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7/17/2019 frsbog_mim_v04_1914.pdf http://slidepdf.com/reader/full/frsbogmimv041914pdf 1/6 TOR RELEASE IN MORNING PAPERS. JANUARY 14, 1917. PRESS STATEMENT. January 13, 1917. After having given much attention to the problem of con- trolling and. regulating the gold supply of the United States and to the question of bank reserves in general, the Federal Reserve Board, has prepared and transmitted to the Chairmen of the Committees on Banking and Currency of the Senate and House of Representatives recommendations for the amendment of the Federal Reserve Act. While it is not deemed desirable to give out the text of the amendments transmittedj since they will probably soon be introduced in Congress the following general statement concerning them is made public. When the Federal Reserve Act was drafted its principal object was to deal with national problems of banking and currency. Since its enactment financial and economic conditions in the United States have undergone far-reaching changes which were not foreseen three years ago. The United States has grown to be a world power in financial affairs and it seems necessary that the Act,which has proved of such great value in the treatment of our dotiiestic problems should now be amended in order to enable us to deal effectively with the new international problems which seem destined to play so import ant a part in our economic life. The banking system of the United States should be prepared to meet effectively two conditions of op- posite character - one, the excessive and uncontrolled inflow of gold, the other the excessive and unregulated outflow of gold. The amendments proposed are designed to provide means of controlling an over-extension of loans based on new accretions to our gold stock and to provide for the mobilization and concentration of the gold holdings of the United States so that the flow of gold back into Europe, or to South America or to the Orient, may be arranged with- out forcing any violent contraction of loans or causing undue dis- turbance to legitimate business. Of approximately two and three-quarter billions of gold in this country there are held or controlled by Federal reserve banks about $736,000,000, of which Federal reserve agents hold $283,000,- 000 as security for Federal reserve notes outstanding, and $453,- 000,000 is reserve money and must therefore be used conservatively. But even assuming that the Federal reserve banks were willing to re- duce their gold reserves to 40$ of their deposits and note liability
Transcript of frsbog_mim_v04_1914.pdf
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TOR
RELEASE
IN
MORNING PAPERS. JANUARY
1 4 , 1 9 1 7 .
PRESS STATEMENT.
Janua ry
1 3 , 1 9 1 7 .
Afte r hav ing g iven much a t ten t ion
t o t h e
problem
o f c o n -
t r o l l i n g
and.
r e g u l a t i n g
t h e
gold supply
of t h e
Uni ted S ta te s
a n d
t o t h e
q u e s t i o n
of
bank reserves
i n
g e n e r a l ,
t h e
Federa l Reserve
Board,
h a s
p r e p a r e d
an d
t r a n s m i t t e d
t o t h e
Chairmen
of t h e
Committees
on
Banking
a nd
Currency
of t h e
Sena te
and
House
of
R e p r e s e n t a t i v e s
recommendations
f o r t h e
amendment
o f t h e
Federa l Reserve
A c t .
While
i t i s n o t deemed des irable t o g ive o u t t h e t e x t o f t h e amendments
t r a n s m i t t e d j s i n c e t h e y w i l l p r o b a b ly s oo n
b e
in t r o d u c e d
i n
Congress
t h e
fo l l owin g gen e ra l s ta tement conce rn ing them
i s
made publ ic .
When
t h e
Federa l Reserve
Ac t was
d r a f t e d
i t s
p r i n c i p a l
o b j e c t w a s t o dea l wi t h na t i on a l problems of bank ing an d cur rency .
