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The Commoner
VOL. 13, NO. 29
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The Administration's Currency Bill
INCREASE AND DECREASE
OF CAPITAL
of tho
Section 5. That shares
capital stock of federal reservo
banks shall not be transferable, nor
bo hypothecated. In case a sub
scribing bank Increases Its capital, it
shall thereupon subscribe for an ad
ditional amount of capital stock of
tho federal reserve bank of its dis
trict equal to twenty per centum of
tho bank's own increase of capital,
ten per centum of said sub
ecription to bo paid in cash in the
manner hereinbefore provided for
original subscription, and ten per
centum to become a liability of tho
subscribing bank according to the
terms of tho original subscription.
A bank applying for- stock in a
federal reserve bank at any time
after the formation of the latter must
subscribe for an amount of the capi
tal of said reservo bank equal to
twenty per centum of ihe capital of
said subscribing bank, paying there
for Its par value in accordance with
tho terms prescribed by section two
of this act. When the capital of any
federal reserve bank has been in
creased either on account of tho in
crease of capital of the banks hold
ing stock therein or on account of
the increase in the number of stock
holding banks, the board of directors
shall make and execute a certificate
to the comptroller of tho currency
showing said increase in capital, the
amount paid in, and by wbom paid.
(Continued from Page 7.)
amounts to twenty per centum of the
paid-in capital and the shareholders
shall have received the dividends at
the rate of five per centum per an
num hereinbefore provided for, sixty
per centum of all excess earnings
shall bo paid to tho United States
and forty per centum to the member
banks in proportion to their annual
average balances with such federal
reserve bank; all earnings derived
by tho United States from federal
reserve banks shall constitute a sink
ing fund to bo held for the reduc
tion of tho outstanding bonded in
debtedness of tho United States, said
reduction to be accomplished under
regulations to be prescribed by the
secretary of the treasury. Should a
federal reserve bank bo dissolved
or go into liquidation, the surplus
fund of said bank, after the payment
of all debts and 'dividend require
ments as Hereinbefore provided for,
shall be paid to and become the
property of the United States.
Every federal reserve bank incor
porated under the terms of this act
and the Btock therein held by mem
ber banks shall be exempt from
federal, state, and local taxation, ex
cept in respect to taxes upon real
estate.
Section 8. That any national
banking association heretofore or
ganized may upon application at any
time within one year after tho pass
age of this act, and with tho ap
proval of the comptroller of the cur
rency, be granted, as herein pro
vided, all the rights, and be subject
to all the liabilities, of national
In case a subscribing bank reduces banking awoiati sub-
its capital it shall surrender a pro- 1----" "V" - "
portlonate amount of its holdings in
the capital of said federal reserve
bank, and in case a bank goes into
voluntary liquidation it shall sur
render all of its holdings of the
capital of said federal reserve bank.
In either case the shares surrendered
shall be canceled and the bank shall
receive in payment therefor a sum
equal to its cash paid subscriptions '
on the shares surrendered.
Section G. That' if any share
holder of a federal reserve bank shall
becomo insolvent and a receiver be
appointed, the stock held by it in
said federal reservo bank shall bo
canceled and tho balance, after de-
Provided, That such application on
the part of such associations shall
bo authorized by the consent in writ
ing of stockholders owning not less
than a majority of the capital stock
of the association. Any national
banking association now organized
which shall not, within one year
after the passage of this act, become
a national banking association under
the provisions hereinbefore stated,
or which shall fall to comply with
any of the provisions of this act ap
plicable thereto, shall be dissolved;
but such dissolution shall not take
away or impair any remedy against
such corporation, its stockholders or
officers, for any liability or penalty
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paid subscriptions all debts due by which shall have previously been in
such insolvent bank to said federal currea.
reserve bank, shall be paid to tho
receiver of the insolvent bank.
Whenever tho capital stock of a
federal reserve bank is reduced,
r either on account of a reduction in
capital of any bank or of the liquida
tion or insolvency of any such bank,
the board of directors shall make' and
. execute a certificate to tho comptrol
ler of the currency showing such
reduction of capital stock and the
amount repaid to such bank.
