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l.

X-5093

L E G I S L A T I O ~ J RECOU£8I DE1D

The

Federal

Reserve Board

has heretofore

recomrnended

the

enactment

of S. 1989 and H. R. 6491 two bil ls pending

in the

present Congress, and

desires to renew i t s recornrnendation

that

these bil ls be enacted into law.

The third paragraph

of

Section 13

of

the Federal

Reserve

Act now

authorizes

Federal

reserve banks to rediscount or

purchase bil ls

of exchange

payable at

s i ~ h t or

on demand which are drawn to finance the

domestic ship-

ment

of

nonperishable,

readily

marketable,

staple

agricultural

products;

and S. 1989 would ~ n e n d

this

paragraph

in two respects: 1) t would

make

the provisions

thereof

applicable

to

bil ls

of

exchange payable at sight

or

on demand covering

not

only nonperishable,

readily marketable, staple,

agricultural products but also other nonperishable, readily

PJarketable

staples,

whether

agricultural or not; and 2) i t would make such sight

and

demand

drafts

eligible

for

rediscount

when drawn

to finance the ex-

portation

as well as

the

domestic shipment of non:c;erishable

readily

marketable staples. The

Board

has had

some

difficulty

in construing and

applying the term agricul tural produ cts

; and due to certain court de-

cisions defining similar terms, i t

has

been

constrained

to

rule that a

number of

products

such

as

cotton seed oil , flour,

bran, and

canned food

products

are

not

agricultural

products

within

the

meaning

of

the

statute.

The

Board

feels that these

commodities and other

nonperishable, readily

marketable, staples

are equally

as

good

security

for. sight and demand

drafts

as are products which are technically agricul tural products

and

also

that there is no good reason why

this

privilege should not

be

ex-

tended to

bil ls drawn to finance the exportation as well as the domestic

shipment

of

such products. The enactment

of

S. 1989 therefore, would

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-2-

X-5093

broaden

the

scope of

this

particular rediscount

faci l i ty of the Federal

reserve banks in a manner

beneficial

both

to

the member banks

of

the

FedeYal Reserve System and

to

our domestic and foreign o m ~ e r e in general.

H

R. 6491 would amend that part of Section 8

of

the

Clayton

Anti-

t rust Act which authorizes the Federal Reserve

Board

to permit

inter-

locking directorates between not more than three banks in the classes

affected by the Clayton Act,

provided that

such banks are not

11

in sub-

stantial

competi t ion

•

The

Board has found this :provision very diff i

cult

to

administer

anc1 experience

has

shown that i t sometimes defeats

the purpose for which i t was enacted, since i t

discourages

rather than

'

encourages o n ~ e t i t i o n

between

banks

and penalizes

those directors which

permit

their

ba1iks to compete. The runendment would authorize the Board

to permit

interlocking directorates

between

not

more

than three

banks

affected by the

provisions

of the Clayton Act whenever in the Board s

jud@nent

i t

is

not

incompatible with the public

interest

and would ex-

pressly

authorize the Board

to

revoke any such

permit

whenever

i t finds,

af ter reasonable

notice and

opportunity to

be

heard, that the

public in-

terest requires i t s revocation.

In

the

Board s opinion, such an

runend-

ment

would

be much more

effective

than

the

present

law

in

carrying out

the original intent of the

Clayton

Anti-trust

Act; and the Board desires

to

renew the recommendations cont.ained in i t s Annual Reports for

several

years

past that this amen nent be

enacted.

The

Board is

of

the

opinion

that

no major

amendments to the

Federal

Reserve Act are

necessary or

desirable,

but

desires

to

reconu:1end the

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3

following amenilinents concerning matters

of

detail which

have

arisen in

the

administration of

the Federal Reserve

System:

1)

A

amendment

to

Section

9

of

tho

Federal

Reserve

Act

to

~ e r r r i t

State

member

ba11ks

of

the Federal

Reserve System

to

have

foreign branches.