S in c e i t s e n a c tm e n t f i n a n c i a l an d economic condi t ions i n t h e United
Sta tes have undergone fa r - reaching changes which were
n o t
f o r e s e e n
three yea r s
a g o . T he
Uni ted S ta te s
h a s
grown
t o b e a
world power
i n
f i n a n c i a l a f f a i r s
a n d i t
seems necessa ry tha t
t h e
Act ,which
h a s
proved
of
such grea t va lue
i n t h e
t r e a t m e n t
o f o u r
dotiiestic problems
should
now be
amended
i n
o r d e r
t o
e n a b l e
u s t o
d e a l e f f e c t i v e l y w i t h
t h e n e w in te rna t iona l p rob lems which seem des t ined t o p l a y s o import
a n t a p a r t i n o u r e c o n o m ic l i f e . The banking sys tem o f t h e United
S ta te s shou ld
b e
p r e p a r e d
t o
m e e t e f f e c t i v e l y
tw o
c o n d i t i o n s
o f o p -
p o s i t e c h a r a c t e r
- o n e , t h e
e x c e s s iv e
and
u n c o n t r o l l e d i n f l o w
of
g o ld ,
t h e
o t h e r
t h e
e x c e s s i v e
and
u n r e g u l a t e d o u t f l o w
of
g o ld .
The
amendments proposed
a r e
des igned
t o
provide means
of
c o n t r o l l i n g
a n
o v e r - e x t e n s i o n of loans ba sed on new a c c r e t i o n s t o o u r gold stock
a n d t o p r o v id e f o r t h e m o b i l i z a t i o n an d c o n c e n t r a t i o n o f t h e gold
h o ld in g s
o f t h e
Uni ted S ta te s
s o
t h a t
t h e
f l o w
o f
gold back in to
Europe ,
o r t o
South America
o r t o t h e
O r i e n t ,
may be
a r r a n g e d w i th -
o u t
f o r c i n g
a n y
v i o l e n t c o n t r a c t i o n
of
l o a n s
o r
ca usi ng undue
d i s -
t u r b a n c e
t o
l e g i t i m a t e b u s i n e s s .
Of approx ima te ly two and t h r e e - q u a r t e r b i l l i o n s of gold i n
t h i s c o u n t r y t h e r e a r e he ld o r c o n t r o l l e d b y Federa l rese rve banks
about $736,000,000,
of
which Fede ra l r e se rve agen ts ho ld $283 ,000 , -
0 0 0 a s
s e c u r i t y
f o r
F e d e r a l r e s e r v e n o t e s o u t s t a n d i n g ,
an d
$ 4 5 3 , -
000 ,000
i s
re se rv e money
an d
mu st t h e r e f o r e
b e
us e d c o n s e r v a t i v e l y .
B u t even assuming that t h e F ede ra l r e se r ve banks we re wi l l in g t o r e -
duce t h e i r go ld re se rves t o 4 0 $ o f t h e i r d e p o s i t s an d n o t e l i a b i l i t y
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(which would b e reg a rd ed a s a minimum and i n normal times would
b e i n a d e q u a t e ) t h e amount of f r e e g o l d , i . e . , t h e amount of
gold tha t
t h e
Fed era l re se rv e banks would lose bef or e reac h ing
t h i s
40
o
minimum, would
be a
l i t t l e more t h an $ 3 7 5 ,0 0 0 ,0 0 0 .
Whi le th i s
i s a
v e ry l a r g e
s um i t s
s u f f i c i e n c y
c a n n o t
s a f e l y
b e
assumed when
we
c o n s i d e r
t h e
wide scope
o f ou r
t r a n s a c t i o n s
i n
w o r l d f i n an ce
a n d t h e
phenomenal growth
of our own
c r e d i t s t r u c -
t u r e
.
I t i s es t i ma t ed t h a t t h e re a r e no w i n t h e hands o f t he
p u b l i c , i * e . , o u t s i d e t h e T reas u ry a n d t h e banks , over e i gh t h u n -
d r ed m i l l i o n d o l l a r s i n gold an d gold c e r t i f i c a t e s , an d t h a t t h e re
a r e a t
p re s en t h e l d
i n t h e
v a u l t s
o f
member banks about $815,000,-
000 of
re se rv e money
of
which $540,000,000
i s
gold coin
o r
gold
c e r t i f i c a t e s . The re s ho ul d
b e
added
t o
t h i s e s t i ma t e ab o u t $ 6 0 0 , -
000 ,000 of lawful money i n t h e v a u l t s of nonmember State banks and
t rus t companies .
NOTE AMENDMENT.
