
certificate, in no case less than 30
days, or
(c) Upon written notice given a certain
specified number of days, not less
than 30 days before the date of
repayment, and
(d) In all cases only upon presentation
of the certificate at each withdrawal
for proper indorsement or surrender.
Time Deposits and Savings Accounts.

1. Statutory provisions.
2. Definition of Time Deposits,
Open Accounts.
3. Definition of Savings Accounts.

4. Definition of Time Certificate
of Deposit.

O See page 29.
Sixteen
O REGULATION E
(Superseding Regulation E of 1916.)
Purchase of Warrants.
STATUTORY REQUIREMENTS.
Section 14 of the Federal Reserve Act reads
in part as follows:
Every Federal Reserve Bank shall have
power—
(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 exceed-
ing six months, issued in anticipation of the
collection of taxes or in anticipation of the
receipt of assured revenues by any State,
county, district, political subdivision, or munic-
ipality in the continental United States, in-
cluding irrigation, drainage, and reclamation
districts, such purchases to be made in accord-
ance with rules and regulations prescribed by
the Federal Reserve Board.
For brevity’s sake, the term “warrant” when
used in this regulation shall be construed to
mean “bills, notes, revenue bonds, and war-
rants with a maturity from date of purchase of
not exceeding six months,” and the term
“municipality” shall be construed to mean
“State, county, district, political subdivision,
or municipality in the continental United
States, including irrigation, drainage, and rec-
lamation districts.”
REGULATION.
I. Any Federal Reserve Bank may purchase
warrants issued by a municipality in anticipation
of the collection of taxes or in anticipation of
the receipt of assured revenues, provided—
(a) They are the general obligations of
the entire municipality; it being
intended to exclude as ineligible for
purchase all such obligations as are
payable from “local benefit” and
“special assessment” taxes when the
municipality at large is not directly
or ultimately liable;
(b) They are issued in anticipation of
taxes or revenues which are due and
payable on or before the date of
maturity of such warrants; but the
Federal Reserve Board may waive
this condition in specific cases.
For the purposes of this regulation,
taxes shall be considered as due
and payable on the last day on
which they may be paid without
penalty;
(c) They are issued by a municipality—
(1) Which has been in existence1
for a period of 10 years; ,
1 See Appendix, page thirty.
ANALYSIS
-
Purchase of Warrants.
STATUTORY REQUIREMENTs.
“Warrant”—Bills, notes, revenue
bonds, and warrants with maturity
from purchase date not exceeding 6
months.
“Municipality”—State, county,
district, political subdivision or
municipality in continental U. S.
REGULATION.
I. Reserve Bank may purchase
warrants issued by a munici-
pality in anticipation of collec-
tion of taxes or assured rev-
enues, provided
(a) General obligations of entire
municipality.
(b) Are due and payable before
- maturity of warrants.
(1) Reserve Board may
waive this condition.
(2) Considered due and pay-
able last day may be
paid without penalty.
(c) Issued by municipality.
1. In existence 10 years.


O See page 21. Seventeen
REGULATION E
ANALYSIS
(2) Which for a period of 10 year
previous to the purchase has
not defaulted1 for longer than
15 days in the payment of any
part of either principal or in-
terest of any funded debt
authorized to be contracted
y it;
(3) Whose net funded indebted-
ness' does not exceed 10 per
centum of the valuation of its
taxable property, to be ascer-
tained by the last preceding
valuation of property for the
assessment of taxes.
II. Except with the approval of the Federal
Reserve Board, no Federal Reserve Bank shall
purchase and hold an amount in excess of 25
per centum of the total amount of warrants
outstanding at any time and issued in con-
formity with provisions of section 14 (b) above
quoted, and actually sold by a municipality.
III. Except with the approval of the Federal
Reserve Board, the aggregate amount invested
by any Federal Reserve Bank in warrants of
all kinds shall not exceed at the time of purchase
a sum equal to 10 per centum of the deposits
kept by its member banks with such Federal
Reserve Bank. -
IV. Except with the approval of the Federal
Reserve Board, the maximum amount which
may be invested at the time of purchase by
any Federal Reserve Bank in warrants of any
single municipality shall be limited to the
following percentages of the deposits kept
in such Federal Reserve Bank by its member
banks:
Five per centum of such deposits in war-
rants of a municipality of 50,000 popu-
lation or over;
Three per centum of such deposits in
warrants of a municipality of over 30,000
population, but less than 50,000;
One per centum of such deposits in war-
rants of a municipality of over 10,000
population, but less than 30,000.
V. Warrants of a municipality of 10,000
population or less shall be purchased only
with the special approval of the Board.
The population of a municipality shall be
determined by the last Federal or State census.
Where it can not be exactly determined the
Board will make special rulings.
VI. Opinion of recognized counsel on munic-
ipal issues or of the regularly appointed
counsel of the municipality as to the legality
of the issue shall be secured and approved in
tºº.” by counsel for the Federal Reserve
2Ilk.
1 See Appendix, page thirty.
2.
II.
. Whose net funded
Which 10 years previous to
purchase has not defaulted
longer than 15 days in pay-
ment of principal or interest
of funded debt.
indebted-
ness does not exceed 10% of
valuation of taxable property.

No Reserve Bank shall except
approved by Board purchase
and hold in excess of 25% of
total amount of warrants out-
standing and actually sold by
a municipality.
III. Aggregate amount invested in
IV.
W.
VI
warrants shall not exceed at
purchase 10% of deposits of
its member banks.
Maximum amount invested at
purchase shall be limited to
following percentages of mem-
ber banks' deposits
5% when population is 50,000
Or OVer.
3% when population is 30,000
to 50,000.
1% when over 10,000 but less
than 30,000.

Warrants of municipality of
10,000 or less can be purchased
only by special approval.

. Legality of issue shall be se-
cured and approved in each
case by counsel for Reserve
Bank.

Eighteen
REGULATION E
ANALYSIS
VII. Any Federal Reserve Bank may pur-
chase from any of its member banks warrants
of any municipality, indorsed by such member
bank, with waiver of demand, notice, and
protest, up to an amount not to exceed 10
per centum of the aggregate capital and sur-
plus of such member bank: Provided, however,
That such warrants comply with provisions
I and III of these regulations, except that
where a period of 10 years is mentioned in I
(c) hereof a period of 5 years shall be sub-
stituted for the purposes of this clause.
VII. Reserve Bank may purchase
from its members warrants
indorsed with waiver of de-
mand, notice and protest.
(a) not to exceed 10% of
aggregate capital and sur-
plus of such member,
Provided warrants comply
with provisions of I and III
of these regulations
(a) except period of 10 years
mentioned in I (c) shall
be 5 years.
O REGULATION F
(Superseding Regulation F of 1916.)
ANALYSIS
Trust Powers of National Banks.
I. STATUTORY PROVISIONS.
The Federal Reserve Act provides:
SEC. 11. The Federal Reserve Board shall
be authorized and empowered:
(k) To grant by special permit to national
banks applying therefor, when not in contra-
vention of State or local law, the right to act
as trustee, executor, administrator, or registrar
of stocks and bonds, under such rules and regu-
lations as the said Board may prescribe.
II. APPLICATIONS.
A national bank desiring to exercise any or
all of the privileges authorized by section 11,
subsection (k), of the Federal Reserve Act,
shall make application to the Federal Reserve
Board on a form approved by said Board
(Form No. 61). Such application shall be
forwarded by the applying bank to the Chair-
man of the Board of Directors of the Federal
Reserve Bank of its district, and shall there-
upon be transmitted to the Federal Reserve
Board with his recommendations.
III. SEPARATE DEPARTMENTS.
Every national bank permitted to act under
this section shall establish a separate trust
department, and shall place such department
under the management of an officer or officers,
whose duties shall be prescribed by the board
of directors of the bank.
IV. PROVISION FOR KEEPING TRUST FUNDS.
The funds, securities, and investments held
in each trust shall be held separate and dis-
tinct from the general funds and securities of
the bank, and separate and distinct one from
another. The ledgers and other books kept
for the trust department shall be entirely sepa-
rate and apart from the other books and rec-
ords of the bank.
Trust Powers of National Banks.
I. STATUTORY PROVISIONS.
II. APPLICATIONS.
National Banks desiring to
exercise any or all these pro-
visions shall
(a) Make application to Board
on Form 61.
(b) Forward to Chairman of
Board of Directors of its
Reserve Bank.
III. Separate Trust Department
shall be established.
IV. Funds, securities and invest-
ments held in trust shall be
held separate and distinct.
Ledgers and other books en-
tirely separate.

O See page 16. Nineteen

REGULATION F
ANALYSIS
W. EXAMINATIONS.
Examiners appointed by the Comptroller
of the Currency or designated by the Federal
Reserve Board will hereafter be instructed to
make thorough and complete audits of the cash,
securities, accounts, and investments of the
trust department of every bank at the same
time that examination is made of the banking
department.
VI. CONFORMITY WITH STATE LAWS.
Nothing in these regulations shall be con-
strued to give to a national bank doing business
as trustee, executor, administrator, or registrar
of stocks and bonds under section 11 (k) of the
Federal Reserve Act any rights or privileges in
contravention of the laws of the State in which
the bank is located.
VII. REVOCATION OF PERMITS.
The Federal Reserve Board reserves the
right to revoke permits granted under these
regulations in any case where in the opinion
of the Board a bank has willfully violated the
provisions of these regulations or the laws of
any State relating to the operations of such
bank when acting as trustee, executor, adminis-
trator, or registrar of stocks and bonds.
VIII. CHANGES IN RULES.
These regulations are subject to change by
the Federal Reserve Board; provided, however,
that no such change shall prejudice obliga-
tions undertaken in good faith under regula-
tions in effect at the time the obligation was
assumed.
W. Examiners will audit trust
department at time of examina-
tion of banking department.
VI. Nothing in these regulations
shall give any rights or privi-
; in contravention of state
aWS.
VII. Reserve Board reserves right
to revoke permits when laws
of state or these regulations
have been willfully violated.
-
VIII. Regulations subject to
change.
(a) Provided obligations un-
dertaken in good faith
at time assumed are not
prejudiced.
O REGULATION G
(Superseding Regulation G of 1916)
ANALYSIS
Loans on Farm Land and Other
Real Estate.
Section 24 of the Federal Reserve Act
provides in part that—
Any national banking association not situated
in a central reserve city may make loans
secured 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 unen-
cumbered real estate located 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
Loans on Farm Land and
Other Real Estate.
1. Statutory provisions.
O See page 33. Twenty
REGULATION G
ANALYSIS
security of such real estate as distinguished
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 hereafter as
heretofore to receive time deposits and to
pay interest on the same.
National banks not located in central reserve
cities may, therefore, legally make loans
secured by improved and unencumbered farm
land or other real estate as provided by this
section.
Certain conditions and restrictions must,
however, be observed—
(a) There must be no prior lien on the land;
that is, the lending bank must hold an absolute
first mortgage or deed of trust.
(b) The amount of the loan must not
exceed 50 per cent of the actual value of the
land by which it is secured.
(c) The maximum amount of loans which a
national bank may make on real estate,
whether on farm land or on other real estate
as distinguished from farm land, is limited
under the terms of the act to an amount not
in excess of one-third of its time deposits at
the time of the making of the loan, and not
in excess of one-third of its average time
deposits during the preceding calendar year:
Provided, however, That if one-third of such
time deposits as of the date of making the
loan or one-third of the average time deposits
for the preceding calendar year, is less than
one-fourth of the capital and surplus of the
bank as of the date of making the loan, the
bank in such event shall have authority to
make loans upon real estate under the terms
of the Act to the extent of one-fourth of the
bank's capital and surplus as of that date.
(d) Farm land to be eligible as security for
a loan by a national bank must be situated
within the Federal reserve district in which
such bank is located or within a radius of
#. miles of such bank irrespective of district
IneS. -
(e) Real estate as distinguished from farm
land to be eligible as security for a loan by
a national bank must be located within a radius
# 100 miles of such bank irrespective of district
Ines,
2. National banks not located in
central reserve cities may make
loans secured by improved and
unencumbered farm land or
other real estate, provided,
(a) No prior lien on the land.
(b) Amount of loan does not
exceed 50% of actual value
of land.
(c) Maximum amount not in
excess of 1/3 of its time de-
posits.
(1) If this is less than %
of its capital and sur-
plus, can make loans
to that amount.
(d) Farm land situated in its
district or within 100 miles.
(e) Real estate located within
100 miles.

Twenty-one
REGULATION G
ANALYSIS
(f) The right of a national bank to “make
loans” under section 24 includes the right to
purchase or discount loans already made as
well as the right to make such loans in the
first instance: Provided, however, That no
loan secured by farm land shall have a maturity
of more than five years from the date on which
it was purchased or made by the national
bank and that no loan secured by other real
estate shall have a maturity of more than one
year from such date.
(g) Though no national bank is authorized
under the provisions of section 24 to make a
loan on the security of real estate, other than
farm land, for a period exceeding one year,
nevertheless, at the end of the year, it may
properly make a new loan upon the same securi-
ty for a period not exceeding one year. The
maturing note must be cancelled nd a new
note taken in its place, but in order to obviate
the necessity of making a new mortgage or
deed of trust for each renewal, the original
mortgage or deed of trust may be so drawn
in the first instance as to cover possible future
renewals of the original note. Under no cir-
cumstances, however, must the bank obligate
itself in advance to make such a renewal. It
must, in all cases, preserve the right to require
payment at the end of the year and to foreclose
the mortgage should that action become neces-
sary. The same principles apply to loans of
longer maturities secured by farm lands.
(h) In order that real estate loans held by a
bank may be readily classified, a statement
signed by the officers making a loan and having
knowledge of the facts upon which it is based
must be attached to each note secured by a
first mortgage on the land by which the loan
is secured, certifying in detail as of the date
of the loan that all of the requirements of
law have been duly observed.
(f) No loan secured by
(1) Farm land shall have
maturity of more than
5 years.
(2) Other real estate ma-
turity of not more than
1 year.
(g) New loans may be made
upon same security. Ma-
turing note must be can-
celled and new one issued,
but original mortgage or
deed of trust may be drawn
to cover renewals. Bank
must not obligate itself in
advance to make renewals.
(h) A statement signed by offi-
cers making loan must be
attached to each note.
O REGULATION H
(Superseding Regulation H of 1916.)
ANALYSIS
Membership of State Banks and Trust
Companies.
I. STATUTORY REQUIREMENTS.
Section 9 of the Federal Reserve Act, as
amended by the act approved June 21, 1917,
which authorizes State banks and trust com-
panies to become members of the Federal
Reserve System, is quoted in the appendix to
this regulation on page 24.
II. BANKS ELIGIBLE FOR MEMBERSHIP.
A State bank or a trust company to be
eligible for membership in a Federal Reserve
Bank must comply with the following condi-
tions:
Membership of State Banks and Trust
Companies.
I. Statutory Requirements—See
Section 9 of the Federal Reserve
Act, page 11.
II. Banks Eligible for Member-
ship must
O See page 11.
Twenty-two


