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The Coxnmonei:
JANUARY, 1914
11
such suspension for periods not exceeding fifteen
days, any reserve requirement specified iu this
Act: Provided, That it shall establish a grad
uated tax upon the amounts by which the re
serve requirements of this Act may be permitted
to fall below the level hereafter 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
ono per centum" per annum upon such deficiency
until the reserves fall to thirty-two and one-half -per
centum, and when said reserve fulls 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 dis
count fixed by the Federal Reserve Board.
(d) To supervise and regulate through the
bureau under the charge of the Comptroller of
the Currency the issue and retirement of Federal
reserve notes, and to prescribe rules and regu
lations under which such notes may be delivered
by the Comptroller to the Federal reserve agents
applying therefor.
(e) To add to the number of cities classified
"as reserve and central reserve cities under ex
isting law in which national banking associa
tions are subject to the reserve requirements set
forth in section twenty of this Act; or to re
classify existing reserve and central reserve
cities or to terminate their designation as such.
(f) To suspend or remove any officer or di
rector of any Federal reserve bank, the cause of
such removal to be forthwith communicated in
writing by the Federal Reserve Board to the re
moved officer or director and to said bank.
(g) To require the writing off of doubtful or
worthless assets upon the books and balance
sheets of Federal reserve banks.
(h) To suspend, for the violation of any of
the provisions of this Act, the operations of any
Federal reserve bank, to take possession thereof,
administer the same during the period of sus
pension, and, when deemed advisable, to liqui
date or reorganize such bank.
(i) To require bonds of Federal reserve
agents, to make regulations for the safeguard
ing of all collateral, bonds, Federal reserve
notes, money or property of any kind deposited
in the hands of such agents, and said board shall
perform the duties, functions, or services speci
fied in this Act, and make all rules and regula
tions necessary to enable said board effectively
to perform the same.
(j) To exercise general supervision over said
Federal reserve banks.
(k) To grant by special permit to national
banks applying therefor, when not in contraven
tion of State or local 'law, the right to act as
trustee, executor, administrator, or registrar of
stocks and bonds under such rules and regula
tions as the said board may prescribe.
(1) To employ such attorneys, experts, assist
ants, clerks, or other employees as may be
deemed necessary to conduct the business of the
board. All salaries and fees shall be fixed in Ad
vance by said board and shall be paid in the
same manner as the salaries of the members of
said board. All such attorneys, experts, assist
ants, clerks, and other employees shall be ap
pointed 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 regula
tion made in pursuance thereof: Provided, That
nothing herein shall prevent the President from
placing said employees in the classified service.
FEDERAL ADVISORY COUNCIL
Sec. 12. There is hereby created a Federal
Advisory Council, which shall consist of as many
members as there are Federal reserve districts.
Each Federal reserve bank by its board of di
rectors shall annually select from its own Fed
eral reserve district one member of said council?
who shall receive such compensation and allow
ances as may be fixed by his board of directors
subject to the approval of the Federal Reserve
Board. The meetings of said advisory council
shall be held at Washington, District of
Columbia, at least four times each year, and
oftener if called by the Federal Reserve Board.
The council may in addition to the meetings
above provided for hold such, other meetings in
Washington, District of Columbia, or elsewhere,
as it may deem necessary, may select its own
officers and adopt its own methods of procedure,
and a majority of its members shall constitute
a quorum for the transaction of business.
Vacancies in the council shall be filled by the
respective reserve banks, and members selected
to fill vacancies, shall serve for the unexpired
term.
The Federal Advisory Council shall have
power, by itself or through its officers, (1) to
confer directly with the Federal Reserve Board
on general business conditions; (2) to make
oral or written representations concerning mat
ters within the jurisdiction of said board; (3)
to call for information and to make recom
mendations in regard to discount rates, redis
count 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 re
ceive from any of its member banks, and from
the United States, deposits of current funds in
lawful money, national-bank notes, Federal re
serve notes, or checks and drafts upon solvent
member banks, payable upon presentation; or,
solely for exchange purposes, may receive from
other Federal reserve banks deposits of current
funds in lawful money, national-bank notes or
checks and drafts upon solvent member or other
Federal reserve banks, payable upon presenta
tion. Upon the indorsement of any of its member
banks, with a waiver of demand, notice and pro
test by such bank, any Federal reserve bank
may discount notes, drafts, and bills of exchange
arising out of actual commercial transactions;
that is, notes, drafts, and bills of exchange issued
or drawn for agricultural, industrial, or com
mercial purposes, or the proceeds of which ha.ve
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. jNothing 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 bill; admitted
to discount under the terms of thiB paragraph
must have a maturity at the time of discount of
not more than ninety days: Provided, That
notes, drafts, and bills drawn or issued for agri
cultural purposes or based on live stock and
having a maturity not exceeding six months may
be discounted in an amount to be limited to a
percentage of the capital of the Federal reserve
bank, to be ascertained and fixed by the Federal
Reservo Board.
