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The Commoner
VOL. 13, NO. 29
12
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United States shall 1)0 paid and re
turned to tho federal reserve bunks
'through which they woro originally
.'issued, and federal resorvo notes re
ceived by tho treasury otherwise
than for redemption shall bo ox
changed for lawful money out of
!tho live per centum redemption fund
'horolnaftor provided an(J returned as
'hereinbefore provided to tho resorvo
bank through which they woro
originally issued.
Tho fodoral rosorvo board shall
have powor, In its discretion, to re
quire federal reserve banks to main
tain on deposit in tho treasury of tho
"United States a sum in gold equal to
flvo per contum of such amount of
fodoral rosorvo notes as may bo is
sued to them under the provisions
of this act; but such five per centum
shall be counted and included as part
of tho thirty-three and one-third per
centum resorvo hereinbefore re
quired. The said board shall also
have tho right to grant In wholo or
in part or to reject entirely tho ap
plication of any federal resorvo bank
for fodoral resorvo notes; but to the
extent and in tho amount that such
application may be granted tho
federal resorvo board shall, through
its local federal reserve agent, de
posit foderal reserve notes with tho
bank so applying, and such bank
shall bo charged with the amount of
such notes and shall pay such rate
of interest on said amount as may
be established by the federal reserve
hoard, which rate shall not bo less
than one-half of ono per centum per
annum, and tho amount of such
foderal rosorvo notes so issued to
any such bank shall, upon delivery,
bocomo a first and paramount lien
on all tho assets of such bank.
Any federal resorvo bank may at
any time reduce its liability for out
standing federal reserve notes by tho
deposit of federal reserve notes,
, whether issued to such bank or to
somo other resorvo bank, or lawful
I money of tho United States, or gold
1 bullion, with any federal reserve
agent or with the treasurer of the
United States, and such reduction
Bhall bo accompanied by a corres
ponding reduction in tho required
reserve fund of laiwful money set
apart for the redemption of said
notes and by the release of a corres
ponding amount -of the collateral
security deposited with tho local
federal reserve agent.
Any federal reserve bank may at
its discretion withdraw collateral
deposited with the local federal re
serve agent for the protection of
federal reserve notes deposited with
it and shall at tho same time substi
tute other collateral of equal value
approved by the federal reserve
agent under regulations to be pre
scribed by the federal reserve board.
it snaii do tne uuty or everv
provisions of section fifty-one hun
dred and fifty-nine of the Re
vised Statutes of the United States,
and section four of the act of June
20, 1874, and section eight of tho
act of July 12, 1882, and of any
other provisions of existing statutes,
as require that before any. national
banking association shall bo auth
orized to commence banking busi
ness it shall transfer and deliver to
tho treasurer of the United States a
stated amount of United States
registered bonds bo, and the same is
hereby, ropealod.
