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The Commoner
SEPTEMBER, 1913
The Administration's Currency Bill
The following1 is the full text of the Owen
Glass currency bill as approved by the demo
cratic caucus and introduced in. the house of
representatives August 29, 191o. The bill was
referred to the committee on banking and cur
rency and reported back to the house Septem
ber 9, 1913:
To provide for the establishment of federal
reservo banks, to 'furnish an elastic currency, to
afford means" of 'rediscounting commercial paper,
to establish a m'or.e effective supervision of
banking in the. United States', and for other
purposes.
Be it enacted by the senate and house of
representatives of the United States of America
in congress assembled, That the short title of
this act shall be the "Federal Reserve Act."
FEDERAL RESERVE DISTRICTS
Section 2. That within ninety days after the
passage of this act, or as soon thereafter as
practicable, tho secretary of the treasury, tho
secretary of agriculture, and the comptroller of
the currency, acting as "The Reserve Bank
Organization Committee," shall designate from
among the reserve and central reserve cities
now authorized by law a number of such cities
to T)e known as federal reserve cities, and shall
divide the continental United States into dis
tricts, each district to contain one of such federal
reserve cities: Provided, That the districts
shall be apportioned with due regard to the con
venience and customary course of business of
the community and sliall not necessarily coincide
with the area of such state or states as may be
wholly or in part included in any given district.
The districts thus created may be readjusted
and new districts may from time to time be
created by the federal reserve board heroin
after established, acting upon a joint applica
tion made by not less than ten member banks
desiring to. be organized into a new district.
The? districts thus constituted shall be known
asr federal reserve districts and shall be deslg-
nated by number according to the pleasure of
the organization committee, and no federal re
serve district shall be abolished, nor the loca
tion of a federal reserve bank changed, except
upon the application of three-fourths of the
member banks of such district.
The organization committee shall, in accord
ance with regulations to be established by Itself,
proceed to organize in each of the reserve cities
designated as hereinbefore specified a federal
reserve bank. "Each such federal reserve bank
shall' include in its title the name of the city in
which it is situated, as "Federal Reserve Bank
of Chicago," and so forth. The total number
of reserve cities designated by the organiza
tion committee shall be not less than twelve, and
the organization committee shall be authorized
to employ counsel and expert aid, to take testi
mony, to send for persons and papers, to ad
minister oaths, and to make such investiga
tions as may be deemed necessary by the said
committee for" the f purpose of determining the
reserve cities to be designated and organizing
the reserve districts hereinbefore provided.
Every national bank located within a given
district "shall be required to subscribe to the
capital stock of the federal reserve bank of that
district a sum equal to twenty per centum of the
apital Btock of such national bank fully paid
in and unimpaired, one-fourth of such subscrip
tion to be paid In cash and one-fourth within
sixty days after said subscription is made. The
remainder of the subscription or any part
thereof shall become a liability of the sub
scriber, subject to call and payment thereof
whenever necessary to meet the obligations of
the federal reserve bank under such terms and
in accordance with, such regulations as the board
of directors of said federal reserve bank may
prescribe: Provided, That no federal reserve
bank shall be organized with a paid-up and
unimpaired capital, at the time of beginning
business less in amount than $5,000,000. The
organization committee shall have power to
appoint such assistants and incur such expenses
in carrying out the provisions of this act as it
shall deem necessary, and such expenses shall
bd payable by the treasurer of the United States
upon vbucher approved by the secretary of the
treasury, and the sum of $100,000, or so much
thereof as may be necessary, Is hereby appro
priated, out of any moneys in tho treasury not
otherwise appropriated, for tho payment of such
expenses.
STOCK ISSUES
Section .1. That the capital stock of each
federal reserve hank shall bo divided into shares
of $100. Tho outstanding capital stock shall ho
increased from time to time as subscribing banks
increase their capital or as additional banks be
come subscribers, and shall be decreased as sub
scribing banks reduco their capital on cease to
be stockholders. Each federal reserve bank may
establish brauch ofllcos undor regulations of the
federal reserve board at points within the
federal reservo district In which it is located:
Provided, That tho total number of such
branches shall not exceed one for each $000,000
of the capital stock of said federal reserve bank.
FEDERAL RESERVE BANKS
Section 4. That a sufficient number of na
tional banks in a federal reservo district having
mado and filed with the comptroller of the cur
rency a certificate in tho form required In sec
tions fifty-one hundred and thirty-four and fifty
one hundred and thirty-five of the Revised
Statutes of tho United States, such national
banks shall become a body corporate, and as
such, and in tho name designated In such organi
zation certificate, shall have power to perform
all those acts and to enjoy all those privileges
and to exercise all those powers described in
section fifty-one hundred and thirty-six, Re
vised Statutes, save in so far as the same shall
be limited by the provisions of this act. Tho
federal reservo bank so incorporated shall have
succession for a period of twenty years from
Its organization, unless sooner dissolved by act
of congress.
Every federal reserve bank, shall be conducted
under tho oversight and control of a board of
directors, "whose powers shall be the same as
those conferred upon the boards of directors
of national banking associations under existing
law, not inconsistent with tho provisions of this
act. Such board of directors shall be constituted
and elected as hereinafter specified and shall
consist of nine members, holding office for three
years, and divided into three classes, designated
as classes A, B, and C.
