The commoner. (Lincoln, Neb.) 1901-1923, January 01, 1914, Page 9, Image 9
a -The 6ommone JANUARY, 1914 provided for in this Act, to define their duties, require bonds of them, and, fix th'e penalty there of , .and to dismiss at pleasure such officers or , . employees. Sixth. To prescribe by its board of directors, by-laws not inconsistent with law, regulating the manner in which its general business may bo conducted, and the privileges granted to it by law may be exercised and enjoyed. Seventh. To exercise by its board of directors, or duly authorized officers or agents, all powers specifically granted by the provisions of this Act and such incidental powers as shall be1 necessary to carry on the business of banking within the -limitations prescribed by this Act. Eighth. Upon deposit with the Treasurer of the United States of any bonds of the United States in the manner provided by existing law relating to national banks, to receive from the Comptroller of the Currency circulating notes In blank, registered and countersigned as provided by law, equal in amount to the par value of the bonds so deposited, such notes to be issued under th'e same conditions and provisions, of law as re late to the issue of circulating notes of national banks secured by bonds of the United Spates bearing the circulating privilege, except that the issue of such notes shall not be limited to the capital stock of such Federal reserve bank. But no Federal reserve bank shall transact any business except such as is Incidental and necessarily preliminary to its organization until it has been authorized by the Comptroller of the Currency to commence business under the pro visions of this Act. Every Federal reserve bank shall be con 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 fairly and impartially and without dis crimination in favor of or against any member bank or banks and shall, subject to the provi sions of law and the orders of tho 'Federal. He servo Board',-ext'end to: each member barik 'such discounts; advancements and accommodations 'as may be safely atnd reasonably made with due regard for the claims and demands of other member banks. Such board of directors shall be selected as hereinafter specified and shall consist of nine members, holding office for threo years, and divided- into thred classes, designated as classes A, B, and C. ' Glass A shall consist of three members, who' shall bo chosen by and be representative of the stock-holding banks. Class B shall consist of three members, who at the time of their election shall be actively en gaged in the'r district in commerce, agriculture or some other industrial pursuit." Class C shall consist of three members who 'shall be designated by the Federal Reserve Board. When the necessary subscriptions to the capital stock have been obtained for the organ ization of any Federal reserve bank, the Federal Reserve Board shall appoint the class C directors and shall designate one of such directors as chairman of the board to be selected. Pending the designation of such chairman, the organiza tion committee shall exercise the powers and duties appertaining to the office of chairman in the organization of such Federal reserve bank. No Senator or Representative in Congress shall be a member of the Federal Reserve Board or an officer or a director of a Federal reserve bank. No director of class B shall be an officer, di rector, or employee of any bank. No director of class C shall be an officer, di rector, employee, or stockholder of any bank. Directors of class A and class B shall be chosen in the following manner: The chairman of the board of directors of the Federal reserve bank of the district in which the bank is situated or, pending the 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 tne chairman. At at regularly called meeting of the board of directors of each member bank-in the district it shall elect by ballot a district reserve elector and shall certify his-name to the chairman of the board of directors of tho Federal reserve bank of tho district. The chairman shall make lists of the district reserve electors thus named by banks in each of the aforesaid threo groups and shall transmit one list to each elector in each group. . Each member bank shall be permitted to nominate to tho chairman one candidate for di rector of class A and one candidate for director of class B. Tho candidates so nominated shall bo listed by tho chairman, indicating by whom nominated, and a copy of said list shall, within fifteen days after its completion, bo furnished by tho chairman to each elector. Every elector shall, with fifteen days after the receipt of the said list, certify to the chair man 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, tho chairman of tho 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 moro than one choice for any oile can didate. Any candidate having a majority of all votes cast In the column of first choice shall be de clared 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 candi dates 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 ma jority of electors voting when the first and sec ond 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 by the Federal Reserve Board. They shall have been for at least two years residents of the district 1:or which they are appointed, one of wjiom shall be designated by said board as chairman of the board of