This section, as amended by the McFadden Act

~ p r o v e d

February 25 1927,

provides that

no

State

ba1lk

may

retain

or

acquire stock in

a

Federal re-

serve

bank except upon

relinquishment of

any

branch

or

branches estab-

lished af ter

February

25,

1927 beyond

the l imits of the city,

town

or

village

in

which the

?arent

baruc is

situated. I t

is obvious that

Congress

intended

to

deal with

domestic

branches, but the

language of

the act

is

so

broad that

i t

clearly

applies

to foreign branches

and

forbids any State

bank

to acquire or retain stock

in a

Federal reserve

bank

i f i t

has a

foreign branch established subsequent to February 25, 1927. The

McFadden

Act expressly provides that the

restrictions

on the establishment

of

branches by

national banks

shall

not

be construed

to affect

the

estab-

lishment by

national

b a r u ~ s

of branches

in

foreign countries, dependencies,

or

insular

possessions

of

the United States; but

no

exception

was

l J.ade as

to foreign branches of State 1nember banks of the Federal

Reserve

System.

There

is

no

justif ication for such

a

discrimination against State

member

banks, and

the

Board is of

the opinion that

the

law should be amended as

soon

as possible

so

as to

remove such discrimination3

2) An

amendment

to Section

4

of

the Federal

Reserve Act to

permit

an officer, director or

employee

of

a

mutual savings bank to serve as

a

Class

l3

director

or

Class C

director

of

a

Federal

reserve

bank. Section

4

6f the Federal

Reserve

Act

provides

that

no

Class E director

of

a Federal

reserve

bank

shall

be

an

officer,

director

or

employee

of

any

bank

and

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X-5093 _

no

Class

C

director

shall be

an

officer,

director,

e u ~ l o y e e or

s t o l ~ o l d e r

of

any bank;

and

the Attorney General has ruled that rrmtual savings ba ks

are banks

within

these

:provisions

of law and

that,

accordingly, an

officer,

director or

employee

of

a mutual savinGs bank may

not

be a Class

B

or Class

C

director of

a

Federal

reserve bank.

The

Federal

Reserve

Board

is thoroughly

in accord

with

the

principle that Class Band Class

C

directors should not

be

connected

with

co1rrnercial

banking institutions;

but there

is

no reason why this principle

should

alJPlY

to officers,

di-

rectors or

employees of mutual

savings

banks, which are essentially dif-

ferent

from

ordinary

commercial ba11king institutions and are not

permitted

to be members of

the

Federal

Reserve

System. A number of cases

have

arisen

in which persons

eminently

f i t ted

to serve

as

directors of

Federal re-

serve

banks were ineligible to

do

so

merely because of their connections

with mutual savings banks, and the Board feels that the

law

should

be

amended so as to exclude directors, officers, and employees of mutual

savings

banks from this

prohibition.

(3)

An amendment

permitting the cancellation of Federal reserve

bank

stock

held

by

member

banks which have gone

out

of

business

without a re-

ceiver or liquidating agent having been appointed therefor. The present

law

authorizes the surrender and cancellat·i.on of

l l

of the

stock

hold

by

a member bank

only

when such member bank ( goes

into

voluntary

liq_uida-

tion,

(2)

is placed in

the hands

of

a

receiver,

or (3)

withdraws

from the

Federal

Reserve

System either

voluntarily

or

invol mtarily;

and,

in

a

number

of

cases, Federal

reserve

banks have experienced

great difficulty

in

securing the surrender

of Federal

reserve

bank stock

held

by member

banks which

have

ceased

entirely

to

do

business but

which have

not

techni-

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4 ~

-5-

X-5093

cally gone into voluntary liquidation

or

into

the

haBds of receivers.

Under such

eircumstances, Federal

reserve

banlcs

have

sometimes

been

com-

welled

to

pay dividends in large amounts on stock held by banks which have

ceased

to

do business and ceased

to

maintain reserve accounts with them.