Class A shall consist of three members, who
shall be chosen by and bo representative of tho
stock-holding banks.
Class B shall consist of three members, who
shall be representative of the general public in
terests of tho reservo district.
Class C shall consist of three members, who
shall be designated by tho federal reserve board.
Directors of class A shall bo chosen In the
following manner:
It shall be the duty of the chairman of the
board of directors of the federal reserve bank
of the district in which each such bank Is situ
ated to classify the member banks of the said
district into three general groups or divisions.
Each such group shall contain as nearly as may
be one-third of the aggregate number of said
member banks of the said district and shall
consist, as nearly as may be, of banks of simi
lar capitalization. The said groups shall be
designated by number at the pleasure of the
chairman of tho board of directors of tbe
federal reserve bank.
At a regularly called directors' meeting of
each member bank in the federal reserve dis
trict aforesaid, the board of directors of such
member bank shall elect by ballot one of its
own members as a district reserve elector and
shall certify his name to the chairman of the
board of directors of the federal reserve bank
of the district. The said chairman shall estab
lish lists of the district reserve electors, class
A, thus named by banks In each of, the afore
said three groups and shall transmit one list to
each such elector in each group. Every elector
shall, within fifteen days of the receipt of the
said list, select and certify to the said chairman
from among the names on the list pertaining
to his group, transmitted to him by the chair
man, one name, not his own, as representing his
choice for federal reserve director, class A. The
name receiving the greatest number of votes,
not less than a majority, shall be designated by
said chairman as federal reserve director for the
group to which he belongs. In case- no candi
date shall receive a majority of all votes cast
in any district, the chairman aforesaid shall
establish an eligible list, consisting of the three
namos receiving tho greatest number of votos on
tho first ballot, and shall trnimmlL said list to
tho electors in oach of the groups of hMiVn
established by him. Each elector shall at on'u
select and cortlfy to tho said chairman from
among tho three pontons submitted to him his
choice for federal reserve director, clan A, nnd
the name receiving the greatest number of, such
votes shall ho doclarafl hy tho chairman rw
federal rosorvo director, class A.
Directors of class B Khali ho choucn by tho
electors of the respective group at tho same
time and in tho name manner proscribed for
directors of clans A, except that they must bo
selected from a list of namen furnished, ono by
each memhor hank, and such names shall In no
case bo those of officers or directors of any hank
or banking association. They shall not accept
office as such during the term of their sorvlco
as directors of tho federal ruHcrvo bank. They
shall bo fairly representative of tho commercial,
agricultural, or industrial interests of their
respective districts, Tho federal reserve board
shall have power at its discretion to remove any
director of class B in any federal reserve bank,
If it should appear at any time that such director
does not fairly represent the commercial, agri
cultural, or industrial interests of his district.
Three directors belonging to class C shall bo
chosen directly by tho federal reserve board,
who shall he residents of the district for which
they are selected, one of whom shall ho desig
nated by said hoard as chairman of the board
of directors of tho federal reserve bank of tho
district to which he is appointed and shall bo
designated as "federal reservo agent." He shall
be a person of tested banking experience; and
In addition to his duties as chairman of the
board of directors of the federal reserve bank
of tho district to which he Is appointed, ho
shall bo required to maintain under regulations
to bo established by the fedoral reserve board a
local office of said board, which shall be situated
on tho promises of tho federal reserve bank of
tho district. He shall make regular reports to
tho federal reserve board, and shall act as Its
official representative for the performance of tho
functions conferred upon It by this act. Ho
shall receive an annual compensation to be fixed
by the federal reservo board and paid monthly
by the federal reservo bank to which ho is
designated.
Directors of federal reserve banks shall re
ceive, in addition to any compensation other
wise provided, a reasonable allowance for neces
sary expenses in attending meetings of their
respective boards, which amount shall be paid
by tho respective federal reserve banks. Any
compensation that may bo provided by boards
of directors of federal reservo banks for mem
bers of such boards shall be subject to review
by tho fedoral reservo board.
Tho reservo bank organization committee
may, in organizing federal reserve banks for tho
first time, call such meetings of bank directors
in tho several districts as may be necessary to
carry out the purposes of this act and may
exercise the functions herein conferred upon tho
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
directors of each federal reserve bank after
organization it shall be the du&of the directors
of classes A and B and C, respectively, to desig
nate one of the members of each class whoso
term of office shall expire in one year from tho
first of January nearest to date of such meet
ing, one whose term of office shall expire at tho
end of two years from said date, and ono whoso
term of office shall expire at the end of three
years from said date. Thereafter every director
of a federal reserve bank chosen as hereinbefore
provided shall hold office for a term of three
years; but the chairman of the board of direc
vitors of J&ch federal reserve bank designated by
therfsderal reserve board, as hereinbefore
described, shall bo removable at the pleasure oi
the said board without notice, and his successor
shall hold office during the unexpired term of
the director In whose place he was appointed.
Vacancies that may occur -In the several classct
of directors of federal reserve banks may ,be.
filled la the manner provided for the original:
selection of such directors, such appointees -U
hold office for the unexpired terms of their
predecessors.
-. - (Continued on Page 10.) '
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