º
º
f
REGULATION H
ANALYSIS
(1) It must have been incorporated under a
special or general law of the State or district
in which it is located.
(2) It must have a minimum paid-up unim-
paired capital stock as follows:
In cities or towns not exceeding 3,000
inhabitants, $25,000.
In cities or towns exceeding 3,000 but
notexceeding 6,000 inhabitants, $50,000.
In cities or towns exceeding 6,000 but
not exceeding 50,000 inhabitants,
$100,000.
In cities exceeding 50,000 inhabitants,
$200,000.
III. APPLICATION FOR MEMBERSHIP.
Any eligible State bank or trust company
may make application on F. R. B. Form 83a,
made a part of this regulation, to the Federal
Reserve Board for an amount of capital stock
in the Federal Reserve Bank of its district
equal to 6 per cent of the paid-up capital stock
and surplus of such State bank or trust com-
pany. This application must be forwarded
direct to the Federal Reserve Agent of the dis-
trict in which the applying bank or trust com-
pany is located and must be accompanied by
Exhibits I, II, and III, referred to on page 1
of the application blank.
IV. APPROVAL OF APPLICATION.
In passing upon an application the Federal
Reserve Board will consider especially—
(1) The financial condition of the applying
bank or trust company and the general char-
acter of its management.
(2) Whether the corporate powers exercised
by the applying bank or trust company are
consistent with the purposes of the Federal
Reserve Act.
(3) Whether the laws of the State or district
in which the applying bank or trust company
is located contain provisions likely to prevent
proper compliance with the provisions of the
Federal Reserve Act and the regulations of
the Federal Reserve Board made in conformity
therewith.
If, in the judgment of the Federal Reserve
Board, an applying bank or trust company
conforms to all the requirements of the Federal
Reserve Act and these regulations, and is
otherwise qualified for membership, the Board
will issue a certificate of approval subject to
such conditions as it may deem necessary to
insure compliance with the act and these regu-
lations. When the conditions imposed by the
Board have been accepted by the applying
bank or trust company the Board will issue a
certificate of approval, whereupon the applying
bank or trust company shall make a payment to
(1) Be incorporated under law of
state or district where locat-
eCl.
(2) Have minimum paid-up un-
impaired Capital stock
Not exceeding 3,000
inhabitants... . . . $25,000
3,000 to 6,000 in-
habitants... . . . . . $50,000
6,000 to 50,000 in-
habitants... . . . . $100,000
Exceeding 50,000 in-
habitants........ $200,000
III. APPLICATION FOR MEM-
BERSHIP.
(a) To be made on F. R. B. Form
83a to Reserve Board.
(b) For amount of Capital Stock
in Reserve Bank equal to 6%
of its paid-in capital and sur-
plus
(1) Application to be forward-
ed direct to Federal Re-
serve Agent of its district.
IV. APPROVAL OF APPLICATION.
Reserve Board will consider espe-
cially
1. Financial condition and general
character of its management.
2. Nature , of corporate powers
exercised.
3. Whether laws of its state or
district contain provisions likely
to prevent compliance with
Act or regulations of Board.
When conditions imposed by
Board have been accepted, Board
will issue certificate of approval,
when applicant shall

Twenty-three
REGULATION H
ANALYSIS
the Federal Reserve Bank of its district of
one-half of the amount of its subscription, i.e.,
3 per cent of the amount of its paid-up capital
and surplus, and upon receipt of this payment
the appropriate certificate of stock will be issued
by the Federal Reserve Bank. The remaining
half of the subscription of the applying bank
or trust company shall be subject to call when
i. necessary by the Federal Reserve
OarC1.
V. POWERS AND RESTRICTIONS.
Every State bank or trust company while a
member of the Federal Reserve System—
(1) Shall retain its full charter and statutory
rights as a State bank or trust company, sub-
ject to the provisions of the Federal Reserve
Act and to the regulations of the Federal
Reserve Board, including any conditions embod-
ied in the certificate of approval.
(2) Shall maintain such improvements and
changes in its banking practice as may have
been specifically required of it by the Federal
Reserve Board as a condition of its admission
and shall not lower the standard of banking
then required of it; and
(3) Shall enjoy all the privileges and observe
all those requirements of the Federal Reserve
Act and of the regulations of the Federal
Reserve Board made in conformity therewith
which are applicable to State banks and trust
companies which have become member banks.
VI. EXAMINATIONS AND REPORTS.
Every State bank or trust company, while a
member of the Federal Reserve System, shall
be subject to examinations made by direction
of the Federal Reserve Board or of the Federal
Reserve Bank by examiners selected or approved
by the Federal Reserve Board.
In order to avoid duplication, examinations
of State banks and trust companies made by
State authorities will be accepted in lieu of
examinations by examiners selected or approved
by the Board wherever these are satisfactory
to the directors of the Federal Reserve Bank
and where, in addition, satisfactory arrange-
ments for co-operation in the matter of exami-
nation between the designated examiners of the
Board and those of the States already exist
or can be effected with State authorities.
Examiners from the staff of the Board or of
the Federal Reserve Banks will, whenever
desirable, be designated by the Board to act
with the examination staff of the State in order
that uniformity in the standard of examination
may be assured.
(a) Make payment to Reserve
Bank of 3% of its capital and
surplus, and receive certificate
of stock.
(b) Remaining half of subscription
subject to call by the Reserve
Board.
V. POWERS AND RESTRICTIONS.
While a member shall
1. Retain full charter and statu-
tory rights, subject to provisions
of Act and Regulations of
Board.
2. Maintain such improvements
and changes in its banking
practice as required by Board
at its admission.

. Enjoy all privileges and observe
all requirements of Act and
Regulations of Board applica-
ble to them.
VI. EXAMINATIONS AND REPORTS.
1. Examinations made by exami-
ners approved by Board.
(a) Examinations made by State
authorities accepted in lieu
thereof when satisfactory to
directors of Reserve bank,
and wherever consistent.
Twenty-four


REGULATION H
ANALYSIS
Every State bank or trust company, while a
member of the Federal Reserve System, shall
be required to make in each year not less than
three reports of condition and of the payment of
dividends. Such reports shall be made to the
Federal Reserve Bank of its district on call of
such bank on dates to be fixed by the Federal
Reserve Board.
2. At least 3 reports of condition
and payment of dividends to
be made each year to its Reserve
Bank on call of Bank on dates
fixed by Reserve Board.
© REGULATION I
(Superseding Regulation I of 1916.)
ANALYSIS
Increase or Decrease of Capital Stock of
Federal Reserve Banks.
INCREASE OF CAPITAL STOCK.
Whenever the capital stock of any Federal
Reserve Bank shall be increased by new banks
becoming members, or by the increase of capital
or surplus of any member bank and the allot-
ment of additional capital stock to such bank,
the board of directors of such Federal Reserve
Bank shall certify such increase to the Comp-
troller of the Currency on Form 58, which is
made a part of this regulation.
DECREASE OF CAPITAL STOCK.
I. Whenever a member bank reduces its
capital stock or surplus, and, in the case of
reduction of its capital, such reduction has
been approved by the Comptroller of the
Currency and by the Federal Reserve Board
in accordance with the provisions of section 28
of the Federal Reserve Act, it shall file with
the Federal Reserve Bank of which it is a
member an application on Form 60, which
is made a part of this regulation. When this
application has been approved, the Federal
Reserve Bank shall take up and cancel the
receipt issued to such bank for cash payments
made on its subscription and shall issue in
lieu thereof a new receipt after refunding
to the member bank the proportionate amount
due such bank on account of the subscription
canceled. The receipt so issued shall show the
date of original issue, so that dividends may
be calculated thereon.
II. Whenever a member bank shall be
declared insolvent and a receiver appointed by
the proper authorities, such receiver shall file
with the Federal Reserve Bank of which the
insolvent bank is a member an application on
Form 87, which is made a part of this regula-
tion, for the surrender and cancellation of the
stock held by, and for the refund of all balances
due to such insolvent member bank. Upon
approval of this application by the Federal
Reserve Agent the Federal Reserve Bank shall
accept and cancel the stock surrendered, and
shall adjust accounts between the member
Increase or Decrease of Capital
Stock.
INCREASE OF CAPITAL STOCK.
Form 58 to be sent to Comptroller
when Capital stock of Reserve
Bank is increased.
1. By new members,
2. By increase of Capital or sur-
plus of member.
DECREASE OF CAPITAL STOCK.
I. Form 60 to be filed with its
Reserve Bank when member
reduces its capital or surplus
(capital reduction being ap-
proved by Comptroller and
Board). Upon approval, new
receipt will be issued showing
original issue.
II. When declared insolvent Form
87 shall be filed by Receiver
with member's Reserve Bank.
Upon approval by Federal
Reserve Agent, Reserve Bank
shall adjust accounts and pay
any balance to Receiver.


O Sea page 8. Twenty-five
REGULATION I
ANALYSIS
bank and the Federal Reserve Bank by apply-
ing to the indebtedness of the insolvent mem-
ber bank to such Federal Reserve Bank all
cash-paid subscriptions made by it on the
stock canceled with one-half of 1 per centum
per month from the period of last dividend, if
earned, not to exceed the book value thereof,
and the balance, if any, shall be paid to the
duly authorized receiver of such insolvent
member bank.
III. Whenever a member bank goes into
voluntary liquidation and a liquidating agent
is appointed, such agent shall file with the
Federal Reserve Bank of which it is a member
an application on Form 86, which is made a
part of this regulation, for the surrender and
cancellation of the stock held by and for the
refund of all balances due to such liquidating
member bank. Upon approval of this applica-
tion by the Federal Reserve Agent the Federal
Reserve Bank shall accept and cancel the stock
surrendered, and shall adjust accounts between
the liquidating member bank and the Federal
Reserve Bank by applying to the indebtedness
of the liquidating member bank to such Federal
Reserve Bank all cash-paid subscriptions made
by it on the stock canceled with one-half of 1
per centum per month from the period of last
dividend, if earned, not to exceed the book
value thereof, and the balance, if any, shall
be paid to the duly authorized liquidating
agent of such liquidating member bank.
IV. Whenever the stock of a Federal Re-
serve Bank shall be reduced in the manner
provided in Paragraphs I, II, or III of this
regulation the board of directors of such
Federal Reserve Bank shall, in accordance
with the provisions of section 6, file with the
Comptroller of the Currency a certificate
of such reduction on Form 59, which is made
a part of this regulation.
III. When bank goes into volun-
IV.
tary liquidation Form 86 shall
be filed by Liquidating Agent
with member's Reserve Bank.
Upon approval, Reserve Bank
shall adjust accounts and pay
any balance to Liquidating
Agent.
Form 59 shall be filed with
Comptroller when Reserve
Bank’s stock has been reduced
as above.
e REGULATION J
(Superseding Regulation J of 1916.)
ANALYSIS
Check Clearing and Collection.
Section 16 of the Federal Reserve Act
authorizes the Federal Reserve Board to require
each Federal Reserve Bank to exercise the
function of a clearing house for its member
banks, and section 13 of the Federal Reserve
Act, as amended by the act approved June 21,
1917, authorizes each Federal Reserve Bank
to receive from any nonmember bank or trust
company, solely for the purposes of exchange
or of collection, 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 com-
pany maintains with its Federal Reserve Bank
Check Clearing and Collection.
I. Statutory provision.

O See pages 17 and 26. Twenty-six
REGULATION J
ANALYSIS
a balance sufficient to offset the items in transit
held for its account by the Federal Reserve
Bank.
In pursuance of the authority vested in it
under these provisions of law, the Federal
Reserve Board, desiring to afford both to the
public and to the various banks of the country
a direct, expeditious, and economical system
of check collection and settlement of balances,
has arranged to have each Federal Reserve
Bank exercise the functions of a clearing house
for such of its member banks as desire to avail
themselves of its privileges and for such State
banks and trust companies as may maintain
with the Federal Reserve Bank a balance
sufficient to qualify it as a clearing member
under the provisions of section 13.
Each Federal Reserve Bank shall exercise
the functions of a clearing house under the fol-
lowing general terms and conditions:
(1) Each Federal Reserve Bank will receive
at par from its member banks and from non-
member banks in its district which have become
clearing members, checks' drawn on all mem-
ber and clearing member banks and on all other
nonmember banks which agree to remit at par
. the Federal Reserve Bank of their
istrict.
(2) Each Federal Reserve Bank will receive
at par from other Federal Reserve Banks and
will receive at par from all member and clearing
member banks, regardless of their location,
for the credit of their accounts with their
respective Federal Reserve Banks, checks
drawn upon all member and clearing member
banks of its district and upon all other non-
member banks of its district whose checks can
be collected at par by the Federal Reserve
Bank. The Federal Reserve Banks will pre-
pare a par list of all nonmember banks, to be
revised from time to time, which will be fur-
nished to member and clearing member banks.
(3) Immediate credit entry upon receipt
subject to final payment will be made for all
such items upon the books of the Federal
Reserve Bank at full face value, but the pro-
ceeds will not be counted as part of the minimum
reserve nor become available to meet checks
drawn until actually collected, in accordance
with the best practice now prevailing.
(4) Checks received by a Federal Reserve
Bank on its member or clearing member banks
will be forwarded direct to such banks and will
not be charged to their accounts until sufficient
time has elapsed within which to receive advice
of payment.
II. Reserve Banks exercise the
functions of a clearing house
for member banks and such
state banks and trust com-
panies as maintain sufficient
balances, under the following
general terms and conditions:
1. Will receive at par from clearing
members, checks drawn on all
member and clearing member
banks and all nonmember banks
which agree to remit at par
through Reserve Bank of their
district.
. Will receive at par from other
Reserve Banks and all member
and clearing member banks,
regardless of location, for credit
of their accounts with Reserve
banks, checks upon its members
and nonmember banks when
collectible at par.
. Credit entry made at face value
(a) Proceeds not counted as
part of minimum reserve
nor available to meet checks
until actually collected.
. Checks received on its clearing
members forwarded direct to
such banks and not charged to
their accounts until sufficient
time for advice of payment has
elapsed.
* A check is generally defined as a draft or order upon a bank or order upon a bank
or banking house, purporting to be drawn upon a deposit of funds, for the payment
at all events of a certain sum of money to a certain person therein named, or to him
or his order, or to bearer, and payable instantly on demand.

Twenty-seven
REGULATION J
ANALYSIS
(5) In the selection of collecting agents for
handling checks on nonmember banks, which
have not become clearing members, member
banks will be given the preference.
(6) Under this plan each Federal Reserve
Bank will receive at par from its member and
clearing member banks checks on all member
and clearing member banks and on all other
nonmember banks whose checks can be col-
lected at par by any Federal Reserve Bank.
Member and clearing member banks will be
required by the Federal Reserve Board to pro-
vide funds to cover at par all checks received
from or for the account of their Federal Reserve
Banks: Provided, however, That a member or
clearing member bank may ship currency or
specie from its own vaults at the expense of
its Federal Reserve Bank to cover any defi-
ciency which may arise because of and only in
the case of inability to provide items to offset
checks received from or for the account of its
Federal Reserve Bank.1
(7) Section 19 of the Federal Reserve Act
provides that—
The required balance carried by a member
bank with a Federal Reserve Bank may, under
the regulations and subject to such penalties
as may be prescribed by the Federal Reserve
Board, be checked against and withdrawn by
such member bank for the purpose of meeting
existing liabilities: Provided, however, That no
bank shall at any time make new loans or shall
pay any dividends unless and until the total
balance required by law is fully restored.
It is manifest that items in process of col-
lection can not lawfully be counted as part of
the minimum reserve balance to be carried by
a member bank with its Federal Reserve Bank.
Therefore, should a member bank draw against
such items the draft would be charged against
its reserve balance if such balance were sufficient
in amount to pay it; but any resulting impair-
ment of reserve balances would be subject to
all the penalties provided by the Act.
In as much as it is essential that the law in
respect to the maintenance by member banks
of the required minimum reserve balance shall
be strictly complied with, the Federal Reserve
Board, under authority vested in it by section
19 of the Act, hereby prescribes as the penalty
for any deficiency in reserves a sum equivalent
to an interest charge on the amount of the
deficiency of 2 per cent per annum above the
ninety day discount rate of the Federal Reserve
Bank of the district in which the member bank
is located. The Board reserves the right to
5. Member banks given preference
as collecting agents.
. Member and clearing member
banks required to provide funds
to cover all checks of its Reserve
Bank
(a) May ship currency or specie
from its own vaults at
expense of its Reserve Bank
to cover any deficiency.
. Required balance carried with
Reserve Banks may be checked
against and withdrawn,
(a) No bank shall make new
loans or pay dividends until
ºal balance is fully restor-
eOl.
(b) Should member draw against
item in process of collection,
draft would be charged
against reserve balance and
if thereby impaired, sub-
ject to penalties provided.
(c) Penalty for deficiency in
reserve balance equivalent
to interest charge of 2% per
annum above 90 day dis-
count rate of its Reserve
Bank.