The Federa l reserve no te , which i s an o b l i g a t i o n o f t he
Uni ted Sta tes secured by an ample reserve of gold an d commercial
p a p e r ,
i s
a c c e p t e d
a s
w i l l i n g l y
b y t h e
p u b l i c
a s a
nat ional bank
n o t e
o r a s a n y
other form
of
cu r r en cy ,
a nd t h e
publ ic does
n o t
d i s c r i mi n a t e b e t w een d i f f e r en t fo rms
of
Uni ted St a t es cu r renc y .
F e d e r a l r e s e r v e n o t e c i r c u l a t i o n h a s b e e n s u b s t i t u t e d f o r gold c e r ~
t i f i c a t e s t o t h e e x t e n t of about th re e hundred mi l l io n d o l l a r s .
' Under t h e p r e s e n t l a w th i s go ld i s d ep o s i t ed w i t h t h e
Fed e ra l r e s e rv e ag en t s i n redempt ion o f t he Federa l reserve no tes
i s s u ed ag a i n s t i t . T he no te s o prov ided f o r t h e r e b y i n e f f e c t
ceas es t o be an o b l i g a t i o n o f t h e Federa l reserve bank ; b u t a s
t h e gold does n o t f i g u r e a s an a s s e t o f t h e Federa l reserve banks ,
t h e Federa l reserve banks a r e u n ab l e t o show t h e g r e a t e r s t r e n g t h
which might b e ev idenced i f t h e l a w p e r m i t t e d , a s proposed i n t h e
amendments,
t h e
i s s u a n c e
of
Fed e ra l r e s e rv e n o t e s
n o t
only ag ai ns t
commercial paper ,
b u t
a l so aga ins t go ld
o r
a g a i n s t e i t h e r , p r o v i de d
always th at e very Fed era l re se rv e note must
b e
covered
b y a t
l e a s t
l o of
commercial paper
o r
g o l d ,
and
that there must always
b e
a go ld reserve o f n o t less than 40% a g a i n s t a l l o u t s t an d i n g Fed e ra l
r e s e rv e n o t e s .
RESERVES.
T he c o n t r o l of gold by Federa l reserve banks i n t imes of
abundance such a s a t p r e s e n t , w i l l d e c r e a s e t h e danger of i n f l a t i o n
of d o mes t i c c r ed i t s a nd a t t h e same t ime wi l l enable t h e country
when t h e t i d e t u r n s t o part wi th large sums of go ld wi t h l e ss i n -
conven ience
o r
shock , thus enab l ing
u s
mo re s a fe l y
a n d
e f f e c t i v e l y
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. t o proceed with t h e development o f o u r f o r e i g n t r a d e an d to
g i v e
t h e
ne c es s a ry c r e d i t f a c i l i t i e s
f o r i t s
e x t e n s i o n .
The
United Sta tes should
be in a
p o s i t i o n
t o
face condit ions which
may c a l l f o r a n o u t f l o w o f gold wi thout a n y d i s t u r b a n c e s of
o u r ow n o r t o t h e w o r l d ' s b u s i n e s s , and wi thout making neces-
sary dras t ic changes i n o u r i n t e r e s t o r d is c o u nt r a t e s . The
amendments suggested
b y t h e
Board
a r e
designed
t o
enab le
t h e
Federa l reserve banks
t o
wi thdraw gold f rom ac tu al c i rc ul a t i on
while enabling member banks a t t h e same time t o r e l e as e go ld
which a t p r e s e n t i s t i e d u p in t h e i r cw n v a u l t s . The amendments
a r e based upon t h e thec ry tha t a l l o f t h e indiv idual banks
shou ld s t r eng then
t h e
gold holdings
o f t h e
Federa l reserve banks.
