1 Sixth. To prescribe by its board of directors, by-laws not inconsistent 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 2 any bank. 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 1 of the board of directors of the Federal reserve bank he shall be required to maintain under regulations to be established by the 2 Federal Reserve Board a local office of said board on the 3 premises of the Federal reserve bank. He shall make regular 4 reports to the Federal Reserve Board, and shall act as its official 5 representative for the performance of the functions conferred 6 upon it by this Act. He shall receive an annual compensation 7 to be fixed by the Federal Reserve Board and paid monthly by 8 the Federal reserve bank to which he is designated. One of 9 the directors of class C, who shall be a person of tested banking 10 experience, shall be appointed by the Federal Reserve Board as 11 deputy chairman and deputy Federal reserve agent to exercise the 12 powers of the chairman of the board and Federal reserve agent in 13 Directors of Federal reserve banks shall receive, in addition to any 15. compensation otherwise provided, a reasonable allowance for neces- 16 sary expenses in attending meetings of their respective boards, which 17 amount shall be paid by the respective Federal reserve banks. Any 18 compensation that may be provided by boards of directors of Federal 19 reserve banks for directors, officers or employees shall be subject to 20 The Reserve Bank Organization Committee may, in organizing 22 Federal reserve banks, call such meetings of bank directors in the sev- 23 eral districts as may be necessary to carry out the purposes of this 24 Act, and may exercise the functions herein conferred upon the chair- 25 man of the board of directors of each Federal reserve bank pending 26 At the first meeting of the full board of directors of each Federal 28 reserve bank, it shall be the duty of the directors of classes A, B and 29 C, respectively, to designate one of the members of each class whose 30 term of office shall expire in one year from the first of January 31 nearest to date of such meeting, one whose term of office shall expire 32 at the end of two years from said date, and one whose term of office 33 shall expire at the end of three years from said date. Thereafter 34 every director of a Federal reserve bank chosen as herein before pro- 35 vided shall hold office for a term of three years. Vacancies that 36 may occur in the several classes of directors of Federal reserve banks 37 may be filled in the manner provided for the original selection of 38 such directors, such appointees to hold office for the unexpired terms 39 of their predecessors. SEC. 5. The capital stock of each Federal reserve bank shall be 42 divided into shares of $100 each. The outstanding capital stock 43 shall be increased from time to time as member banks increase their 44 capital stock and surplus or as additional banks become members, 45 and may be decreased as member banks reduce their capital stock or 46 surplus or cease to be members. Shares of the capital stock of 47 Federal reserve banks owned by member banks shall not be trans- 48 ferred or hypothecated. When a member bank increases its capi- 49 tal stock or surplus, it shall thereupon subscribe for an additional 50 amount of capital stock of the Federal reserve bank of its district 51 equal to six per centum of the said increase, one-half of said sub- 52 1 scription to be paid in the manner herein before provided for original 2 subscription, and one-half subject to call of the Federal Reserve 3 Board. A bank applying for stock in a Federal reserve bank at any 4 time after the organization thereof must subscribe for an amount of 5 the capital stock of the Federal reserve bank equal to six per centum 6 of the paid-up capital stock and surplus of said applicant bank, pay7 ing therefor its par value plus one-half of one per centum a month 8 from the period of the last dividend. When the capital stock of any 9 Federal reserve bank shall have been increased either on account of 10 the increase of capital stock of member banks or on account of the 11 increase in the number of member banks, the board of directors shall 12 cause to be executed a certificate to the Comptroller of the Currency 13 showing the increase in capital stock, the amount paid in, and by 14 whom paid. When a member bank reduces its capital stock it shall 15 surrender a proportionate amount of its holdings in the capital of 16 said Federal reserve bank, and when a member bank voluntarily 17 liquidates it shall surrender all of its holdings of the capital 18 stock of said Federal reserve bank and be released from its stock 19 subscription not previously called. In either case the shares sur20 rendered shall be canceled and the member bank shall receive in 21 payment therefor, under regulations to be prescribed by the Federal 22 Reserve Board, a sum equal to its cash-paid subscriptions on the 23 shares surrendered and one-half of one per centum a month from the 24 period of the last dividend, not to exceed the book value thereof, less 25 any liability of such member bank to the Federal reserve bank. 26 SEC. 6. If any member bank shall be declared insolvent and a 27 