frsbog_mim_v14_0547.pdf
TRANSCRIPT
X-3109
CPANGT!::S mP'!CR VTOULD ~ ~r.TH:n !E FEDEFAL B,ESERVF. ACT
lW ENfiCTMF.NT OF P'. F. L;.go6, 67th CnNGPESS, 1st SESSI0N. - - - - - -- --- -- .
SECT!nN 2. ~resent ~vision§. Desipnates Comptroller of the Currency
as one of 0r~anization Committee to estaolish Federal reserve batiks
and divide countr,_r into Federal reserve districts. -orovides that
suits to dissolve national ban~s for viol2tion of Federal Reserve
Act shall be brou~ht by ComDtroller of the Currency, under direction
of Federal Reserve Board.
Effect of H.R. 4906. No effect in so far as concerns Organiza-
tion Comrrittee as that Comrrittee has co!!ltlleted its wor¥ and gone out
of existence. Under H. R. 4906 suits heretofore brought by the
Comotroller of the CUrrency mar be brouzht by Federal Reserve Board
in name of its Chairman.
The word "chairman" in line i3, page
8 should be changed to 11 1eovernor 11 in order that the references through-
out the bill to the active executive officer of the Federal Reserve
Board may be uniform.
S~CTION 4, ~esent ~revisions. Certificate of Organization Committee, show-
inf< f!eop:ranhical limits of each district and Federal reserve city desig-
nated in each, and certificates of orrranization of Federal reserve batiks
to be filed with Comntroller of the currency. Cotr']:ltroller to authorize
those ban¥s to commence business. Describes general ~owers of Federal
reserve banks includin~ the ~ower, unon denosit with the Treasurer of
the United States of bonds bearin;:c circulatinz 1Jrivilege, to receive
from Corontroller circulatinrr notes to be issued under sarrs condition
and provisions of law as relate to circulating notes of national bariks
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Effect of H. R. 49C~. Pecords of COIP;trolJ.er' s office are trans
ferred to Federal Reserve 'Board. "Powers and duties of Corrmtroller in
respect to circulating notes of Federal resenre ban'.r.s are transferred to
Secretary of the Treasury so that ttese notes would be issued by the
Secretary.
SECTIONS 5 AND 6. "Present "'Dr?visio~s. Certificates of increase or reduc-
tiotl of ca:9i tal stocl· of Federal reserve ban,, s to be filed with the
ComCJtroller.
Effect of B.B, 4906. Filed 1Mith Pederal Reserve Board. ~·.~--.at~··~·~::;:-_ ... .:-~.~~.-;.":. ;r=-
Present nr ovi si ~. "Provides !'IT ocedure for c onv er si on of state bani.~ s
into national banlcs. Conversion and narre of converted ban:: to be approved
by Corrmtroller. Com~t~oller to issue certificate that provisions of Act
have been corrmlied with.
Effect of H. B. 4906. Approval given and certificate issued by
Federal Reserve "Poard.
SECTION 10 - FIRST .,1\R/IGPA"PP, "Present "Provisions. Federal Reserve Board to
consist of seven members including the Secretary of the Treasury and the
Comptroller, members ex-officio, and five members appointed by the "Preside;,~
for terms of ten years.
Effect of B.R. 4906. Federal Beserve Board to consist of seven
members includinc- t:r_e Under-secretary of the Treasury, rrember ex-officio,
and six members apnointed by the "President for terrr's of twelve years. Sec-
tion 2 of R.R. 4906 ~rovides for an Under-secretary of the Treasury to
be appointed by the ~esident at a salary of $10,000 per annum. The first
section of 4906 provides that t:r.is Under-secretary shall be paid by the
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Federal Reserve Board such additional salary as to make the ag®ate of
the salaries -paid him equal to $12J o:;o :per anm'!n, which is the salary of
the apnointive members.
~.,
SECTION 10 - 'PARAGRti'DBS '!"t'O AND Tll"FEE. 'Present "Provicions. All members of the
Federal Reserve ~oard ineligible while in office and for two years trere-
after to hold office in any member bank except that this restriction does
not ap::>lY to an ap"J?ointive member who bas served the full term for which
appointed. Of five ap-oointive members at least two JLust be ex"f:)erienced in
banking or finance. The Secretary of the Treasury may assign offices in .
the Treasury for use of Federal Reserve "Ro&rd. Federal Reserve Board to
levy semi-annual assessments upon Federal reserve b~~s to pay its estimated
ex-penses and salarie~ for succeeding ~alf year.
Effect of F.B. 4~06. No restrictions unon eligibility of ex-members
of Federal Reserve Board to hold office in member baru~s. At least three of
ap-oointive members must be experience~ ih baruring or finance. The Secretary
of the Treasury may, at the request of the Federal Reserve Board, assign
offices and vault space in the Treasury for the use of the Federal Reserve
Board. The Federal Besej,1 Ve ~oard shall have -_oc•ver to levy semi-annual as-
sessments U"J?On the Federal reserve ba.nks to ray its estimated exnenses and
salaries for the -precedin~ half year and srall have power to :orovide itself
with suitable offices and vaults in tt-e City of was:rington, D.C. and to levy
assessments u~on the Federal reserve banFs sufficient to cover the eX9enses
t)lereby incurred, provided, that in case of tl"e -purchase of pronerty or the
erection of a building or vaults the amount assessed shall be limited to
three million dollars and provided, further. that title to any pro~erty
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acquired shall be in the United States, but the :orovi sions of Section 10 of
the .Act a:pnroved March 1, 1919, autborizJng the 1:1u1:>lic Building Corrmission
to allot snace in public buildin§~S shall not be applicable to such nro1Jerty.
The amount assessed by the Federal Reserve Board against each Federal reserve
banl' may be credited by said barik to an ace own, wnicn Ir'E.Y be drawn unon by
the Federal Reserve Board, and all funds derived by the Federal Reserve Board
from any assessments may be deposited with any Federal reserve banl{, or rrember
ba.nlr. or with the Treasurer of the United States and shall be ex1:)ended in
accordance with the terrrs of the Federal Reserve Act. All accounts of
salaries and other eXPenses of the Toard shall be audited at least once every
six months by a certified rublic accountant, in lieu of other audit, and a
certified copy of eac1: audit shall be transmitted to the Sneaker of the House
of Representatives.
SECTION 10 - FIFTt.r "PAFAGR.AT.l}', "Present Provisions. T>-e "President rray fill all
vacancies that rr:ay hapnen on the Federal Reserve ~oard during a recess of
the senate by grantin; corrmissions to expire thirty days after the next
session of the Senate convenes.
Effect of R.R. 4906. Recess corrmissions ex~ire at the end of the next
session of Congress.
SECTION 10 - SE'mNTH PARAGP~pq. ~esent Provisions. Federal Reserve P.oard
shall annually make a full renort of its operations to the Speaker of the
House of Representatives.
Effect of P.R. 490~ The Board will be required to cover in the
annual re"TJort of its operations, a report of those O"P9rations which hereto-
fore carre within the jurisdiction of the Comptroller. No se:carate annual
report is reauired on account of these latter operations.
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SECTION 10 - PARAGJAPH ETGHT. Present Provisions. Recites t2xt of Section
324 R. S. c;,s a.mended :;::rovid.L1g cilo.t t.w..:;re s_:.:.,J.l oe in t:Ue Departmer.t of
tl:e Treo,sury a Bureau chc..r;ed .ii tn t..:e execu1;.ion oi ""11 lc;,ws relating
to the issue o,nd regulation of nationa.l cur~'ency secured by United Sto.tes
bonis c:.nd, under tne general s-:.1pervision of the Federa.l Reserve Board,
of ci.ll Federa.l reser·je notes, cl:le cnief officer of w. ici:l Bureau suall be
cc:.lled the Comptroller of tne Currency and si:lall rerform :Uis duties under
t.o.e general directions of the Secretary· of tne Treasury.