REFUNDING BONDS
Section 19. That upon applica
tion the secretary of the treasury
shall exchange the two per centum
bonds of the United States bearing
the circulation privilege deposited
by any national banking association
with tho treasurer of the United
States as security for circulating
notes for three per centum bonds of
tho United States without the circu
lation privilege, payable after twen
ty years from date of issue, and ex
empt from federal, state, and mu
nicipal taxation both as to income
and principal. No national bank
shall, in any one year, present two
per centum bonds for exchange in
the manner hereinbefore provided to
an amount exceeding five per centum
of tho total amount of bonds on de
posit with the treasurer by said bank
for circulation purposes. Should any
national bank fail in any one year
to bo exchange its full quota of two
per centum bonds under the terms
of this act, the secretary of the
treasury may permit any other na
tional bank or banks to exchange
bonds in excess of the five per cen
tum -aforesaid in an amount equal
to the deficiency caused by the fail
ure of any one or more hanks to
make exchange in any one year, al
lotment to be made to applying
banks in proportion to their holdings
of bonds. At the expiration of
twenty years from the passage of
this act every holder of United
States two per centum bonds then
outstanding shall receive payment at
par and accrued interest. After
twenty years from the date of the
passage of this act national-bank
notes still remaining outstanding
shall be recalled and redeemed by
the national banking associations
issuing the same within a period and
under regulations to bo prescribed
by the federal reserve board, and
notes still remaining in circulation
at the end of such period shall be
secured by an equal amount of law
ful money to he deposited in the
treasury of the United States by the
banking associations originally issu
ing such notes. Meanwhile every
national bank may continue to apply
for and receive circulating notes
federal reserve bank to receive on from the comptroller of the currency
deposit, at par and without charge
for exchange or collection, checks
and drafts drawn upon any of its de
positors or by any of its depositors
upon any other depositor and checks
and drafts drawn by any depositor
in any other federal reserve bank
upon funds to the credit of said de
positor in said resorvo bank last men
tioned, nothing herein contained to
be construed as prohibiting member
banks from making reasonable
charges to cover actual expenses in
curred in collecting and remitting
funds for their patrons. The federal
reserve board shall make and pro
mulgate from time to time regula
tions governing the transfer of funds
at par among federal reserve banks,
and may at its discretion exercise
functions of a clearing house for
such, federal reserve banks, or may
designate a federal reserve bank to
exercise Buch functions, and may also
require each such bank to exercise
the functions of a clearing house for
its shareholding banks.
Section 18. That so much of the
based upon the deposit of two per
centum bonds or of any other bonds
bearing the circulation privilege;
but no national hank shall be per
mitted to issue other circulating
noteB except such as are secured as
in this section provided or to issue
or to make use of any substitute for
such circulating notes in the form
of clearing-house loan certificates,
cashier's checks, or other obligation.
BANK RESERVES
Section 20. That from and after
the date when the secretary of the
treasury shall have officially an
nounced, in such manner as he mav
elect, tho fact that a federal reserve
bank has been established in any
designated district, every banking
association "within said district which
shall have subscribed for stock in
such federal reserve bank shall be
required to establish and maintain
reserves as follows:
(a) If a country bank as defined
by existing law. it shall hold and
I maintain a reserve equal to twelve
per centum of the aggregate amount
of its deposits, not including savings
deposits hereinafter provided for.
Five-twelfths of such reserve shall
consist of money which national
banks may under existing law count
as legal reserve, held actually in the
bank's own vaults; and for a period
of fourteen months from the date
aforesaid at least three-twelfths and
thereafter at least five-twelfths of
such reserve shall consist of a credit
balance with the federal reserve
bank of its district. The remainder
of the twelve per centum reserve
hereinbefore required may, for a
period of thirty-six months from and
after the date fixed by the secretary of
the treasury as hereinbefore pro
vided, consist of balances due from
national banks in reserve or central
reserve cities as now defined by law.
.From and after a date thirty-six
months subsequent to the date fixed
by the secretary of the treasury as
hereinbefore provided the said re
mainder of the twelve per centum re
serve required of each country bank
shall consist either in whole or in
part of reserve money in the bank's
own vaults or of credit balance with
the federal reserve bank of its dis
trict. (b) If a reserve city bank as de
fined by existing law, it shall hold
and maintain, for a period of sixty
days from the date fixed by the sec
retary of the treasury as hereinbe
fore provided, a reserve equal to
twenty-five per centum of the aggre
gate amount of its deposits, not in
cluding savings deposits hereinafter
provided for, and permanently there
after eighteen per centum. At least
one-half of such reserve shall consist
of money which national banks may
under existing law count as legal re
serve, held actually in the bank's
own vaults. After sixty days from
the date aforesaid, and for a period
of one year, at least three-eighteenths
and permanently thereafter
at least five-eighteenths of such re
serve shall consist of a credit bal
ance with the federal reserve bank
of its district. The remainder of
the reserve in this paragraph re
quired may, for a period of thirty-six
months from and after the date
fixed hy the secretary, of the treas
ury as hereinbefore provided, consist
of balances due from national banks
in central reserve cities as now de
fined hy law. From and after a date
thlrty-hix months subsequent to the
date fixed by the secretary of the
treasury as hereinbefore provided,
the said remainder of the eighteen
per centum reserve required of each
reserve city bank shall consist either
in whole or in part of reserve money
in the bank's own vaults or of credit
balance with the federal reserve
bank of its district.
