FEDERAL RESERVE ACT AND AMEND

MENTS TO SEPTEMBER 7, 1916

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."

Wherever the word "bank" is used in this Act, the word shall be held to include State bank, banking association, and trust company, except where national banks or Federal reserve banks are specifically referred to. The terms "national bank" and "national banking association" used in this Act shall be held to be synonymous and interchangeable. The term "member bank" shall be held to mean any national bank, State bank, or bank or trust company which has become a member of one of the reserve banks created by this Act. The term "board" shall be held to mean Federal Reserve Board; the term "district" shåll be held to mean Federal reserve district; the term "reserve bank” shall be held to mean Federal reserve bank.

FEDERAL RESERVE DISTRICTS

SEC. 2. As soon as practicable, the Secy. of the Treas., the Secy. of Agriculture and the Comptroller of the Currency, acting as "The Reserve Bank Organization Committee," shall designate not less than 8 nor more than 12 cities to be known as Federal reserve cities, and shall divide the continental U. S., excluding Alaska, into Dists., each Dist. to contain only one of such Fed. Res. cities. The determination of said organization committee shall not be subject to review except by the Fed. Res. Board when organized: Provided, That the Dists. shall be apportioned with due regard to the convenience and customary course of business and shall not necessarily be coterminous with any State or States. The Dists. thus created may be readjusted and new Dists. may from time to time be created by the Fed. Res. Board, not to exceed 12 in all. Such Dists. shall be known as Fed. Res. Dists. and may be designated by number. A majority of the organization committee shall constitute a quorum with authority to act.

Said organization committee shall be authorized to employ counsel and expert aid, to take testimony, to send for persons and papers, to administer oaths, and to make such investigation as may be deemed necessary by the said committee in determining the reserve Dists. and in designating the cities within such Dists. where such Fed. Res. banks shall be severally located. The said committee shall supervise the organization in each of the cities designated of a Fed. Res. bank, which shall include in its title the name of the city in which it is situated, as "Federal Reserve Bank of Chicago."

Under regulations to be prescribed by the organization committee, every Nat. banking Asso. in the U. S. is hereby required, and every eligible bank in the U. S. and every Tr. Co. within the Dist. of Col., is hereby authorized to signify in writing, within 60 days after the passage of this Act, its acceptance of the terms and provisions hereof. When the organization committee shall have designated the cities in which Fed. Res. banks are to be organized, and fixed the geographical limits of the Fed. Res.

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Dists., every Nat. banking Asso. within that Dist. shall be required within 30 days after notice from the organization committee, to subscribe to the capital stock of such Fed. Res. bank in a sum equal to 6% of the paid-up capital stock and surplus of such bank, of the subscription to be payable on call of the organization committee or of the Fed. Res. Board, within 3 months and within 6 months thereafter, and the remainder of the subscription, or any part thereof, shall be subject to call when deemed necessary by the Fed. Res. Board, said payments to be in gold or gold certificates. The shareholders of every Fed. Res. bank shall be held individually responsible, equally and ratably, and not one for another, for all contracts, debts, and engagements of such bank to the extent of the amount of their subscriptions to such stock at the par value thereof in addition to the amount subscribed, whether such subscriptions have been paid up in whole or in part, under the provisions of this Act.

Any Nat. bank failing to signify its acceptance of the terms of this Act within the 60 days aforesaid, shall cease to act as a reserve agent, upon 30 days' notice, to be given within the discretion of the said organization committee or of the Fed. Res. Board.

Should any Nat. banking Asso. in the U. S. now organized fail within one year after the passage of this Act to become a member bank or fail to comply with any of the provisions of this Act applicable thereto, all of the rights, privileges, and franchises of such Asso. granted to it under the national-bank Act, or under the provisions of this Act, shall be thereby forfeited. Any noncompliance with or violation of this Act shall, however, be determined and adjudged by any court of the U. S. of competent jurisdiction in a suit brought for that purpose in the Dist. or territory in which such bank is located, under direction of the Fed. Res. Board, by the Comptroller of the Currency in his own name before the Asso. shall be declared dissolved. In cases of such noncompliance or violation, other than the failure to become a member bank under the provisions of this Act, every director who participated in or assented to the same shall be held liable in his personal or individual capacity for all damages which said bank, its shareholders, or any other person shall have sustained in consequence of such violation.

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

Should the subscriptions by banks to the stock of said Fed. Res. banks or any one or more of them be, in the judgment of the organization committee, insufficient to provide the amount of capital required therefor, then and in that event the said organization committee may, under conditions and regulations to be prescribed by it, offer to public subscription at par such an amount of stock in said Fed. Res. banks, or any one or more of them, as said committee shall determine, subject to the same conditions as to payment and stock liability as provided for member banks.

