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About The commoner. (Lincoln, Neb.) 1901-1923 | View Entire Issue (Sept. 1, 1913)
wtw -fcv ' The Commoner SEPTEMBER, 1913 11 nothing herein contained shall be construed to affect auy power now vested by law in the comptroller of the currency or the secretary of tho treasury. Section 12. That the federal re serve board hereinbefore established bhall hje authorized and empowered: (a) To examine at its discretion the accounts, books, and affairs of each federal reserve bank and to re quire such statements and reports as it may deem necessary. Tho said board shall publish once each week a statement showing the condition of each federal reserve bank and a con solidated statement for all federal reserve banks. Such statements shall show in detail the assets and liabili ties of the several institutions, single and combined, and shall furnish full information regarding the character of the lawful money held a3 reserve and the amount, nature, and maturi ties of the paper owned by federal reserve banks. (b) To permit or require, In time of emergency, federal reserve banks to rediscount the discounted prime paper of other federal reserve banks, at least five members of the board being present .rtien sucli action Is taken .and all present consenting to the requirement. The exercise of this compulsory rediscount power by the federal reserve board shall be subject to an interest charge to the accommodated bank of not les3 than one nor greater than three per cen tum above the higher of the rates prevailing in the districts immedi ately affected. (c) To suspend for a period not exceeding thirty days (and to renew such suspension for periods not to exceed fifteen days) any and every re?erve requirement specified in this act: Provided, That it shall estab lish a graduated tax upon the amounts by which the reserve re quirements of this act may be per mitted to fall below the level here inafter specified, such tax to be uni form in its application to all banks; but said board shall not suspend the reserve requirements with reference to federal reserve notes. (d) To supervise and regulate the issue and retirement of federal reserve notes and to prescribe the form and tenor of such notes. (e) To add to the number of cities classified as reserve and cen tral reserve cities under existing law in which national banking associa tions are subject to the reserve re quirements set forth in section twen ty of this act; or to reclassify exist ing reserve and central reserve cities and to designate the banks therein situated as country banks at its dis cretion. (f) To suspend the officials of federal reserve banks and, for cause stated In writing with opportunity of hearing, require the removal of said officials for Incompetency dere liction of duty, fraud, or deceit, such removal to be subject to approval by the president of the United States. (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 cause relat ing to violation of any of tho pro visions of this act, the operations of any federal reserve bank and appoint a receiver therefor. (I) To perform the duties, func tions, or services specified or im plied in this act. FEERAL ADVISORY COUNCIL Section 13. There is hereby cre ated a federal advisory council, "Which shall consist of as many mem bers a3 there are federal reserve dis tricts. Each federal reserve bank by its board of directors shall an nually select from its own federal Teserve district one member of said council, who shall' receive no com pensation for his services, but may bo reimbursed for actual necessary expenses. The meetings of said ad visory council shall bo held at Wash ington, District of Columbia, at least four times each year, and oftener if ! called by the federal reserve board. The council may select its own olli cers and adopt its own methods of procedure, and a majority of its members shall constitute a quorum for the transaction of business. Va cancies in the council shall be filled by the respective reserve banks, and members selected to fill vacancies shall servo for the unexpired term. The federal advisory council shall have power (1) to meet and confer directly with tho federal reserve board on general business condi tions; (2) to make oral or written representations concerning matters within tho jurisdiction of said board; (3) to call for complete information and to make recommendations in re gard to discount rates, rediscount business, note issues, reserve condi tions in the various districts, the purchase and sale of gold or securi ties by reserve banks, open-market operations by said banks, and the general affairs of the reserve bank ing system. REDISCOUNTS Section 14. That any federal re serve bank may receive from any of its stockholders or, solely for ex change purposes, from other federal reserve banks deposits of current funds in lawful money, iational-bank notes, federal reserve notes, or checks and drafts upon solvent banks, payable upon presentation. Upon the indorsement of any member bank any federal reserve bank may disccunt notes and bills of exchange arising out of commercial transactions; that is, notes and bills of exchange issued or drawn for agri cultural, industrial, or commercial purposes, or the proceeds of which have been used, or may 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; but such definition shall not Include notes or bills issued or drawn for tho purpose of carrying or trading in stocks, bonds, or other investment securi ties, nor shall anything herein con tained bo construed to prohibit such note3 and bills of exchange, securod by staple agricultural products, or other goods, wares, or merchandise from being eligible for such dis count Notes and bills admitted to discount under tho terms of this paragraph must have a maturity of not more than ninety days. Upon the indorsement of any member bank any federal reserve bank may discount the paper of the classes hereinbefore described hav ing a maturity of more than sixty and not more than one hundred and twenty days, when its own cash re serve exceeds thirty-three and one third per cent of its total outstand ing demand liabilities exclusive of its outstanding federal reserve notes by an amount to be fixed by the fed eral reserve board; but not more Hi an fiftv ner cent of the total paper so discounted for any member bank shall have a maturity of more than ninety days. Upon the indorsement of any member bank any federal reserve bank may discount acceptances of such banks which are based on the exportation or Importation, of goods and which mature in not more than six months and bear the signature of at least one member bank in addi tion to that of the acceptor. The amounts so discounted shall at no time exceed one-half the capital of the bank for which the rediscounts are made. aui nercrrAcrate of such notes ana bills bearing the signature or in dorsement of any