1 Under regulations to be prescribed by the organization committee, 2 every national banking association in the United States is hereby 3 required, and every eligible bank in the United States and every 4 trust company within the District of Columbia, is hereby authorized 5 to signify in writing, within sixty days after the passage of this Act, 6 its acceptance of the terms and provisions hereof. When the organi7 zation committee shall have designated the cities in which Federal 8 reserve banks are to be organized, and fixed the geographical limits 9 of the Federal reserve districts, every national banking association 10 within that district shall be required within thirty days after notice 11 from the organization committee, to subscribe to the capital stock 12 of such Federal reserve bank in a sum equal to six per centum 13 of the paid-up capital stock and surplus of such bank, one-sixth of 14 the subscription to be payable on call of the organization committee 15 or of the Federal Reserve Board, one-sixth within three months and 16 one-sixth within six months thereafter, and the remainder of the sub17 scription, or any part thereof, shall be subject to call when deemed 18 necessary by the Federal Reserve Board, said payments to be in 19 gold or gold certificates.

20 The shareholders of every Federal reserve bank shall be held indi21 vidually responsible, equally and ratably, and not one for another, 22 for all contracts, debts, and engagements of such bank to the extent 23 of the amount of their subscriptions to such stock at the par value 24 thereof in addition to the amount subscribed, whether such subscrip25 tions have been paid up in whole or in part, under the provisions of 26 this Act.

27 Any national bank failing to signify its acceptance of the terms of 28 this Act within the sixty days aforesaid, shall cease to act as a reserve 29 agent, upon thirty days' notice, to be given within the discretion of the 30 said organization committee or of the Federal Reserve Board. 31 Should any national banking association in the United States now 32 organized fail within one year after the passage of this Act to become 33 a member bank or fail to comply with any of the provisions of this 34 Act applicable thereto, all of the rights, privileges, and franchises of 35 such association granted to it under the national-bank Act, or under 36 the provisions of this Act, shall be thereby forfeited. Any noncom37 pliance with or violation of this Act shall, however, be determined 38 and adjudged by any court of the United States of competent juris39 diction in a suit brought for that purpose in the district or territory 40 in which such bank is located, under direction of the Federal Reserve 41 Board, by the Comptroller of the Currency in his own name before 42 the association shall be declared dissolved. In cases of such noncom43 pliance or violation, other than the failure to become a member 44 bank under the provisions of this Act, every director who partici45 pated in or assented to the same shall be held liable in his personal 46 or individual capacity for all damages which said bank, its share47 holders, or any other person shall have sustained in consequence of 48 such violation.

49

Such dissolution shall not take away or impair any remedy against 50 such corporation, its stockholders or officers, for any liability or 51 penalty which shall have been previously incurred.

52 Should the subscriptions by banks to the stock of said Federal 53 reserve banks or any one or more of them be, in the judgment of the 54 organization committee, insufficient to provide the amount of capital

1

required therefor, then and in that event the said organization committee may, under conditions and regulations to be prescribed by it, 2 offer to public subscription at par such an amount of stock in said 3 Federal reserve banks, or any one or more of them, as said committee 4 shall determine, subject to the same conditions as to payment and 5 stock liability as provided for member banks.

6

No individual, copartnership, or corporation other than a member 7 bank of its district shall be permitted to subscribe for or to hold at 8 any time more than $25,000 par value of stock in any Federal reserve 9 bank. Such stock shall be known as public stock and may be trans- 10 ferred on the books of the Federal reserve bank by the chairman of 11 the board of directors of such bank.

12

Should the total subscriptions by banks and the public to the stock 13 of said Federal reserve banks, or any one or more of them, be, in the 14 judgment of the organization committee, insufficient to provide the 15 amount of capital required therefor, then and in that event the said 16 organization committee shall allot to the United States such an 17 amount of said stock as said committee shall determine. Said United 18 States stock shall be paid for at par out of any money in the Treas- 19 ury not otherwise appropriated, and shall be held by the Secretary 20 of the Treasury and disposed of for the benefit of the United States 21 in such manner, at such times, and at such price, not less than par, 22 as the Secretary of the Treasury shall determine.

23

Stock not held by member banks shall not be entitled to voting 24

power.

25

The Federal Reserve Board is hereby empowered to adopt and 26 promulgate rules and regulations governing the transfers of said 27 stock.