1 In accordance with instructions issued by the Federal Reserve Board on April
24, 1917, the various Federal Reserve Banks have issued circulars setting forth the
conditions under which their respective member banks may draw drafts on their
Reserve Bank accounts payable with or through any other Federal Reserve Bank.
*
*
-
Twenty-eight
º
*
REGULATION J
ANALYSIS
increase this penalty whenever conditions
require it.
For the purpose of keeping their reserve
balances intact member banks may at all times
have recourse to the rediscount facilities offered
by their respective Federal Reserve Banks.
(8) Each Federal Reserve Bank will deter-
mine by analysis the amounts of uncollected
funds appearing on its books to the credit of
each member bank. Such analysis will show
the true status of the reserve held by the Federal
Reserve Bank for each member bank and will
enable it to apply the penalty for impairment
of reserve.
A schedule of the time required within which
to collect checks will be furnished to each bank
to enable it to determine the time at which any
item sent to its Federal Reserve Bank will be
counted as reserve and become available to
meet any checks drawn.
(9) In handling items for member and clear-
ing member banks, a Federal Reserve Bank
will act as agent only. The Board will require
that each member and clearing member bank
authorize its Federal Reserve Bank to send
checks for collection to banks on which checks
are drawn, and, except for negligence, such
Federal Reserve Bank will assume no liability.
Any further requirements that the Board may
deem necessary will be set forth by the Federal
Reserve Banks in their letters of instruction
to their member and clearing member banks.
Each Federal Reserve Bank will also promul-
gate rules and regulations governing the details
of its operations as a clearing house, such rules
and regulations to be binding upon all member
and nonmemberbanks which are clearing through
the Federal Reserve Bank.
(10) The cost of collecting and clearing
checks must necessarily be borne by the banks
receiving the benefit and in proportion to the
service rendered. An accurate account will
be kept by each reserve bank of the cost of
performing this service and the Federal Reserve
Board will, by rule, fix the charge, at so much
per item, which may be imposed for the service
of clearing or collection rendered by the reserve
banks, as provided in section 16 of the Federal
Reserve Act.
8. Reserve Bank will determine by
analysis amounts of uncollected
funds appearing on its books
to credit of each member.
(a) Schedule of time required
to collect checks furnished.
9. Reserve Bank acts as agent
only,
10. Cost of collecting and clearing
checks proportioned according
to service rendered.


Twenty-nine
APPENDIX TO REGULATION E
(Page Seventeen)
“NET FUNDED INDEBTEDNESS.”
The term “net funded indebtedness” is
hereby defined to mean the legal gross
indebtedness of the municipality (includ-
ing the amount of any school district or
other bonds which depend for their
redemption upon taxes levied upon
property within the municipality) less
the aggregate of the following items:
(1) The amount of outstanding bonds
or other debt obligations made
payable from current revenues;
(2) The amount of outstanding bonds
issued for the purpose of pro-
viding the inhabitants of a
municipality with public utili-
ties, such as waterworks, docks,
electric plants, transportation
facilities, etc.: Provided, That
evidence is submitted showing
that the income from such utili-
ties is sufficient for maintenance,
for payment of interest on such
bonds, and for the accumulation
of a sinking fund for their
redemption;
(3) The amount of outstanding im-
provement bonds, issued under
laws which provide for the levy-
ing of special assessments against
abutting property in amounts
sufficient to insure the payment
of interest on the bonds and the
redemption thereof: Provided,
That such bonds are direct
obligations of the municipality
and included in the gross in-
debtedness of the municipality;
(4) The total of all sinking funds
accumulated for the redemption
of the gross indebtedness of the
municipality, except sinking
funds applicable to bonds just
described in (1), (2), and (3)
above.
“EXISTENCE’’ AND “NONDEFAULT.”
Warrants will be construed to comply
with that part of I (c) of Regulation E
relative to term of existence and non-
default, under the following condi-
tions:
(1) Warrants issued by or in behalf of
any municipality which was, subsequent
to the issuance of such warrants, con-
solidated with or merged into an existing
political division which meets the re-
quirements of these regulations, will be
deemed to be the warrants of such
political division: Provided, That such
warrants were assumed by such political
division under statutes and appropriate
proceedings the effect of which is to make
such warrants general obligations of such
assuming political division and payable,
either directly or ultimately, without
limitation to a special fund from the
proceeds of taxes levied upon all the
taxable real and personal property within
its territorial limits.
(2) Warrants issued by or in behalf
of any municipality which was, subse-
quent to the issuance of such warrants,
wholly succeeded by a newly organized
political division whose term of existence
added to that of such original political
division or of any other political division
so succeeded, is equal to a period of 10
years will be deemed to be warrants of
such succeeding political division: Pro-
vided, That during such period none of
such political divisions shall have default-
ed for a period exceeding 15 days in the
payment of any part of either principal
or interest of any funded debt authorized
to be contracted by it: And provided
further, That such warrants were assumed
by such new political division under stat-
utes and appropriate proceedings the effect
of which is to make such warrants general
obligations of such assuming political
division and payable, either directly or
ultimately, without limitation to a special
fund from the proceeds of taxes levied
upon all the taxable real and personal
property within its territorial limits.
(3) Warrants issued by or in behalf of
any municipality which, prior to such
issuance, became the successor of one or
more, or was formed by the consolidation
or merger of two or more, preexisting
political divisions, the term of existence
of one or more of which, added to that of
such succeeding or consolidated political
division, is equal to a period of 10 years,
will be deemed to be warrants of a
political division which has been in
existence for a period of 10 years; Pro-
vided, That during such period none of
such original, succeeding, or consolidated
political divisions shall have defaulted
for a period exceeding 15 days in the
payment of any part of either principal
or interest of any funded debt authorized
to be contracted by it. º


Thirty
FEDERAL
RESERVE ACT
as Amended
CONTENTS
PAGE
Amendments to the Federal Reserve Act Outlined... iii
Index to Federal Reserve Act as Amended. . . . . . . . v-xii
Complete Text of Federal Reserve Act as Amended 1–36
Amendment Approved August 4, 1914. . . . . . . . . . . 35
Amendments of August 15, 1914,
and March 3, 1915, no longer in effect
Amendment Approved September 7, 1916... 17–22, 33–34
Amendment Approved June 21, 1917,
4, 8, 11-13, 17-19, 21-27, 29–30, 32
Kern Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . . 36
The regular type indicates the original teact of the
Federal Reserve Act. The Bold Face type indicates
the actual changes in the various amendments. The
complete teact of the sections amended has been re-
printed in the amendments approved, but we have
shown only the actual changes from the original act
in bold face, and eliminated entirely the portions
which are no longer in effect. In other words, the
Federal Reserve Act as herein printed is as it is
effective.—June 21, 1917.




Copyright 1917 by
National Bank News
Philadelphia

AMENDMENTS TO THE FEDERAL
RESERVE ACT
Approved August 4, 1914, Affecting Paragraph
Sec. 27. Emergency Currency Act. . . . . . . . . . . . . . . . . . . . . . . . .
Approved August 15, 1911, Affecting
Sec. 19. Reserves. This amendment was superseded by
amendment approved June 21, 1917.
Approved March 3, 1915, Affecting
Sec. 13. Acceptances—Giving banks permission, by authority
of Federal Reserve Board, to accept up to 100%
of capital and surplus. This amendment was
omitted in amendment approved September 7,
1916, but amendment of June 21, 1917, contained
practically the same matter . . . . . . . . . . . . . . . . . . . . . . . . . 92
Approved September 7, 1916, Affecting
Sec. 11. Reserves. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Sec. 13. Collections by Federal Reserve Banks. . . . . . . . . . . . . . . . . . . 88
Discount operations. . . . . . . . . . . . . . . . . . . . . . . . . . . . 89–90, 95
Acceptances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91–92
Advances on promissory notes. . . . . . . . . . . . . . . . . . . . . . . . . 93
National Banks as agents or brokers . . . . . . . . . . . . . . . . . . . 96
Drafts or bills of exchange to furnish dollar exchange. . . . .97
Sec. 14. Foreign Correspondents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
Sec. 16. Note Issues. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
Sec. 24. Loans on Farm Lands or Real Estate. . . . . . . . . . . . . . . . . . . 153
Sec. 25. Foreign Branches and international or foreign
banking... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155–162
Approved June 21, 1917, Affecting
Sec. 3. Branch Reserve Banks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Sec. 4. Chairman and Reserve Agent. . . . . . . . . . . . . . . . . . . . . . . 43–44
Sec. 9. Membership of State Banks and Trust Companies. . . . . 54–64
Sec. 13. Character of deposits in Reserve Banks, and permit-
ting collection charges for exchange. . . . . . . . . . . . . . . . . . . 88
Acceptances—permission granted to accept up to
100% of capital and surplus . . . . . . . . . . . . . . . . . . . . . . . . 92
Sec. 14. Foreign Agencies and Correspondents. . . . . . . . . . . . . . . . . . 103
Sec. 16. Reserve Banks permitted to exchange Federal
reserve notes for gold and gold certificates,
107–109, 111–113
Gold Settlement Fund. . . . . . . . . . . . . . . . . . . . . . . . . . . 121–123
Sec. 17. Deposit of Government Bonds. . . . . . . . . . . . . . . . . . . . . . . . 124
Sec. 19. Reserve requirements of member banks. . . . . . . . . . . . 134–142
Sec. 22. Limitations as to fees and benefits to Directors,
Officers and Employees of member banks. . . . . . . . . . . . 150



iii
.
Alphabetical Index to Federal Reserve Act
as Amended
Paragraph
Acceptances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91–95, 103
Bankers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
On domestic transactions limited. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
Permission to accept up to 100% of capital and surplus. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
Accept drafts or bills of exchange........ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92, 97
Accounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88, 103, 161
Of foreign agencies and correspondents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
Of foreign branches . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 161
Advances on Promissory Notes...... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
Advisory council. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86–87
Agencies in foreign countries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
Agent or Broker, Member banks as... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
Agricultural products... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
Alter, amend or repeal act...... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 168
Amendment:
Approved August 4, 1914. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165
Approved August 15, 1914, superseded by amendment of June 21, 1917
Approved March 3, 1915............ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
Approved September 7, 1916 . . . . . . . . . . . . . . . . . . . . . . . . . . . 85, 88–93, 95–97, 103, 107,153, 155–162
Approved June 21, 1917. . . . . 15, 43–44, 54–64, 88, 92, 103, 107–109, 111–113, 121–124, 134–142, 150
To Section 3. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
To Section 4. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43–44
To Section 9.... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54–64
To Section 11... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
To Section 13. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88–93, 95–97
To Section 14. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
To Section 16... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107–109, 111–113, 121–123
To Section 17. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124
To Section 19. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134–142
To Section 22. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150
To Section 24. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153
To Section 25...... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155–162
To Section 27... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165
Approved. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 169
Assets—doubtful to be written off. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Assistant Secretaries of the Treasury not eligible for position with member bank. . . . . . . . . . . . . . 66
Attorneys
Limitation as to fees and benefits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150
B
Balance
How to estimate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141
In reserve banks may be checked against. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 140
To be maintained to offset items. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
Bank—meaning of... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.
Banks, adopt resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bills. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accepted for rediscount as security for notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bills of Exchange
Acceptances of . . . . . . . ‘. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accepted to furnish dollar exchange. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Advances on promissory notes secured by . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Collateral security for Federal reserve notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Discount of, arising out of actual commercial transactions
Discounted for state members. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Drawn against money actually on deposit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .:
In foreign countries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Limitation of amount rediscounted. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Open-market operations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ;
Operations subject to restrictions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchase and sale of... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Board, meaning of... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - ‘. . . .
Bonds—State and political sub-divisions. . . . . . . . . . . . . . . . . . . . . . . . - - - - - - - - - - - - - - - - - - - - - - - - - - - 100
Of U. S. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89, 93, 99–100
Branch Reserve Bank. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . * * * * * 15
Broker, Member banks as...... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - - - - - - - - - - - - - - - - - - - - - - 96
C
Cable transfers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
Capital stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4, 48–49
May be reduced by national banks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166
Of banks or corporations engaged in international or foreign banking. . . . . . . . . . . . . . . . . . . 157–160
State banks must possess sufficient capital to become national. . . . . . . . . . . . . . . . . . . . . . . . . . . . 54


V
Paragraph

Certificate of organization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Charges for collection. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
Charter bonds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124
Checks........ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . " ' ' ' ' ' ' ' ' ' ' ' ' ' 88, 119
Certification of by State members . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Clearing of . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119
Collection of . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
Circulation:
By Federal Reserve Banks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27, 129–130
Cancel and retire. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128
Federal Reserve Bank—permitted to take out. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129
Federal Reserve Bank—not limited. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130
Limit of liability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
May retire after two years. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125
National bank notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
Cities—Federal Reserve. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - - 2
Cities—In which banks may make farm loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 154
Cities—Reserve and central reserve. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137, 138
Cities—Increase or decrease number of reserve or central reserve. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Classified service. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
Clearing checks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88, 119
Collateral. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99, 112
To secure notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
Collection of notes and bills. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
harges for . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commercial transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . . - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 89, 101, 103
Comptroller of the Currency:
Approve reduction capital national banks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166
Approve State bank conversion into National Association . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Authorize Federal Reserve Bank to begin business. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Certificate showing change Federal Reserve Bank stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48–49
Compensation increased. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Condition of foreign branches to be furnished. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159
Control and custody of plates and dies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116
Deposit finished notes in available places. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115
Examine member banks...... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144
Forward application blanks.... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Ineligible to hold office in any member bank. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Issue and retirement of Federal Reserve notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Issue and retirement of bond secured notes of reserve banks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130
Member of organization committee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - - - - - - - -
Member of Federal Reserve Board. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . 65
Organization certificate transmitted to . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Prepare plates and dies for printing notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - - - - - - - - - - 114
Prescribe rules for bank to act as agent or broker. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
Recommend salaries examiners. . . . . . . . . .* - - - - - - - - - - - - - - - - - - - - - - - - . . . . . . . . . . . . . . . . . . . . . . 145
Suit for dissolution national bank. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
To give certificate on conversion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Upon filing certificates Federal Reserve Board shall have power. . . . . . . . . . . . . . . . . . . . . . . . . . 19
Correspondents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
Court decisions limited. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167
Credit, lines of... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146
D
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deposit, limit in non-member. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139
Deposits:
Current funds. . . . . . . . . . . . . . '• - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - . . . . . . . . . . . . . . . . . . . . . . . . 88
emand. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134
Exception to liability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
Government. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
Philippine Islands. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
Received from member banks at par. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119
By Federal Reserve Banks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119
Redemption fund........ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
To retire Federal Reserve notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
lme. . . . . . . . . . . . . . . . . . . .
• * * * * * * * * * * * * * - - - - - - - - - - - - - - - - - - . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134
Directors: -
Class “A”. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Class ‘‘B’. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
. Class ‘‘B’ cannot be officer any bank. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Qlass 9... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34.43
Qlass “C” cannot be officer or stockholder any bank..... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . '3?
Compensation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Federal Reserve Bank to control. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
How chosen. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Number and term of office. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Qf branch reserve banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.
Qualifications Federal Reserve Banks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36.37
State institutions continue. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . '53
Subject to orders, Federal Reserve Board. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Terms of office. . . . . . . . . . . . . . . . . -------- ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Vacancies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47




Paragraph
Extended by Federal Reserve Bank. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Federal Reserve Banks required. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Limit as to amount. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89, 90, 95
Ninety-day bills. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
No member shall act as medium of a non-member. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139
Of acceptances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
Rates fixed by board. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Restrictions of state members. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Dissolution:
National banks... . . . . . . . . . . . . . ‘. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Not impair remedy ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
District reserve elector. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Districts: -
Established by... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... 16
Geographical limits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
umber. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Readjusted. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . * - ------ - - - - - - - - - - -... . . . . . 2
Dividend. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Cumulative... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Liability for dividends. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
Unearned prohibited. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Dollar exchange. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
Domestic Acceptances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
Limitation of, accepted. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
Double liability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5, 152
Drafts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89, 90, 92,93, 95
Acceptances of . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92'
Advances on promissory notes secured by . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .98
Collection of... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
Discount of...... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
Drawn against money actually on deposit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
Drawn to furnish dollar exchange. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
Limit of discount. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
E.
Earnings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50–51
Electors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Emergency Currency Act extended. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 164
Tax changed... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 164
Examinations:
Branches abroad. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159
By Federal Reserve Banks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 146
By State authorities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144
Cost to be borne by member banks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145
Every member bank twice each year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144
Of Federal Reserve Banks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148
Of State member banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58–59
Special examination of Federal Reserve Bank on application ten member banks . . . . . . . . . . . . 148
Examiners:
Appointment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144
Jurisdiction of . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144
Of State banks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58–59, 63
Salaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145
Exchange charges. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
Executor... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Experienced in Banking:
Assistants to Federal Reserve Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Federal Reserve Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Members of Federal Reserve Board. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... 66
Expenses:
For collecting checks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119
Gold settlement fund. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122
Incident to Federal Reserve Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116
Of examination of State banks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
F
Federal advisory council. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86–87
Federal Reserve Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43, 107
Assistants to . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Holds security for Federal reserve notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107–112
To give bond. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Federal Reserve Banks:
Board of Directors. . . . . . . . . . . . . . ." . . . . . . . . . . . . . . . . . * * * * . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Certificate of organization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - - -
Character of deposits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deal in gold coin and bullion
Deposit United States Bonds and receive circulation
Exempt from taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General supervision. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
How organized. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .-
Into liquidation. . . . . . . --------------------------- . . . . . . . . . . . .
Issuing bank to have redeemed notes returned - -