The
c o u n t r y ' s h o l d i n g s
of
gold
a r e n o t
used mos t e f f ec t i ve l y
when they a r e i n t h e v a u l t s of a large number of banks sca t t e r ed
a l l over t h e coun t ry , b u t i t s g r e a t e s t u s e Would come from c o n -
c e n t r a t i n g
i t t o a
g r e a t e r d i g r e e
i n t h e
v a u l t s
o f t h e
Federa l
reserve banks, where i t c a n b e e f f e c t i v e l y p r o t e c t e d w h e n n o t
r e q u i r e d an d effectively ttsdd-when needed. The member bank
does n o t re qu ir e gold with which t o supply t h e ordinary demands
o f i t s d e p o s i t o r s s o much a s cur rency.
I t i s f rom th is poi n t of view that t h e Federal Reserve
Board h a s proposed that Congress increase t h e r equ i r ed r ese rves
t o b e m a i n t a i n e d b y member banks w i t h t h e Federa l reserve banks.
On November 1 7 , 1 9 1 6 , t h e cash hold ings o f a l l member banks
were about 815,000,000. Umder t h e proposed amendment o f Sect ion
19 ,$250 ,000 ,000 o f t h i s amount would b e t r a n s f e r r e d t o t h e F e d e r -
a l re se rv e ban ks. Hence t h e Bo
a
r d b e l i e v e s t h a t u l t i m a t e l y t h e
l a w shou ld r equ i r e of member banks n o more than t h a t th ey shoul d
m a i n t a i n i s p e c i f i e d b a l a nc e s w i t h t h e Federal reserve banks i n
amounts adequate t o supply t h e necessa ry r e se rve bas i s , an d tha t
t h e Federa l r e se rve banks mus t have s u f f i c i e n t r e se rve s of gold
>vith which t o p r o t e c t a l l o b l i g a t i o n s , b u t that there should ,
however,
b e n o
l ega l r equ i r emen t
a s t o t h e
amount
d f
cur rency that
a
member bank should carry
i n i t s own
v a u l t . T hi s
i s a
m a t t e r
of
bus in es s judgment th a t might we ll be l e f t t o t h e d i s c r e t i o n of
each member bank. I t w a s tho ught , however, th at i f t h i s p r i n c i p l e
w er e c a r r i e d i n t o f u l l e f f e c t a t th i s t ime , t h e step might b e
cons ide red t o o e x t r em e , p a r t i c u l a r l y u n de r p r e s e n t c o n d i t i o n s , and
nothing should
b e
done that might tend
t o a
f u r t h e r r e l e a s e
of
reserve money.
A minimum amount of cur r ency tha t t h e member banks
should b e r e q u i r e d t o keep i n t h e i r v a u l t s i s , t h e r e f o r e , p r e -
scribed.
The
amount suggested
i s 5 o f t h e
demand deposi ts,
so --•
t h a t t h e to t a l r equ i r emen t s - cash a n d r e s e r v e - wi l l r emain p ra c -
t i c a l l y unchanged. Whi le t h e e f f e c t of some o f t h e proposed
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changes wi l l b e t o reduce somewhat t h e re se rve re qu i re me n t s , t h e
r e s e r v e s w i l l h e inc re a se d b y t h e a b r o g a t i o n o f t h e p r a c t i c e
h i t h e r t o o b s e r v e d
of
coun ting i tems
i n
t r a n s i t
o r
f l o a t
a s r e -
s e r v e ,
The
permission given member banks
t o u s e
t h e i r
own
d i s c r e -
t i o n
a s t o t h e
c h a r a c t e r
of
c ur re nc y
i n
the i r va u l t s , w i l l e na b l e
them
t o
r e l e a s e
t h e
gold they
no w
hold , wi th
t h e
impor t a n t r e su l t
t h a t
t h e
s u b s t i t u t i o n
of
Federa l rese rve notes
f o r
gold
and
gold
c e r t i f i c a t e s w i l l
b e
f a c i l i t a t e d
b y
t h i s change
i n t h e l a w .
Wi th ou t some such change member banks w i l l co nt in ue
t o a s k f o r
g o l d c e r t i f i c a t e s
i n
small denominat ions, because
a s
long
a s
they must have gold
o r
lawful money
t o
count
a s
r e s e r v e
i t
would
be
imposs ib le
f o r t h e
banks
t o
exchange them
f o r
Federa l rese rve
n o t e s .
