1 institution, trust company, or Federal reserve bank nor hold stock 2 in any bank, banking institution, or trust company; and before 3 entering upon his duties as a member of the Federal Reserve Board 4 he shall certify under oath to the Secretary of the Treasury that he 5 has complied with this requirement. Whenever a vacancy shall 6 occur, other than by expiration of term, among the five members of 7 the Federal Reserve Board appointed by the President, as above 8 provided, a successor shall be appointed by the President, with the 9 advice and consent of the Senate, to fill such vacancy, and when 10 appointed he shall hold office for the unexpired term of the member 11 whose place he is selected to fill.

12 The President shall have power to fill all vacancies that may hap13 pen on the Federal Reserve Board during the recess of the Senate, by 14 granting commissions which shall expire thirty days after the next 15 session of the Senate convenes.

16 Nothing in this Act contained shall be construed as taking away 17 any powers heretofore vested by law in the Secretary of the Treasury 18 which relate to the supervision, management, and control of the 19 Treasury Department and bureaus under such department, and wher20 ever any power vested by this Act in the Federal Reserve Board or 21 the Federal reserve agent appears to conflict with the powers of the 22 Secretary of the Treasury, such powers shall be exercised subject 23 to the supervision and control of the Secretary.

24 The Federal Reserve Board shall annually make a full report of 25 its operations to the Speaker of the House of Representatives, who 26 shall cause the same to be printed for the information of the Congress. 27 Section three hundred and twenty-four of the Revised Statutes of 28 the United States shall be amended so as to read as follows: There 29 shall be in the Department of the Treasury a bureau charged with 30 the execution of all laws passed by Congress relating to the issue and 31 regulation of national currency secured by United States bonds and, 32 under the general supervision of the Federal Reserve Board, of all 33 Federal reserve notes, the chief officer of which bureau shall be called 34 the Comptroller of the Currency and shall perform his duties under 35 the general directions of the Secretary of the Treasury.

36

SEC. 11. The Federal Reserve Board shall be authorized and em37 powered:

38 (a) To examine at its discretion the accounts, books and affairs 39 of each Federal reserve bank and of each member bank and to require 40 such statements and reports as it may deem necessary. The said 41 board shall publish once each week a statement showing the condi42 tion of each Federal reserve bank and a consolidated statement for all 43 Federal reserve banks. Such statements shall show in detail the 44 assets and liabilities of the Federal reserve banks, single and com45 bined, and shall furnish full information regarding the character of the 46 money held as reserve and the amount, nature and maturities of the 47 paper and other investments owned or held by Federal reserve 48 banks.

49 (b) To permit, or, on the affirmative vote of at least five members 50 of the Reserve Board to require Federal reserve banks to rediscount 51 the discounted paper of other Federal reserve banks at rates of in52 terest to be fixed by the Federal Reserve Board.

53

(c) To suspend for a period not exceeding thirty days, and from 54 time to time to renew such suspension for periods not exceeding

fifteen days, any reserve requirement specified in this Act: Provided, 1 That it shall establish a graduated tax upon the amounts by which 2 the reserve requirements of this Act may be permitted to fall below 3 the level hereinafter specified: And provided further, That when the 4 gold reserve held against Federal reserve notes falls below forty per 5 centum, the Federal Reserve Board shall establish a graduated tax of 6 not more than one per centum per annum upon such deficiency until 7 the reserves fall to thirty-two and one-half per centum, and when 8 said reserve falls below thirty-two and one-half per centum, a tax at 9 the rate increasingly of not less than one and one-half per centum 10 per annum upon each two and one-half per centum or fraction thereof 11 that such reserve falls below thirty-two and one-half per centum. 12 The tax shall be paid by the reserve bank, but the reserve bank shall 13 add an amount equal to said tax to the rates of interest and discount 14 fixed by the Federal Reserve Board.

15

(d) To supervise and regulate through the bureau under the charge 16 of the Comptroller of the Currency the issue and retirement of Federal 17 reserve notes, and to prescribe rules and regulations under which such 18. notes may be delivered by the Comptroller to the Federal reserve 19 agents applying therefor.

20

(e) To add to the number of cities classified as reserve and central 21 reserve cities under existing law in which national banking associa- 22 tions are subject to the reserve requirements set forth in section 23 twenty of this Act; or to reclassify existing reserve and central 24 reserve cities or to terminate their designation as such.

25

(f) To suspend or remove any officer or director of any Federal 26 reserve bank, the cause of such removal to be forthwith communi- 27 cated in writing by the Federal Reserve Board to the removed officer 28 or director and to said bank.

29

(g) To require the writing off of doubtful or worthless assets upon 30 the books and balance sheets of Federal reserve banks.

31

(h) To suspend, for the violation of any of the provisions of this 32 Act, the operations of any Federal reserve bank, to take possession 33 thereof, administer the same during the period of suspension, and, 34 when deemed advisable, to liquidate or reorganize such bank.

