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