OTHER PROPOSED AMENDMEKTS.
Bes ides
t h e
proposed changes re la t ing
t o
note i ssues
and t o r e s e r v e s t h e Board h a s sugges ted a l so t h e fo l l ow ing :
Amendment of s e c t i o n 11 so as t o p e r m i t t h e Federal
Reserve Board
t o
ra i se re se rve re qu i re me n t s
i n
emerge ncies, ju st
as i t i s now empowered i n c e r t a in c on t inge nc i e s of a d i f f e r e n t
kind
t o
lower those requi rements .
This provision would. , i f adopted, enable t h e Federa l
Reserve Board
i n
prolonged per iods
of
extreme ease
i n t h e
money
marke t
t o
check
a n y
tendency toward excessive loans
o r
other
forms
of
undue extensions
of
c r e d i t .
Amendment of Se c t ion 16 t o permit nonmember State banks
and
tr u s t companies, even though
t o o
smal l
t o b e
e l i g i b l e
f o r m em -
b e r s h i p
i n t h e
Federa l rese rve banks ,
t o
a v a i l t he mse lve s
of t he
c l e a r i n g
and
c o l l e c t i o n f a c i l i t i e s
o f t h e
Federa l rese rve banks ,
provided that they cover a t p a r checks on themse lves sent f o r
c o l l e c t i o n b y t h e Federal reserve bank, and p rov ide d fu r the r t ha t
they keep
a
compensat ing balance with
t h e
Federal reserve bank
i n an
amount
t o b e
de te rmined under ru les presc r ibed
b y t h e
Fe de r -
a l
Reser ve Board , This
i s n o t
in tended
t o
o p e r a t e
as an
e x t e ns ion
of any of t he
p r i v i l e g e s
o f t he
Federa l rese rve sys tem
t o
nonmember
banks
a t t h e
expense
of
members,
b u t o n t h e
c o n t r a r y
t h e
amendment
i s
p ropose d p r ima r i l y
f o r t h e
convenience
o f t he
p u b l i c
and
i n c i -
d e n t a l l y f o r t h e b e n e f i t o f t he member banks. I t i s contemplated
t h a t t h e compensat ing balances which nonmember banks part ic ipat ing
i n t h e c l e a r i n g p l a n w i l l b e r e q u i r e d t o keep with Federal reserve
ba nks , w i l l b e s u f f i c i e n t l y l a r g e t o protect member banks a n d j u s -
t i fy Fe de ra l r e se rve ba nks i n undertaking, t h e s e r v i c e . Any c l e a r -
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m g a nd c o l l e c t i o n p l a n t o be e f f e c t i v e m us t be so comprehen-
s i v e a s t o i n c l u d e a l l checks . A t p r e s e n t t h e p a r l i s t s o f t he
Federa l reserve banks inc lude t h e names of banks checks on
which can bo c o l l e c t e d < i n an y c i r cumstances a t a minimum of time
an d expense j b u t d o n o t embrace a large number of towns i n every
Sta te where the re a r e n o member banks; and in o r d e r t o make c o l -
l e c t i o n s
on
such points many banks
a r e
o b l i g e d
t o
m a i n t a i n
a c -
counts
i n
a d d i t i o n
t o
t he i r r e se rve accoun t s wi th
t h e
Fede ra l
r e se rve banks . A n e c e s s a r y f a c t o r i n any s u c c e s s f u l c l e a r i n g
p l a n i s t h e o f f s e t , whereby ba lance s on ly r eq u i r e se t t l e me n t
i n s t e a d o f t h e to ta l vo lume of t r a n s a c t i o n s * As l o n g a s t h e
c lea r ing sys tem does
n o t
embrace
a l l of t h e
banks th i s o f f se t
i s
l o s t
i n a
cor responding degree
a n d t h e
v a l u e
o f t he
system
dimin i shed i n p r o p o r t i o n .
