frsbog_mim_v35_0438.pdf

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-

c c

(Third Tentative Draft - September 22, 1931.)

A BILL

To

amend Section

19 of the

Federal Reserve

Act , and for

other

purposes.

BE IT ENACTED BY THE SENATE AHD HOUSE OP REPRESENTATIVES OF THE

UNITED STATES 01 AMERICA IB CONGRESS ASSEMBLED, That Section 19 of the

Federal Reserve Act (United States Code, Title 12, Sections 461 to 466,

inclusive, and Section 374) , a s amended, be further amended an d reenacted

to read a s follows:

BAHK RESERVES

Section

19 . ( a )

Each member bank sh al l e s t ab l i sh

and

maintain

r e -

serves equal

to

f ive

p e r

centum

(5$) of the

amount

o f i t s n e t

deposits,

p l u s f i f t y

p e r

centum

(50$) of the

amount

o f i t s

dai ly debi ts;

bu t , in no

event, shall th e aggregate reserves required to be maintained by any mem-

b e r bank exceed thirteen p e r centum (13$) of i t s gross deposits.

(b ) Each member bank in a ci ty i n which a Federal reserve bank o r

a branch thereof i s located, or in any other city i n close proximity there-

t o designated by the Federal Reserve Board, shall maintain n o t le ss than

f o u r - f i f t h s

o f i t s

total required reserves

in the

form

of a

reserve balance

on deposit with th e Federal reserve bank: Provided, however. That, with the

permission

of the

Federal Reserve Board which

may be

granted, denied,

o r

revoked in the d iscret ion of said Board, banks i n outlying sections of such

c i t i e s may maintain n o t less than two-fifths of their total required reserves

in the form of reserve balances on deposit with th e Federal reserve bank.

Every other member bank shall maintain n o t less than two-fifths o f i t s total

required reserves in the form of a reserve balance on deposit with the Fed-

eral reserve bank.

The

remainder

of

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th e total required r6serves of each member bank, over and above th e amount r e -

quired to be maintained in the form of a reserve balance on deposit with the

Federal reserve bank, may, a t the option of such member bank, co ns is t e i th er

of a reserve balance on deposit with t h e Federal reserve bank, or of cash

owned

by

such member bank

o n i t s

premises

or in

transit between such member

bank and the Federal reserve bank.

(c) The term

1

gross depo si ts ' , within th e meaning o f this section,

shall include a l l depos i t l i ab i l i t i e s of any member bank of any kind o r

cha racte r, incl uding demand depos it s, time dep osi ts , savings accounts, time

c e r t i f i c a t e s o f deposit, postal savings deposits, deposits o f public moneys

of the United States or of any St at e, county, ci ty , town, vi ll ag e, municipal-

i t y o r po li ti c al subdivision there of, ce rt if ie d checks outstanding, cas hie rs' ,

t r easu re r s '

and

other officers' checks outstanding, cash letters

of

credi t ,

tr av el er s' checks outstanding,

an d a l l

o ther s imi lar l iab i l i t ies ,

a s

further

defined

and

speci f ied

by the

Federal Reserve Board.

n

(d) The term ' n e t depos i t s ' , a s used in this section, shall mean

th e

amount

of the

gross deposits

of any

member bank,

a s

above defined

and

a s further defined by the Federal Reserve Board, minus the sum of ( 1) a l l

balances due to such member bank from other member banks in the United

States and their domestic branches, and (2) checks and other cash items i n

process

of

collection which

a r e

payable immediately upon presentation

in the

United States, within th e meaning of those terms a s further defined by the


(e) The

term 'deb i t s ' ,

a s

used

i n

this section, shall mean

the

total daily amount of charges o r 'debits made by any member bank to any and

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a l l accounts included i n gross deposits a s above defined and as fu r ther d e -

f ined by th e federal Reserve Board, except charges resulting from th e payment

o f

cert i f ied checks

and

cas h ier s ' , t reasurers '

and

other officers' checks.

( f ) The term 'cash', within th e meaning of this section, shall

include gold bul lio n, gold coins, standard si lv er do ll ar s, subsidiary si lv er

coins, minor coins, United States notes, gold certificates, silver certifi-

cates, Treasury notes of 1890, nat ion al bank not es , Federal res erv e not es ,

and Federal reserve bank notes, lawfully coined o r issued under t h e laws of

th e

United States,

a s

further defined

by the


(g) The teim

T

r e serve balance *, as used i n this section, shall mean

a

member bank's actual

n e t

balance

on the

books

of the

Federal reserve bank

representing actually collected funds available f o r immediate withdrawal

o r f o r

reserve purposes under regulations prescribed

by the

Federal Reserve

Board.

(h ) With re spec t to each member bank, th e term 'Federal reserve

bank' , a s used i n this section, shall mean th e Federal reserve bank o r branch

Federal reserve bank of the d i s t r i c t i n which such member bank i s located.