directors of the Federarreserve bijnk and as "Federal reserve agent.". He shall tie a person of tested banking experience; and in ad dition j;o 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 Fed eral reservo bank. He shall make regular re ports to the Federal Reserve Board, and shall act as its official representative for the per formance of the functions conferred cpon it by this Act. He shall receive an annual compensa tion to bo fixed by the Federal Reserve Board and paid monthly by the Federal reserve bank to which he is designated. One of the directors of class C, who shall be a person of tested bank ing experience, shall be appointed by the Federal Reserve Board as deputy chairman and deputy Federal reserve agent to exercise the powers of tho chairman of tho board and Federal reserve agent in case of absence or disability of his principal. Directors of Federal reserve banks shall re ceive, In addition to any compensation otherwise provided, a reasonable allowance for necessary expenses in attending meetings of their respec tive boards, which amount shall be paid by the respective Federal reservo banks. Any com pensation that may be provided by boards of directors of Federal reserve banks for directors, officers or employees shall be subject to the ap proval of the Federal Reserve Board. The Reserve Bank Organization Committee may, in organizing Federal reserve banks, call such meetings of bank directors in the several districts as may be necessary to carry out the purpose 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 di rectors of each Federal reserve bank, it shall be the duty of the directors of classes A, B and C, respectively, to designate one of the members of each class whose term of office shall expire in one year from the first of January nearest to date of such 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 threo " years from said date. Thereafter every director of a Federal reserve bnnkchosen as hereinbefore provided shall hold office for a term of three years. Vacancies that may occur in tho several classes of directors of Federal reserve banks may be filled in the man- nor provided for tho original selection of such directors, such appointees to hold office for tlie unexpired terms of their predecessors. STOCK ISSUES; INCREASE AND DECREASE OF CAPITAL Sec. H. Tho capital stock of each Federal re serve bank shall bo divided into shares of $100 each. Tho outstanding capital stock shall bo In creased from time to time as member banks in crease their capital stock and surplus or as addi tional banks become members, and may be de creased as member banks reduce their capital stock or surplus or cease to be members. Shares of the capital stock of Federal reservo banks owned by member banks shall not bo transferred or hypothecated. When a member bank In creases 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 herelnboforc provided for original subscription, and one-half subject o call of tho 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 appli cant bank, paying therefor its par value pluB one-half of one per centum a month from the period of tho 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 tho 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 hold Ings in tho capital of said Federal reservo bank, and when a member bank, voluntarily liquidates it shall surrender all- of Its holdings of tle capital stock of said Federal reservo bank and bo released from its stock subscription not pre viously called. In either case the shares, sur rendered shall be canceled and the member bank: shall receive In payment therefor, under regular tions to be prescribed by the Federal Reserve Board, a sum equal to its cash-paid subscrip tions on the shares surrendered and one-half pf one per centum a month from tho period of the last dividend, not to exceed tho book value thereof, less any liability of such member bank to tho Federal reservo bank. Sec. G. If any member bank shall bo declared insolvent and a receiver appointed therefor, the stock, held by it in said Federal reservo bank shall be canceled, without Impairment of its liability, and all cash-paid subscriptions on said stock, with one-half of one per centum per month from the period of last dividend, not to exceed the book value thereof, shall be first ap plied 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 tho liquidation or insolvency of such bank, tho 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 a Fed eral reserve bank have been paid or provided for, the stockholders shall be entitled to receive an annual dividend of six per centum on the paid-in capital stock, which dividend shall do cumulative. After the aforesaid dividend claims have been fully met, all the net earning shall be paid to the United States as a franchise tax, ex cept that one-half of such net earnings shall be paid into a surplus fund until it shall amount to forty per centum of the paid-in capital stock of such bank. The net earnings derived by the United States from Federal reserve banks shall, in tho discre tion of the Secretary, be used to supplement the gold reservo held against outstanding United States notes, or shall be applied to the reduction of the outstanding bonded indebtedness of the United States under regulations to be prescribed by the Secretary of the Treasury. Should a r. , . 3t Mljf i.7 ": l,WaVwteaal jLl' v " . f j K t ..?