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THE ACT OF AUGUST 15, 19141

[PUBLIC--No. 171-63D CONGRESS]

[S. 4966]

An Act Proposing an amendment to section nineteen of the Federal Reserve Act relating to reserves, and for other purposes.

Be it enacted by the Senate and House of Representatives of the 2 United States of America in Congress assembled, That section nine3 teen, sub-sections (b) and (c) of the Act approved December twen4 ty-third, nineteen hundred and thirteen, known as the Federal reserve 5 Act, be amended and reenacted so as to read as follows:

6 "(b) A bank in a reserve city, as now or hereafter defined, shall hold 7 and maintain reserves equal to fifteen per centum of the aggregate 8 amount of its demand deposits and five per centum of its time deposits, 9 as follows:

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"In its vaults for a period of thirty-six months after said date, six11 fifteenths thereof, and permanently thereafter five-fifteenths. 12 "In the Federal reserve bank of its district for a period of twelve 13 months after the date aforesaid, at least three-fifteenths, and for each 14 succeeding six months an additional one-fifteenth, until six-fifteenths 15 have been so deposited, which shall be the amount permanently 16 required.

17 "For a period of thirty-six months after said date the balance of the 18 reserves may be held in its own vaults, or in the Federal reserve bank, 19 or in national banks in central reserve cities, as now defined by law. 20 "After said thirty-six months' period all of said reserves, except 21 those hereinbefore required to be held permanently in the vaults of 22 the member bank and in the Federal reserve bank, shall be held in 23 its vaults or in the Federal reserve bank or in both, at the option of 24 the member bank.

25 "(c) A bank in a central reserve city, as now or hereafter defined, 26 shall hold and maintain a reserve equal to eighteen per centum of the 27 aggregate amount of its demand deposits and five per centum of its 28 time deposits, as follows:

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"In its vaults, six-eighteenths thereof.

"In the Federal reserve bank, seven-eighteenths.

"The balance of said reserves shall be held in its own vaults or in

82 the Federal reserve bank, at its option.

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"Any Federal reserve bank may receive from the member banks as 84 reserves not exceeding one-half of each installment, eligible paper as 35 described in section thirteen3 properly indorsed and acceptable to the 86 said reserve bank.

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"If a State bank or trust company is required [or permitted] by the 38 law of its State to keep its reserves either in its own vaults or with 39 another State bank or trust company [or with a national bank,] such 40 reserve deposits so kept in such State bank, trust company, [or 41 national bank] shall be construed within the meaning of this section 42 as if they were reserve deposits in a national bank in a reserve or 43 central reserve city for a period of three years after the Secretary of 44 the Treasury shall have officially announced the establishment of a 45 Federal reserve bank in the district in which such State bank or trust

company is situate. Except as thus provided, no member bank shall keep on deposit with any nonmember bank a sum in excess of ten 2 per centum of its own paid-up capital and surplus. No member 8 bank shall act as the medium or agent of a nonmember bank in 4 applying for or receiving discounts from a Federal reserve bank 5 under the provisions of this Act except by permission of the Federal 6 Reserve Board.

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"The reserve carried by a member bank with a Federal reserve bank may, under the regulations and subject to such penalties as may be prescribed by the Federal Reserve Board, be checked against 10 and withdrawn by such member bank for the purpose of meeting 11 existing liabilities: Provided, however, That no bank shall at any 12 time make new loans or shall pay any dividends unless and until the 18 total reserve required by law is fully restored.

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"In estimating the reserves required by this Act, the net balance 15 of amounts due to and from other banks shall be taken as the basis 16 for ascertaining the bank deposits against which reserves shall be 17 determined. Balances in reserve banks due to member banks shall, 18 to the extent herein provided, be counted as reserves.