35

(i) To require bonds of Federal reserve agents, to make regulations 36 for the safeguarding of all collateral, bonds, Federal reserve notes, 37 money or property of any kind deposited in the hands of such 38 agents, and said board shall perform the duties, functions, or services 39 specified in this Act, and make all rules and regulations necessary to 40 enable said board effectively to perform the same.

41

(j) To exercise general supervision over said Federal reserve banks. 42 (k) To grant by special permit to national banks applying therefor, 43 when not in contravention of State or local law, the right to act as 44 trustee, executor, administrator, or registrar of stocks and bonds 45 under such rules and regulations as the said board may prescribe.

46

(1) To employ such attorneys, experts, assistants, clerks, or other 47 employees as may be deemed necessary to conduct the business of 48 the board. All salaries and fees shall be fixed in advance by said 49 board and shall be paid in the same manner as the salaries of the 50 members of said board. All such attorneys, experts, assistants, 51 clerks, and other employees shall be appointed without regard to the 52 provisions of the Act of January sixteenth, eighteen hundred and 53 eighty-three (volume twenty-two, United States Statutes at Large, 54

This reference to section 20 is an error in the Act. The reference should be to section 19.

1 page four hundred and three), and amendments thereto, or any rule 2 or regulation made in pursuance thereof: Provided, That nothing 3 herein shall prevent the President from placing said employees in the 4 classified service.

5

6

FEDERAL ADVISORY COUNCIL.

SEC. 12. There is hereby created a Federal Advisory Council, 7 which shall consist of as many members as there are Federal reserve 8 districts. Each Federal reserve bank by its board of directors shall 9 annually select from its own Federal reserve district one member of 10 said council, who shall receive such compensation and allowances as 11 may be fixed by his board of directors subject to the approval of the 12 Federal Reserve Board. The meetings of said advisory council shall 13 be held at Washington, District of Columbia, at least four times each 14 year, and oftener if called by the Federal Reserve Board. The 15 council may in addition to the meetings above provided for hold such 16 other meetings in Washington, District of Columbia, or elsewhere, as 17 it may deem necessary, may select its own officers and adopt its own 18 methods of procedure, and a majority of its members shall constitute 19 a quorum for the transaction of business. Vacancies in the council 20 shall be filled by the respective reserve banks, and members selected 21 to fill vacancies, shall serve for the unexpired term. 22 The Federal Advisory Council shall have power, by itself or through 23 its officers, (1) to confer directly with the Federal Reserve Board on 24 general business conditions; (2) to make oral or written representa25 tions concerning matters within the jurisdiction of said board; (3) to 26 call for information and to make recommendations in regard to 27 discount rates, rediscount business, note issues, reserve conditions in 28 the various districts, the purchase and sale of gold or securities by 29 reserve banks, open-market operations by said banks, and the general 30 affairs of the reserve banking system.

31

POWERS OF FEDERAL RESERVE BANKS.

32 SEC. 13. Any Federal reserve bank may receive from any of its 33 member banks, and from the United States, deposits of current funds 34 in lawful money, national-bank notes, Federal reserve notes, or 35 checks and drafts upon solvent member banks, payable upon presen36 tation; or, solely for exchange purposes, may receive from other 37 Federal reserve banks deposits of current funds in lawful money, 38 national-bank notes, or checks and drafts upon solvent member or 39 other Federal reserve banks, payable upon presentation. 40 Upon the indorsement of any of its member banks, with a waiver of 41 demand, notice and protest by such bank, any Federal reserve bank 42 may discount notes, drafts, and bills of exchange arising out of actual 43 commercial transactions; that is, notes, drafts, and bills of exchange 44 issued or drawn for agricultural, industrial, or commercial purposes, 45 or the proceeds of which have been used, or are to be used, for such 46 purposes, the Federal Reserve Board to have the right to determine 47 or define the character of the paper thus eligible for discount, within 48 the meaning of this Act. Nothing in this Act contained shall be 49 construed to prohibit such notes, drafts, and bills of exchange, secured 50 by staple agricultural products, or other goods, wares, or merchandise

1

from being eligible for such discount; but such definition shall not include notes, drafts, or bills covering merely investments or issued or drawn for the purpose of carrying or trading in stocks, bonds, or 3 other investment securities, except bonds and notes of the Govern- 4 ment of the United States. Notes, drafts, and bills admitted to dis- 5 count under the terms of this paragraph must have a maturity at 6 the time of discount of not more than ninety days: Provided, That 7 notes, drafts, and bills drawn or issued for agricultural purposes or 8 based on live stock and having a maturity not exceeding six months 9 may be discounted in an amount to be limited to a percentage of the 10 capital of the Federal reserve bank, to be ascertained and fixed by the 11 Federal Reserve Board.