28

No Federal reserve bank shall commence business with a sub- 29 scribed capital less than $4,000,000. The organization of reserve 30 districts and Federal reserve cities shall not be construed as chang- 31 ing the present status of reserve cities and central reserve cities, 32 except in so far as this Act changes the amount of reserves that 33 may be carried with approved reserve agents located therein. The 34 organization committee shall have power to appoint such assistants 35 and incur such expenses in carrying out the provisions of this Act as 36 it shall deem necessary, and such expenses shall be payable by the 37 Treasurer of the United States upon voucher approved by the Secre- 38 tary of the Treasury, and the sum of $100,000, or so much thereof as 39 may be necessary, is hereby appropriated, out of any moneys in the 40 Treasury not otherwise appropriated, for the payment of such 41

expenses.

BRANCH OFFICES.

42

43

SEC. 3. Each Federal reserve bank shall establish branch banks 44 within the Federal reserve district in which it is located and may do 45 so in the district of any Federal reserve bank which may have been 46 suspended. Such branches shall be operated by a board of directors 47 under rules and regulations approved by the Federal Reserve Board. 48 Directors of branch banks shall possess the same qualifications as 49 directors of the Federal reserve banks. Four of said directors shall 50 be selected by the reserve bank and three by the Federal Reserve 51 Board, and they shall hold office during the pleasure, respectively, 52 of the parent bank and the Federal Reserve Board. The reserve 53 bank shall designate, one of the directors as manager.

54

1

FEDERAL RESERVE BANKS.

2 SEC. 4. When the organization committee shall have established 3 Federal reserve districts as provided in section two of this Act, a 4 certificate shall be filed with the Comptroller of the Currency showing 5 the geographical limits of such districts and the Federal reserve city 6 designated in each of such districts. The Comptroller of the Cur7 rency shall thereupon cause to be forwarded to each national bank 8 located in each district, and to such other banks declared to be eli9 gible by the organization committee which may apply therefor, an 10 application blank in form to be approved by the organization com11 mittee, which blank shall contain a resolution to be adopted by the 12 board of directors of each bank executing such application, author13 izing a subscription to the capital stock of the Federal reserve bank 14 organizing in that district in accordance with the provisions of this 15 Act.

16 When the minimum amount of capital stock prescribed by this 17 Act for the organization of any Federal reserve bank shall have been 18 subscribed and allotted, the organization committee shall designate 19 any five banks of those whose applications have been received, to 20 execute a certificate of organization, and thereupon the banks so 21 designated shall, under their seals, make an organization certificate 22 which shall specifically state the name of such Federal reserve bank, 23 the territorial extent of the district over which the operations of such 24 Federal reserve bank are to be carried on, the city and State in which 25 said bank is to be located, the amount of capital stock and the num26 ber of shares into which the same is divided, the name and place of 27 doing business of each bank executing such certificate, and of all 28 banks which have subscribed to the capital stock of such Federal 29 reserve bank and the number of shares subscribed by each, and the 30 fact that the certificate is made to enable those banks executing 31 same, and all banks which have subscribed or may thereafter sub32 scribe to the capital stock of such Federal reserve bank, to avail them33 selves of the advantages of this Act.

34 The said organization certificate shall be acknowledged before a 35 judge of some court of record or notary public; and shall be, together 36 with the acknowledgment thereof, authenticated by the seal of such 37 court, or notary, transmitted to the Comptroller of the Currency, 38 who shall file, record and carefully preserve the same in his office. 39 Upon the filing of such certificate with the Comptroller of the 40 Currency as aforesaid, the said Federal reserve bank shall become a 41 body corporate and as such, and in the name designated in such 42 organization certificate, shall have power

43

44

First. To adopt and use a corporate seal.

Second. To have succession for a period of twenty years from its 45 organization unless it is sooner dissolved by an Act of Congress, or 46 unless its franchise becomes forfeited by some violation of law.

47

48

Third. To make contracts.

Fourth. To sue and be sued, complain and defend, in any court of 49 law or equity.

50 Fifth. To appoint by its board of directors, such officers and em51 ployees as are not otherwise provided for in this Act, to define their 52 duties, require bonds of them and fix the penalty thereof, and to dis53 miss at pleasure such officers or employees.

Sixth. To prescribe by its board of directors, by-laws not inconsist- 1 ent with law, regulating the manner in which its general business 2 may be conducted, and the privileges granted to it by law may be 3 exercised and enjoyed.

4

Seventh. To exercise by its board of directors, or duly authorized 5 officers or agents, all powers specifically granted by the provisions of 6 this Act and such incidental powers as shall be necessary to carry on 7 the business of banking within the limitations prescribed by this Act. 8 Eighth. Upon deposit with the Treasurer of the United States of 9 any bonds of the United States in the manner provided by existing 10 law relating to national banks, to receive from the Comptroller of the 11 Currency circulating notes in blank, registered and countersigned as 12 provided by law, equal in amount to the par value of the bonds so 13 deposited, such notes to be issued under the same conditions and pro- 14 visions of law as relate to the issue of circulating notes of national 15 banks secured by bonds of the United States bearing the circulating 16 privilege, except that the issue of such notes shall not be limited to the 17 capital stock of such Federal reserve bank.