Amendment of S e c t i o n 2 2 t h e p e n a l s t a t u t e •* s o a s t o
de f i ne more c l ea r l y
t h e
r i g h t s
a n d
l i m i t a t i o n s
of
d i r e c t o r s
i n
t h e
m a t t e r
of
a c c e p t i n g f e e s
o r
compensat ion o ther than
t h e
o r d i n a r y f e e s p a i d d i r e c t o r s
f o r
l e g i t i m a t e s e r v i c e s r e n d e re d
i n t h e r egu la r cou r se of b u s i n e s s , t h e per formance of which
s e r v i c e i s n o t incumbent upon them i n t h e i r c a p a c i t y a s d i r e c t -
or s .
Amendment of S e c t i o n 13 t o r e s t o r e t h e p r o v i s i o n
which wa s by e r r o r s t r i c k e n f r o m t h e A c t i n t h e amendments of
September 7 , 1 9 1 6 , t h u s r e s t o r i n g t o n a t i o n a l b a n k s , w i t h t h e
app rova l o f t he Federal Reserve Board, t h e r i g h t t o a c c e p t up
t o 100% of t h e i r c a p i t a l a n d s u r p l u s i n t r a n s a c t i o n s i n v o l v-
i n g
impor ts
o r
e x p o r t s .
Amendment of S e c t i o n 17 t o cance l t h e p r o v i s i o n of
t h e
National Bank
A c t
which requires na t ional banks
t o
ma in -
t a i n
- a
minimum deposit
of
Government bonds with
t h e
Treasu re r
o f t h e Uni ted St a t es • Nat i onal banks a r e n o lon ge r r equ i r ed
t o
keep ou t s t and ing
a
minimum amount
of
c i r c u l a t i n g n o t e s ,
and
a newly organized bank i s n o t o b l i g e d t o pu rchase o r c a r r y any
bonds o f t he U n i t e d S t a t e s ; b u t t h e r e a r e a number of n a t i o n a l
banks organised before t h e p a s s a g e o f t h e Federa l Reserve Ac t
w hi ch h av e r e t i r e d t h e i r n a t i o n a l b an k c i r c u l a t i o n i n f u l l ,
y e t t h e y a r e , under a c o n s t r u c t i o n of t h e o l d l a w , r e q u i r e d t o
keep
on
d e p o s i t w i t h
t h e
T r e a s u r e r
o f t h e
U n i t e d S t a t e s ,
a c e r -
tain minimum of Uni ted Sta tes bonds. The Board fe e l s tha t i t
i s j u s t 1b th es e banks th a t they b e r e l i e v e d of t h i s o b l i g a t i o n .
Amendment
of
s e c t i o n
25 t o
authorize member banks
l o -
c a t e d i n c i t i e s of more than 100,000 populat ion a n d which have
7/17/2019 frsbog_mim_v04_1914.pdf
http://slidepdf.com/reader/full/frsbogmimv041914pdf 6/6
1919
967
- 6 -
% c a p i t a l a n d s u r p l u s cf more t l isS $1,000,000 t o e s t a b l i s h
%#*nches i n t h e same c i t y , p n v U M t h e Sta te laws d o n o t
p r o h ib i t S t a t e b a n k s
and
t r u s t companies f rom e s ta b l i s h i ng
b r a n c h e s .
Amendment
of
S e c t i o n
9 t o
a ut hor iz e mutua l savi ngs
banks n o t h a v in g c a p i t a l s t o c k t o become associate members of
t h e
Fede ra l r e s e rv e sys tem unde r c e r t a i n p r e s c r ib ed con d i t i ons .