12

Any Federal reserve bank may discount acceptances which are 13 based on the importation or exportation of goods and which have 14 a maturity at time of discount of not more than three months, and 15 indorsed by at least one member bank. The amount of acceptances 16. so discounted shall at no time exceed one-half the paid-up'capital stock 17 and surplus of the bank for which the rediscounts are made.1

18

The aggregate of such notes and bills bearing the signature or in- 19 dorsement of any one person, company, firm, or corporation redis- 20 counted for any one bank shall at no time exceed ten per centum of the 21 unimpaired capital and surplus of said bank; but this restriction shall 22 not apply to the discount of bills of exchange drawn in good faith 23 against actually existing values.

24

Any member bank may accept drafts or bills of exchange drawn upon 25 it and growing out of transactions involving the importation or expota- 26 tion of goods having not more than six months sight to run; but no bank 27 shall accept such bills to an amount equal at any time in the aggregate 28 to more than one-half its paid-up'capital stock and surplus.'

29

Section fifty-two hundred and two of the Revised Statutes of the 30 United States is hereby amended so as to read as follows: No national 31 banking association shall at any time be indebted, or in any way 32 liable, to an amount exceeding the amount of its capital stock at such 33 time actually paid in and remaining undiminished by losses or other- 34 wise, except on account of demands of the nature following:

First. Notes of circulation.

35

36

37

Second. Moneys deposited with or collected by the association. Third. Bills of exchange or drafts drawn against money actually 38 on deposit to the credit of the association, or due thereto.

39

Fourth. Liabilities to the stockholders of the association for 40 dividends and reserve profits.

41

Fifth. Liabilities incurred under the provisions of the Federal 42 Reserve Act.

43

The rediscount by any Federal reserve bank of any bills receivable 44 and of domestic and foreign bills of exchange, and of acceptances 45 authorized by this Act, shall be subject to such restrictions, limita- 46 tions, and regulations as may be imposed by the Federal Reserve 47 Board.

OPEN-MARKET OPERATIONS.

48

49

SEC. 14. Any Federal reserve bank may, under rules and regula- 50 tions prescribed by the Federal Reserve Board, purchase and sell in 51 the open market, at home or abroad, either from or to domestic or 52

1Amended by Act of March 3, 1915. See, § 13: 1. 1: p. 32.

70820°-15-2

1 foreign banks, firms, corporations, or individuals, cable transfers and 2 bankers' acceptances and bills of exchange of the kinds and maturities 3 by this Act made eligible for rediscount, with or without the indorse4 ment of a member bank.

5

6

Every Federal reserve bank shall have power:

(a) To deal in gold coin and bullion at home or abroad, to make 7 loans thereon, exchange Federal reserve notes for gold, gold coin, or 8 gold certificates, and to contract for loans of gold coin or bullion, giv9 ing therefor, when necessary, acceptable security, including the hy10 pothecation of United States bonds or other securities which Federal 11 reserve banks are authorized to hold;

12

(b) To buy and sell, at home or abroad, bonds and notes of the 13 United States, and bills, notes, revenue bonds, and warrants with a 14 maturity from date of purchase of not exceeding six months, issued 15 in anticipation of the collection of taxes or in anticipation of the 16 receipt of assured revenues by any State, county, district, political 17 subdivision, or municipality in the continental United States, includ18 ing irrigation, drainage and reclamation districts, such purchases to 19 be made in accordance with rules and regulations prescribed by the 20 Federal Reserve Board;

21 (c) To purchase from member banks and to sell, with or without its 22 indorsement, bills of exchange arising out of commercial transactions, 23 as hereinbefore defined;

24 (d) To establish from time to time, subject to review and determi25 nation of the Federal Reserve Board, rates of discount to be charged 26 by the Federal reserve bank for each class of paper, which shall be 27 fixed with a view of accommodating commerce and business;

28 (e) To establish accounts with other Federal reserve banks for 29 exchange purposes and, with the consent of the Federal Reserve 30 Board, to open and maintain banking accounts in foreign countries, 31 appoint correspondents, and establish agencies in such countries 32 wheresoever it may deem best for the purpose of purchasing, selling, 33 and collecting bills of exchange, and to buy and sell with or without its 34 indorsement, through such correspondents or agencies, bills of exchange 35 arising out of actual commercial transactions which have not more 36 than ninety days to run and which bear the signature of two or more 37 responsible parties.

38

39

GOVERNMENT DEPOSITS.

SEC. 15. The moneys held in the general fund of the Treasury, 40 except the five per centum fund for the redemption of outstanding 41 national-bank notes and the funds provided in this Act for the redemp42 tion of Federal reserve notes may, upon the direction of the Secretary 43 of the Treasury, be deposited in Federal reserve banks, which banks, 44 when required by the Secretary of the Treasury, shall act as fiscal 45 agents of the United States; and the revenues of the Government or 46 any part thereof may be deposited in such banks, and disbursements 47 may be made by checks drawn against such deposits.

48 No public funds of the Philippine Islands, or of the postal savings, 49 or any Government funds, shall be deposited in the continental United 50 States in any bank not belonging to the system established by this Act: 51 Provided, however, That nothing in this Act shall be construed to deny 52 the right of the Secretary of the Treasury to use member banks as 53 depositories.