Federal Reserve Banks: (Continued) Paragraph
Liabilities incurred. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
Make advances on promissory notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ; ; ; ; ... . . . . . . . . 93
May exchange bonds purchased from member banks for one-year notes and thirty-years, 133
8% bonds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -
No collection charges permitted against. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
Nonmember bank collections. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
Not to commence business until authorized by Comptroller. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Organization of . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Powers. . . . . . . . . . . . . . . . . . . . . . .
Reports of State members
Required capital. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ; ; ... . . . . . . . . . ; .
Shall control exchange one-year gold notes for 3% thirty-year bonds. . . . . . . . . . . . . . . . . . . . . .
Shall establish branches. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - - - -
State banks as stockholders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Stock, amount required by members. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - - 4
Stock, public subscription. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Stock, allot to United States. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Suspend for violation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
To be fiscal agents of the government. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
To bear expense of issue of notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116
To establish rates of discount. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
To purchase and sell bills of exchange. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
To receive deposits of government funds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
Under control board of directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29–30
Federal Reserve Board:
(See Powers Federal Reserve Board)
Membership... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Federal Reserve notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81, 106
Application for... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
Custody of. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
Exchange for gold. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
May be exchanged for gold out of redemption fund when presented to Treasury for other
purposes than redemption. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
Not to be reissued...... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
Qther appropriation made available for preparation..... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118
Redemption funds...... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
Reserve agent holds security for... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107–112
Retirement of. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
Unfit for use. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
Fees...other than usual salary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150
Fiscal agents of the United States... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104, 156
Five per cent. fund.... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
Foreign acceptances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . * . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign agencies and correspondents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
Foreign branches..... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 156, 159, 161
Accounts to be kept independently. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... 161
Franchise tax... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Qold certificates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gold deposits counted as lawful reserve
Gold, notes redeemed in
Gold redemption fund
Gold reserve
Importation or exportation
Indorsement....... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ineligible to hold office in any bank:
Comptroller of the Currency
Directors, Class B
Directors, Class C. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Members of Federal Reserve Board..
Secretary of the Treasury
Insurance companies—Banks as agents for...... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . §
Lawful L
*Wºul money. ...; . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -
Laws amended, Section 5154...... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88, 106, 108, 110 *::
Section 324.............. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ' ' ' ' ' ' ' ' ' ' ' ' 72
Section 5202. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ' ' ' ' ' ' ' ' 94
Section 5174. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ' ' ' ' ' ' ' ' 117
Gold standard act not repealed, ..... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 168
... Inconsistent provisions repealed..... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ' ' ' ' ' ' 163
Liquidation Federal Reserve Bank... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Live stock paper.................... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
Banks as agent or broker in procuring....... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
Loans to bank examiners prohibited. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ' ' ' ' ' ' ' ' ' ' ' ' ' 149
Loans on farm lands..... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153
Secured by real estate........ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 158




W111



M Paragraph
Member bank, meaning of... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
National banks: N
Penalty fail to join system. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6–7
Required to join. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
National Bank notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
Redemption funds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
Note issues. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
Notes..... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89–90
Deposited with Treasury, United States. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115
Lien on all assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
Maturity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
Method of retiring. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
Not to be reissued. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
Plates and dies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114
Redemption. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108–111
Reserve agent to hold security for . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107–112
Serial number. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
When issued on bonds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130
Oath: O
Members Federal Reserve Board must subscribe to oath of office. . . . . . . . . . . . . . . . . . . . . . . . . 66
Members Federal Reserve Board certify under oath not an officer or stockholder of any bank. 68
s National Bank Examiners may put officers under oath. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144
Officers, amenable to penalties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Open-market operations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . • - - - - - - - - - - - - - - - - - - - - - - - - - - - - 98
Organization Committee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Approve reduction capital stock of national banks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166
Approve Comptroller's form of resolution for stock subscription. . . . . . . . . . . . . . . . . . . . . . . . . . 16
Call meetings of directors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Classify member banks into groups. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Give notice to subscribe. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Powers of . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . * - - - - - - - - - - - - - - - - - - - - - - - . . . 3.
Powers to incur expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
To act as chairman of Board, Federal Reserve Board. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
To establish districts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - - - - - - - - - - 16.
To fix date for the first meeting Federal Reserve Board. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68.
- P
Penalty for making loan to bank examiner. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149:
denalty for failure of state banks to file reports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Penalty for paying out notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
Plates and dies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114, 116–118
Postal savings deposits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105, 134
Powers of the Federal Reserve Board. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73–85
To act upon application of state banks for membership. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
To add to or reclassify existing reserve or central reserve cities. . . . . . . . . . . . . . . . . . . . . . . . . . . 77
To adopt regulations to control local office. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
To prescribe rules to govern branches Federal Reserve Bank. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
To adopt rules for transfer stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
To appoint Deputy Chairman. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
To approve application of any Federal Reserve Bank for the exchange at par 3% bonds for
one-year 3% gold notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
To approve application of Federal Reserve Bank for exchange 2% United States Bonds one-
year notes 3% without circulation privilege. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131
To approve applications for reduction capital of national banks. . . . . . . . . . . . . . . . . . . . . . . . . . 166
- To approve application for special examinations of member banks by Federal Reserve Banks 146
To approve compensation fixed by Federal Reserve Bank Boards. . . . . . . . . . . . . . . . . . . . . . . . . 45
To approve compensation of the members of Federal Advisory Council. . . . . . . . . . . . . . . . . . . . 86
To authorize issue of notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
To authorize examinations by State authorities or direct special examinations of State insti-
tutions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
To authorize suit to dissolve national banks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
To call for additional securities to protect notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
To call for remainder of stock subscription... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4, 48
To call meetings Federal Advisory Council. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
To call stock subscriptions of state member banks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
To consent to national banks located in Alaska to become member banks of any one of the
reserve districts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
To designate chairman of board. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
To designate Class “C” directors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34, 43
To designate Federal Reserve Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
To employ attorneys and others. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
To establish a graduated tax on reserves below requirements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
To examine and require reports from Federal Reserve and member banks. . . . . . . . . . . . . . . . . 73
To exercise the functions of a clearing house for Federal Reserve Banks, or may designate a
Federal Reserve Bank to exercise such functions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
To exercise supervision over Federal Reserve Banks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
File application to establish foreign branches. . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . 155, 156, 158
File application to invest in stock of banks or corporations. . . . . . . . . . . . . . . . . . . . . . . . . . . 155, 157
First meeting to be held in Washington. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
To fix compensation Federal Reserve Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
To fix by rule charges to be collected by member banks from patrons for collecting checks... 119
To fix the rate of interest to be paid by Federal Reserve Board for notes issued to it. . . . . . . . 109
To fix penalties under which member banks may check against balances. . . . . . . . . . . . . . . . . . . 140



IX

- - *
Powers of the Federal Reserve Board: (Continued) Paragraph
To fix salaries of bank examiners upon recommendation of Comptroller. . . . . . . . . . . . . . . . . . . 145
Foreign operations reserve banks subject to consent Reserve Board. . . . . . . . . . . . . . . . . . . . . . . 103
To give permission to a member bank to apply for discount for a non-member. . . . . . . . . . . . . . 139
To grant in whole or in part, or reject entirely, any application for Federal Reserve notes... 109
To grant special permission to national banks to act as trustee, etc..... . . . . . . . . . . . . . . . . . . . 83
- To have general supervision over the issue of national currency. . . . . . . . . . . . . . . . . . . . . . . . . . 72
To have control over Board of Directors of Federal Reserve Banks. . . . . . . . . . . . . . . . . . . . . . . 30
To have power to add to list of cities in which National banks shall not be permitted to loan
on real estate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 154
To have power to determine character of the paper. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
To increase or decrease number of places where banking operations may be carried on . . . . . . 158
To issue regulations fixing charges governing the transfer of funds. . . . . . . . . . . . . . . . . . . . . . . . 120
To levy assessment semi-annually. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
To make regulations for its own conduct. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
To make rules and regulations for purchase and sale of bills eligible for discount. . . . . . . . . . . . 98
To make rules and regulations for purchase of bonds of any State, etc. . . . . . . . . . . . . . . . . . . . . 100
To make rules and regulations in re-applications made by State banks. . . . . . . . . . . . . . . . . . . . 54
May require surrender of stock or restore membership. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
To order an examination once each year of each Federal Reserve Bank. . . . . . . . . . . . . . . . . . . . 148
To permit Federal Reserve Banks to establish branches. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
To permit interlocking of directors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 162
To permit or require Federal Reserve Banks to discount paper of other Federal Reserve Banks, 74
To permit member banks to carry reserves in Reserve Banks. . . . . . . . . . . . . . . . . . . - - - - - - - - - 85
To permit State banks to purchase stock Federal Reserve Bank. . . . . . . . . . . . . . . . . . . . . . . . . . 54
Permission to accept up to 100% of capital and surplus. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
To prescribe examinations applying banks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
To prescribe rules for purpose of furnishing dollar exchange. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
To prescribe rules and regulations for withdrawal of collateral. . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
To regulate charges for collection or exchange. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
To require bonds of assistants to Federal Reserve Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
To require bonds of Federal Reserve Agents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
To require Federal Reserve Bank to maintain redemption fund with United States. . . . . . . . . 109
To require Federal Reserve Banks to purchase bonds from banks. . . . . . . . . . . . . . . . . . . . . . . . . 126
To require deposit of gold with Treasury for redemption of notes. . . . . . . . . . . . . . . . . . . . . . . . . 111
To require any bank to surrender stock Federal Reserve Bank. . . . . . . . . . . . . . . . . . . . . . . . . . . 60
To require the writing off of doubtful assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
To restore membership upon proof... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
To restrict and limit transactions in domestic and foreign bills of exchange and acceptances. 95
To review discount rates established by Federal Reserve Banks. . . . . . . . . . . . . . . . . . . . . . . . . . 102
To suspend operation of any Federal Reserve Bank. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
To suspend member banks from privileges. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . , 60
To suspend or remove any officer or director of a Federal Reserve Bank. . . . . . . . . . . . . . . . . . . . 78
To suspend reserve requirements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
P tº: Supervise the issue and retirement of Federal Reserve notes. . . . . . . . . . . . . . . . . . . . . . . . . . . 76
*999 St. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Public subscriptions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . s:
Promissory notes, advances on . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
- Q
Quorum—Federal Advisory Council. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Organization Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Rates: R
Discounts fixed by board. . . . . . . . . . .• * * * * * * * * * * * * * * * * * * * * * - - - - - - - - - . . . . . . . . . . . . . . . . . . . 74
Real Estate:
Banks as agent or broker in procuring loans on. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . "96
Loans on. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153
Rediscounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
Eligible for. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
Limitations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
Refunding bonds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125
Repeal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 168
Reports:
Board may require. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
By Federal Reserve Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ' ' ' ' 43
By State banks becoming members. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ' ' ' ' ' 57
Federal Reserve Agent on notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ' ' ' ' ' ' ' ' ' 107
Federal Reserve Board. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
National Bank Examiners to report to Comptroller............... . . . . . . . . . . . . . . .' ' ' ' ' ' ' 144
Of State bank examiners. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ' ' ' ' ' ' ' ' ' 59
Publish weekly. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Representatives in Congress. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Reserve:
Suspend requirements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Reserve Agent:
Cease to act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Located in reserve district. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Reserves:
Against demand deposits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - - - - - - - - . . . 136–138
Against Time deposits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136–138
Amendment regarding. . . . . . . ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Balances in reserve banks to count as reserve. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141


X
}
Reserves: (Continued) Paragraph
Bank in a central reserve city. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138
Bank in a reserve city. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137
Bank not in a reserve city. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Bank reserves..... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85, 135–143
Carried in own vaults. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . * - - - - - - - - - - - - - - - - - - - - - - - - -
Estimating reserves. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141
Federal Reserve Banks, deposits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
Five per cent. fund not to be counted as part of lawful reserve. . . . . . . . . . . . - - - - - - - - - - - - - - - - 143
Gold deposits counted as lawful. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . * . . . . . . . . -- - - - - - ---------- 123
No bank under its reserve shall make new loans or pay dividends. . . . . . . . . --------------- . . . 140
Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
Required to be established. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135
State banks joining must comply . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - - - - - - - - - - - - - 57
With a Federal Reserve Bank may be checked against under rules. . . . . . . . . . . . . . . . . . . . . . . . 140
Reserve Cities:
Add to and reclassify. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Changing present status. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Defined . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - - - - - - - - - - - - - - - 2
Responsibility of stockholders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 152
Shareholders of Federal Reserve Banks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Salary: S
Employees of Federal Reserve Board. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
How raised. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Members of Advisory Council. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Federal Reserve Board. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Secretary of Treasury: -
Approve vouchers for expenses of Organization Committee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Authorized to receive deposits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121
Dispose of stock of Federal Reserve Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Ex-officio chairman Federal Reserve Board. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .... 68
Fix amount of note redemption fund. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
General direction of the Bureau of Comptroller of Currency. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Hold stock Federal Reserve Bank. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
May borrow gold, pledging bonds; or may buy gold, selling bonds. . . . . . . . . . . . . . . . . . . . . . . . 163
May suspend limitations on additional circulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165
Member of Federal Reserve Board. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Organization Committee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Net earnings, how used. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Powers of, unchanged . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Prescribe form of notes issued by reserve banks on government bonds. . . . . . . . . . . . . . . . . . . . . 130
Redemption of notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
To assign offices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66.
Use other appropriations for preparation of notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118
Security:
Advances on promissory notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
Dollar exchange. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
Exchange of . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
For acceptances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
For Federal reserve notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107, 109, 111
For loans of gold coin or bullion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
Loans on Farm Lands. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153
Senators cannot act as officer or director Federal Reserve Bank. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Shareholders, Federal Reserve Bank individually responsible. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Shares, converted banks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
State Banks:
Action upon application for membership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Amenable to penalties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
As members. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54–64
Authorized to join. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital requirements for membership. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Certifiation of checks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Examinations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - - - - - - - - - - - - - - - . . . . . . . . . . 58, 63
Must conform to provisions National Bank Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Requirements, restrictions, duties and penalties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57–64
Withdrawal from membership. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Stock:
Amount privately held limited. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Canceled. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48–49
Federal Reserve Bank allotted to United States. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Increase and decrease. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Member banks not transferable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Public. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Shares $100. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Subscriptions of state member banks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Transfer of . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Stocks and bonds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
Subscribe to capital stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4, 48
Subscriptions, stock Federal Reserve Bank. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Surplus fund. . . . . . . . . . . . . . . . . . . . . . . . ... • - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 50
Balance property United States. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
On liquidation Federal Reserve Bank. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Suspend officers and directors Federal Reserve Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78



X1
T Paragraph
Taxes, exemption. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Changed on emergency currency. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 164
Terms:
Acceptance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Meaning. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Members Federal Reserve Board. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Trust companies as member banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54–64
Trust companies in D.C.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trustee, appointment as... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Treasurer of the United States:
Notify member banks of bonds sold. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128
To report applications for sale of bonds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126
U
United States bonds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89, 99–100
Allot to each Federal Reserve Board. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127
Exchange 2% for 8%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131
Federal Reserve Banks to purchase..... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126
Refunding. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125
United States one-year 3%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132
Thirty-year 8%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132
V
Vacancies Federal Advisory Council. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Vacancy in Federal Reserve Board. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68–69
Violations, directors responsible. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Visitatorial powers...... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147
Voting power, only member banks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
W
Withdrawal of state bank or trust company from membership. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
-

xii


Federal Reserve Act
Approved December 23, 1913
Amendments: Approved August 4, 1914; August 15, 1914;
March 3, 1915; September 7, 1916, and June 21, 1917
An Act To provide for the establishment of Federal reserve banks,
to furnish an elastic currency, to afford means of rediscounting commercial
paper, to establish a more effective supervision of banking in the United
States, and for other purposes.
Be it enacted by the Senate and House of Representatives of the United
States of America in Congress assembled, That the short title of this Act
shall be the “Federal Reserve Act.”
Wherever the word “bank” is used in this Act, the word
1 Definitions. shall be held to include State bank, banking association,
and trust company, except where national banks or Federal reserve banks
are specifically referred to. -
The terms “national bank” and “national banking association”
used in this Act shall be held to be synonymous and interchangeable.
The term “member bank” shall be held to mean any national bank,
State bank, or bank or trust company which has become a member of
one of the reserve banks created by this Act. The term “board” shall be
held to mean Federal Reserve Board; the term “district” shall be held
to mean Federal reserve district; the term “reserve bank” shall be held
to mean Federal reserve bank.
FEDERAL RESERVE DISTRICTS.
Sec. 2. As soon as practicable, the Secretary
2 Organization committee. of the Treasury, the Secretary of Agriculture
and the Comptroller of the Currency, acting as “The Reserve Bank
Organization Committee,” shall designate not less than eight nor more
than twelve cities to be known as Federal reserve cities, and shall
divide the continental United States, excluding Alaska, into districts,
each district to contain only one of such Federal reserve cities. The
determination of said organization committee shall not be subject to
review except by the Federal Reserve Board when organized: Provided,
That the districts shall be apportioned with due regard to the con-
venience and customary course of business and shall not necessarily
be coterminous with any State or States. The districts thus created may
be readjusted and new districts may from time to time be created by
the Federal Reserve Board, not to exceed twelve in all. Such districts
shall be known as Federal reserve districts and may be designated by
number. A majority of the organization committee shall constitute a
quorum with authority to act.