The
p r i n c i p a l b e n e f i c i a r i e s
of
t h i s amendment would
b e t h e m u -
tua l savings banks
o f t he
e a s t e r n
and New
England S t a t e s , which
c a n n o t
become members
o f t h e
Fe der a l res e rve sys tem under
t h e
p r e s e n t l a w owing t c t h e l a c k of any pr ov i s i on en ab l ing them
t o
s u b s c r i b e
f o r
c a p i t a l s t o c k
of a
Fede ra l re se r ve bank,
a s
they have
n o
c a p i t a l i z a t i o n
of
t h e i r
own
upon which
a
p e r c e n t a g e
could
b e
ba se d. They would
b e
r e q u i r e d
t o
c a r r y
a
r e s e r v e
b a l -
ance with
t h e
Fe de ra l r e se rve bank ag a in s t th e i r t ime dep os i t s
i n t h e
same propos t ion
a s
member banks;
a n d t h e
accommodations
proposed f o r mutual savings banks a r e l im i te d s t r i c t l y t o t h e
d i s c o u n t
of
t h e i r t h i r t y - d a y o b l i g a t i o n s p r o p e r l y s e c u r e d .
Amendment
of
S e c t i o n
18 so a s t o
g i v e
t o
United
S ta t e s o n e - y e a r
3%
gold no tes
i n t h e
hands
of
Fede ra l r e se rve
banks t h e c i r c u l a t i o n p r i v i l e g e f o r t h e i s s u a n c e of F e d e r a l r e -
se rv e bank no t e s , such c i rc u l a t io n t o be taxed a t t h e same rate
a s ' . c i r c u l a t i n g n o t e s , w h ic h
a r e
s e c u r e d
by 3$
bonds
o f t he
U n i t e d S t a t e s .
I n t h e
op in ion
o f t h e
Board
i t i s
d e s i r a b l e
t o
e x t e n d t h i s p r i v i l e g e
t o t h e
Federa l rese rve banks
i n
order
th a t t h e y
may
have ad di t i on a l means
of
p r o t e c t i n g t h e m s e lv e s
a t times when there i s an unusual demand f o r cur rency .
Amendment
of
S e c t i o n
4 t o
a b o l i s h
t h e
t i t l e
a nd o f -
f i c e
of
deputy Federa l rese rve agent , thus having
tw o
una t ta ched
Cla ss
"C"
d i r e c t o r s i n s t e ad
of one as a t
p r e s e n t ,
aid t o
c r e a t e
t h e
p o s i t i o n
of
a s s i s t a n t F e d e r a l r e s e r v e a g e n t ,
who
s h a l l
n o t
b e a d i r e c t o r o f t h e bank, b u t w h o s h a l l be a sa l a r ie d bonded
o f f i c e r i n t h e Federal reserve agent;
1
s depa r tment , s e rv ing a t
a l l
t imes
as an
a s s i s t a n t
t o t h e
Fede ra l r e se rve agen t
and
q u a l i f i e d
t o a c t f o r t h e
agen t
i n h i s
absen ce . Exper ience
h a s
shown that there
i s
d i f f i c u l t y
i n
f i l l i n g
t h e
o f f i c e
of
deputy
F e d e r a l r e s e r v e a g e n t . T hi s o f f i c e r
i s
r e q u i r e d
t o
have
t h e
s a m e q u a l i f i c a t i o n s a s t h e Fede ra l r e se rve agen t ; he must have
h a d bank ing expe r ience and he must n o t b e a n o f f i c e r , d i r e c t o r ,
o r
s t o c k h o l d e r
i n a n y
bank.
A t t h e
same xime
he i s no t a s a
r u l e
a
s a l a r i e d o f f i c e r ,
an d
rece ive s on ly
t h e
customary fees
p a i d d i r e c t o r s
f o r
a t tend ance upon meet ings ,
and he i s
obl iged
t o b e
p r e p a r e d
t o
assume
t h e
d u t i e s
o f t h e
Fede ra l r e se rve
agen t i n case o f t he absence o r d i s a b i l i t y of t h a t o f f i c e r ,
which involves a t r a n s f e r and a u d i t of s e c u r i t i e s and accounts .
I t i s b e l i e v e d t h a t t h e change sugges ted wil l opera te t o f i x r e -
s p o n s i b i l i t y m o r e d e f i n i t e l y
and
w i l l g iv e
t h e
Board more l a t i -
tude
i n t h e
s e l e c t i o n
o f t h e
Cla s s
u
C
lf
d i r e c to r s o th e r t h a n
t h e
Fede ra l r e se rve agen t .