DIVISION OF EARNINGS
Section 7. That after the pay
ment of all necessary expenses and
taxes of a federal reserve bank, the
shareholders shall be entitled to re-
ceivo an annual dividend of five per
centum on the paid-in capital, which
dividend shall be cumulative. One
. half of the net earnings, after the
aforesaid dividend claims have beon
fully met, shall bo paid into a sur
plus fund until such fund shall
amount to twenty per centum of tho
. paid-in capital of. such bank, and of
' tho remaining one-half sixty per cen-
1 turn shall be paid to tho United
v, States and forty pe? centum to tho
, member banks in ihe -ratio qf thoir
average balances with, tho federal
reserve bank for the preceding year.
..Whenever and so long as the surplus
fund of a federal reservo bank
section y. mat any Dank or
banking association incorporated by
special law of any state or of the
United States, or organized under
the general laws of any state or the
United States, and having an un
impaired capital sufficient to entitle
it to become a national banking as
sociation under the provisions of
existing laws, may, by the consent
in writing of the shareholders own
ing not less than fifty-one per centum
of the capital stock of such bank, or
banking association, and with the ap
proval of tho comptroller of the cur
rency, become a national banking as
sociation under its former name or
by any name approved by the comp
troller. The directors thereof may
Continue to be the directors of the as
sociation so organized until others
are elected or appointed in accord
ance with the provisions of the law.
When tho comptroller has given to
such bank or banking association a
certificate that the provisions of this
act shall have been complied with,
such hank or banking association,
and all its stopkholders, officers, and
employees, shall have the same
powers and privileges, and shall be
s.ubject to the same duties, liabilities,
and regulations, in all respects, as
shall have been prescribed by this
act or by the national banking act
for associations originally organized
as national banking associations,
STATE BANKS AS MEMBERS
Section 10. That from and afjier
the passage of this act any hank or
banking, association or trust com
pany incorporated by special law of
any state, or organized under the
general laws of any state or the
United States, may make application
to tho federal reserve board herein
after created for the right to sub
scribe to the stock of the federal re
serve bank organized or to be or
ganized within the federal reserve
district where the applicant, is
located. The federal reserve board
under such rules, and regulations as
it may prescribe, subject to the. pro
visions of this section, shall permit
such applying bank to become a
stockholder in , the federal reserve
bank of the district in which such
applying bank is located. Whenever
the federal reserve board shall per
mit such an applying bank to become
a stockholder in the federal reserve
bank of the district in which the ap
plying bank is located, stock shall .be
issued and paid for under the rules
and regulations in this act provided
for national banks which become
stockholders in federal reserve
banks.
It shall be the duty of the federal
reserve hoard to establish by-laws
for the, general government of its
conduct in acting upon applications
made by the state banks and bank
ing associations and trust companies
hereinbefore referred to for stock
ownership in federal reserve banks.
Such by-laws shall require applying
banks not organized under federal
law to comply with the reserve re
quirements and submit to the inspec
tion and regulation provided for in
this andt other laws relating to na
tional banks. No such applying
bank shall be admitted to stock
ownership in a federal reserve bank
unless it possesses a paid-up unim
paired capital sufficient to entitle it
to become a national banking as
sociation in the place vhere it is
situated, under the provisions of the
national banking act, and conforms
to the provisions herein prescribed
for national banking associations oT
similar capitalization and to the
regulations of the federal reserve
board.
If at any time it shall appear to
the federal reserve board that a
DanKing association or trust com
pany organized under the laws of
any state or of the United States has
failed to comply with the provisions
of thissection or the regulations of
the board, it shall be within the
power of the said, board to require
such banking association or trust
company to surrender its stock in, the
federal, reserve bank in which , it
holds shares uppn receiving frpm
such bank the cash-naid subscrinr
tions to the said, shares in current
funds, and said federal .reserve, bank,
shall upon notice , from the. federaj
reserve board be required to sus
pend the designated banking associar
tion or trust company frqni further
privileges of membership,' and shall
within thirty days of .such notice
cancel and retire Its stpek and make
payment therefor ,in tlie manner
herein provided.