1

Said organization committee shall be authorized
3 Organization of to employ counsel and expert aid, to take testimony,
reserve banks. 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 located. The said committee shall supervise the organization
in each of the cities designated of a Federal reserve bank, which shall
include in its title the name of the city in which it is situated, as “Federal
Reserve Bank of Chicago.”
Under regulations to be prescribed by the
4 National banks required organization committee, every national
and State banks and trust banking association in the United States is
companies authorized to ac- hereby required, and every eligible bank in
cept Act. 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 com-
mittee or of the Federal Reserve Board, one-sixth within three months
and one-sixth within six months thereafter, and the remainder of the
subscription, or any part thereof, shall be subject to call when deemed
necessary by the Federal Reserve Board, said payments to be in gold or
gold certificates.
The shareholders of every Federal
5 Shareholders of Reserve Banks reserve bank shall be held individually
individually responsible. responsible equally and ratably, and
not one for another, for all contracts, debts and engagements of such
bank to the extent of the amount of their subscriptions to such stock at
the par value thereof in addition to the amount subscribed, whether such
subscriptions have been paid up in whole or in part, under the provisions
of this Act.
Any national bank failing to signify its accep-
6 Penalty for failure to tance of the terms of this Act within the sixty
accept Act within 60 days aforesaid, shall cease to act as a reserve
days. agent, upon thirty days’ notice, to be given
within the discretion of the said organization committee or of the Federal
Reserve Board.
Should any national banking association in
7 National banks failing to the United States now organized fail within
become members within one one year after the passage of this Act to
gear forfeit national charters. become a member bank or fail to comply
with any of the provisions of this Act applicable thereto, all of the rights,
privileges, and franchises of such association granted to it under the
national-bank Act, or under the provisions of this Act, shall be thereby
forfeited. Any noncompliance with or violation of this Act shall, how-

2


ever, 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 non-
compliance or violation, other than the failure to become a member
bank under the provisions of this Act, every director who participated in
or assented to the same shall be held liable in his personal or individual
capacity for all damages which said bank, its shareholders, or any other
person shall have sustained in consequence of such violation.
8 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
9 Public subscription to stock of said Federal reserve banks or any
stock of reserve banks. one or more of them be, in the judgment of
the organization committee, insufficient to provide the amount of capital
required therefor, then and in that event the said organization committee
may, under conditions and regulations to be prescribed by it, offer to
public subscription at par such an amount of stock in said Federal reserve
banks, or any one or more of them, as said committee shall determine,
subject to the same conditions as to payment and stock liability as pro-
vided for member banks.
- No individual, copartnership, or corpora-
10 Amount of stock privately tion other than a member bank of its dis-
held limited. trict 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 stocks shall be known as public stock and may be
transferred on the books of the Federal reserve bank by the chairman of
the board of directors of such bank.
Should the total subscriptions by banks and the
11 Government stock. public to the stock of said Federal reserve banks,
or any one or more of them, be, in the judgment of the organization
committee, insufficient to provide the amount of capital required therefor,
then and in that event the said organization committee shall allot to the
United States such an amount of said stock as said committee shall deter-
mine. 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
12 Voting power. to voting power.
The Federal Reserve Board is hereby empowered
13 Stock transfers. to adopt and promulgate rules and regulations
governing the transfers of said stock.
No Federal reserve bank shall commence
14 Capital requirements— business with a subscribed capital less than
Reserve cities—Appropria- $4,000,000. The organization of reserve
tion for organization. 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



3

that may be carried with approved reserve agents located therein. The
organization committee shall have power to appoint such assistants
and incur such expenses in carrying out the provisions of this Act as it
shall deem necessary, and such expenses shall be payable by the Treasurer
of the United States upon voucher approved by the Secretary of the
Treasury, and the sum of $100,000, or so much thereof as may be neces-
sary, is hereby appropriated, out of any moneys in the Treasury not
otherwise appropriated, for the payment of such expenses.
BRANCH OFFICES.
Sec. 3. The Federal Reserve Board may per-
15 Branch reserve banks. mit or require any Federal reserve bank to
establish branch 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 regula-
tions as the Federal Reserve 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 Reserve Board.
FEDERAL RESERVE BANKS.
Sec. 4. When the organization committee shall
16 Stock subscription have established Federal reserve districts as
resolution. provided in section two of this Act, a certificate
shall be filed with the Comptroller of the Currency showing the geographi-
cal limits of such districts and the Federal reserve city designated in each
of such districts. The Comptroller of the Currency shall thereupon cause
to be forwarded to each national bank located in each district, and to such
other banks declared to be eligible by the organization committee which
may apply therefor, an application blank in form to be approved by the
organization committee, which blank shall contain a resolution to be
adopted by the board of directors of each bank executing such application,
authorizing a subscription to the capital stock of the Federal reserve bank
organizing in that district in accordance with the provisions of this Act.
When the minimum amount of capital stock pre-
17 Incorporation of scribed by this Act for the organization of any
reserve banks. Federal reserve bank shall have been subscribed
and allotted, the organization committee shall designate any five banks
of those whose applications have been received, to execute a certificate
of organization, and thereupon the banks so designated shall, under their
seals, make an organization certificate which shall specifically state the
name of such Federal reserve bank, the territorial extent of the district
over which the operations of such Federal reserve bank are to be carried
on, the city and State in which said bank is to be located, the amount
of capital stock and the number of shares into which the same is divided,
the name and place of doing business of each bank executing such certif-
icate, and of all banks which have subscribed to the capital stock of such
Federal reserve bank and the number of shares subscribed by each, and
the fact that the certificate is made to enable those banks executing
Note-Bold face type indicates matter added in amendment approved June 21, 1917. -

4

º
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.
18 The said organization certificate shall be acknowledged before a
judge of some court of record or notary public; and shall be, together with
the acknowledgment thereof, authenticated by the seal of such court,
or notary, transmitted to the Comptroller of the Currency, who shall file,
record and carefully preserve the same in his office.
19 Upon the filing of such certificate with the Comptroller of the Cur-
rency 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—
20 Corporate seal. First. To adopt and use a corporate seal.
Second. To have succession for a period
21 Twenty-year franchise. 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.
22 Contracts. Third. To make contracts.
Fourth. To sue and be sued, complain and
23 Court jurisdiction. defend, in any court of law or equity.
Fifth. To appoint by its board of directors
24 Appointment of officers such officers and employees as are not other-
and employees. wise provided for in this Act, to define their
duties, require bonds of them and fix the penalty thereof, and to dismiss
at pleasure such officers or employees. -
Sixth. To prescribe by its board of directors, by-laws
25 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,
26 Incidental powers. or duly authorized officers or agents, all powers
specifically granted by the provisions of this Act and such incidental
powers as shall be necessary to carry on the business of banking within
the limitations prescribed by this Act.
Eighth. Upon deposit with the Treasurer
27 Federal bank circulation of the United States of any bonds of the
on government bonds. 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 privilege, except that
the issue of such notes shall not be limited to the capital stock of such
Federal reserve bank.
But no Federal reserve bank shall transact
28 Approval of Comptroller any business except such as is incidental
to commence business. and necessarily preliminary to its organiza-
tion until it has been authorized by the Comptroller of the Currency to
commence business under the provisions of this Act.

5
Every Federal reserve bank shall be conducted
29 Board of directors. under the supervision and control of a board
of directors.
The board of directors shall perform the duties usually appertaining
to the office of directors of banking associations and all such duties as are
prescribed by law.
30 Said board shall administer the affairs of said bank fairly and im-
partially 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
31 Consist of 9 members hereinafter specified and shall consist of nine
divided into 3 classes. 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
32 A Directors. chosen by and be representative of the stock-holding
banks.
Class B shall consist of three members, who at the
33 B Directors. 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
34 C Directors designated who shall be designated by the Federal
by Reserve Board. Reserve Board. When the necessary sub-
scriptions 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 chair-
man of the board to be selected. Pending the designation of such chair-
man, the organization 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 Con-
35 Imeligibility of Senators and gress shall be a member of the Federal
Congressmen for employment. Reserve Board or an officer or a director
of a Federal reserve bank.
No director of class B shall be an officer,
36 Limitations of directors. director, or employee of any bank.

37 No director of class C shall be an officer, director, employee, or stock
holder of any bank.
38 Election of A and B Directors of class A and class B shall be
Directors. chosen in the following manner:
The chairman of the board of directors of the Federal reserve bank
of the district in which the bank is situated or, pending the appointment
of such chairman, the organization committee shall classify the member
banks of the district into three general groups or divisions. Each group
shall contain as nearly as may be one-third of the aggregate number of
the member banks of the district and shall consist, as nearly as may be,
of banks of similar capitalization. The groups shall be designated by

number by the chairman.



K
At a regularly called meeting of the board
39 District reserve electors. of directors of each member bank in the
district it shall elect by ballot a district reserve elector and shall certify
his name to the chairman of the board of directors of the Federal reserve
bank of the district. The chairman shall make lists of the district reserve
electors thus named by banks in each of the aforesaid three groups and
shall transmit one list to each elector in each group.
Each member bank shall be permitted to
40 Member banks permitted nominate to the chairman one candidate
to nominate one candidate for director of class A and one candidate
each for A and B classes. for director of class B. The candidates
so nominated shall be listed by the chairman, indicating by whom nomi-
nated, and a copy of said list shall, within fifteen days after its completion,
be furnished by the chairman to each elector.
41 Every elector shall, within fifteen days after the receipt of the said
list, certify to the chairman his first, second, and other choices of a director
of class A and class B, respectively, upon a preferential ballot, on a form
furnished by the chairman of the board of directors of the Federal reserve
bank of the district. Each elector shall make a cross opposite the name
of the first, second, and other choices for a director of class A and for a
director of class B, but shall not vote more than one choice for any one
candidate.
42 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 together in like manner, and the candi-
date then having the highest number of votes shall be declared elected.
An immediate report of election shall be declared.
Class C directors shall be appointed by the
43 Chairman and “Federal Federal Reserve Board. They shall have
reserve agent,” also deputy been for at least two years residents of the
chairman. Appointment, qual- district for which they are appointed, one
ifications and duties. of whom shall be designated by said board
as chairman of the board of directors of the Federal reserve bank and as
“Federal reserve agent.” He shall be a person of tested banking experi-
ence, 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 regula-
tions to be established by the Federal Reserve Board, a local office of said
board on the premises of the Federal Reserve Bank. He shall make regu-
lar 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

7
of the chairman of the board when necessary. In case of the absence of
the chairman and deputy chairman, the third-class C director shall preside at
meetings of the board.
Subject to the approval of the Federal Reserve
44 Assistants to Federal Board, the Federal reserve agent shall appoint
reserve agent. 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
45 Compensation of directors, receive, in addition to any compensation
officers and employees. otherwise provided, a reasonable allow-
ance 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 directors of
Federal reserve banks for directors, officers or employees shall be sub-
ject to the approval of the Federal Reserve Board.
The Reserve Bank Organization Commit-
46 Call meetings of bank tee may, in organizing Federal reserve
directors for organization banks, call such meetings of bank directors
purposes. 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
47 Tenure of office of directors. directors of each Federal reserve bank,
One of each class to retire each year it shall be the duty of the directors of
—thereafter term is three years. 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 meeting, one
whose term of office shall expire at the end of two years from said date,
and one whose term of office shall expire at the end of three years from said
date. Thereafter every director of a Federal reserve bank chosen as
hereinbefore provided shall hold office for a term of three years. Vacan-
cies 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.
STOCK ISSUES: INCREASE AND DECREASE OF CAPITAL.
Sec. 5. The capital stock of each
48 Reserve bank Stock. Shares, Federal reserve bank shall be divided
$100 each. Stock increased as into shares of $100 each. The out-
member banks increase or grow, standing capital stock shall be in-
and vice versa. Shares owned by creased from time to time as member
member banks shall not be trans- banks increase their capital stock and
ferred or hypothecated. surplus or as additional banks become
members, and may be decreased as member banks reduce their capital
Note—Bold face type indicates matter added in amendment approved June 21, 1917.

8


stock or surplus or cease to be members. Shares of the capital stock of
Federal reserve banks owned by member 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 district equal to six per centum
of the said increase, one-half of said subscription to be paid in the manner
hereinbefore provided for original subscription, and one-half subject to
call of the 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 increased either on account of the increase
of capital stock of member banks or on account of the increase in the
number of member banks, the board of directors shall cause to be executed
a certificate to the Comptroller of the Currency showing the increase in
capital stock, the amount paid in, and by whom paid. When a member
bank reduces its capital stock it shall surrender a proportionate amount of
its holdings in the capital of said Federal reserve bank, and when a member
bank voluntarily liquidates it shall surrender all of its holdings of the
capital stock of said Federal reserve bank and be released from its stock
subscription not previously called. In either case the shares 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 any liability of such member bank to
the Federal reserve bank.
Sec. 6. If any member bank shall be declared insolvent
49 Insolvent and a receiver appointed therefor, the stock held by
member banks. it in said Federal reserve bank shall be canceled, with-
out impairment of its liability, and all cash-paid subscriptions on said
stock, with one-half of one per centum per month from the period of
last dividend, not to exceed the book value thereof, shall be first applied
to all debts of the insolvent member bank to the Federal reserve bank,
and the balance, if any, shall be paid to the receiver of the insolvent bank.
Whenever the capital stock of a Federal reserve bank is reduced, either
on account of a reduction in capital stock of any member bank or of the
liquidation or insolvency of such bank, the board of directors shall cause
to be executed a certificate to the Comptroller of the Currency showing
such reduction of capital stock and the amount repaid to such bank.