receiver appointed therefor, the stock held by it in said Federal 28 reserve bank shall be canceled, without impairment of its liability, 29 and all cash-paid subscriptions on said stock, with one-half of one per 30 centum per month from the period of last-dividend, not to exceed 31 the book value thereof, shall be first applied to all debts of the insol32 vent member bank to the Federal reserve bank, and the balance, if 33 any, shall be paid to the receiver of the insolvent bank. Whenever 34 the capital stock of a Federal reserve bank is reduced, either on 35 account of a reduction in capital stock of any member bank or of the 36 liquidation or insolvency of such bank, the board of directors shall 37 cause to be executed a certificate to the Comptroller of the Currency 38 showing such reduction of capital stock and the amount repaid to 39 such bank. 40 DIVISION OF EARNINGS. 41 SEC. 7. After all necessary expenses of a Federal reserve bank 42 have been paid or provided for, the stockholders shall be entitled to 43 receive an annual dividend of six per centum on the paid-in capital 44 stock, which dividend shall be cumulative. After the aforesaid 45 dividend claims have been fully met, all the net earnings shall be 46 paid to the United States as a franchise tax, except that one-half of 47 such net earnings shall be paid into a surplus fund until it shall 48 amount to forty per centum of the paid-in capital stock of such 49 bank. 50 The net earnings derived by the United States from Federal reserve 51 banks shall, in the discretion of the Secretary, be used to supplement 52 the gold reserve held against outstanding United States notes, or shall 53 be applied to the reduction of the outstanding bonded indebtedness of the United States under regulations to be perscribed by the Secre- 1 tary of the Treasury. Should a Federal reserve bank be dissolved 2 or go into liquidation, any surplus remaining, after the payment of all 3 debts, dividend requirements as hereinbefore provided, and the par 4 value of the stock, shall be paid to and become the property of the 5 United States and shall be similarly applied. 6 Federal reserve banks, including the capital stock and surplus 7 therein, and the income derived therefrom shall be exempt from 8 Federal, State, and local taxation, except taxes upon real estate. 9 SEC. 8. Section fifty-one hundred and fifty-four, United States 10 Revised Statutes, is hereby amended to read as follows: 11 Any bank incorporated by special law of any State or of the 12 United States or organized under the general laws of any State or of 13 the United States and having an unimpaired capital sufficient to 14 entitle it to become a national banking association under the pro- 15 visions of the existing laws may, by the vote of the shareholders 16 owning not less than fifty-one per centum of the capital stock of 17 such bank or banking association, with the approval of the Comp- 18 troller of the Currency be converted into a national banking associa- 19 tion, with any name approved by the Comptroller of the Currency: 20 Provided, however, That said conversion shall not be in contravention 21 of the State law. In such case the articles of association and organi- 22 zation certificate may be executed by a majority of the directors of 23 the bank or banking institution, and the certificate shall declare that 24 the owners of fifty-one per centum of the capital stock have author- 25 ized the directors to make such certificate and to change or convert 26 the bank or banking institution into a national association. A ma- 27 jority of the directors, after executing the articles of association and 28 the organization certificate, shall have power to execute all other 29 papers and to do whatever may be required to make its organization 30 perfect and complete as a national association. The shares of any 31 such bank may continue to be for the same amount each as they 32 were before the conversion, and the directors may continue to be 33 directors of the association until others are elected or appointed in 34 accordance with the provisions of the statutes of the United States. 35 When the Comptroller has given to such bank or banking association 36 a certificate that the provisions of this Act have been complied with, 37 such bank or banking association, and all its stockholders, officers, 38 and employees, shall have the same powers and privileges, and shall 39 be subject to the same duties, liabilities, and regulations, in all re- 40 spects, as shall have been prescribed by the Federal Reserve Act and 41 by the national banking Act for associations originally organized as 42 national banking associations. STATE BANKS AS MEMBERS. 43 44 SEC. 9. Any bank incorporated by special law of any State, or 45 organized under the general laws of any State or of the United 46 States, may make application to the reserve bank organization 47 committee, pending organization, and thereafter to the Federal 48 Reserve Board for the right to subscribe to the stock of the Federal 49 reserve bank organized or to be organized within the Federal reserve 50 district where the applicant is located. The organization committee 51 or the Federal Reserve Board, under such rules and regulations as 52 |