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"National banks located in Alaska or outside the continental 20 United States may remain nonmember banks, and shall in that event 21 maintain reserves and comply with all the conditions now provided 22 by law regulating them; or said banks, except in the Philippine 23 Islands, may, with the consent of the Reserve Board, become member 24 banks of any one of the reserve districts, and shall, in that event, take 25 stock, maintain reserves, and be subject to all the other provisions of 26 this Act."

Approved, August 15, 1914.

The new matter is to be found in brackets.

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2 Words "reserve or" contained in original section 19 omitted. Consult line 37, section 19.

Word "fourteen" in original section 19 changed to "thirteen." Consult line 1, section 19.

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THE ACT OF MARCH 3, 19151

[PUBLIC--No. 281-63D CONGRESS]

[H. R. 15038]

AN ACT Proposing an amendment to the Federal Reserve Act relative to acceptances, and for other purposes.

Be it enacted by the Senate and House of Representatives of the 2 United States of America in Congress assembled, That section thir3 teen, paragraphs three, four, and five, of the Act approved December 4 twenty-third, nineteen hundred and thirteen, known as the Federal 5 Reserve Act, be amended and reenacted so as to read as follows: 6 "Any Federal reserve bank may discount acceptances which are 7 based on the importation or exportation of goods and which have a 8 maturity at time of discount of not more than three months and 9 indorsed by at least one member bank. The amount of acceptances 10 so discounted shall at no time exceed one-half the paid up [and 11 unimpaired] capital stock and surplus of the bank for which the 12 rediscounts are made, [except by authority of the Federal Reserve 13 Board, under such general regulations as said board may prescribe, 14 but not to exceed the capital stock and surplus of such bank.]

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"The aggregate of such notes and bills bearing the signature or 16 indorsement of any one person, company, firm, or corporation redis17 counted for any one bank shall at no time exceed ten per centum of 18 the unimpaired capital and surplus of said bank; but this restriction 19 shall not apply to the discount of bills of exchange drawn in good 20 faith against actually existing values.

21 "Any member bank may accept drafts or bills of exchange drawn 22 upon it and growing out of transactions involving the importation. 23 or exportation of goods having not more than six months' sight to 24 run; but no bank shall accept such bills to an amount equal at any 25 time in the aggregate to more than one-half of its paid-up [and un26 impaired] capital stock and surplus, [except by authority of the Fed27 eral Reserve Board, under such general regulations as said board may 28 prescribe; but not to exceed the capital stock and surplus of such 29 bank, and such regulations shall apply to all banks alike regardless 30 of the amount of capital stock and surplus."]

31 Approved, March 3, 1915.

The new matter is to be found in brackets.

SCHEDULE OF SECTIONS OF THE NATIONAL BANK ACT AND AMENDATORY ACTS AFFECTED BY THE

1 Consult the Introduction to Paine's National Banking Laws, pp. 12-15. 2The word "modified" used above means alteration in some substantial way and also means that this section of the National Bank Act has been affected by amending acts, which amending acts are affected by the Federal Reserve Act.

It may be added that the method employed by the authors of Federal laws affecting banks and banking should be changed. The method in use by the Legislature of the State of New York is preferable. In that State when a statute is changed the following language is employed: "This section is amended so as to read as follows." Instances occur in which a section of the National Bank Act has been amended by part of an amending act, and later the Federal Reserve Act amended or completely did away with that part of that amending act; but direct reference is not made in the last-named statute.

A phase is shown by section 2 of the act of June 20, 1874, which is affected by section 20 of the Federal Reserve Act. In the National Bank Act, its amendments, and the Federal Reserve Act, the examiner has to read section 2 of act of June 20, 1874, then read United States Revised Statutes, sections 5191 and 5192, and subsequently read section 20 of Federal Reserve Act. Upon reading section 20 of Federal Reserve Act, it is found that "so much of" certain sections as have a certain purpose "is hereby repealed." In section 21 of the Federal Reserve Act, amending section 5240 of United States Revised Statutes, the New York method is adopted.