DIVISION OF EARNINGS.
Sec. 7. After all necessary expenses of
50 Stockholders 6 per cent. cumu- a Federal reserve bank have been
lative dividend annually. Balance paid or provided for, the stockholders
paid United States as a franchise shall be entitled to receive an annual
taa, or divided for surplus fund. dividend of six per centum on the
paid-in capital stock, which dividend shall be cumulative. After the
aforesaid dividend claims have been fully met, all the net earnings shall
9
be paid to the United States as a franchise tax, except that one-half of
such net earnings shall be paid into a surplus fund until it shall amount
to forty per centum of the paid-in capital stock of such bank.
The net earnings derived by the United
51 Government's share in States from Federal reserve banks shall,
earnings used to supple– in the discretion of the Secretary, be used
ment gold reserve or to re- to supplement the gold reserve held against
duce the bonded debt. 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 liqui-
dation, any surplus remaining, after the payment of all debts, dividend
requirements as hereinbefore provided, and the par value of the stock,
shall be paid to and become the property of the United States and shall
be similarly applied.
Federal reserve banks, including the capital
52 Taacation exemption. 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-
53 Conversion of State four, United States Revised Statutes, is hereby
banks to mational. 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 executed by a majority of the directors of the bank or
banking institution, and the certificate shall declare that the owners of
fifty-one per centum of the capital stock have 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 organization certificate, shall
have power to execute all other papers and to do whatever may be required
to make its organization perfect and complete as a national association.
The shares of any such bank may continue to be for the same amount
each as they were before the conversion, and the directors may continue
to be directors of the association until others are elected or appointed in
accordance with the provisions of the statutes of the United States.
When the Comptroller has given to such bank or banking association a
certificate that the provisions of this Act have been complied with, such
bank or banking association, and all its stockholders, officers, and em-
ployees, 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 national banking
Act for associations originally organized as national banking associations.

10

STATE BANKS AS MEMBERS.
Sec. 9. Any bank incorporated by special
54 Banks may become law of any State, or organized under the general
members and retain State laws of any State or of the United States, desir-
charters upon approval ing to become a member of the Federal Reserve
of Reserve Board. 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 applica-
tion 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 stock-
holder of such Federal reserve bank.
In acting upon such applications the Federal
55 Action upon applica- Reserve Board shall consider the financial condi-
tions. tion of the applying 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 per-
56 Stock subscriptions pay- mit the applying bank to become a stockholder
able on call. 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
57 Requirements, restric- of this section shall be required to comply with the
tions, duties, and penalties. 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 relate 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, and shall be
required to make reports of condition and of the payment of dividends to the Fed-
eral reserve bank of which they become a member. Not less than three of such
reports shall be made annually on call of the Federal 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 offending 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
58 Examinations. likewise be subject to examinations made by
direction of the Federal 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
59 Reports of State exam- bank shall approve the examinations made by the
iners may be accepted. State authorities, such examinations and the
reports thereof may be accepted in lieu of examinations made by examiners
selected or approved by the Federal Reserve Board: Provided, 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
Note—Bold face type indicates matter added in amendment approved June 21, 1917.

11
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
60 Reserve Board may Reserve Board that a member bank has failed
require surrender of to comply with the provisions of this section
reserve bank stock or or the regulations of the Federal Reserve Board
restore membership. 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
61. Withdrawals from mem- withdraw from membership in a Federal reserve
bership of State banks or bank may do so, after six months’ written notice
trust companies. shall have been filed with the Federal Reserve
Board, upon the surrender and cancellation of all of its holdings of capital
stock in the Federal 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. Whenever a member bank shall surrender its stock holdings in a Fed-
eral 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
62 Capital requirements in a Federal reserve bank unless it possesses a
necessary for membership. paid-up, unimpaired 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
63 Banks subject to pro- System under authority of this section shall be
visions relating specifically subject to the provisions of this section and to
to member banks, except those of this act which relate specifically to member
examinations. Discount re- banks, but shall not be subject to examination
strictions. 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. 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 continue to exercise all corporate powers
granted it by the State in which it was created, and shall be entitled to all privi-
Heges 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
Note—Bold face type indicates matter added in amendment approved June 21, 1917.


12 --


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 section. 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 certificate 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
64 Certification of checks agent of any bank admitted to membership under
by officer, clerk or agent of authority of this section to certify any check
bank admitted to member- drawn upon such bank unless the person or com-
ship. pany drawing the check has on deposit therewith
at the time such check is certified an amount of money equal to the amount speci-
fied 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. -
FEDERAL RESERVE BOARD.
Sec. 10. A Federal Reserve Board is hereby
65 To consist of seven created which shall consist of seven members,
members: Secretary of including the Secretary of the Treasury and the
the Treasury, Comp- Comptroller of the Currency, who shall be
troller of the Currency, members ex officio, and five members appointed
and five others appointed by the President of the United States, by and
by President with con- with the advice and consent of the Senate.
sent of the Senate. In selecting the five appointive members of the
Federal Reserve Board, not more than one of whom shall be selected from
any one Federal reserve district, the President shall have due regard to a
fair representation of the different commercial, industrial and geographical
divisions of the country. The five members of the Federal Reserve Board
appointed by the President and confirmed as aforesaid shall devote their
entire time to the business of the Federal Reserve Board and shall each
receive an annual salary of $12,000, payable monthly together with actual
necessary traveling expenses, and the Comptroller of the Currency, as
ex officio member of the Federal Reserve Board, shall, in addition to the
salary now paid him as Comptroller of the Currency, receive the sum of
$7,000 annually for his services as a member of said Board.
The members of said board, the Secretary of the
66 Qualifications of Treasury, the Assistant Secretaries of the Treasury,
members of the Re- and the Comptroller of the Currency shall be
serve Board. ineligible during the time they are in office and
for two years thereafter to hold any office, position, or employment in
any member bank. Of the five members thus appointed by the President
at least two shall be persons experienced in 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
Note—Bold face type indicates matter added in amendment approved June 21, 1917.

13
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 Sec-
retary of the Treasury may assign offices in the Department of the Treas-
ury for the use of the Federal Reserve Board. Each member of the
Federal Reserve Board shall within fifteen days after notice of appointment
make and subscribe to the oath of office.
The Federal Reserve Board shall have
67 Earpenses of Reserve Board power to levy semiannually upon the
assessed on reserve banks Federal reserve banks, in proportion to
8emiannually. their capital stock and surplus, an assess-
ment sufficient to pay its estimated expenses and the salaries of its mem-
bers and employees for the half year succeeding the levying of such assess-
ment, together with any deficit carried forward from the preceding half
year.
The first meeting of the Federal Reserve
68 First meeting of Reserve Board shall be held in Washington, District
Board. No member shall be of Columbia, as soon as may be after the
connected with any bank. passage of this Act, at a date to be fixed
by the Reserve Bank Organization Committee. The Secretary of the
Treasury shall be ex officio chairman of the Federal Reserve Board. No
member of the Federal Reserve Board shall be an officer or director of
any bank, banking institution, trust company, or Federal reserve bank
nor hold stock in any bank, banking institution, or trust company; and
before entering upon his duties as a member of the Federal Reserve Board
he shall certify under oath to the Secretary of the Treasury that he has
complied with this requirement. Whenever a vacancy shall occur, other
than by expiration of term, among the five members of the Federal Reserve
Board appointed by the President, as above provided, a successor shall
be appointed by the President, with the advice and consent of the Senate,
to fill such vacancy, and when appointed he shall hold office for the unex-
pired term of the member whose place he is selected to fill.
The President shall have the power to fill all
69 Vacancies filled by vacancies that may happen on the Federal
President during recess Reserve Board during the recess of the Senate,
of Congress. by granting commissions which shall expire
thirty days after the next session of the Senate convenes.
Nothing in this Act contained shall be con-
70 Powers of Secretary strued as taking away any powers heretofore
of the Treasury not here- vested by law in the Secretary of the Treasury
by limited. which relate to the supervision, management,
and control of the Treasury Department and bureaus under such depart-
ment, and wherever any power vested by this Act in the Federal Reserve
Board or the Federal reserve agent appears to conflict with the powers
of the Secretary of the Treasury, such powers shall be exercised subject
to the supervision and control of the Secretary.

71 Reserve Board shall The Federal Reserve Board shall annually
report annually to Con- make a full report of its operations to the
gré88. Speaker of the House of Representatives, who
shall cause the same to be printed for the information of the Congress.
14


y
Section three hundred and twenty-four of
72 Jurisdiction of Comp- the Revised Statutes of the United States
troller of the Currency. shall be amended so as to read as follows:
There shall be in the Department of the Treasury a bureau charged with
the execution of all laws passed by Congress relating to the issue and regu-
lation of national currency secured by United States bonds and, under the
general supervision of the Federal Reserve Board, of all Federal Reserve
notes, the chief officer of which bureau shall be called the Comptroller
of the Currency and shall perform his duties under the general directions
of the Secretary of the Treasury.
Sec. 11. The Federal Reserve Board shall be
73 Reserve Board shall authorized and empowered:
examine reserve banks; (a) To examine at its discretion the ac-
make weekly reports of counts, books and affairs of each Federal
their condition. reserve bank and of each member bank and
to require such statements and reports as it may deem necessary. The
said board shall publish once each week a statement showing the condition
of each Federal reserve bank and a consolidated statement for all Federal
reserve banks. Such statements shall show in detail the assets and liabil-
ities 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
74 Permit or require least five members of the Reserve Board to require
rediscounts between Federal reserve banks to rediscount the discounted
reserve banks. 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
75 Suspend reserve require- thirty days, and from time to time to re-
ments for not over 30 days new such suspension for periods not ex-
and renewals of 15 days. ceeding fifteen days, any reserve require-
Provided a graduated taa: is ment specified in this Act: Provided, That
established upon amounts be- it shall establish a graduated tax upon the
low specified level. 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.
v. (d) To supervise and regulate through the
76 Supervise and regulate bureau under the charge of the Comptroller
7ssue of reserve notes. of the Currency the issue and retirement
of Federal reserve notes, and to prescribe rules and regulations under


15
which such notes may be delivered by the Comptroller to the Federal
reserve agents applying therefor.
(e) To add to the number of cities classified
77 Add to, reclassify or as reserve and central reserve cities under
terminate reserve and cem- existing law in which national banking asso-
tral reserve cities. ciations are subject to the reserve requirements
set forth in section twenty" of this Act; or to reclassify existing reserve
and central reserve cities or to terminate their designation as such.
(f) To suspend or remove any officer or di-
78 Suspend or remove rector of any Federal reserve bank, the cause
officers or directors of of such removal to be forthwith communicated
reserve banks. in writing by the Federal Reserve Board to the
removed officer or director and to said bank.
(g) To require the writing off of doubtful or
79 Worthless assets worthless assets upon the books and balance
to be written off. sheets of Federal reserve banks.
(h) To suspend, for the violation of any of
80 Suspend, administer or the provisions of this Act, the operations
liquidate any reserve bank. of any Federal reserve bank, to take posses-
sion thereof, administer the same during the period of suspension, and,
when deemed advisable, to liquidate or reorganize such bank.
(i) To require bonds of Federal reserve agents,
81 Make regulations— to make regulations for the safeguarding of
Require bonds. all collateral, bonds, Federal reserve notes,
money or property of any kind deposited in the hands of such agents,
and said board shall perform the duties, functions, or services specified
in this Act, and make all rules and regulations necessary to enable said
board effectively to perform the same.
82 General supervision (j) To exercise general supervision over said
over reserve banks. Federal reserve banks.
(k) To grant by special permit to national
83 Limited trust powers banks applying therefor, when not in con-
granted national banks. travention of State or local law, the right to
act as trustee, executor, administrator, or registrar of stocks and bonds
under such rules and regulations as the said board may prescribe.
(l) To employ such attorneys, experts,
84 Employ attorneys, experts assistants, clerks, or other employees as
and assistants. 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 pur-
suance thereof: Provided, That nothing herein shall prevent the President
from placing said employees in the classified service.
*This reference to Sec. 20 is an error in the Act. Reference should be Sec. 19.

16


(m) Upon the affirmative vote of not less
85 Permit member banks to than five of its members the Federal Reserve
carry in reserve banks reserves Board shall have power, from time to time,
required to be held in own vaults. by general ruling, covering all districts alike,
to permit member banks to carry in the Federal reserve banks of their respective
districts any portion of their reserves now required by section nineteen of this
Act to be held in their own vaults.
FEDERAL ADVISORY COUNCIL.
86 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 procedure, and a majority of its
members shall constitute a quorum for the transaction of business.
Vacancies in the council shall be filled by the respective reserve banks,
and members selected to fill vacancies, shall serve for the unexpired term.
The Federal Advisory Council shall have power,
87 Powers of Ad- by itself or through its officers, (1) to confer directly
visory Council. 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.
Sec. 13. Any Federal reserve bank may
88 Character of deposits, receive from any of its member banks, and
or for purposes of collec- from the United States, deposits of current
tion or eacchange. Collec- funds in lawful money, national-bank notes,
tion charges permitted. Federal reserve notes, or checks, and drafts,
payable upon presentation, and also, for
collection, maturing [notes and bills, or, solely for purposes of exchange
or of 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 pre-
sentation within its district, and maturing [notes and bills payable within
its district] ; or, solely for the purposes of exchange or of collection, may receive
from any nonmember 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

Note—Bold face type indicates amendments approved September 7, 1916, and June 21, 1917. Matter
in brackets was added by amendment approved June 21, 1917.
17
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
89 May discount notes banks, which shall be deemed a waiver of
of member banks arising demand, notice and protest by such bank
out of actual commercial as to its own indorsement exclusively, any Fed-
transactions. Six months’ eral reserve bank may discount notes, drafts,
agricultural paper provi- and bills of exchange arising out of actual
sions. commercial transactions; that is, notes, drafts,
and bills of exchange issued or drawn for agricultural, industrial, or com-
mercial 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 merchandise
from being eligible for such discount; but such definition shall not include
notes, drafts, or bills covering merely investments or issued or drawn for
the purpose of carrying or trading in stocks, bonds, or other investment
securities, except bonds and notes of the Government of the United States.
Notes, drafts, and bills admitted to discount under the terms of this
paragraph must have a maturity at the time of discount of not more than
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
90 Limit of notes of one bearing the signature or indorsement of any
borrower rediscounted. one borrower, whether a person, company, firm,
or corporation, rediscounted for any one bank shall at no time exceed
ten per centum of the unimpaired capital and surplus of said bank; but
this restriction shall not apply to the discount of bills of exchange drawn
in good faith against actually existing values.
Any Federal reserve bank may discount
91 May discount acceptances. 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.
Note—Bold face type indicates amendments approved September 7, 1916, and June 21, 1917. Matter
in brackets was added by amendment approved June 21, 1917.
*


18


*
Any member bank may accept drafts or
92 Member bank may accept bills of exchange drawn upon it having not
drafts and bills of eacchange more than six months’ sight to run, exclusive
growing out of importation or of days of grace, which grow out of transactions
exportation transaction, or do- involving the importation or exportation of
mestic shipments properly Se- goods; or which grow out of transactions
cured. involving the domestic shipment of goods
provided shipping documents conveying or
securing title are attached 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, com—
pany, 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, under such
general regulations as it may prescribe, which shall apply to all banks alike regard-
less 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
93 Advances on promissory to its member banks on their promissory notes
notes properly secured. for a period not exceeding fifteen days at rates
to be established by such Federal reserve banks, subject to the review and deter-
mination 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.
Section fifty-two hundred and two of the Revised
94 Limitation of in- Statutes of the United States is hereby amended
debtedness of national so as to read as follows: No national banking
banks. 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 association for dividends
and reserve profits.