No individual, copartnership, or Corp. other than a member bank of its Dist. shall be permitted to subscribe for or to hold at any time more than $25,000 par value of stock in any Fed. Res. bank. Such stock shall be known as public stock and may be transferred on the books of the Fed. Res. bank by the chairman of the board of directors of such bank.

Should the total subscriptions by banks and the public to the stock of said Fed. Res. banks, or any one or more of them, be, in the judgment of the organization committee, insufficient to provide the amount of capital required therefor, then and in that event the said organization committee shall allot to the U. S. such an amount of said stock as said committee shall determine. Said U. S. stock shall be paid for at par out of any money in the Treasury not otherwise appropriated, and shall be held by the Secy. of the Treas. and disposed of for the benefit of the U. S. in such manner, at such times, and at such price, not less than par, as the Secy. of the Treas. shall determine.

Stock not held by member banks shall not be entitled to voting power. The Fed. Res. Board is hereby empowered to adopt and promulgate rules and regulations governing the transfers of said stock.

No Fed. Res. bank shall commence business with a subscribed capital less than $4,000,000. The organization of Res. Dists. and Fed. Res. cities shall not be construed as changing the present status of reserve cities and central reserve cities, except in so far as this Act changes the amount of reserves that may be carried with approved reserve agents located therein. 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 be payable by the Treasurer of the U. S. upon voucher approved by the Secy. of the Treas., and the sum of $100,000, or so much thereof as may be necessary, is hereby appropriated, out of any moneys in the Treas. not otherwise appropriated, for the payment of such expenses.

BRANCH OFFICERS

SEC. 3. The Fed. Res. Board may permit or require any Fed: Res. bank to establish branch banks within the Fed. Res. Dist. in which it is located or within the Dist of any Fed. Res. bank which may have been suspended. Such branches, subject to such rules and regulations as the Fed. Res. Board may prescribe, shall be operated under the supervision of a board of directors to consist of not more than 7 nor less than 3 directors, of whom a majority of 1 shall be appointed by the Fed. Res. bank of the Dist., and the remaining directors by the Fed. Res. Board. Directors of branch banks shall hold office during the pleasure of the Fed. Res. Board.

FEDERAL RESERVE BANKS

SEC. 4. When the organization committee shall have established Fed. Res. Dists. as provided in Sec. 2 of this Act, a C't'f. shall be filed with the Comptroller of the Currency showing the geographical limits of such Dists. and the Fed. Res. city designated in each of such Dists. The Comptroller of the Currency shall thereupon cause to be forwarded to each Nat. bank located in each Dist., and to such other banks declared to be eligible by the organization committee which may apply therefor, an application blank in form to be approved by the organization committee, which blank shall contain a resolution to be adopted by the board of directors of each bank executing such application, authorizing a subscription to the capital stock of the Fed. Res. bank organizing in that Dist. in accordance with the provisions of this Act.

When the minimum amount of capital stock prescribed by this Act for the organization of any Fed. Res. bank shall have been subscribed and allotted, the organization committee shall designate any 5 banks of those whose applications have been received, to execute a C't'f. of organization, and thereupon the banks so designated shall, under their seals, make an organization C’t'f. which shall specifically state the name of such Fed. Res. bank, the territorial extent of the Dist. over which the operations of such Fed. Res. bank are to be carried on, the city and State in which said bank is to be located, the amount of capital stock and the number of shares into which the same is divided, the name and place of doing business of each bank executing such C't'f., and of all banks which have subscribed to the capital stock of such Fed. Res. bank and the number of shares subscribed by each, and the fact that the C't'f. is made to enable those banks executing same, and all banks which have subscribed or may thereafter subscribe to the capital stock of such Fed. Res. bank, to avail themselves of the advantages of this Act.

The said organization C't'f. shall be acknowledged before a judge of some

court of record or notary public; and shall be, together with the acknowledgement thereof, authenticated by the seal of such court, or notary, transmitted to the Comptroller of the Currency, who shall file, record and carefully preserve the same in his office.

Upon the filing of such C't'f. with the Comptroller of the Currency as aforesaid, the said Fed. Res. bank shall become a body corporate and as such, and in the name designated in such organization C't'f., shall have

power

1st. To adopt and use a corporate seal.

2d. To have succession for a period of 20 years from its organization unless it is sooner dissolved by an Act of Congress, or unless its franchise becomes forfeited by some violation of law.

3d. To make contracts.

4th. To sue and be sued, complain and defend, in any court of law or equity.

5th. To appoint by its board of directors, such officers and employees as are not otherwise provided for in this Act, to define their duties, require bonds of them and fix the penalty thereof, and to dismiss at pleasure such officers or employees.