Effect of H.R. 4906. Repeals Section 324 R. S. ,:md tra.nsfers all
ro·vers and duties of tne Comptroller and his Bureau to che Federal Re-
serve :i3oard except t~i.d.t the powers and duties' of the Comptroller or nis
3ureau in respect to Federal reserre notes and circulating notes of
nationo.l banks and Federal reserve banks are transferred to tne Secre-
tary of the Trec:tsury.
SECTION 11 (d) Present Pro1isions. Federcl.l Reserv.e Board given :po·,ver to
supervise und reg~late tnrough Comptroller's bureau tne issue andre-
't irerr.ent. of Feierul reser .•e notes ani to prescribe regulations unier
·,v.o.ich said notes ma.y be delivered by tne Comptroller to Federal reserve
agents.
Effect of H.R. 4906. Powers c;,nd duties of Comptroller in respect
to Federal reserve notes are transferred to Secretary of tb.e Treas,.::.ry,
S'J.Ch notes to ce subject to the: order of the Federal Reserve Bo.a.ri for
their delivery.
fF.CTION 13. NEXT TO LA.ST PARAGRAPH. Present Provi§iions. Gives m tional bank.
located in place having popuh.tion of less 5, OUO po1.H~r to act as ag,ent
for insurance companies and as a~ent for others in maKing· or procur-
ing real est3.te loans under rules and regulations prescribed by Camp-
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Effect of H.R. 4906. .Tile rules ani regulations would be
prescribed by the Federal Reserve Board.
SECTION 16. Present Provisions. Provides for ).ssue d.nd redemption of Feder-
al reserve notes - Notes unfit for circulation to be returned to Comptroller
for cancellation and destructio~ (3rd paragraph). Comptroller. under direcw
tion of Secretary of Treasury, to cause plates ci.nd dies to be engrc:l.ved. ~Tote.:;
to be in such form and tenor as iirected by Secretary of Tredsury. (9th
paragraph). Notes when prepared to be deposited in Treasury or a sub-
treasury to be held for use of Federal reserve oank subject to order of
.Comptroller. (lOth para.grdpb.) .. ;Pl3.tes and dies to be under control d.nd
direction of Comptroller, and expenses of procuring sucn notes to be paid
by Federal reser-;e banks, ( ll'th paragraph).
Effect of li.R. 4906. Powers d.r.d. duties of Comptroller in respect
to Federd.l reserve r~tes and circuld.ting notes of rational banks an~ Federcll
reserve banks are tr..msferred to Secretary of Treasury, so ;;:Oat functions
heretofore performed by Comptroller in connection with issue and redemption
of Federal reserve notes as provided by Section 16 will be performed by
Secret~y of Trea.sur~
SECTION 18. Present Provisions. Upon deposit with Treasurer of TJni ted States
of bonds bearing circulating privilege, Federal r.eserve banks entitled to
receive from the Comptroller circulating notes in form prescribed by tue
Secretary of Treas"J.ry. These notes to be of t:C.e same tenor and effect, and
to be issued and redeemed upon the same terms ~nd corditions, as natio~l
bank notes. I
Effect of H.R. 4906. Powers of Comptroller with respect to issue
and redemp~ion of circul3ting notes of Federa.l reserve banks transferred
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SECTION 21, SECTION 5240, REVISED STNI' .~~s. SECTION 327. coMPTROLLER's COMPIL.A-
TION. Present Provisions. COlllfJtroller, with c::~.pproval of t:ae Sacreta.ry of
Treasury, shall appoint examiners who shall examine every national bcu"1k a.t
least tvrice a. yea.r. Examiners to make full and detailed report to Comptroll-
er of condition of banks examiner. Federal Reserve Board, upon recommenda~
tion of Comptroller, saall fix SGla.ries of ex~iners. EXpense of ex~ina-
tions sha.ll be assessed a.ga.inst banks exar..J.ned.,
Effect of H .. R. 4906. Examiners appointed by, a. m report to, Fed.-
era.l Reserve Board. Tha.t pa.rt of section repealed w .. :J.cb. req,ui.ces ~i;a.t
eact. member bank, whether State or national, sDo.ll bea.r ~.c.e cost of exam-
ina.tion.
SUGGESTE:g AMENDMENT TO H.R. 4906. Since Section 9 of ·t;ne Federal Reserve Act
cont~ins a provision req,uiring that the expenses of examinations of State
member ba.nks shall be assessed against and paid by the banks examined., and .. . since Section 5238 Revised Statutes contains c::1. provision requiring t:aat 11All
expenses of any preliminary or otmr e.xo.mina.tions into the condition of any
association sba.ll be paid by such association", it would seem that the
provision of H. R. 4906, which is intended to repeal the requirement that
the examinations of member banks shall be paid by the banks examined,
,should be broad enough to repeal the provisions of Section 5238 Revised
Statutes and Section 9 of the Federal Reserve Act a.s well a.s the provision
of Section 21 of the Federal Reserve Act. At ·11he same time it would seem
desirable to give the Board power to assess against the natiol'l.::1l bank ex-
amined the cost of tlle examination prelindnc::~.ry to the issuance of a. cer-
tificate to commence businesst a.nd it would seem desira.ble a.lso to give
the Board power to assess agc::~.inst the banks examined the cost of all ex-
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aminations in the event that at any future time the earnings of the Federal
reserve banks should be insufficient to meet such cost in addition to the
operating expenses of the Federal reserve banks and six per cent dividends
payable upon their capital stock. lt is suggested, therefore, that the
sentence beginning on line 24 of page 8 and ending on line 2 of page 9 be
changed to read as follows: "Those parts of Sections 9 and 21. of the Fed
eral Reserve Act and Section 5238 of the Revised Statutes which require
respectively that each national or State bank shall bear the cost of ex-
amination are hereby repealed; Provided, however, that the Federal Reserve
Board shall have power, in its discretion ani subject to regulations pre-
scribed by it. to require each membe:;:o bwik, whether State or national, to
pay the cost of examination in whole or in part. 11
SECTION 22{b2. Present Provisions. No exJndner shall disclose names of bor-
· .~rowers or collateral for loans of member bank to other than officers of
bank without express permission in writing from Comptroller, or etc.
Effect of ELR. 4906. Permission would have to be obtained from Federal
Reserve Board.
SECTION 25. Present Provisions. National banks operating foreign branches re-
quired to furnish information concerning condition of such branches to
Comptroller upon demand.
Effect of H.R. 4906. Information could be required by Federal Reserve
Board.
SECTION 28. Present Provisions. Prescribes Gonditions and procedure for reduc
tion of oapital stoOk by national banks. Any proposed reduc~~on must be
reported to Comptroller and approved by Comptroller and Federal Reserve Board.
Effect of Hs R. 4906. Proposed reduction must be reported to and
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CHANGES WHICH WOULD BE EFFECTED IN NATIONAL BANKTNq LAWS BY THE._ E:r;J£1-CTM~Jl.!. OF ff. fi, 4906.,~ 6111! -
CONGRJ<..:.§.§_, F!RST SESSIO}!
H. R. 49C6) in so far as it refers to the Bureau of the Comptroller
of the Currency, expressly repeals Sections 324.; 325 and 326 R. S. (Par.