18

But no Federal reserve bank shall transact any business except such 19 as is incidental and necessarily preliminary to its organization until it 20 has been authorized by the Comptroller of the Currency to commence 21 business under the provisions of this Act.

22

Every Federal reserve bank shall be conducted under the super- 23 vision and control of a board of directors. 24

The board of directors shall perform the duties usually appertaining 25 to the office of directors of banking associations and all such duties as 26 are prescribed by law.

27

Said board shall administer the affairs of said bank fairly and impar- 28 tially and without discrimination in favor of or against any member 29 bank or banks and shall, subject to the provisions of law and the orders 30 of the Federal Reserve Board, extend to each member bank such dis- 31 counts, advancements and accommodations as may be safely and 32 reasonably made with due regard for the claims and demands of 33 other member banks.

34

Such board of directors shall be selected as hereinafter specified and 35 shall consist of nine members, holding office for three years, and 36 divided into three classes, designated as classes A, B, and C.

37

Class A shall consist of three members, who shall be chosen by and 38 be representative of the stock-holding banks.

39

Class B shall consist of three members, who at the time of their 40 election shall be actively engaged in their district in commerce, agri- 41 culture or some other industrial pursuit.

42

Class C shall consist of three members who shall be designated by 43 the Federal Reserve Board. When the necessary subscriptions to the 44 capital stock have been obtained for the organization of any Federal 45 reserve bank, the Federal Reserve Board shall appoint the Class C 46 directors and shall designate one of such directors as chairman of the 47 board to be selected. Pending the designation of such chairman, the 48 organization committee shall exercise the powers and duties_apper- 49 taining to the office of chairman in the organization of such Federal 50 reserve bank.

51

No Senator or Representative in Congress shall be a member of the 52 Federal Reserve Board or an officer or a director of a Federal reserve 53 bank. 54

1

No director of class B shall be an officer, director, or employee of bank.

2 any

3

No director of class C shall be an officer, director, employee, or 4 stockholder of any bank.

5

Directors of class A and class B shall be chosen in the following 6 manner:

7 The chairman of the board of directors of the Federal reserve bank 8 of the district in which the bank is situated or, pending the appoint9 ment of such chairman, the organization committee shall classify the 10 member banks of the district into three general groups or divisions. 11 Each group shall contain as nearly as may be one-third of the aggre12 gate number of the member banks of the district and shall consist, as 13 nearly as may be, of banks of similar capitalization. The groups shall 14 be designated by number by the chairman.

15

At a regularly called meeting of the board of directors of each 16 member bank in the district it shall elect by ballot a district reserve 17 elector and shall certify his name to the chairman of the board of 18 directors of the Federal reserve bank of the district. The chairman 19 shall make lists of the district reserve electors thus named by banks 20 in each of the aforesaid three groups and shall transmit one list to each 21 elector in each group.

22 Each member bank shall be permitted to nominate to the chair23 man one candidate for director of class A and one candidate for 24 director of class B. The candidates so nominated shall be listed by 25 the chairman, indicating by whom nominated, and a copy of said list 26 shall, within fifteen days after its completion, be furnished by the 27 chairman to each elector.

28 Every elector shall, within fifteen days after the receipt of the said 29 list, certify to the chairman his first, second, and other choices of a 30 director of class A and class B, respectively, upon a preferential bal31 lot, on a form furnished by the chairman of the board of directors of 32 the Federal reserve bank of the district. Each elector shall make a 33 cross opposite the name of the first, second, and other choices for a 34 director of class A and for a director of class B, but shall not vote 35 more than one choice for any one candidate.

36 Any candidate having a majority of all votes cast in the column. 37 of first choice shall be declared elected. If no candidate have a 38 majority of all the votes in the first column, then there shall be added 39 together the votes cast by the electors for such candidates in the 40 second column and the votes cast for the several candidates in the first 41 column. If any candidate then have a majority of the electors vot42 ing, by adding together the first and second choices, he shall be de43 clared elected. If no candidate have a majority of electors voting 44 when the first and second choices shall have been added, then the 45 votes cast in the third column for other choices shall be added to46 gether in like manner, and the candidate then having the highest 47 number of votes shall be declared elected. An immediate report of 48 election shall be declared.

49 Class C directors shall be appointed by the Federal Reserve Board. 50 They shall have been for at least two years residents of the district 51 for which they are appointed, one of whom shall be designated by 52 said board as chairman of the board of directors of the Federal 53 reserve bank and as "Federal reserve agent." He shall be a person of 54 tested banking experience; and in addition to his duties as chairman