Fifth. Liabilities incurred under the provisions of the Federal
reserve Act. *
Note—Bold face type indicates amendments of Sept. 7, 1916, and June 21, 1917. Matter in brackets
added by amendment of June 21, 1917, which is practically the same as amendment of March 3, 1915, but
omitted Sept. 7, 1916,
19
The discount and rediscount and the purchase
95 Operations subject to and sale by any Federal reserve bank of any
restrictions of Board. bills receivable and of domestic and foreign
bills of exchange, and of acceptances authorized by this Act, shall be
subject to such restrictions, limitations, and regulations as may be im-
posed by the Federal Reserve Board.
That in addition to the powers now vested
96 National banking asso- by law in national banking associations organ-
ciation where population does ized under the laws of the United States any
not exceed 5,000 may act as such association located and doing business
agent or broker. 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 collecting 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 placein 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 principal or interest
of any such loans or assume or guarantee the payment of any premium on insur-
ance policies issued through its agency by its principal: and provided further,
that the bank shall not guarantee the truth of any statement made by an assured
in filing his application for insurance.
Any member bank may accept drafts or
97 Member banks may ac- bills of exchange drawn upon it having not
cept drafts or bills of exchange more than three months' sight to run, ex-
to furnish dollar eacchange. clusive of days of grace, drawn under regula-
tions to be prescribed by the Federal Reserve Board by banks or bankers in foreign
countries or dependencies or insular possessions of the United States for the pur-
pose of furnishing dollar exchange as required by the usages of trade in the respec-
tive 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 ex-
change referred to in this paragraph for any one bank to an amount exceeding in
the aggregate ten per centum of the paid-up and unimpaired capital and surplus
of the accepting bank unless the draft or bill of exchange is accompanied by docu-
ments conveying or securing title or by some other adequate security: Provided
further, that no member bank shall accept such drafts or bills in an amount ex-
ceeding 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 may,
98 Reserve bank may pur- under rules and regulations prescribed by
chase and sell in open market. the Federal Reserve Board, purchase and
sell in the open market, at home or abroad, either from or to domestic
Note—Bold face type indicates matter added in amendment approved September 7, 1916.
*

20
*
or foreign banks, firms, corporations, or individuals, cable transfers and
bankers’ acceptances and bills of exchange of the kinds and maturities
by this Act made eligible for rediscount, with or without the indorsement
of a member bank.
Every Federal reserve bank shall have power:
99 Powers of reserve (a) To deal in gold coin and bullion at home
banks—Deal in gold or abroad, to make loans thereon, exchange
coin, etc. Federal reserve notes for gold, gold coin, or gold
certificates, and to contract for loans of gold coin or bullion, giving there-
for, when necessary, acceptable security, including the hypothecation
of United States bonds or other securities which Federal reserve banks
are authorized to hold;
(b) To buy and sell, at home or abroad,
100 Deal in government bonds and notes of the United States, and bills,
or municipal bonds. notes, revenue bonds, and warrants with a
maturity from date of purchase of not exceeding six months, issued in
anticipation of the collection of taxes or in anticipation of the receipt of
assured revenues by any State, county, district, political subdivision, or
municipality in the continental United States, including irrigation,
drainage and reclamation districts, such purchases to be made in accord-
ance with rules and regulations prescribed by the Federal Reserve Board;
(c) To purchase from member banks and to
101 Buy and sell bills sell, with or without its indorsement, bills of
of eacchange. exchange arising out of commercial transactions,
as hereinbefore defined;
(d) To establish from time to time, subject to review
102 Establish rates and determination of the Federal Reserve Board,
of discount. rates of discount to be charged by the Federal reserve
bank for each class of paper, which shall be fixed with a view of accom-
modating commerce and business;
(e) To establish accounts with other Federal
103 Open accounts with reserve banks for exchange purposes and, with
each other and in foreign the consent [or upon the order and direction] of
countries. the Federal Reserve Board [and under regulations
to be prescribed by said board, to open and maintain accounts in foreign
countries, 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
indorsement, through such correspondents or agencies, bills of exchange
(or acceptances) arising out of actual commercial 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 con-
sent of the Federal Reserve Board, to open and maintain banking accounts for
such foreign correspondents 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.]
Note—Bold face type indicates amendments approved September 7, 1916, and June 21, 1917. Matter
in brackets was added by amendment approved June 21, 1917.

21
GOVERNMENT DEPOSITS.
104 Sec. 15. The moneys held in the general fund of the Treasury, except
the five per centum fund for the redemption of outstanding national-bank
notes and the funds provided in this Act for the redemption of Federal
reserve notes may, upon the direction of the Secretary of the Treasury,
be deposited in Federal reserve banks, which banks, when required by
the Secretary of the Treasury, shall act as fiscal agents of the United States;
and the revenues of the Government or any part thereof may be deposited
in such banks, and disbursements may be made by checks drawn against
such deposits.
No public funds of the Philippine Islands,
105 Government funds not to be or of the postal savings, or any Govern-
deposited with nonmember banks. ment funds, shall be deposited in the
continental United States in any bank not belonging to the system
established by this Act: Provided, however, That nothing in this Act
shall be construed to deny the right of the Secretary of the Treasury
to use member banks as depositories.
NOTE ISSUES.
Sec. 16. Federal reserve notes, to be issued
106 Board to issue Federal at the discretion of the Federal Reserve
reserve notes to reserve banks. Board for the purpose of making advances
to Federal reserve banks through the Federal reserve agents as hereinafter
set forth and for no other purpose, are hereby authorized. The said
notes shall be obligations of the United States and shall be receivable by
all national and member banks and Federal reserve banks and for all
taxes, customs, and other public dues. They shall be redeemed in gold
on demand at the Treasury Department of the United States, in the city
of Washington, District of Columbia, or in gold or lawful money at any
Federal reserve bank.
Any Federal reserve bank may make application
107 Reserve banks to to the local Federal reserve agent for such amount
receive notes upon fil- of the Federal reserve notes hereinbefore provided
ing proper security. for as it may require. Such application shall be
accompanied with a tender to the local Federal reserve agent of collateral
in amount equal to the sum of the Federal reserve notes thus applied for
and issued pursuant to such application. The collateral security thus
offered shall be notes, 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 provisions of said section fourteen I, or gold or gold certificates;
but in no event shall such collateral security, whether gold, gold certifi-
cates, or eligible paper, be less than the amount of Federal reserve notes
applied for.] The Federal reserve agent shall each day notify the Federal
Reserve Board of all issues and withdrawals of Federal reserve notes to
and by the Federal reserve bank to which he is accredited. The said
Federal Reserve Board may at any time call upon a Federal reserve bank
for additional security to protect the Federal reserve notes issued to it.
t

Note—Bold face type indicates amendments approved September 7, 1916, and June 21, 1917. Matter
in brackets was added by amendment approved June 21, 1917. ---.
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N
*
Every Federal reserve bank shall main-
108 Gold and other security tain reserves in gold or lawful money of
against reserve notes and reg- not less than thirty-five per centum against
wlations as to issuance and its deposits and reserves in gold of not less
redemption. 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
to maintain against its Federal reserve notes in actual circulation. Notes
so paid out shall bear upon their faces a distinctive letter and serial
number which shall be assigned by the Federal Reserve Board to each
Federal reserve bank. Whenever Federal reserve notes issued through
one Federal reserve bank shall be received by another Federal reserve
bank, they shall be promptly returned for credit or redemption to the
Federal reserve bank through which they were originally issued 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 in gold or gold certificates,
then such funds shall be reimbursed to the extent deemed necessary by
the Secretary of the Treasury in gold or gold certificates, and such Federal
reserve bank shall, so long as any of its Federal reserve notes remain out-
standing, 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 exchanged for gold out of the redemption
fund hereinafter provided and returned to the reserve bank through
which they were originally issued, or they may be returned to such bank
for the credit of the United States. Federal reserve notes unfit for cir-
culation shall be returned by the Federal reserve agents to the Comp-
troller of the Currency for cancellation and destruction.
The Federal Reserve Board shall require
109 Reserve banks to main- each Federal reserve bank to maintain
tain note redemption fund in on deposit in the Treasury of the United
Treasury. States a sum in gold sufficient in the judg-
ment 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 notes issued less the amount of gold or gold cer-
tificates 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
Note—Bold face type indicates matter added in amendment approved June 21, 1917. -
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23
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 by 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
110 Method of liability for outstanding Federal reserve notes by
retiring notes. 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 com-
pliance with the conditions of an original issue.
The Federal reserve agent shall hold such
111 Reserve agent to hold gold, gold certificates, or lawful money avail-
security for notes. able exclusively for exchange for the out-
standing 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 discre-
112 Eacchange of collateral tion withdraw collateral deposited with the
permitted. Retirement of local Federal reserve agent for the protection
Federal reserve notes. 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 prescribed 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 redemp-
tion 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
113 Custody of Federal certificates, and lawful money issued to or deposit-
reserve notes, gold, gold cer— ed with any Federal reserve agent under the
tificates and lawful money. 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 the 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
Note—Bold face type indicates matter added in amendment approved June 21, 1917.
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contained, however, shall be construed to prohibit 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 Treasurer of the United States for
the purposes authorized by law.
In order to furnish suitable notes for circulation
114 Printing of notes. as Federal reserve notes, the Comptroller of
the Currency shall, under the direction of the Secretary of the Treasury,
cause plates and dies to be engraved in the best manner to guard against
counterfeits and fraudulent alterations, and shall have printed therefrom
and numbered such quantities of such notes of the denominations of
$5, $10, $20, $50, $100, as may be required to supply the Federal reserve
banks. Such notes shall be in form and tenor as directed by the Secretary
of the Treasury under the provisions of this Act and shall bear the dis-
tinctive numbers of the several Federal reserve banks through which
they are issued.
When such notes have been prepared, they shall
115 Custody of un- be deposited in the Treasury, or in the subtreasury
issued notes. or mint of the United States nearest the place of
business of each Federal reserve bank and shall be held for the use of
such bank subject to the order of the Comptroller of the Currency for
their delivery, as provided by this Act.
The plates and dies to be procured by the
116 Comptroller to have cus- Comptroller of the Currency for the
tody of dies and plates. printing of such circulating notes shall
remain under his control and direction, and the expenses necessarily
incurred in executing the laws relating to the procuring of such notes,
and all other expenses incidental to their issue and retirement, shall
be paid by the Federal reserve banks, and the Federal Reserve Board
shall include in its estimate of expenses levied against the Federal reserve
banks a sufficient amount to cover the expenses herein provided for.
117 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
118. Eacisting appropriations of the general funds of the Treasury for
for note printing made avail- engraving plates and dies, the purchase of
able. 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 purposes
of this Act, and should the appropriations heretofore made be insufficient
to meet the requirements of this Act in addition to circulating notes pro-
vided for by existing law, the Secretary is hereby authorized to use so
much of any funds in the Treasury not otherwise appropriated for the
purpose of furnishing the notes aforesaid: Provided, however, That nothing
in this section contained shall be construed as exempting national banks
or Federal reserve banks from their liability to reimburse the United
States for any expenses incurred in printing and issuing circulating notes.
Note—Bold face type indicates matter added in amendment approved June 21, 1917.

25
Every Federal reserve bank shall receive on deposit
119 Clearing house at par from member banks or from Federal reserve
functions. banks checks and drafts drawn upon any of its
depositors, and when remitted by a Federal reserve bank, checks and
drafts drawn by any depositor in any other Federal reserve bank or mem-
ber bank upon funds to the credit of said depositor in said reserve bank
or member bank. Nothing herein contained shall be construed as pro-
hibiting a member bank from charging its actual expense incurred in
collecting and remitting funds, or for exchange sold to its patrons. The
Federal Reserve Board shall, by rule, fix the charges to be collected by
the member banks from its patrons whose checks are cleared through
the Federal reserve bank and the charge which may be imposed for the
service of clearing or collection rendered by the Federal reserve bank.
120 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 discre-
tion exercise the functions of a clearing house for such Federal reserve
banks, or may designate a Federal reserve bank to exercise such functions,
and may also require each such bank to exercise the functions of a clearing
house for its member banks.
That the Secretary of the Treasury is hereby
121 Secretary of Treas- authorized and directed to receive deposits of gold
wry authorized to receive coin or of gold certificates with the Treasurer or
deposits of gold coin or any assistant treasurer of the United States when
gold certificates. tendered by any Federal reserve bank or Federal
reserve agent for credit to its or his account with
the Federal Reserve Board. The Secretary 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 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 de-
posit 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 subtreasuries in order to make such payments, or as a result of mak-
ing such payments, shall be paid by the Federal Reserve Board and assessed
against the Federal reserve banks. The order used by the Federal 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
122 Expenses of gold set- out these provisions, including the cost of the
tlement fund. 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 assessments against the several
deral banks.
Federal reserve banks Gold deposits standing to the credit of any Federal
123 Gold deposits counted reserve bank with the Federal Reserve Board
as lawful reserve. shall, at the option of said bank, be counted
as part of the lawful reserve which it is required to maintain against outstanding
Note—Bold-face type indicates matter added in amendment approved June 21, 1917.

26
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 hundred, 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 certificates issued
under those acts.
Sec. 17. So much of the provisions of
124 Repeal of bond require- section fifty-one hundred and fifty-nine of
ments of national banks. the Revised Statutes of the United States,
and section four of the Act of June twentieth, eighteen hundred and
seventy-four, and section eight of the Act of July twelfth, eighteen hundred
and eighty-two, and of any other provisions of existing statutes as require
that before any national banking association shall be authorized to com-
mence banking business it shall transfer and deliver to the Treasurer of
the United States a stated amount of United States registered bonds, and
so much of those provisions or of any other provisions of existing statutes
as require any national banking association now or hereafter organized
to maintain a minimum deposit of such bonds with the Treasurer is
hereby repealed.
REFUNDING BONDS.
Sec. 18. After two years from the passage
125 Retirement of national of this Act, and at any time during a period
bank circulation. of twenty years thereafter, any member
bank desiring to retire the whole or any part of its circulating notes, may
file with the Treasurer of the United States an application to sell for its
account, at par and accrued interest, United States bonds securing cir-
culation to be retired.
The Treasurer shall, at the end of each quarterly
126 Reserve Board may period, furnish the Federal Reserve Board
require reserve banks to with a list of such applications, and the Federal
purchase bonds. Reserve Board may, in its discretion, require
the 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 $25,000,-
000 of such bonds in any one year, and which amount shall include bonds
acquired under section four of this Act by the Federal reserve bank.
Provided further, That the Federal Reserve Board
127 Bonds allotted shall allot to each Federal reserve bank such pro-
to reserve banks. portion of such bonds as the capital and surplus
of such bank shall bear to the aggregate capital and surplus of all the
Federal reserve banks.
Upon notice from the Treasurer of the amount of
128 Transfer of bonds bonds so sold for its account, each member bank
to reserve banks. shall duly assign and transfer, in writing, such
bonds to the Federal reserve bank purchasing the same, and such Federal
reserve bank shall, thereupon, deposit lawful money with the Treasurer
of the United States for the purchase price of such bonds, and the Treasurer
Note—Bold face type indicates matter added in amendment approved June 21, 1917. -º
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shall pay to the member bank selling such bonds any balance due after
deducting a sufficient sum to redeem its outstanding notes secured by such
bonds, which notes shall be canceled and permanently retired when re-
deemed.
129 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
130 Circulating notes issued the United States of bonds so purchased, or
equal to par value of bonds de- any bonds with the circulating privilege ac-
posited. quired 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 deposit-
ed. 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
131 Two per cent. gold bonds bank, approved by the Federal Reserve
eacchanged for one-year gold Board, the Secretary of the Treasury may
notes and 30-year 3 per cent. issue, inexchangefor the United States two
gold bonds. per centum gold bonds bearing the circu-
lation privilege, but against which no circulation is outstanding, one-
year gold notes of the United States without the circulation privilege,
to an amount not to exceed one-half of the two per centum bonds so
tendered for exchange, and thirty-year three per centum gold bonds
without the circulation privilege for the remainder of the two per centum
bonds so tendered: Provided, That at the time of such exchange the Federal
reserve bank obtaining such one-year gold notes shall enter into an obli-
gation 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 exchange for such bonds, if so requested
by the Secretary, and at each maturity of one-year notes so purchased by
such Federal reserve bank, to purchase from the United States such an
amount of one-year notes as the Secretary may tender to such bank, not
to exceed the amount issued to such bank in the first instance, in exchange
for the two per centum United States gold bonds; said obligation to pur-
chase at maturity such notes shall continue in force for a period not to
exceed thirty years.
For the purpose of making the exchange
132 Treasury notes and herein provided for, the Secretary of the
U. S. gold bonds author- Treasury is authorized to issue at par Treasury
ized. 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
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from the date of their issue in gold coin of the present standard value,
and to be exempt as to principal and interest from the payment of all
taxes and duties of the United States except as provided by this Act,
as well as from taxes in any form by or under State, municipal, or local
authorities. And for the same purpose, the Secretary is authorized and
empowered to issue United States gold bonds at par, bearing three per
centum interest, payable thirty years from date of issue, such bonds to be
of the same general tenor and effect and to be issued under the same general
terms and conditions as the United States three per centum bonds without
the circulation privilege now issued and outstanding.
- Upon application of any Federal reserve bank, ap-
133 Secretary to proved by the Federal Reserve Board, the Secretary
make exchange. may issue at par such three per centum bonds in
exchange for the one-year gold notes herein provided for.
BANK RESERVES.
Sec. 19. Demand deposits within the meaning
134 Demand and time of this Act shall comprise all deposits payable
deposits defined. within thirty days, and time deposits shall com-
prise all deposits payable after thirty days, all savings accounts and
certificates of deposit which are subject to not less than thirty days'
notice before payment, and all postal savings deposits.
Every bank, banking association, or trust com-
135 Reserve requirements pany which is or which becomes a member of any
of member banks. Federal reserve bank shall establish and maintain
reserve balances with its Federal reserve bank as follows:
(a) If not in a reserve or central reserve city, as
136 Country banks. now or hereafter defined, it shall hold and main-
tain with the Federal reserve bank of its district an actual net balance equal to
not less than seven per centum of the aggregate amount of its demand deposits
and three per centum of its time deposits.
(b) If in a reserve city, as now or hereafter defined,
137 Reserve city banks. it shall hold and maintain with the Federal reserve
bank of its district an actual net balance equal to not less than ten per centum
of the aggregate amount of its demand deposits and three per centum of its time
deposits.
(c) If in a central reserve city, as now or
138 Central reserve city banks. hereafter defined, it shall hold and main-
tain with the Federal reserve bank of its district an actual net balance equal to
not less than thirteen per centum of the aggregate amount of its demand deposits
and three per centum of its time deposits.
Reserves Required to be held by members in Federal Reserve Bank