100, 101 and 162 of the Comptroller of the C1u·rency's compilation of the
lbtional Bank Act, as ame:rrled_, recomplled Feb:~·va.ry l920L and transfers to
the Secretary of the Treasury the powers and duties now conferred by law
upon the Comptroller of the Curi"Emey *'in respec·t to Federal reserve notes
and circulating notes of .na.ti0:nal banks and ::Tode:(al reserve banks) 11 and
transfers to the Federal Reserve Board all other r:P ·Jwers and duties here
tofore conferred or imposed by law upon the CompJ.~roJ.ler of the Currency."
Inasmuch as Section 324 R. s. now provides t~at there shall be in the
Department of the Treasury "a bureau charged with the execution of all lawQ
passed by Congress relating to the issue and regt•lat.ion of :na.tioml currency
secured by U. S. bonds *** the chief officer of which shall be called the
Comptroller of the Currency) 11 and im.sm1.lch as H. R. l.t9o6 propoees to abolish
the office of the Comptroller and to J~:,:\.:.nsfer the powers and duties now
exercised by the Comptroller partly to the Federal Reserve Board and pa.rUy
to the Secretary of the Trea.sury~ it would seem that, if H. R. 4906 becomes
lawl the Secretary of the Treasury thereafter would be charged gene~lly
with the execution of all laws in respect to national bank notes, Federal
reserve bank notes and Federal reserve notes which theretofore have been
exercised by the Comptroller, a.nd the Federal Reserve Beard would be charged
generally with the execution of all other laws theretofore eAercised by the
Comptroller relating to the administration of national banks.
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As stated above 1 paragraphs 1001 101 and 102 of the Comptroller
;10,•• .,
of the Currency's compilation~ referred to above '~-(Sees. 3241 325 and
326 Revised Statutes) are expressly repealed. In view of the provisions
of the proposed bill, it would also seem tha~ pax·s. 103 1 104, 1051 1061
107 and 108 (Sees. 327 1 3281 329, 330 and 331 Revised StatutesL and part
of the Acts of May 221 1908 and March 41 1909, would be repealed by infer-
ence. Howeve.::, in ordo:c- that thex·e rm.y be l:10 qu.tH';t:';.on as to the appli-
cability of these sections, it is suggested that these sections likewise
be eJCpressly repealed.. It doo.s not seem aJvisable1 however, to repeal
~ r- ,-. ::.;; .;.,.i) 'i)
par •. 110~ Section 333, Revised Statutes or par. 1111 Act of April 281 1902.
There follov.a a detailed discussion of the powers and duties which
would be specifically transferred tu tLJS Federal Reserve Board or the
Secretary of the Treasury, as the case may be1 should H. R. 49o6 become
a law. Reference is made orily to those sections which now impose specific
powers or duties upon the Comptroller of the Currency. Wherever the power
or duty iD: question would be tnnsferred from the Com-ptroller of the Cur-
rency to the Federal Reserve Board or to the Secretary of the Treasury~ the
respective department 1 underscored1 is substituted in pl::Lce of the Comp-
troller of the Currency.
*Note! Hereafter 1 where the designation "par." appears, it refers to the paragraphs in the Comptroller of the Currency 1 s Compilation of the Nat,:l.or:al Bank Act, as amended1 recompiled February, 1920.
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THE ORGANIZATION AND POWERS OF NAT Tl2_N,:1. BANKS. ( CF.APTER 2 OF THE COMPTROLLER'S COMPIL~TION).
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Par. 201 - Sec. 5133 R. S. A copy of t~e articles of association#
when executed, shall be forwarded to the Fede:ra.l_ fles~ Board and filed
and prese~ved in its office.
Par. 202 ... Sec. 5134 R. S.. The orgJ.nizat:\on certificate shall
specifically state# first 1 the mme of the propo:'led association which
sh'lll be subject to the approval of the Feder:'tl R.~.§.Y.!~ Beard.
Par. 203 - Sec. 5135 R. S. The organi7,ation certificate, upon being
acknowledged before a judge cl:" notary public, §ba.ll bfl transmitted to the
Federal Reserve Board whicll flhall record it and carefully preserve it
in its office ..
Par. 204 - Sec~ 5136 R. S. Upon filing the ar.ticles of association
and. organization certificate, the association shall have certain enumerat~
corporate powers; but no association shall tr~n~act any business except
such as is ir~idental and necessary prelimir.ary to its or§anization
until it has been authorized by the Federal. g~~ Board to commeuce the
business of banking.
Par. 319- Sec. 5163 R~ S. When the orgp,nization certificate is
transmitted to the Federal Reserve Board, and the association transmitting
it notifies the Federal Reserve Boa£a that at least 50% of its cap4tal
ftnnk has been paid in, the Federal Reserve Bca rd is required to examine
into the condition of the associatio~ and the association shall transmit
a statement necessary to enable the Feder.:::~.l Resarve Fl~ to determine
whether the association is lawfully entitled to commence the business
of banking.
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Par. 320 - Sec. 5169. If upon a careful examination of the facts so
reported1 and of any other facts which may come to the knowledge of the
Federal Reserve Board. it appears to the Feder~l Reserve Board that the
association is entitled to commence the businass of banking_, the £'ed.eral
Reserve ~ shall then issae a certificate authorizing such association
to commence business1 but the Federal Reserve Board n:ay withhold th:i. s --------certificate whenever it has reason to suppose that it has been formed for
ary other .:than the legitimate objects contemplated by the Act.
Par. 209 - Act of September 7, 1916., 39 Stat. L. 752,. Amer.ding Sec.
13 of the Federal Reserve Act. See discussion of Federal Reserve Act.,infra~
Par. 210. Section 25 of the Federal Reserve Act. See discussion
Federal Reserve Act, infra.
Par .. 211 - Sec. 2 of Act of May 1., 1886, 24 Stat. L. 18. Any change
of location or change of name of a ratiGnal bank is subject to the approval
of the Federal Reserve Board, and notice of such new location or oame must
be sent to the Federal Reserve Board. No cha.n6a of name or location will
be valid until the Federal Reserv<::~ Board has issue~ a certificate of ap-
prova.l. •
Par. 215 - Sec. l. Act of July 121 1882., 22 Stat. L. 162. A national
banking association may e .. <tend its corporate existence for a period of
twenty years with the approval of the Federal ResQrve Beard by amenr1.; ;.z
its articles of association.
Par. 216 - Sec. 2 of the same Act. The consent of two-thirds of the
shareholders to an amendment in the articles of ~ssociation authorizing
the extension nust be certified 'to the Federal Reserve Board, accompanied
by an application requesting approval of the amended articles of associa··
tion by the Feder~l Reserve Board. and such amended articles are not
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valid until the Federal Reserve Board has issued a certificate under its
hand and seal that the association :b.3.s compli.ad wit.h all of the requisite
provisions and is authorized to have successio'."l . .f 01: the exten<ied period~
Par. 217 - Sec. 3 of same Act.. Upon receipt d the· application and
certificate, the Federal Reserve ~ shall r~ve a special examination
made at the expense of the association in order to determine its condition,
and if after the examination it appears to the Federal Reserve Board that
the condition is satisfactory it shall grant a certificate of approval, or
if it appears that the condition is unsatisfactory, it shall withhold the
certificate of approval.