The Board believes

that

this situation should be remedied by

an

appropriate

amendment

to the

law

providing

means whereby

Federal

reserve bank

stock

held by such member banks

may

be

cancelled

and the proceeds paid to them.

(4)

n

amendment making i t discretionary with the Federal Reserve

Eoard

to assess

the

costs

of

examinins State

member

banks against the banks

examined. The

Federal

Reserve Board has been

handicaOJ::_Jed in i ts efforts

to

establish

a nore effective supervision of bariking by the fact that

the present law requires the

e } ~ e n s e s

of

l l

examinations of State member

banks made by the

Federal

Reserve

Board

or by the

Federal reserve

banks to

be

assessed

against the

banks examined. ~ ~ e

State

banks object to

bearing

the expenses of

such

examinations

on

the

ground that i t subjects them to

the expenses of

double examinations; since

they are also

required, either

directly or indirectly, to bear the expenses of

examinations

made by the

State authorities, whereas national ba11ks

only

have

to

bear

the

expenses

of

examinations

made

by

the

Comptroller

of

the

Currency.

As

a

result

of

this opposition, both the

Federal

Reserve Board

and

the

Federal

reserve

banks have

been reluctant to

mru{e

independent examinations of State

~ e r

banks

and

have had to rely very largely upon

re,orts

of

examinations made

by the State authorities. Such

examinations

frequently are inadequate for

the Board's purpose, since the

State

authorities

are

not

charged

with the

duty

of

enforcing

the

provisions of

the

Federal

Reserve

Act

and

do

not

consider i t

necessary

to broaden the

scope of their

examinations

so as

to

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6

disclose violations of the Federal Reserve Act. The

fear of having to bear

the expenses of double exruninations

has also

been frequently given as one

of the reasons why more State banks do not join the Federal Reserve System.

The

:Board, therefore, believes

that an

ar;1endr 1ent granting

i t

the

dis-

ctetionary

authority

to absorb the

expenses of such e x ~ ~ i n a t i o n s

to

permit

the Federal

reserve banks to absorb them,

or to assess

the ex-

penses

against

the banks examined when deemed necessary, would be

very

beneficial.·

5) An amendment exempting

Federal reserve

banks from attachment

or g a r n i s l l i ~ e n t proceedings before final j u d ~ e n t in any

case

or proceeding.

Under

the

provisions

of

Section 5242

of the

Revised

Statutes, national

barks are exempted from attachment,

injunction or

execution before final

judgment in any

case

or proceeding; and

the

Board feels that

the

law should

be amended so

as

to give

Federal

reserve

banks

the

same

protection

in

this

respect.

I t is conceivable

that

i f large amounts of the funds

or

credits

,\

of the Federal

reserve

banks should be

t ied

up

through

attachment or

·

, t

garnishment

proceedings

the a b i l ~ k . y of the reserve banks

to

meet the

credit needs of

the

country might be

seriously

hampered.

6)

A amen nent to the Judicial

Code

restoring

to

the United States

District

Courts

jurisdiction of suits by and

against

Federal

reserve

banks.

Formerly, the Federal courts had jurisdiction of such suits , because the

F e d e ~ a l

reserve

banks were

incorporated

under

an act

of

Congress; but

S e ~ t i o n 12 of the Act

of

February 13, 1925, provides that

no

distr ict

court of the United States

shall

have jurisdiction

of

any action or suit

by or

against

any corporation upon

the

ground

that

i t was incorporated by

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7

X-509 _3

cr under an act of

Co:1cress,

e;;:ceut co:nor2,tio:.1s

in :1ich t:1.e

Government

of

the

United States is the mmer of 1..:o:ce than one-hc:clf of the ca-.Ji

ta l

stock. I t

is not believed that Concress

ho,d

the

FeC.eral reserve baill{s in

mind

when

i t

e:.1acted this ame:1.dment,

but the c'I:le:ldDEmt deprives the United

States District Courts of jur isdict ion of a l l

suits

by or acainst Federal

reserve ba:.1ks unless a question involving the

L1 1iGryretation

of

the

Con-

s t i tut ion of the United States or

some Fed.eral s tatute

is ra ised

by

the

orir;inal

~ o l e a d i n r ; s

of

the

plair . t i f f .