Any Federal reserve bank may discount ac
ceptances which are based on the importation or
exportation of goods and which have a maturity
at time of discount of not more than three
months, and indorsed by at least one member
bank. The amount of acceptances so discounted
shall at no time exceed one-half the paid-up
capital stock and surplus of the bank for which
the rediscounts are made.
The aggregate of such notes and bills bearing
the signature or indorsement of any one person,
company, firm or corporation rediscounted for
any oho bank shall at no time exceed ten per
centum of the unimpaired capital and surplus of
said bank; but this restriction shall not apply
to the discount of bills of exchange drawn in
good faith against actually existing values.
Any member bank may accept drafts or bills
of exchange drawn upon it and growing out of
transactions involving the importation or ex
portation of goods having not more than six
months sight to run; but no bank- shall accept
such bills to an amount equal at any time in the
aggregate to more than one-half its paid-up
capital stock and surplus.
Section fifty-two hundred and two of the Re
vised Statutes of the United States is hereby
amended so as to read as follows: No national
banking association shall at any time be in
debted, or in any way- liable, to an amount ex
ceeding the amount of its "capital stock at such
time acutally paid in and remaining undi
minished by losses or otherwise, except on ac
count of demands, of the nature following:
First. Notes of circulation.
Second. Moneys deposited with or collected
by tho association.
Third. Bills of oxcjiango or drafts drawn
ngainst money actually on deposit to tho credit
of tho association, or duo tho re to.
Fourth. Liabilities to the stockholders of tho
association for dividends and' reservo profits.
Fifth, labilities incurred under the pro
visions of tho Federal Reservo Act.
Tho rediscount by any Federal resorvo bank
of any bills receivable and of domestic and
foreign bills of exchange, and of acceptances
authorized by this Act, shall bo subject to such
restrictions, limitations, and regulations as may
bo imposed by tho Fedoral Reserve Board.
OPEN-MARKET OPERATIONS
Sec. 14. Any Fedoral reservo bank may,
under rules and regulations prescribed by tho
Federal Reservo Board, purchase and sell in tho
open market, at homo or abroad, either from or
to domestic or foreign banks, firms, corporations
or individuals, cable transfers and bankers' ac
ceptances and bills of exchango of the kinds and
maturities by this Act mado eligiblo for redis
count, with or without tho indorsement of a
member bank.
Every Federal reservo bank shall havo power:
(a) To deal In gold coin and bullion at home
or abroad, to make loans thereon, exchange
Federal reservo 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 tho hypothecation
of United States bonds or other securities which
Federal reserve banks are authorized to hold;
(b) To buy and sell, at homo or abroad,
bonds and notes of the United States, and bills,
notes, revenue bonds, and warrants with a ma
turity from date of purchase of not exepeding
six months, issued in anticipation of the collec
tion of taxes or in anticipation of the receipt of
assured revenues by any State, county, district,
political subdivision, or municipality in the
continental United States, Including irrigation,
drainage and reclamation districts, such pur
chases to be made In accordance with rules and
regulations prescribed by the Federal Reserve
Board;
(c) To purchase from member banks and to
sell with or without its indorsement, bills of ex
change arising out of commercial transactions,
as herelnbeforo defined;
(d) To establish from time to time, subject
to review and determination of the Fedoral Re
serve Board, rates of discount to bo charged by
the Federal reserve bank for each class of paper,
which shall be fixed with a view of accommoi
dating commerce and business;
(e) To establish accounts with olher Federal
reserve banks for exchange purposes and, with '
the consent of the Federal Reserve Board, to
open and maintain banking accounts in foreign
countries, appoint correspondents, and establish
agencies in such countries wheresoever It may
deem best for the purpose of purchasing, selling,
and collecting bills of exchange, and to buy and
sell with or without its indorsement, through
such correspondents or agencies, bills of ex
change arising out of actual commercial trans
actions which have not more than ninety days
to run and which bear the signature of two or
more responsible parties.
GOVERNMENT DEPOSITS
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 Treas
ury, be deposited in Federal reserve banks,
which banks, when required by the Secretary of
the Treasury, shall act as fiscal agents of tho
United States; and the revenues of the Govern
ment or any part thereof may be deposited in
such banks, and disbursements may be made by
checks drawn against such deposits.
No public funds of the Philippine Islands, or
of the postal savings, or any Government funds,
shall be deposited in the continental United
States in any bank not belonging to the system
established by this Act: Provided, however,
That nothing in this Act shall be construed to
deny the right of the Secretary of the Treasury
to use member banks as depositories.
NOTE ISSUES
Sec. 1G. Federal reserve notes, to be issued
at tho discretion of tho Federal Reserve Board
for the purpose of making advances to Federal
reserve banks through the Federal reserve
agents as hereinafter set forth and for no other
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