Par. 219 - Sec. 5 of the same Act4 When the Federal Reserve ~ bas •
granted its certificate of approval to an amendmont to the articles of
association of a national bank extending its corporate existence1 and a
ahareholder dissents from the proposed action and desires to withdraw from
the associ.ation, he is entitled to the v:ll ue of his shares to be ascertained
by an appraisal to be made by a committee~ and in case the value f i.xed by
the committee is not satisfactory the shareholder may appeal to the Federa~
Reserve Board1 which shall cause a re-appraisal to b0 made which shall be
f.iual and binding.
Par. 220 - Sec. 61 of the same Act. Circul~ting notes of any associa-
tion extending its corporate existence which were issued prior to such
extension shall be redeemed at the Treasury, and when redeemed shall be
forwarded to the §_ecretary of 1h§. Treasury and destroyed as provided by law.
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Par. 222 - Act of Apr~ 12, 19021 32 Stat~ L. 102. The Federal E~-
serv.e Board is authorized to extend for a f 1A.rther psriod the chartex- of
a m tiom1 bank already extended under t;he pro-;; ;i.~ions of the Act of
July 12_, l882.l
Par. 226 - Sec. 5140. fn n:aking payment v:f the capital stock of
newly orgFLnized associationS, the payment of each installment, when due,
must be certified to the Federal Reser~~ epard under oat~
Par. 228 - Sec. 5142~ An increase of capital stock nay be n:a.de from
time to time, but the Federa1 Reserve Board shall determine the maximum
increase1 and no increase shall be valid until the whole amount has been
paid in and notice therefor has been transmitted to the Federal Reserve
Board and its certificate obtained signifying its approval thereof, and
that the increase has been paid in in accordance with law,
Par. 229. - Sec. 1. Act of May 1. 1886, 24 Stat. L. 19, A national
banking association may, with the approval of the Federal Reserve Board,
and by the necessary vote of its shareholders increase its capital stock
in an amount approved by the ._Federal Reserve Board, notwithstanding the
limit fixed by its origiml articles of association and determined by the
Federal Reserve Board.
Par. 230 - Sec. 5143. No reduction of capital •'stock shall be made
until the amount thereof has been reported to the Federa! Reserve Board
and such reduction has beenapproved by the Federal Reserve Board.(At
present, the reduction must be approved by the Comptroller of the Cur-
rency and by the Federal Reserve Board.)
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Par. 232 - Sec. 5145. The origiml directors of an association shall
be elected at a shareholders' meeting held at any time before the associa-
tion is authorized by the Federal Reserve Board to commence business.
Par. 236 - Sec. 5147 R. s. A direCtor's required oath of office) when
certified to) must immediately be transmitted to the Federal Reserve ~~
and filed and preserved in its office.
Par. 240 - Sec. 5151 R. s. Shareholders of mtioml bmks are under
double liability for debts of the banks1 "except that shareholders of any
banking association now (June 31 1864) existing under State laws, having
not less than five millions of dollars of capital actually paid in1 and
a surplus of twenty per centum on hand 1 both to be determined by the11
•Federal Reserve Board 1 1' shall be liable only to the amount invested in
their shares." In case deficiency in the surplus occurs, the Federal
Reserve Board nay compel the association to close its business and wind
up its affairs ..
Par. 245 - Sec. 5154 R. S. State banks nay be converted into national
banking associations upon the vote of not less than 51% of their stock-
holders, with the approval of the Federal Reserve Boar~ and with any name
which nay be approved by the Federal Reserve Board. The Federal Reserve
Board shall issue a certificate that the provisions of the Act have·'
been COirJplied with in the case of conversion1 and thereafter the banking
association shall have the same powers and shall be subject to the same
duties as other na.tioml ba riking associations.
OBTAINING AND ISSUING CIRCULATING NOTES. (OHAPTER J OF THE COMPTROLLER'S COMPILATION QE ~NATIONAL
BANKING~-
Par. 304 - Sec. 5160 R.S. A natioral bank, in case it desires to re-
duce its capital or close up its business, may take up ita bonds deposited
with the Treasurer of the United States upon returning to the SecretarJ[
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of the Treasury the required amount of circulating notes.
Pdr. 306- Sec. 5162 R. s. Where United States bonds are transferred
to the Treasurer of the United States. the T:..·_;a..:;ur<lr s.~.1u.ll ::oli .such bonds
in trust for the associdtion and a receipt snall ue given to the associa-
· tion by the Secretary of the Treasur~ No assignment or transfer of such
bonds by the Treasurer shall be deemed valid unless countersigned by the
Secretary of the Treasury.
Par. 307- Sec. 5163 R. S. The Secretary of t~e Treasury shall
keep in his office a book in which si:Jall be reccJJ:·d.ei any transfer or
assignment by the Treasurer of the United StatF;s of any bonis belonging
to a national banking associa.t1 on.
Par. 308- Sec. 516~ R. S. The Sacretary ~f the Treasury, upon
entering any transfer or dSsigr~ent by the Treasurer of the United States
of bonds belonging to a national bank, shall advise tn.e bank by nail
for wnose account tne transfer is made.
Par .. 309- Sec. 5165 R. S~ T~ Secretary of the Treasury s:ilall at
all times have access to the books of the Treasurer of the United States
for tbe purpose of ascertaining the Gorrectness of any transfer or assign-
ment of bonis presented to him to com1terslgn and the Treasurer of the
United States shall have like access to the books of the Secretary of
the Treasury and the Secreta.ry of the Treasury snall also have access
to t}lE:· bonds on de:posi t ,,.,i th the Treasurer ~o a..scertain tneir amount
and condition,
P~r. 310- Sec. 51SG R. S. Every association having bonds deposited
with the Treasurer of the Uni. ted States snall examine such bonis annu<.J.lly
and compare them with the books of the SecretdrY of the Treasury. Such
examinations shall be made at any time as the Treasurer dlld. the Secretary
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of the Treasury nay select.
Par. 311- Sec. 5167 R. s. The SecretaEY ~f .,1Pe Treasury shall
give to every association a power of attorney to receive the interest
on the bonds securing its dr.culating notes whj_r::h j_ ... has tra~;sferred to
the Treasurer of the United States. Whenever the ~arket value of such
bonds is reduced below tee amount of the circulation issued against such
bonds, the Secretary~ the Treasury may receive the amount of such
depreciation in other United States bonds or in money to be deposited
with the Treasurer as long as such d.e[J:.:~ciation continues. The Secretary
of the Treasury may permit bonds to be exchanged for those received as
security for circulating notes if in his Opinion such exchange can be
made without prejudice to the United States and the ~ecretary of~
Treasurl may direct the return of any of such bonds upon surrendering
and cancelling a proportionate· amount of circulating notes.
Par. 314 Sec. 9 of the Act of July 12, 1882, 22 Stat. t. 164.
A national banking association desiring to withdraw its circulating notes.,
may, upon depositing lawful money with the Treasurer and with the con-
sent of the Secretary~~ Treasury, withdraw a propor~ionate amount
of bonds as security for such notes.
Par. 317. - Sec. 18 of the Federal Reserve Act. Se9 discussion of
Federal Reserve Act infra.
Par. 323-Sec. 12. Act of Mar. 14, 1900, as amended, 31 Stat.
L. 49. Upon depositing the necessa.ry bonds with the Treasurer of the
United States a national banking association shall receive from the
Secretary~~ Treasury circulating notes in blank and upon due
application to the Secretary of~ ~~ry may receive additional
notes from the Secretary~ ~ Treas~ to an amount which will increase
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its circulating notes to tue par value of the bonds deposited provided that
nothing sha.ll prevent the 13ecretary of the Treasury from requiring addi-
tional deposit of bonis or lawful money in case the market value thereof
falls below the par value of the circul~ting notes outst~ding.
