Index-digest of the Federal Reserve Act and Amendments ...

1 hereinafter provided and returned to the reserve bank through which 2 they were originally issued, or they may be returned to such bank 3 for the credit of the United States. Federal reserve notes unfit for 4 circulation shall be returned by the Federal reserve agents to the 5 Comptroller of the Currency for cancellation and destruction.

The Federal Reserve Board shall require each Federal reserve bank 7 to maintain on deposit in the Treasury of the United States a sum 8 in gold sufficient in the judgment of the Secretary of the Treasury 9 for the redemption of the Federal reserve notes issued to such 10 bank, but in no event less than five per centum; but such de11 posit of gold shall be counted and included as part of the forty per 12 centum reserve herein before required. The board shall have the 13 right, acting through the Federal reserve agent, to grant in whole 14 or in part or to reject entirely the application of any Federal 15 reserve bank for Federal reserve notes; but to the extent that such 16 application may be granted the Federal Reserve Board shall, through 17 its local Federal reserve agent, supply Federal reserve notes to the 18 bank so applying, and such bank shall be charged with the amount 19 of such notes and shall pay such rate of interest on said amount as 20 may be established by the Federal Reserve Board, and the amount of 21 such Federal reserve notes so issued to any such bank shall, upon 22 delivery, together with such notes of such Federal reserve bank as 23 may be issued under section eighteen of this Act upon security of 24 United States two per centum Government bonds, become a first and 25 paramount lien on all the assets of such bank.

26 Any Federal reserve bank may at any time reduce its liability for 27 outstanding Federal reserve notes by depositing, with the Federal 28 reserve agent, its Federal reserve notes, gold, gold certificates, or 29 lawful money of the United States. Federal reserve notes so depos30 ited shall not be reissued, except upon compliance with the conditions 31 of an original issue.

32 The Federal reserve agent shall hold such gold, gold certificates, or 33 lawful money available exclusively for exchange for the outstanding 34 Federal reserve notes when offered by the reserve bank of which he is 35 a director. Upon the request of the Secretary of the Treasury the 36 Federal Reserve Board shall require the Federal reserve agent to 37 transmit so much of said gold to the Treasury of the United States as 38 may be required for the exclusive purpose of the redemption of such

39 notes.

Any Federal reserve bank may at its discretion withdraw collateral 41 deposited with the local Federal reserve agent for the protection of 42 its Federal reserve notes deposited with it and shall at the same time 43 substitute therefor other like collateral of equal amount with the 44 approval of the Federal reserve agent under regulations to be pre45 scribed by the Federal Reserve Board.

46 In order to furnish suitable notes for circulation as Federal reserve 47 notes, the Comptroller of the Currency shall, under the direction of 48 the Secretary of the Treasury, cause plates and dies to be engraved 49 in the best manner to guard against counterfeits and fraudulent 50 alterations, and shall have printed therefrom and numbered such 51 quantities of such notes of the denominations of $5, $10, $20, 52 $50, $100, as may be required to supply the Federal reserve banks. 53 Such notes shall be in form and tenor as directed by the Secretary of 54 the Treasury under the provisions of this Act and shall bear the

distinctive numbers of the several Federal reserve banks through 1 which they are issued.

When such notes have been prepared, they shall be deposited in the Treasury, or in the subtreasury or mint of the United States nearest the place of business of each Federal reserve bank and shall 5 be held for the use of such bank subject to the order of the Comp- 6 troller of the Currency for their delivery, as provided by this Act. 7

The plates and dies to be procured by the Comptroller of the Cur- 8 rency for the printing of such circulating notes shall remain under 9 his control and direction, and the expenses necessarily incurred in 10 executing the laws relating to the procuring of such notes, and all 11 other expenses incidental to their issue and retirement, shall be paid 12 by the Federal reserve banks, and the Federal Reserve Board shall 13 include in its estimate of expenses levied against the Federal reserve 14. banks a sufficient amount to cover the expenses herein provided for. 15 The examination of plates, dies, bed pieces, and so forth, and 16 regulations relating to such examination of plates, dies, and so forth, 17 of national-bank notes provided for in section fifty-one hundred and 18 seventy-four Revised Statutes, is hereby extended to include notes 19 herein provided for.