(c) If a central reserve city bank
as defined by existing law, it shall
hold and maintain for a period of
sixty days from the date fixed hy the
secretary of the treasury as herein
before provided a reserve equal to
twenty-five per centum of the aggre
gate amount of its deposits, not in
cluding savings deposits hereinafter
provided for, and permanently there
after eighteen per centum. At least
one-half of such reserve shall con
sist of money which national hanks
may under existing law count as
legal reserve, held actually in the
bank's own vaults; and at least one
fourth of such reserve shall consist
of a credit balance with the
federal reserve bank of its dis
trict. The remainder of the eigh
teen per centum reserve required
of each central reserve city bank
shall consist either in whole or in
part of reserve money actually held
in its own vaults or of credit balance
with the federal reserve bank of its
district.
Section 21. That so much of sec
tions two and three of the act of
June 20, 1874, entitled "An act fix
ing the amount of United sium
notes, providing for a redi.rribution
of the national bank currency and
for other purposes," as provides that
the funds deposited by any national
banking association with the treas,
urer of the United States for the re
demption of its notes shall bo
counted as a part of its lawful re
serve as provided in the act afore
said, be-, and the sanfe is hereby, re
pealed. And from and after the pas
sage of this act such fund of live per
centum shall in no case be counted
by any national banking association
as a part of its lawful reserve.
Section 22. That every federal
reserve bank shall at all times have
on hand in its own vaults, in gold or
lawful money, a sum equal to not
less than thirty-three and one-third
per centum of its outstanding de
mand liabilities.
The federal reserve board may
notify any federal reserve bank whose
lawful reserve shall be below the
amount required to bo kept on hand,
to make good such reserve; and if
such bank shall fail for thirty days
thereafter so to make good its lawful
reserve, the federal reserve board
may appoint a receiver to wind up
the business of said bank.
BANK EXAMINATIONS
Section 23. That tho examina
tion of the affairs of every national
banking association authorized by
existing law shall take place at least
twice in each calendar year and as
much oftener as the federal reserve
board shall consider necessary in
order to furnish a full and complete
knowledge of its condition. The sec
retary of the treasury may, however,
at any time direct the holding of a
special examination. The person as
signed to the making of such exami
nation of the affairs of any national
banking association shall have power
to call together a quorum of the
directors of such association, who
shall, under oath, state to such ex
aminer the character and circum
stances of such of its loans or dis
counts as he may designate; and
from and after the passage of this
act all bank examiners shall receive
fixed salaries, the amount whereof
shall be determined by the federal
reserve board and annually reported
to congress. But the expense of the
examinations herein provided for
shall be assessed by the federal re
serve board upon the associations
examined in proportion to assets or
resources held by such associations
upon a date during the year in which
such examinations are held to be
established by the federal reserve
board. The comptroller of the cur
rency shall so arrange the duties oi
national-bank examiners that no two
successive examinations of any as
sociation shall be made by the same
examiner.
In addition to the examinations
made and conducted by the comp
troller of the currency, every federal
reserve bank may, with the approval
of the federal reserve board, arru"
for special or periodical examination
of the member hanks within its an.
trict. Such examination shall ue J"
conducted as to inform the federal
reserve bank under whose auspices
it is carried on of the condition o
its member banks and of the lines o
credit which are being extended oy
them. Every federal reserve ban
shall at all timeB furnish to w
federal reserve board such Informa
tion as may be demanded . oy
latter concerning the condition
any national banking assoc tot on
located within tho district of m
said federal reserve bank.
Tho federal reserve board snan
often as it deems best, and m a j
case not less frequently than
times each, year, order an ain
tion of national banking assodao
in reserve cities. Such 01int
shall show in detail the total am
of loans made by each bank on
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