Par. 324- Sec. 5172 R.S. The Secretary of the Treasury shall
prepare the necessary plates and dies for printing circulating notes in
blank. (This section at present provides that the Comptroller shall 1'under
the direction of the Secretary of the Treasury" cause the necessary plates
and dies to be prJpared.) *
Par. 325. Sec. 5, Act of June 20, 1874. The Secretary of the
Treasury shall cause the charter numbers of the association to te printed
upon all national bank notes. (This sectionprovides at present that the
Comptroller shall cause, etc. nunder such rules and regulations as the
Secretary of the Treasury may pres cri be").
Par. 327- Sec. 51?3R~ S. The Secretary of the Treasury shall
he;.ve control of the plates cil1d dies procur ··ed by him for printing and
circulating notes, and the expense incident to such are to be paid out
of the taxes asse$sed uponthe circulation of national.bank rotes.
Par. 328- Sec. 5174 R. s. The Secretary of the Treasury
shall cause to be examined eacn year the plates, dies, bed pieces, etc.,
and file in his office annually a correct list of the same. ~~terial
which may have been used in printing notes of associations wnich are
in liquidation or have closed business shall be destroyed under regula-
tions prescribed by the Secretary of the Treasur~. (At present this
section provides that such material shall be destroyed under regula-
tions prescribed by the Comptroller u.nd "approved by the Secretary of
the Treasury. 11 ).
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Sec~ 329-Sec. 3 Act of October 5, 1917. N~tiondl Banking asso-
ciations s4J,all be entitled to receive from the .§.ecretary of the Treas-
ury circulating notes in certdin specified denominations.
Sec. 339- Sec .. 5184 R. s.. It shall l:e the duty of the Secreta:ry
of the Treasury to receive vvorn-out or mutilated circ-ulating notes which,
after a memorandum has been made in the proper books in accordance with
the regulations· establis.ued by the §ecretary of JD.f T.r:=;_asury, sball be
destroyed by maceration in t:Oe p:·:c·>e.-lce of four :. '~ :s ns 1 one to be ap-
pointed by the Secretary of the Treasury, one by the Secretary of the
Treasury(heretofore t.ue second ·representative has been appointed by the
Comptroller), one .by the Tre~surer of the United Stcites and one by the
association itself under such regulations as the Secretary may prescribe.
A certificate of_ destruction shall be m<de in the books of the Secretary of
t.ue Treasury an:i a duplicate forwarded to the association.
Pi::t.r# 414. - Sec. 3, Act of June 20, 1874, 18 Stat. L. 1 23. When
any national bank notes forw-arded to the Treasury for redemption are mu.-
tilated or otherwise unfit for circulation, they shall be fornarded to
to ~....:.a ...vssocL •. tion .-::~.::in~ r..c.;; n0c.c;33c...:ry l0posit ci:ccuL~tino; no·cas of lif-
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REG'liLATION OF THE B.AlJKIHG BUSINESS: ( CRAI.:L: 1,L_ o u.~ rlili C0hlf'·:utuLlliR1 S COMJ?ILATION OF T3E NATJQNAL BAl'ilKING LA!~-
Par. 416- Sec. 6 of. Act of July 14, 1890, 26 Stat. L. 289, De-
:posits made by national banks with tile Treasurer of the United Stcttes to
redeem circu~ating notes s..:..:a.ll be covered in dS mis cellaneou.s receipts and
the Treascu-y s..:.dl1 redeem from the general casn in t}-,:; Trea.sv.ry t.c.ose circu-
lating notes w.c.ich may come into bis :possession Sc<.::,ie<~t to redemption; C~-nd
upon t.he certification of t.he .§.~e..tary of the 'j're·.:~-.§J~:!.X that such notes nave
been received by uim and thd-t tn.ey have been destr·oyed. and tnat no rew notes
will be issued in tbeir place, reimbursement snall be !lhcle to tne Treasurer
of the United. States under such regulations ,as the Secretary of the Treasury
inay prescribe.
Par. -±30- Sec. 5205 R. S. Where an association shall fail to :pay up
its capital stock, or ·vhere its ca:pi tal stock has become impaired: by losses
or otilerwise, it shd-ll make up the deficienc~r w' thin thre8 rr.onths after re-
ceiving notice from the Federal Reserve Boan=b by assessment upon its share-
nolders, and upon notification from the Federal Reserve Board the Treasurer
of the United ~tates shall withhold interest uporr.all bonds held by him in
trust until otherwise notified ..
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Par. "±34- Sec. 5208-R~ S~ Wherever any officer, director, etc. ,
of a member bank falsely certifies a check, tne rrember bank, if a national
bank, sha.ll be subject to the liabilities ~nd proce3din;;s on t.1e part of
tne Federal ,Reserve Board provided for in Section 5234 R.S.
Par. 436- Sec. 5209 R.S. ~"Y officer, iirector, etc., of a Fed-
eral reserve bank or a member bcJnk -rD.o IIldkes any false entry '.:vi t:C. intent
to defraud or injure a Federal reserv<:l bank or mer.Jber ba.nk, or the Federal
Reserve Board, or any agent o:: eJc, ... :.J..Ln:;r, etc. , s:U".J.: c,~ fir.ei or ir.;rris ...
oned. (UnJ.er t.u.e present Act, bo i;h t:Ue Comptroller c.n~.i. the Feieral Re-
serve Board are incluiei in t.c.e L.st of persons.)
Par. 438 (b) Sec. 22 of ~be F. R .. Act., See iiscussion of tile Fed-
eral Reserve Act, infra.
Pa.r. '±'±0- Sec. 5211 P ... S~ ?very _ssoci~.hon s...:.c...ll.r:Jcl.ke not less
tnan five reports to tl:.e Federal Reserve Board aac.c.. year, in a.ccorla.nce
' with the form prescribed by ens Feder~l Reserve Bo~ri. T.c..e report sna.ll
be transmitted to c:W.e Federd.l Reserve Bo2.ri within five days after the
request or requisition by it ani tne report s~ll be publisned in a
newspaper in the sa.rne form in v;..nc.u. it is L;;l.le t.o c.:le Federal Reserve
Board, and proof of public~tion sLall be furnisjBd to the Federal Re-
serve Board as it "W::J.Y require.. Tne Feieral Reserve Board. shall nave
power to call for specic.l reports from any particula.r association 1Vt..en-
ever in its judgcant suc.c. reports are necessary in orier to obtain a
full and complete knowledge of its co nii tion ..
Par. 4:±1- Act of February 26, 1881, 21 Stat. L. 352. The oath
verifying tue returns Ga.ie by national b~nks to the Federal Reserve Board
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Par. 442, Sec. 5212 R.S. In addition to the reports required by
the preceding section each association snall report to the Federal Re-
serve Board the amount of any iivide1:-rJ. d.eclared within ten days after
its declaration, and the amount of net earnings ln excess of such divi-
dends.
Par. 443- Sec. 5213 R. S. 't'(.l:lere an a.ssQciation fails to make any
report required by law cind refuses to pay the :pena.lty inposed after
assessmen~ by the Federal R~~~erve Boari~ t~e amo~~t thereof may be re-
tained by the Treasurer of the United States ~pon tne order of the
Feder~l Reserve Board out of tne interest on tne bonds deposited with
the Treasurer to secu.re circul~tion.
Par. 447- Sec. 5216 R. s. On tae failure. of an association to
make semiannual returns to tl:..e Traa.surer of the Uni tei States, showing
the amount of its notes in circula.tion, as re~uired by par. 446- Sec.