6th. To prescribe by its board of directors, by-laws not inconsistent with law, regulating the manner in which its general business may be conducted, and the privileges granted to it by law may be exercised and enjoyed.

7th. To exercise by its board of directors, or duly authorized officers or agents, all powers specifically granted by the provisions of this Act, and such incidental powers as shall be necessary to carry on the business of banking within the limitations prescribed by this Act.

8th. Upon deposit with the Treas. of the U. S. of any bonds of the U. S. in the manner provided by existing law relating to Nat. banks, to receive from the Comptroller of the Currency circulating notes in blank, registered and countersigned as provided by law, equal in amount to the par value of the bonds so deposited, such notes to be issued under the same conditions and provisions of law as relate to the issue of circulating notes of Nat. banks secured by bonds of the U. S. bearing the circulating privilege, except that the issue of such notes shall not be limited to the capital stock of such Fed. Res. bank.

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

Every Fed. Res. bank shall be conducted under the supervision and control of a board of directors.

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

Said board shall administer the affairs of said bank fairly and impartially and without discrimination in favor of or against any member bank or banks and shall, subject to the provisions of law and the orders of the Fed. Res. Board, extend to each member bank such discounts, advancements and accommodations as may be safely and reasonably made with due regard for the claims and demands of other member banks.

Such board of directors shall be selected as hereinafter specified and shall consist of 9 members, holding office for 3 years, and divided into 3 classes, designated as classes A, B, and C.

Class A shall consist of 3 members, who shall be chosen by and be representative of the stock-holding banks.

Class B shall consist of 3 members, who at the time of their election shall be actively engaged in their Dist. in commerce, agriculture or some other industrial pursuit.

Class C shall consist of 3 members who shall be designated by the Fed.

Res. Board. When the necessary subscriptions to the capital stock have been obtained for the organization of any Fed. Res. bank, the Fed. Res. Board shall appoint the class C directors and shall designate one of such directors as chairman of the board to be selected. Pending the designation of such chairman, the organization committee shall exercise the powers and duties appertaining to the office of chairman in the organization of such Fed. Res. bank.

No Senator or Representative in Congress shall be a member of the Fed. Res. Board or an officer or a director of a Fed. Res. bank.

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

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

Directors of class A and class B shall be chosen in the following manner: The chairman of the board of directors of the Fed. Res. bank of the Dist. in which the bank is situated or, pending the appointment of such chairman, the organization committee shall classify the member banks of the Dist. into 3 general groups or Divs. Each group shall contain as nearly as may be of the aggregate number of the member banks of the Dist. and shall consist, as nearly as may be, of banks of similar capitalization. The groups shall be designated by number by the chairman.

At a regularly called meeting of the board of directors of each member bank in the Dist. it shall elect by ballot a Dist. reserve elector and shall certify his name to the chairman of the board of directors of the Fed. Res. bank of the Dist. The chairman shall make lists of the Dist. Res. electors thus named by banks in each of the aforesaid 3 groups and shall transmit one list to each elector in each group.

Each member bank shall be permitted to nominate to the chairman one candidate for director of class A and one candidate for director of class B. The candidates so nominated shall be listed by the chairman, indicating by whom nominated, and a copy of said list shall, within 15 days after its completion, be furnished by the chairman to each elector.

Every elector shall, within 15 days after the receipt of the said list, certify to the chairman his 1st, 2d, and other choices of a director of class A and class B, respectively, upon a preferential ballot, on a form furnished by the chairman of the board of directors of the Fed. Res. bank of the Dist. Each elector shall make a cross opposite the name of the 1st, 2d, and other choices for a director of class A and for a director of class B, but shall not vote more than one choice for any one candidate.

Any candidate having a majority of all votes cast in the column of first choice shall be declared elected. If no candidate have a majority of all the votes in the 1st column, then there shall be added together the votes cast by the electors for such candidates in the 2d column and the votes cast for the several candidates in the 1st column. If any candidate then have a majority of the electors voting, by adding together the 1st and 2d choices, he shall be declared elected. If no candidate have a majority of electors voting when the 1st and 2d choices shall have been added, then the votes cast in the 3d column for other choices shall be added together in like manner, and the candidate then having the highest number of votes shall be declared elected. An immediate report of election shall be declared.

Class C directors shall be appointed by the Fed. Res. Board. They shall have been for at least 2 years residents of the Dist. for which they are appointed, one of whom shall be designated by said board as chairman of the board of directors of the Fed. Res. bank and as "Federal reserve 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 Fed. Res. bank he shall be required to maintain under regulations to be established by the Fed. Re Be da local office of said board on the premises of the Fed. Res. bank. He shall make regular reports to the Fed. Res. Board, and shall