Banks Not in Reserve or Central - -
Reserve City Reserve City Banks Central Reserve City Banks
7% of Demand Deposits 10% of Demand Deposits 13% of Demand Deposits
3% of Time Deposits 3% of Time Deposits 3% of Time Deposits
Note—Bold face type indicates matter added in amendment approved June 21, 1917.
29
No member bank shall keep on deposit with
139 Deposits with non- any State bank or trust which is not a mem-
member banks. ber bank a sum in excess of ten per centum
of its own paid-up capital and surplus. No member bank shall act as the
medium or agent of a nonmember bank in applying for or receiving dis-
counts from a Federal reserve bank under the provisions of this Act,
except by permission of the Federal Reserve Board.
The required balance carried by a member
140 Balances in reserve bank with a Federal reserve bank may, under
banks may be checked the regulations and subject to such penalties
against. as may be prescribed by the Federal Reserve
Board, be checked against and withdrawn by such member bank for the
purpose of meeting existing liabilities: Provided, however, That no bank
shall at any time make new loans or shall pay any dividends unless and
until the total balance required by law is fully restored.
In estimating the balances required by this
141 How to estimate bal- Act, the net difference of amounts due to and
ances. from other banks shall be taken as the basis
for ascertaining the deposits against which required balances with Federal
reserve banks shall be determined. -
National banks, or banks organized under
142 Banks outside the local laws, located in Alaska or in a depen-
United States. dency or insular possession of any part of
the United States outside the continental United States may remain non-
member banks, and shall in that event maintain reserves and comply
with all the conditions now provided by law regulating them; or said
banks may, with the consent of the Reserve Board, become member banks
of any one of the reserve districts, and shall in that event take stock,
maintain reserves, and be subject to all the other provisions of this Act.
Sec. 20. So much of Sections two and three of the
143 Five per cent. Act of June twentieth, eighteen hundred and
fund no longer re- seventy-four, entitled “An Act fixing the amount
Sø7°06. of United States notes, providing for a redistribu-
tion of the national-bank currency, and for other purposes,” as provides
that the fund deposited by any national banking association with the
Treasurer of the United States for the redemption of its notes shall be
counted as a part of its lawful reserve as provided in the Act aforesaid, is
hereby repealed. And from and after the passage of this Act such fund
of five per centum shall in no case be counted by any national banking
association as a part of its lawful reserve.
BANK EXAMINATIONS.
144 Sec. 21. Section fifty-two hundred and forty, United States Re-
vised Statutes, is amended to read as follows:
The Comptroller of the Currency, with the
Examiners to eſcamine approval of the Secretary of the Treasury, shall
every member at least appoint examiners who shall examine every mem-
twice a year. ber bank at least twice in each calendar year and
Eacaminations by State oftener if considered necessary: Provided, however,
authorities may be That the Federal Reserve Board may authorize
accepted. examination by the State authorities to be ac-
cepted in the case of State banks and trust companies and may at any
Note—Bold face type indicates matter added in amendment approved June 21, 1917.
30
&

(
time direct the holding of a special examination of State banks or trust
companies that are stockholders in any Federal reserve bank. The ex-
aminer making the examination of any national bank, or of any other
member bank, shall have power to make a thorough examination of all
the affairs of the bank and in doing so he shall have power to administer
oaths and to examine any of the officers and agents thereof under oath and
shall make a full and detailed report of the condition of said bank to
the Comptroller of the Currency.
The Federal Reserve Board, upon the recom-
145 Salaries to be paid mendation of the Comptroller of the Currency,
examiners and expenses shall fix the salaries of all bank examiners and
assessed upon banks make report thereof to Congress. The expense
eacamined. of the examinations herein provided for shall
be assessed by the Comptroller of the Currency upon the banks examined
in proportion to assets or resources held by the banks upon the dates of
examination of the various banks.
In addition to the examinations made and
146 Reserve banks may conducted by the Comptroller of the Cur-
make special examina- rency, every Federal reserve bank may, with
tions of its member banks. the approval of the Federal reserve agent or
the Federal Reserve Board, provide for special examination of member
banks within its district. The expense of such examinations shall
be borne by the bank examined. Such examinations shall be so con-
ducted as to inform the Federal reserve bank of the condition of its mem-
ber banks and of the lines of credit which are being extended by them.
Every Federal reserve bank shall at all times furnish to the Federal Re-
serve Boardsuchinformation as may be demanded concerning the condition
of any member bank within the district of the said Federal reserve bank.
No bank shall be subject to any visitatorial
147 Visitatorial powers. powers other than such as are authorized by
law, or vested in the courts of justice or such as shall be or shall have been
exercised or directed by Congress, or by either House thereof or by any
committee of Congress or of either House duly authorized.
The Federal Reserve Board shall, at least
148 Examination of reserve once each year, order an examination of
banks at least once a year. each Federal reserve bank, and upon joint
application of ten member banks the Federal Reserve Board shall order
a special examination and report of the condition of any Federal reserve
bank.
Sec. 22. No member bank or any officer,
149 Loans and gratuities director, or employee thereof shall hereafter
prohibited to eſcaminers. make any loan or grant any gratuity to
Penalties therefor. any bank examiner. Any bank officer,
director, or employee violating this provision shall be deemed guilty of a
misdemeanor and shall be imprisoned not exceeding one year or fined
not more than $5,000, 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 misdemeanor and shall
be imprisoned not exceeding one year or fined not more than $5,000,
or both; and may be fined a further sum equal to the money so loaned
or gratuity given; and shall forever thereafter be disqualified from hold-

31
ing office as a national-bank examiner. No national-bank examiner shall
perform any other service for compensation while holding such office
for any bank or officer, director, or employee thereof.
Other than the usual salary or director's
150 Limitation as to fees and fee paid to any officer, director, employee,
benefits to directors, officers, em- or attorney of a member bank, and other
ployees and attorneys of member than a reasonable fee paid by said bank to
banks. No eacaminer shall such officer, director, employee, or attor-
disclose the names of borrowers ney for services rendered to such bank, no
or collateral for loans. officer, director, employee, or attorney of
a member bank shall be a beneficiary of or receive, directly or indirectly,
any fee, commission, gift, or other consideration for or in connection with
any transaction or business of the bank: Provided, however, That nothing
in this act contained shall be construed to prohibit a director, officer,
employee, or attorney from receiving the same rate of interest paid to other
depositors for similar deposits made with such bank: And provided fur-
ther, That notes, drafts, bills of exchange, or other evidences of debt
executed or indorsed by directors or attorneys of a member bank may be
discounted with such member bank on the same terms and conditions
as other notes, drafts, bills of exchange, or evidences of debt upon the
affirmative vote or written assent of at least a majority of the members of
the board of directors of such member bank. No examiner, public or
private, shall disclose the names of borrowers or the collateral for loans
of a member bank to other than the proper officers of such bank without
first having obtained the express permission in writing from the Comp-
troller of the Currency, or from the board of directors of such bank,
except when ordered to do so by a court of competent jurisdiction, or by
direction of the Congress of the United States, or of either House thereof,
or any committee of Congress or of either House duly authorized. Any
person violating any provision of this section shall be punished by a fine
of not exceeding $5,000 or by imprisonment not exceeding one year, or
both.
151 Except as provided in existing laws, this provision shall not take
effect until sixty days after the passage of this Act.
Sec. 23. The stockholders of every nation-
152 Responsibility of stock- al banking association shall be held
holders of national banks. individually responsible for all contracts,
debts, and engagements of such association, each to the amount of his
stock therein, at the par value thereof in addition to the amount invested
in such stock. The stockholders in any national banking association
who shall have transferred their shares or registered the transfer thereof
within sixty days next before the date of the failure of such association
to meet its obligations, or with knowledge of such 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.
Note—Bold face type indicates matter added in amendment approved June 21, 1917.
{

32


s
LOANS ON FARM LANDS.
Sec. 24. Any national banking association
153 May be made by banks not situated in a central reserve city may
not situated in a central make loans secured by improved and un-
reserve city. Also loans encumbered farm land, situated within
secured by real estate within its Federal reserve district or within a radius
100 miles of bank. 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 estate located 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 distinguished
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 hereafter as heretofore to receive time deposits and
to pay interest on the same.
The Federal Reserve Board shall have power
154 Board has power to from time to time to add to the list of cities
add to list of cities not in which national banks shall not be per-
permitted to make such mitted to make loans secured upon real estate
loans. in the manner described in this section.
FOREIGN BRANCHES.
Sec. 25. Any national banking association pos-
155 Banks of $1,000,000 sessing a capital and surplus of $1,000,000 or more
may file application. may file application with the Federal Reserve
Board for permission to 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
156 Establish foreign branches countries or dependencies or insular posses-
and act as fiscal agent of U. S. sions of the United States for the further-
ance 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 exceed-
157 Invest in stock of banks ing in the aggregate ten per centum of its
or corporations engaged in paid-in capital stock and surplus in the stock
international or foreign bank- of one or more banks or corporations chartered
ing. 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 dependency 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 dependencies or insular possessions.
Such application shall specify the name and
158 Details of application. capital of the banking association filing it,
the powers applied for, and the place or places where the banking 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
Note—Bold face type indicates matter added in amendment. Approved, September 7, 1916.

33
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
operations may be carried on.
Every national banking association operating
159 Reports to be furnished foreign branches shall be required to furnish
Comptroller and Reserve information concerning the condition of such
Board. branches to the Comptroller of the Currency
upon demand, and every member bank investing in the capital stock of banks or
corporations described under subparagraph two of the first paragraph of this
section 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
160 Business to be conducted to purchase stock in any such corporation
under regulations of Reserve the said corporation shall enter into an agree-
Board. ment or undertaking with the Federal Reserve
Board to restrict its operations or conduct its business in such manner or under
such limitations and restrictions 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 trans-
actions 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
161 Accounts of branches to shall conduct the accounts of each foreign
be separate. branch independently of the accounts of other
foreign branches established by it and of its home office, and shall at the end of
each fiscal period transfer to its general ledger the profit or loss accrued at each
branch as a separate item.
Any director or other officer, agent, or employee
162. With approval of Re- of any member bank may, with the approval
serve Board, director, officer of the Federal Reserve Board, be a director
or employee of member bank or other officer, agent, or employee of any
owning stock may be con- such bank or corporation above mentioned
nected with such bank or in the capital stock of which such member
corporation. bank shall have invested as hereinbefore pro-
vided, without being subject to the provisions of section eight of the Act approved
October fifteenth, nineteen hundred and fourteen, entitled “An Act to Supple-
ment Existing Laws Against Unlawful Restraints and Monopolies, and for Other
Purposes.”
Sec. 26. All provisions of law inconsis-
163 Inconsistent provisions tent with or superseded by any of the pro-
of law repealed—Gold stand- visions of this Act are to that extent and to
ard reaffirmed. that extent only hereby repealed: Pro-
vided, Nothing in this Act contained shall be construed to repeal the parity
provision or provisions contained in an Act approved March fourteenth,
Note—Bold face type indicates matter added in amendment. Approved, September 7, 1916.
$
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34

nineteen hundred, entitled “An Act to define and fix the standard of
value, to maintain the parity of all forms of money issued or coined by
the United States, to refund the public debt, and for other purposes,”
and the Secretary of the Treasury may for the purpose of maintaining
such parity and to strengthen the gold reserve, borrow gold on the security
of United States bonds authorized by section two of the Act last referred
to or for one-year gold notes bearing interest at a rate of not to exceed
three per centum per annum, or sell the same if necessary to obtain gold.
When the funds of the Treasury on hand justify, he may purchase and
retire such outstanding bonds and notes.
Sec. 27. The provisions of the Act of May
164 Emergency currency thirtieth, nineteen hundred and eight, au-
Act extended to June 30, 1915. thorizing national currency associations, the
issue of additional national-bank circulation, and creating a National
Monetary Commission, which expires by limitation under the terms of
such Act on the thirtieth day of June, nineteen hundred and fourteen,
are hereby extended to June thirtieth, nineteen hundred and fifteen,
and sections fifty-one hundred and fifty-three, fifty-one hundred and
seventy-two, fifty-one hundred and ninety-one, and fifty-two hundred and
fourteen of the Revised Statutes of the United States, which were amended
by the Act of May thirtieth, nineteen hundred and eight, are hereby
reenacted to read as such sections read prior to May thirtieth, nineteen
hundred and eight, subject to such 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 other-
wise than by bonds of the United States, shall pay for the first three months
a tax at the rate of three per centum per annum upon the average amount
of such of their notes in circulation as are based upon the deposit of such
securities, and afterwards an additional tax rate of one-half of one per
centum per annum for each month until a tax of six per centum per
annum is reached, and thereafter such tax of six per centum per annum
upon the average amount of such notes: -

165 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 national 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 said Act except that no bank
shall be permitted to issue circulating notes in excess of one hundred 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 Treasury 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 circulation
under the terms and conditions of the Act referred to as herein amended: Pro-
vided further, That the Secretary of the Treasury, in his discretion, is further
Note—Bold face type indicates matter added in amendment. Approved, August 4, 1914.
35
authorized 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
166 Reduction of capital forty-three of the Revised Statutes is hereby
permitted to national amended and reenacted to read as follows:
banks. 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 circulation, nor shall any reduc-
tion be made until the amount of the proposed reduction has been re-
ported to the Comptroller of the Currency and such reduction has been
approved by the said Comptroller of the Currency and by the Federal
Reserve Board, or by the organization committee pending the organiza-
tion of the Federal Reserve Board. -
Sec. 29. If any clause, sentence, para-
167 Courts not to repeal graph, or part of this Act shall for any reason
Unadjudicated portions of be adjudged by any court of competent
the Act. 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, sentence, paragraph, or
part thereof directly involved in the controversy in which such judgment
shall have been rendered.
168 Sec. 30. The right to amend, alter, or repeal this Act is hereby
expressly reserved.
169 Approved, December 23, 1913.
Note—Bold face type indicates matter added in amendment. Approved, August 4, 1914.
Kern Amendment.
Be it enacted by the Senate and House of Representatives of the United
States of America in Congress assembled, That section eight of an Act
entitled “An Act to supplement existing laws against unlawful restraints
and monopolies, and for other purposes,” approved October fifteenth,
nineteen hundred and fourteen, be, and the same is hereby, amended by
striking out the period at the end of the second clause of said section,
inserting in lieu thereof a colon, and adding to said clause the following:
“And provided further, That nothing in this Act shall prohibit any
officer, director, or employee of any member bank or class A director of a
Federal 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 revoke 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 member bank.
“The consent of the Federal Reserve Board may be procured 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.”
Approved, May 15, 1916.
36
A
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DEC 1 || 1918
UNIVERSITY OF MICHIGAN
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