5215 R. S.·, the dues to be paid by such association sb.a11 be assessed
upon the diilount of r:otas delivered to it by the .§.~!~ls._r;y of the Treas-
Par. 450- Sec .. 22, Internal Revenue Act- Mar. 1, 18?9, 20 Stat4 t.
351. \1.here the Federal Reserve Board finds ~ national bank to be insolv-
ent, no tax saa.ll re a.ssessei or co:;J.lected on account of suJ,;.b. ba.n.k wcich
sball diminish t~e ~ssets thereof necessary for the full pa~ent of all
of its depositors.
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DISSOLUTION Jl~ BECEIVEBSBTP. {CHlP.,TEP 5 OF ~~TROLLER'S corvr0 ITJJITION OF TFE NATIONAL B.AN!\ING t.Ams:_)
Par. 501 .... Sec.- 5221 !l. s. 1n:herever a nadonal banldng association
votes to go in liauidation, the board of dire::;tor::; srall certify this
fact to the J'ederal ~~ ~ and pubHcatio;1 thereof shall be made
in a specified newspa"?er.
Par. 502- Sec. 5222 R. s. Within six months of the date of the
vote to go into liquidat.ion, the association sh2:.!.1 deposit with the
Treasurer of the United States money sufficient ~.·.o redeem its outstand-
ing circulation. The Treasurer shall execute du.:o1 icate receipts for
such money and de1iver one to the association n:1d the other to the
Federal ]eserv~ Po~rq.
"Par. 503( a) Act of Nov. 7 ~ 1918. Two or mo1·e national banks in
the same city may consolidate into one association, with the approval
of the Federal Reserve "Hoard, ~rovided that whe:1. such consolidation - ·-
shall have been effected and aporoved by the l'£:i~~ _Reserve "Poard, any
shareholder may_ give notice within 20 .days fr,;:,m the date of the Federal
Reserve Board's certification of a:P.';)roval that he dissents from the plan
of consolidation; in which case he is entitled to receive the value of
the shares so held by hh to be; ascertained by an ap:>rai ser t and in
case the value so fixed" is not satisfactory to him, he may within 5
days thereof ap:oeal to the Federal Reserve Bo~ which shall cau:;;e a·.
reappraisal to be made.
Par. 504 - Sec. 5224 R. s. ~~ere a national bank pro~osing to close
up its business shall fail to deposit lawful mon_ey with the Treasurer of
the United States and talre up its bonds within 30 days after the expir-
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ation of the time specified, the Secretary of the Treasury shall have
power to sell the bonds pledged for the circulation of the said bank
at nublic auction in New York City.
"Par. 507 - Sec. 5226 R. s. Tllrnen,-::ver a national ban,·.dng asso-
ciation fails to redeem its circulaUngnotes in lawful mone;y, its
failure shall be protested and the public notary making the protest
shall forward it to the .~ecretar:y 2.~ th~ Tre~, retaining a copy
thereof for himself.
Par. 503. - Sec. 5227 R. S. On receiving notice that any national
ba~ has failed to redeem its circulating notes as specified in the
pt"eeeding section, tl'le ..§~retary of .!b.§ Tr~~:SY tr.ay' appoint a special
agent, who shail investigate whether the ba~ has in fact refused to
redeem its circulatine- notes in lawful money, snd shall report to the
Secretary of ~ Treasurv the facts so ascer ~;ained. If the Secretar~
of~ Treasur:y is satisfied that the association is in default, he
shall within 30 d.ays after·he has received notice declare the bonds
deposited by such association forfeited to the United States.
Par. 509- Sec. 522S F. s. After the .-,S.;:.e.;:..cr.;:..e;;...t;;..;;a--.r""-v _o_f ~ Treasury
has ascertained that a default in connection with· circulating notes
has occurred, and he has given notice thereof to the association, such
· association cannot nay out any of its notes, discount any notes or bills,
or otherwise prosecute the business of banking, exce~t to receive rr.oney
belonging to it and to deliver special deposits.
Par. 510 - Sec. 5229 R. s. Upon declaring the bonds of an asso-
ciation forfeited upon non-payment of notes, the Secretary of~ Treasur¥
shall ~ive notice to the holders of the circulating note to present them
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for payment at the Treasury, and upon payment the Secretary of~
Treasury rnayy in his discretion, cencel an amount of bonds -oledged by
such association e~ual at the current ~arket rates to the notes naid.
~ar. 511 - Sec. 5230 R. s. When the ~P-Cretary of the Treasury
has become satisfied that any association has refused to nay its circu-
lating notes, he may, instead of cancellin~ its bonds, sell so much of
,.....,{""'·-.{ 4' a ~i l
them as may be necessary to redeem the outstanding notes at pu~lic auction
in New York City.
Par. 512 - Sec. 5231 B. s. The Secre U~y __ o_i_!he Treasury, if
he deems it to the inte:.cest of the United s·~ci~es, may sell at private sale
any of the bonds of an association shown to have rrade default in nayin~
its notes •.
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?ar. 515 - Sec. 5234 B. s. Unon being satisfied that an association
has refused to nav its circulating notes and is in defaul t 7 the Feder~l
]eserve ~may fortro~ith apnoint a teceiver. SUch receiver, under the
direction of the Federal Feserve Board shall take possession of the books,
etc., of the association and collect all debts, dues and clairr·s belon~ing
to it, etc., and unon order of court trJay sell all the real and personal
nronerty of such association. Such receiver shall nay over all money so
made to tre Treasurer of tre United States subject to the order of the
Federal Feser't'e ~· T:he receiver shall also make a re"l')ort to the Fed-
~ Reserve ~oard of its act~ and nroceedinFs. The Federal Feserve
~card may if it deems ~roner, deposit any of the money so made in any
regular Government depository and such depository shall pay interest
unon such money at such rates as the Federal Reserve Board may prescribe,
not less, however, than 2~ per annum.
~ar. 516- Sec. 5235- R.S. Tbe Federal :Reserve ~oard unon apnointing .;;;..;;;;..;;.;.;;;;..;;_.- .;...;;..;;~-- - -- - -
a receiver, shall cause notice to be given by advertising in newspapers
for three consecutive months, calling on all persons to submit their.claims
and make nroof thereof.
Par. 517- Sec. 5236 R. S. After Provision has been made for refunding
to the United States any deficiency in redeeming tr.e notes of an insolvent
bank, the Federal :Reserve~ may mrure a ratable dividend of the money
paid over to it by the receiver.
-oar. 518- Sec. 5237 F. s. "''herever an association, against which
proceedings have been instituted on account of its alleged refusal to
redeem its circulating notes, denies raving failed to do so, it rray
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bring proceedings in the proper Federal court to enjoin any further pro-
ceedings in the premises and the court after citing the Federal ~ill
~ to show c.ause why further ~roceedings should not be enjoined, and
after a finding that the association has no~ refused to redeem its notes,
shall make an order to enjoin the M~.~a.J~ ~!~~ li~a~<,! and any receiver
acting under its direction from all further :proceedings on account of the
alleged refusal.
l'ar. 520- Sec. 1, Act June 30, 1876, 19 Stat. L. 63. Whenever
a national bankin~ association shall be dissolved or whenever any cred-
i tor shall have obtained a judgment agai:.-.3t it in any court of record
and such judgment has remained 'l.mpaid for 30 clays, or whenever the
Federal Reserve ~rd shall become satisfied of the insolvency of a
national banking association, it may, after <l~1e examination, appoint a
receiver who shall proceed to close up the affairs of the association.