Any appropriation heretofore made out of the general funds of 21 the Treasury for engraving plates and dies, the purchase of distinc- 22 tive paper, or to cover any other expense in connection with the 23 printing of national-bank notes or notes provided for by the Act of 24 May thirtieth, nineteen hundred and eight, and any distinctive paper 25 that may be on hand at the time of the passage of this Act may be 26 used in the discretion of the Secretary for the purposes of this Act, 27 and should the appropriations heretofore made be insufficient to 28 meet the requirements of this Act in addition to circulating notes 29 provided for by existing law, the Secretary is hereby authorized to 30 use so much of any funds in the Treasury not otherwise appropriated 31 for the purpose of furnishing the notes aforesaid: Provided, however, 32 That nothing in this section contained shall be construed as exempt- 33 ing national banks or Federal reserve banks from their liability to 34 reimburse the United States for any expenses incurred in printing 35 and issuing circulating notes.

Every Federal reserve bank shall receive on deposit at par from 37 member banks or from Federal reserve banks checks and drafts drawn 38 upon any of its depositors, and when remitted by a Federal reserve 39 bank, checks and drafts drawn by any depositor in any other Federal 40 reserve bank or member bank upon funds to the credit of said deposi- 41 tor in said reserve bank or member bank. Nothing herein contained 42 shall be construed as prohibiting a member bank from charging its 43 actual expense incurred in collecting and remitting funds, or for 44 exchange sold to its patrons. The Federal Reserve Board shall, by 45 rule, fix the charges to be collected by the member banks from its 46 patrons whose checks are cleared through the Federal reserve bank 47 and the charge which may be imposed for the service of clearing or 48 collection rendered by the Federal reserve bank.

The Federal Reserve Board shall make and promulgate from time 50 to time regulations governing the transfer of funds and charges 51 therefor among Federal reserve banks and their branches, and may 52 at its discretion exercise the functions of a clearing house for such 53 Federal reserve banks, or may designate a Federal reserve bank to 54

1 exercise such functions, and may also require each such bank to 2 exercise the functions of a clearing house for its member banks. 3 SEC. 17. So much of the provisions of section fifty-one hundred 4 and fifty-nine of the Revised Statutes of the United States, and 5 section four of the Act of June twentieth, eighteen hundred and 6 seventy-four, and section eight of the Act of July twelfth, eighteen 7 hundred and eighty-two, and of any other provisions of existing 8 statutes as require that before any national banking associations 9 shall be authorized to commence banking business it shall transfer 10 and deliver to the Treasurer of the United States a stated amount of 11 United States registered bonds is hereby repealed.

REFUNDING BONDS.

SEC. 18. After two years from the passage of this Act, and at any 14 time during a period of twenty years thereafter, any member bank 15 desiring to retire the whole or any part of its circulating notes, may 16 file with the Treasurer of the United States an application to sell for 17 its account, at par and accrued interest, United States bonds secur18 ing circulation to be retired.

19 The Treasurer shall, at the end of each quarterly period, furnish 20 the Federal Reserve Board with a list of such applications, and the 21 Federal Reserve Board may, in its discretion, require the Federal 22 reserve banks to purchase such bonds from the banks whose appli23 cations have been filed with the Treasurer at least ten days before 24 the end of any quarterly period at which the Federal Reserve Board 25 may direct the purchase to be made: Provided, That Federal reserve 26 banks shall not be permitted to purchase an amount to exceed 27 $25,000,000 of such bonds in any one year, and which amount shall 28 include bonds acquired under section four of this Act by the Federal 29 reserve bank.

30 Provided further, That the Federal Reserve Board shall allot to 31 each Federal reserve bank such proportion of such bonds as the 32 capital and surplus of such bank shall bear to the aggregate capital 33 and surplus of all the Federal reserve banks.