one person, com pany, firm, or corporation roilla counted for any one bunk slinll at no time oxceod 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 national bank may, at Its dis cretion, accept drafts or bills of ex change drawn upon It having not moro than six months sight to run and growing out of transactions in volvlngtho Importation or exportation of goods; but no bank shall accept such bills to an amount equal at any time In tho aggregate to moro than one-half tho faco value of Its paid up and unimpaired capital. OPEN-MARKET OPERATIONS Section 15. That any federal ro servo bank may, undor rulos and regulations prescribed by tho fodoral reservo board, purchase and sell In the open market, olthor from or to domestic or foreign banks, firms, cor porations, or Individuals, prime bankers' bills, and bills of oxchango of tho kinds and maturities by this act made eligible for rediscount, and cable transfers. Every federal reserve bank shall have power (a) to deal In gold coin and bullion both at homo and abroad, to mako loans thereon, and to con tract for loans of gold coin or bul lion, giving therefore, when neces sary, acceptable security, Including tho hypothecation of United States bonds; (b) to invest In United States bonds, and bonds issued by any state, county, district, or mu nicipality; (c) to purchase from member banks and to sell, with or without its indorsement, bills of ox change arising out of commercial transactions, as hereinbefore defined, payable In foreign countries; but such bills of exchange must have not exceeding ninety days to run and must bear the signature of two or more responsible parties, of which the last shall bo that of a member bank; (d) to establish each week, or as much oftener as required, subject to review and determination of tho federal reserve board, a rato of dis count to be charged by such bank for each class of paper, which shall bo fixed with a view of accommodating the commerce of the country; and (e) with the consent of tho fodoral reserve board, to open and maintain banking accounts in foreign coun tries and establish agencies in such countries wheresoever it may deem best for tho purpose of purchasing, selling, and collecting foreign bills of exchange, and to buy and sell with or without its Indorsement, through such correspondents or agencies, prime foreign bills of exchango aris ing out of commercial transactions which have not excerJing ninety days to run and which bear tho sig nature of two or more responsible parties. GOVERNMENT DEPOSITS Section 16. That all moneys now held in the general fund of the treasury shall, upon tho direction of tho secretary of tho treasury, within twelvo months after tho passago of this act, be deposited in federal re serve banks, which banks shall act as fiscal agents of the united states; and thereafter tho revenues of tho government shall bo logularly de posited in such banks, and disburse ments shall bo made by checks drawn against such deposits. The secretary of the treasury shall, subject to the approval of tho federal reserve board, from time to time, ap portion the funds of tho government among the said federal Teserve banks, distributing them, as far as practicable, equitably between dif ferent sections, and may, at their joint discretion, charge Interest thereon and fix, from month to month, a rate which shall be regu larly paid by tho banki holding suoh deposits: Provided, That no fodoral roiorvo bank shall pay lnleroat upon any depoHitu oxcept those of tho Unitod States. No fodoral rcHervo bank ahull re ceive or credit dopoalts oxcopt from tho government of tho United States, Its own mombor banks, and, to the extent pormltted by this act, from other federal roHorvo banks. All domostlc transactions of tho federal reserve banks Involving a rediscount operation or tho creation of dopoBlt accounts shall bo confined to the government and tho depositing and fodoral rosorvo banks, with tho ex ception of tho purchaso or salo of government or stnto securities or of gold coin or bullion. NOTE ISSUES Soctlon 17. That fedoral rosorve notes, to be issued at tho discretion of tho fedoral rcsorvo board for the purposo of making advances to fed eral resorvo banks ns hereinafter set forth and for no other purposo, are hereby authorized. Tho Bald notoi shall bo obligations of tho United States and shall bo receivable for all taxes, customs, nnd other public dues. They shall bo redoemod la gold or lawful money on demand at tho treasury department of the United States, in tho city of Wash ington, District of Columbia, or at any federal rosorvo bank. Any federal resorvo bank may, upon voto of Its dlroctors, mako applk cation to tho local fedoral rosorve agent for such amount of tho treasi ury notes hereinbefore provided foi as it may deem best. Such applies tion shall bo accompanied with tender to tho local federal reserv. agent of collateral security to protect tho noteB for which application If made equal in amount to tho sum of tho notes thus applied for. Th collateral security thus offered shall bo notes and bills accoptod for re discount under tho provisions of sec tions 1-1 and 15 of this net, and thV fedoral reserve agents shall each dajj notify tho fedoral resorvo board of Is sues and withdrawals of notes to an by tho fodoral reserve bank to which ho is accredited. Tho Bald fodoral rcsorvo board shall bo authorized at any tlmo to call upon a federal re servo bank for additional security t protect tho fodoral reservo note issued to it. Whonover any fedoral reserve bank shall pay out or disburse fed eral resorvo notes Issued to It a hereinbefore provided, it shall se gregate in its own vaults and shall carry to a special resorvo account on Its books gold cr lawful money equal In amount to thirty-three and one-third per centum of the reserve notes so paid out by it, such reserve to bo used for tho redemption of said reservo notes as presented; but any federal reserve bank so using any part of such reserve to redeem note shall Immediately carry to said re serve account an amount of gold op lawful coney sufficient to make sal resorvo equal to thirty-three and one-third per centum of Its outstand lng treasury notes. Notes so paid out shall bear upon their faces a dis tinctive letter and serial number, which shall bo assigned by the federal reservo board to each federal reserve bank. Whonover federal re serve notes Issued through one federal reservo bank shall bo re ceived by another federal reserve: bank through which they wort originally issued, or Bha'l bo charged off against government deposits and returned to the treasury of the United States, or shall be presented to tho said treasury for redemptloa. No federal reservo bank shall pay out notes issued through another under penalty of a tax of ten per centum upon tho face value of note so paid out Notes presented for re demption at the traasury of the r.-.-Mijr. y.wn myriuzjiis