· 't>ar. 522- Sec. 3 of the same Act. 11''henever an association has been
placed in the hands of. a receiver, and when the Federal Reserve~
has paid to each creditor, not including shareholders, whose claims have
been allowed the full amount of sue:.-:.. claims, and all expenses of the
receivershi~·nave been ~ovided for, the Federal Reserve~ Shall
call a meeting of the shareholders after due notice, and at such ~eting
the shareholders shall determine whether the receiver shall be continued
and shall wind up the affairs of the association, or whether an agent
shall be elected for this purpose. In case an agent is elected, the
shareholders shall execute and file a bond to the satisfaction of the
Federal Reserve Board conditioned upon the discharge in full of every
claim wt;ich may thereafter be approved, and for the faithful performance
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of the duUes of the trust. · The Federal Reserve Board and the receiver
shall thereupon transfer and deliver to such agent the assets of the
association then remaining in the hands or'subject to the control of purpose
the Federal Reserve :Roard and the receiver, and for thi~ · · - ·····- the
Federal Reserve ~oard and the receiver are empowered to execute any
deed, assignment or instrument in writdlng whioh may be necessary and
proper. The proceeds of any assets which ~ay subse~uently be received
shall be distributed, among other things, upon any assessment made upon
. the stock of the association by an order of the Federal Reserve :Board
and the balance ratably among the stockholders. This distribution shall
be ~.ade from time to time as shall be deemed advisable by the Federal
Reserve ~oard or the said agent.
Par. 523- Sec. 1, Act of March 29, 1886. Whenever the receiver of
a national bank appointed by the Federal Reserve :roard shall consider it
necessary to eiDT:l~ oy funds belonging to his trust to !JUI'Chase property in
which the trust has interests, he rre.y certify the facts in the case,
together·with'his opinion as to the value of the property to be sold,
to the Federal Reserve~ with a rec~uest for the right and authority
to -.urchase such property.
"Pc.r .. 524 - See. 2 of the same .Act. If such request is approved
by the Federal Reserve ?oard it shall be submitted, to~ether with the -certificate of facts and its recommendation as to the amount of money
necessary, to the Secretary of the Treasury and, if the request shall
be approved by him, the Federal :Reserve ~ shall allow the reouest
and notice thereof shall be filed with the Treasurer of the United States.
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Par. 525- Sec. 3 of the sarre Act. Wbenever such a request is
allowed, the Federal Reserve Board is empowered to draw upon such
funds of any such trust as may be deposited with the Treasurer of
the United States to the extent of the amount recorrmended, :provided
that :9ayments on account of the purchase of any such property shall be
made by the Federal Reserve Toard direct, with the approval of the
Secretary of the Treasury, for such purpose only and in such manner
as the Federal Reserve ~ .. may determine and order.
'Par. 526- Sec. 5239 R. s. If a ciirec tor of a national ban1-
knowingly viol2.tes or ;;:>errritl3 any of its officers, a,::_ents, etc., to
violate any of tl:e provisions of t..,..e Act of June 3, 1864, as a.ir:ended,
all the rights and privileces of t:,e national bant shall be forfeited,
but the violation shall be determined by a :?ro~er Federal court in a
suit brought for that -pur:yose by the Federal Reserve ~ in the nar:e
of the Chairn.an of the C?oard, before the associstion shall be declared
dissolved.
Par. 527- Sec. 21 of the Federal Reserve Act. See discussion
of the Federal Reserve Act, infra.
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Par. 700 - Sec. 380 R. S. All suits and proceedings arising
out of the provisions of law governing natiocaJ_ banks, in which the
Upi ted States or any of 5 ts officers or <:~:~c::'tr, s'1all be parties,
shall be conducted by the District Attorneys of the several districts
under the direction a.nd su-cervision of the Solicitor of the Treasury.
This section is re-enacted b;y H. R. 4906 exce·,:>t that the direction
and supervision of the Attorney General of the United States is sub-
stituted for that of tx1e SolicH·)r of the T:ceaoury.
Par. 701. - Sec. 24, Sub-paragra-ph 16, cf ,Judicial Code. .Act
of March 3, 1911, 36 Stat. 1- 1092. The District Courts of the
United States to have original jurisdiction of cases comrr.enced by
the United States, or by direction of any officer thereof, against
any national bank, and of cases for winding ~p the affairs of any
such bank. and of all suits brought by any national banlc to enjoin
the Federal Reserve~ or any receiver acting under its direction.
Par. 702. - Sec. 736 R. S. All -proceedings by any national bani~
to enjoin the Federal Reserve :Roard shall be had in the district where
· such association is located.
Pars. 703 and 704. - Sees. 884 and 385 B. s. Every certificate.
assiE:!.nment, and conveyance executed by the Federal Reserve 1=<oard, in
pursuance of law, and sealed with its seal, and copies of organization
certificates of national banks, duly certified by the Federal Reserve
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~,and authenticated by its seal, sr~ll be received in evidence in
all places and courts, and all copies of -papers h-1 t:he office of the
Federal Reserve~ certified by it and a.uthent:~,:2.ted by its seal
shall be evidence equally ·Nith the originals.
~ar. 715.- Same as ?ar. 450 Suura.
"Par. 771. .Act of r.~arch 22, 1918. During tee continuance of the
existing state of war any natinnal bank may con1:.ri"bute to the AILerican
National Red Cross out of net :)rofi ts available for uividends. Each
association stall re::ort to tre Federa.l ~.-::::'..5: l3.£CE"d the amount of such
contribution and the amoum:; of net earnings in excess tl:.ereof.
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HOUSE Bitt 4906.
TO AMEND s·ECTION 10 OF THE FEDERAL RESERVE ..AC'r.
rhe purpose of this bill in general terms is to transfer to the ' .
Federal Reserve Board those powers and functions now conferred or imposed
upon the Comptroller of the Currency of the Bureau of which he is the
chief officer.
When the Federal Reserve Act was first adopted, the Federal Reserve
Board was made a separate and independent es.tablishment of the Govern-
ment with powers and duties specifically conferred upon it relating to
the organization and operation of the Federal reserve banks and to cer-
tain specified operations of member banks, both national and state banks.
It was expressl~ provided that nothing in this Act should be construed
to take away any of the powers theretofore vested by law in the Secretary
of the Treasury relating to the supertisiont management and control of
the Treasury Department or of any of the Treasury Department Bureaus.
In other words, the effect of the Federal Reserve Act was to leave the
office of the Comptroller of the c~rrency, a Bureau of the Treasury De-
partment, in full charge of the execution of all laws relating to the
issue and regulation of national bank currency and relating to the
examination and supervisi?n of national banking associationsa None of
the powers vested in the office of the Comptroller of the Currency prior
to the enactment of the Federal Reserve Act were tr~nsferred to the Fed-.
eral Reserve Board and accordingly it has been found that the duties
and powers of the Federal Reserve Board and the Comptroller of the
Currenct have resulted either in duplication of effort and expense or in
a real conflict of purpose.