34 Upon notice from the Treasurer of the amount of bonds so sold for 35 its account, each member bank shall duly assign and transfer, in 36 writing, such bonds to the Federal reserve bank purchasing the 37 same, and such Federal reserve bank shall, thereupon, deposit lawful 38 money with the Treasurer of the United States for the purchase price 39 of such bonds, and the Treasurer shall pay to the member bank selling 40 such bonds any balance due after deducting a sufficient sum to 41 redeem its outstanding notes secured by such bonds, which notes 42 shall be canceled and permanently retired when redeemed.

43 The Federal reserve banks purchasing such bonds shall be per44 mitted to take out an amount of circulating notes equal to the par 45 value of such bonds.

46 Upon the deposit with the Treasurer of the United States of bonds. 47 so purchased, or any bonds with the circulating privilege acquired 48 under section four of this Act, any Federal reserve bank making 49 such deposit in the manner provided by existing law, shall be entitled 50 to receive from the Comptroller of the Currency circulating notes 51 in blank, registered and countersigned as provided by law, equal in 52 amount to the par value of the bonds so deposited. Such notes

shall be the obligations of the Federal reserve bank procuring the 1 same, and shall be in form prescribed by the Secretary of the Treas- 2 ury, and to the same tenor and effect as national-bank notes now 3 provided by law. They shall be issued and redeemed under the same terms and conditions as national-bank notes except that they shall not be limited to the amount of the capital stock of the Federal 6 reserve bank issuing them.

Upon application of any Federal reserve bank, approved by the 8 Federal Reserve Board, the Secretary of the Treasury may issue, in 9 exchange for United States two per centum gold bonds bearing the cir- 10 culation privilege, but against which no circulation is outstanding, 11 one-year gold notes of the United States without the circulation 12 privilege, to an amount not to exceed one-half of the two per centum 13 bonds so tendered for exchange, and thirty-year three per centum 14 gold bonds without the circulation privilege for the remainder of the 15 two per centum bonds so tendered: Provided, That at the time of such 16 exchange the Federal reserve bank obtaining such one-year gold 17 notes shall enter into an obligation with the Secretary of the Treas- 18. ury binding itself to purchase from the United States for gold at the 19 maturity of such one-year notes, an amount equal to those delivered 20 in exchange for such bonds, if so requested by the Secretary, and at 21 each maturity of one-year notes so purchased by such Federal reserve 22 bank, to purchase from the United States such an amount of one-year 23 notes as the Secretary may tender to such bank, not to exceed the 24 amount issued to such bank in the first instance, in exchange for the 25 two per centum United States gold bonds; said obligation to pur- 26 chase at maturity such notes shall continue in force for a period not 27 to exceed thirty years.

For the purpose of making the exchange herein provided for, the 29 Secretary of the Treasury is authorized to issue at par Treasury notes 30 in coupon or registered form as he may prescribe in denominations 31 of one hundred dollars, or any multiple thereof, bearing interest at 32 the rate of three per centum per annum, payable quarterly, such 33 Treasury notes to be payable not more than one year from the date of 34 their issue in gold coin of the present standard value, and to be exempt 35 as to principal and interest from the payment of all taxes and duties 36 of the United States except as provided by this Act, as well as from 37 taxes in any form by or under State, municipal, or local authorities. 38 And for the same purpose, the Secretary is authorized and empowered 39 to issue United States gold bonds at par, bearing three per centum 40 interest payable thirty years from date of issue, such bonds to be of 41 the same general tenor and effect and to be issued under the same 42 general terms and conditions as the United States three per centum 43 bonds without the circulation privilege now issued and outstanding. 44 Upon application of any Federal reserve bank, approved by the 45 Federal Reserve Board, the Secretary may issue at par such three 46 per centum bonds in exchange for the one-year gold notes herein 47 provided for.

BANK RESERVES.

48 49

SEC. 19. Demand deposits within the meaning of this Act shall 50 comprise all deposits payable within thirty days, and time deposits 51 shall comprise all deposits payable after thirty days, and all savings 52 accounts and certificates of deposit which are subject to not less than 53 thirty days' notice before payment.

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