FEDERAL RESERVE
BOARD
Section 11. That there shall be
created a federal reserve . board,
which shall consist of seven mem
bers, Including the secretary of the
treasury, the secretary pf agricul
ture, and ,the comptroller of the cur-
leuujr, wuu sunn ue memDerg ex
omcio,, ana rpur members chosen by
the president of the United States,
by and wjth tho advice and" consent
of the senate. In selecting the fouT
appointive members of the federal
reserve board, not more than onn nf
twhom shall be selected from any one
federal reserve district, the president
shall have due regard to a fair ren
resentation of different geographical
divisions of the country. The four
members of the federal reserve board
chosen by the president and con
firmed as aferesaid shall devote their
entire time to the business of the
federal reserve board and shall eaoh
receive an annual salary of $10,000
together with an allowance for actual
necessary traveling expenses, and tho
comptroller of the currency. ? nv
officio member of said federal reserve
ooara, snail, in aauition to the salary
now paid him as comptroller, receive
the sum of $5,000 annually for his
services as a member of said board.
Of the members thus appointed by
the' president not more than two
shall be of the same political
party, and at least on shall
be a person experienced in bank
ing. One shall be designated by
the president to serve for two, one
for four, one for six, and one for
eight years, respectively, and there
after each member so appointed
shall serve for a term of eight years
unless sooner removed for cause by
the president. Of the four persons
thus appointed, one shall be desig
nated by the president as manager
and one as vice manager of the
federal reserve board. The manager
of the federal reserve board, subject
to the supervision of the secretary
of the treasury and 'board, shall bo
the active executive officer of the
federal reserve board.
The federal reserve board shall
have power to levy semi-annually
upon the federal reserve banks, in
proportion to capital, an assessment
sufficient to pay its estimated ex
penses for the half year succeeding
the levying of such assessment, to
gether with any deficit carried for
ward from the preceding half year.
The first meeting of the federal re
serve bpard shall be held in Wash
ington, District of Columbia, as soon
as may be aftpr the passage of this
act, at a date to be fixed by the re
serve bank organization committee.
Tho Rpp.rfitjirv of the treasury shall
bo ex officio chairman of the federal
reserve board. No member of the
federal reserve board shall he an
officer, or director of any bank or
banking institution or federal reserve
bank nor hold stock in any hank or
banking institution; and before en
tering upon his duties as a member
nf 4-Vi frwlfvnol rooorVft ll'n.ird lie SiiaH
certify under oath to the secretary of
tho treasury that he has complied
with this requirement. Whenever a
yacancy shall occur, pther than oy
expiration of term, among the tour
members of the federal reserve uoara
chosen by the president, as auoe
provided, a successor, shall be ap
pointed by the-. president, with
oHrJno ntwl MTlRfiTlf. of the SOmitC l"
fill such vacancy,, and when chosen
shall hold office for the "nfha
term of the member whoso place no
is selected to ,111.
The federal reserve board shall
annually make a report of its nscai
operations to the speaker or u
hous-e of representatives, who sna
cause the same to be printed for ui
information of the-'congress.
' Section three hundred and twentr-
..- 1, TAtHaail RtfltUteS Ol IBO
ilTl"Q SetS
& fi the department of the itwaaury
& bureau charged, except as In ww
act otherwise provided, wuu .
ecution of all laws passed by con
gresfl relating to ,tbe iue and regu
fatten of currency 1P"etfony the
jthrpugh banking. , Mjo clat ions, we
hlef officer of , which. bureau shall p
called the comptroller of the cu
rency, and shajl PerfQnn M auw
under the genera! .direction of te
secretary of the Ureasu" ;.,
the chairman ot the. to ThjU
bpard:" Provided, however,
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