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For instance, while the Comptroller of the Currency has supervision
over the enforcement of ~11 of the provisions of the National Banking
Pet and has power to regulate the operations of national banks in
the exercise of many of the powers conferred by the National Banking
Pet, nevertheless the Federal Reserve Board has complete jurisdiction
over not only the operation of Federal reserve banks but also the exer-
cise of all of those powers conferred by the Federal Reserve .Act upon
member banks, including national banks. The power to make acceptances,
conferred upon all member banks by the terms of Section 13 of the
Federal Reserve .Act is one which is solely within the jurisdiction
of the Federal Reserve Board. The power of national banks to make
loans upon real estate, a power conferred by Section 24 of the Fed-
eral Reserve Act, is also one subject to regulation and jurisdiction
of the Federal Reserve Board. So also the provisions of Section 22 •
of the Federal Reserve .Act limiting certain relations between direc
tors, officers and employees of member banks with those member banks
comes within the jurisdiction of the Federal Reserve Board and not
the Comptroller of the Currency. Section 21 of the Federal Reserve
Act while authorizing the Comptroller of the Currency with the ap
proval of the Secretary of the Treasury to appoint examiners and make
ex8minations of national banks, specifically authorizes the Federal
reserve banks, with the approval of the Federal Reserve Board, to
provide for special examinations of member banks within their districts.
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Numerous provisions of the Federal Reserve Actt therefore,
hBve res1..1.lted etther in actual or potential duplication of ~he powers
and duties of the Comptroller 1 s office. This division of responsibility
has led to confusion and misunderstanding throughout the country. Many
banks desiring information on this, that or the other power conferred
upon them by law, write to the Comptroller of the Currency for ad-
vice and information only to be referred to the Federal Reserve Board
because the power in question was one conferred by the Federal Re-
serve Act. On the other hand other national banks frequently write to
the Federal Reserve Board for information on matters coming solely
within the jurisdiction of the office of the Comptroller of the Cur-
rency.
Independently of these questions of operation, the real
objection to the present organization of the Federal Reserve Board . and the Comptroller's office is that with reference to examinations.
The National Bank Act requires that the Comptroller of the Currency
shall make at least two examinations each calendar year of each na
tional bank. There is no provision in the law which requires the Cornp-
troller of the Currency to make examinations in emergencies of those
banks about which the Federal Reserve Bank may desire information
or to furnish Federal reserve banks with the information obtained
as a result even of the regular examinations.
The Federal reserve banks as lenders of credit are directly
and intimately concern~d in the operations and soundness of their
member banks. They should not only be entitled but should be assured
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of all information resulting from an examination of those banks.
The ti.m~, inconvenience c:m~:l ex;e:nse involved in making examint:\-
tions are such that Federal reserve banks should not be required
or expected to exercise their power to make independent examina.-
tions so long as the office of the Comptroller of the Currency is
required by law to make not less than two such examinations a year.
The only logical conclusion is to have those examinations now re-
quired to be made by the Comptroller available in every way for the
use of the Federal reserve bank of the district in which the national
bank is located.
House Bill 4906 proposes not only to abolish the office
of the Comptroller of the Currency but with certain minor exceptions
to transfer to the Federal Reserve Board all of the powers of the
Comptroller, those relating to the enforcement of the provisions
of the National Banking Act as well as those providing for the ex~
ination of national banking associations. The result.of such a
trensfer will be that the Federal Reserve Board v~ill have jurisdic-
tion over the enforcement of a~l of the provisions of law relating
to national banking associations, not only those which new come within
its own jurisdiction but also those which come with in the jurisdic-
tion of the Comptroller of the Currency. This centralization of
responsibility is both logical and necessary. It will also mean
that all of the examinations of national banks will be made by or
under the supervision of the Federal Reserve Board and will there-
fore be available always for the use of the Federal reserve ba.nk
. through the Federal reserve agent who is the local representative
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of the Federal Reserve Board at the barik.
While the proposed bill is :purposely made sufficiently broad
to :permit the Federal Reserve Board gradually to develop its own
method of effecting the examinations now required by law, never-
theless it is probable that the Board will appoint a head examiner
to act as the heaci of its examining bureau; and the head examiner
will be located in 1~ashington; that the examinations in the various
districts will be made under the direct supervision of chief exam-
iners located in each of the districts; that the offices of the
chief examiners in each district will be located on the premises
of the Federal reserve baruc and that while orders and instructions
to these chief examiners in the field will come direct from the
head examiner in Washington, nevertheless the Federal reserve agent
who is the Board's local representative at each hank, will have
complete access to all of the records of the local chief examiner
and will also be given·authority from time to tirr.e to require the
chief examiner to make special examinations of any batiks about
which the Federal reserve bank may desire particular information.
The ability of the Federal reserve agent to coo~erate officially
and ultimately with the office of the chief examiner in his district
will perhaps do more than any one other thing to promote effectiveness
in examination and efficiency in the OT,Jeration of the Federal Re-
serve System. The only legal power of the Comptroller of the
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Currency at the present time is to ap~oint a receiver for and
close any national barik which may be in difficulty, but the pro-/
posed point of c~1tact between the Federal reserve agent and the
local chief examiner will make possible a cooperation between
the examining force and the lending power of the Feder&l reserve
ban1:s that will often result in revivifying a barik that rnigh t
otherwise l:ave to be closed by the com:otroller. In fact, one
of the chief purposes of a Federal reserve bank is to rr~:e li~uid
the assets of one of its n,embers which is in need of ready cash.
Since tre examination of the assets of any member bank is the
only satisfactory method of determining the amount and character
of its assets which are eligible for rediscount by a Federal re-
serve bank, unless trere is a close cooperation between the
examining force and the Federal reserve bank it might be difficult
or impossible for the Federal reserve bank in err.ere;encies to know
how far or to what extent it might be able to afford assistance.
It is to give tris ~nfor~ation to the Federal reserve bank
immediately in cases of need that the ~ending bill provides rr.eans
whereby the examining force and the representatives of the Federal
reserve banlr may operate in unison, although supervision and
control over the examinin~ force will always be exercised by the
Federal Reserve Board, either directly or indirectly in cases of
err.ergency, throu§h its local representative the Federal reserve
agent.
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There are other rratters such as the right to charter new
national bariks or to renew the charters of existing ones that properly
should c erne within the jurisdiction, not of one individual, the
Comptroller of the Currency, as at present, but of the Federal Re-
serve Board, a body of men having the responsibility for the opera-
tion of the banking system as a whole. Rut these rr.atters are of les-
ser importance as COITJ?ared with the necessity of promoting a cen-
tralization of control and res?onsibility for the examinations and
operations of no. tional banl:s in one body, not in two as is the case
at present. Furthermore, the saving in expense to the Treasury
should not be overlooked for the salary roll of the Comptroller's
office alone amounts to approximately ~200,000 per annum. Under
the proposed bill this expense will be assumed by the Federal Reserve
Foard and will be assessed against the Federal reserve banks.
Inasmuch as the pro1)osed bill provides for the abolition
of the office of the Comptroller of the Currency, it was found ne-
cessary to effect a reorganization of the Federal Reserve Foard by
providing for the apnointment by the President of six instead of
five appointive members. Section 2 creates the office of Under
Secretary of the Treasury who is to be a member of the ~card ex-
officio in ylace of the Secretary of the Treasury who is now a member
ex-officio. This will .rr.ean that the -r:oard will be comoosed of seven
members as at present, but that there will be only one ex-officio
member. In order that the terms of the appointive rrerrbers may exnire
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at regular li1tervals it is necessary to increase the term of office
of each from 10 to 12 years. It is also provided that at least
three of the ap•1ointi ve members shall be men experienced in banking
or finance instead of two as.at present. There are other features
of the bill wr ich are more rLatters of detail, but which are eviderlt
on its face.
For the convenience of the committee I have requested the
Federal Reserve ~oard to prepare a detailed analysis of all the
provisions of law, whether in the Federal Reserve Act or the National
ttanking !.ct which concern the Comptroller of the Currency with a
brief reference to the manner in which those provisions will be
disnosed of under the nroposed amendment.
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