( i ) For the purpose o f computing an d maintaining th e reserves r e -

quired by t h i s secti on , each member bank an d each branch of a member bank

shal l b e deemed to be a sep arat e bank# Each branch o f a member bank shall

maintain

i t s

reserve balance

on

deposit with

t h e


o r

branch Federal reserve bank of t he d i s t r i c t i n which i t i s located, unless

th e Federal Reserve Board, i n i t s discret ion, directs that i t s reserve

balance be maintained on deposit with t h e Federal reserve bank o r branch

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Federal reserve bank of the dis tr ic t i n which th e parent bank i s

located.

( j) The

Federal Reserve Board

i s

authorized

and

empowered

t o

prescribe regulat ions defining further

the

various terms used

i n

this

Ac t ,

fixing periods over which reserve requirements

and

actual

r e -

serves

may he

averaged, determining

th e

methods

by

which reserve

requirements

and

actual reserves shall

be

computed,

and

prescribing

pena l t i e s

f o r

def ic iencies

i n

re se rv es. Su.cn re gu la ti on s

and a l l

other lawful regulations

o f the

Federal Reserve Board shall have

the

force

and

e f f e c t

of law and the

courts shall take judicial notice

of

them.

(k )

Subject

to

such regulations

and

penal t ies

as may be

prescribed by the Federal Reserve Board, any member bank may draw

against

o r

otherwise uti l ize

i t s

reserves

f o r t h e

purpose

of

meeting

existing liabilities: Provided, however. That,

i f a

member bank

in a

c i ty i n which a Federal reserve bank o r branch thereof i s located,

or in any

other ci ty

i n

close proximity thereto designated

by the

Federal Reserve Board, shall fail

f o r s i x

consecutive business days

to

maintain

th e

reserves required

by

this section,

or i f a

member

bank

in any

other ci ty shall fai l

f o r

twelve consecutive business

days

t o

maintain

th e

reserves required

by

this section,

th e

d i r e c -

tors

of

such bank shall

be

jo in t l y

and

severally l iable

for any and

a l l

losses

to

such bank arising

out of any new

loans

o r

investments

made following such periods of continued deficiencies and pr io r to

th e res to ra t ion o f i t s reserves to the amount required b y this

A c t .

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( 1 ) A l l penal t ies f o r deficiencies i n reserves which a r e here-

after incurred under regulations prescribed

by the

Federal Reserve Board

pursuant to the provisions of th is Act shal l be paid to the Federal reserve

bank by the member bank against which they a r e assessed.

(m ) Whenever, in the judgment of the Federal Beserve Board such

action i s necessary to protect t h e gold reserves of the Federal Reserve Sys-

tem, the Federal Reserve*Board, i n i t s discret ion and upon t h e aff i rmative

vote of f i v e o f i t s members, may require any o r a l l member banks to pay

and

deliver

to the


any o r a l l

gold coin, gold bullion,

and

gold certificates owned

by

such member bank

o r

banks. Upon re cei pt

of

such gold coin,- gold bullion o r gold cer t i f icates , t h e Federal reserve bank

shal l pay therefor an equivalent amount of other cash or shall give the

member bank immediate credit therefor i n i t s reserve balance, a t the op-

t ion of the member bank, and shal l p a y a l l costs of the transportat ion of

such gold bul lio n, gold coin, gold c e rt if ic a te s o r other cash, including

th e cost of insurance, (protecti on, and such other incidental costs as may

be

reasonably necessary.

(n) Ho member bank shall keep on deposit with any State bank o r

t rus t company which i s no t a member bank a sum in excess of t en pe r centum

of i ts own paid-up c ap ita l an d surplus.

(o )

Except with

t h e

permission

of the

Federal Reserve Board,

which may be granted, denied or revoked in the discret ion of said Board,

no

member bank shall

a c t a s t h e

medium

o r

agent

of a

non-member bank

in

applying f o r o r receiving discounts o r other credit accommodations from

a Federal reserve bank under t h e provisions of th is Act .

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11

( p ) Natio nal banks o r banks organized, under lo ca l l aws, loca ted

i n Alaska or in a dependency o r insular possession or any par t of the United

States outside of the continental United States may remain non-member banks,

and shal l in that event maintain th e reserves and comply with a l l t h e

other conditions provided by law regulating them prior t o t he enactment

of the Federal Reserve Act ; o r said banks may, with th e consent of the

Federal Reserve Board, become member banks

of an y one of t h e

Federal

R e-

serve Distr icts , and shal l i n that event take stock, maintain reserves,

and be

subject

t o a l l t h e

other provisions

of

th i s

Act .

(q) The provisions of Section 7 of the First Liberty Bond

Act , approved April 24, 1917, Section 8 of the Second liberty Bond Act ,

approved September 24, 1917, and Section 8 of th e Third Liberty Bond

A c t ,

approved April

4, 1918 (U.S.

Code, Title

31 ,

Section

771)

which

exempt deposits

of

public moneys

by the

United States

i n

designated

d e -

positaries from

t h e

reserve requirements

of

t h i s

Ac t and a l l

other acts

o r par t s of acts i n conflict with this Act a re hereby repealed only in

s o f a r a s they a r e i n conflict with t h e provisions of th i s A c t .

Section 2 . This Act shall become effective s i x months after

i t s approval by t he President of the United States.

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