The

Federa.l

reserve

banks

frequently

have to

re ly

upon the

r o v i s i o ~ s

of the Federal Reserve Act or

the

Re5ula-

tions

of the Federal Reserve Board

in

defenC:i l£ suits brought

against

them;

but

this

i s not

a

gruu::J.d uf original

jur isdict ion

in the United States

Distr ict Courts. : 1ha Federal reserve banks are thus forced to defend in

the State courts suits which

turn

upon essential ly Federal questions. Not

infrequently

the

judges

and

jur ies

in

the

State

courts

are

unreasonably

prejudiced against or host i le to the Federal

reserve

banks and i t is

some-

times diff icult

for them to get

fa i r

t r i a l s in

the

State

courts . Unlike

national baru:s, they can not

reBove

suits

brought acainst

them

by persons

I

located in other States to

the United States

Dis tr ic t

Courts

on

the

ground

of

diversi ty

of

citizenship, because the

Supreme Court

has held

that a

Federal corporation is not

a ci t izen

of

any

State, and there is

no

pro

vision in the Federal Reserve Act similar to

that

in the National

Ba11k

Act

providing that

they shal l be

deemed

ci t izens

of the

States in which they

are located. Section 12 of the Act of February

13,

1925,

makes an

e ~ c e p t i o n

in the case of cor

Jorations in which

the

Government

of the

United

States

is the owner of more than one-half of

the

ca:_)i t l stock;

and

i t would seem

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L

' ) P 'l' :

U U f . ~ •

-8-

X-5093

that

the same exception should be

extended

to cover Federal reserve banks,

since ti1ey act

as

f i sca l agents and

sub-treasuries

and perform many other

important

functions

for the Government.

Moreover,

the excess earnings of

the

Federal reserve

banks are payable

to the United

States

in the form

of

a francl1ise tax and, in the event of the l iquidat ion

of

the Federal r.e-

serve

banks,

a l l

of the i r su:c-rlu£>, which amounts to

al)proximately

twice

their

capi ta l stock, would become the -property

of

the United States.

For the

protection of

the Federal

reserve

l::anks

and

for

the

protect ion of

the in teres ts of the

Government in

them, i t is believed that the law

should be amended so

as

to restore

to

the

United States is tr ict Courts

jur i sd ic t ion over sui t s brought by and against Federal reserve banks;

and

the Board strongly recommends

the

enactment of

such

an

amendment.

The

Treasury Department has expressed the opinion that such an amendment should

apply

also

to

Federal

Land

Banks

and

Joint

Stock

Land

Banks.

(7)

An

amen nent to Section 13 of the

Federal

Reserve

Act increasing

from f i f teen

days

to

ninety

days

the maximum maturi ty

of

advances made. by

Federal

reserve

banks

to

member

banks

on their promissory notes

secured

by paper el ig ib le for

rediscount

or for purchase

by

Federal reserve banks.

Such an

~ n e n d m e n t

was

suggested

to

the

Board

under

date

of October 31,

1 ~ 2 5 by Honorable L. T. McFadden, Chairman of the ::SanJ:dng and Currency

Committee

of the House of

Representat ives, and

was

favored

by

the

:Soard

after very careful consideration and

af ter

consultation with the Federal

R e s e ~ v e Agents and

the

Governors

of

the Federal

reserve banks.

I t would

save

rauch trouble and expense to both the member banks and the Federal

reserve banks,

since

i t would

eliminate

the necessity of l i s t ing separately

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-9-

X-5093

the various pieces of eligible paper offered as

collateral

and

would at

the

same

time

eliminate

the

necessity

of

frequent renewals. t

would be

espefial ly

helpful

to country batiks which are

now deterred

by the neces

si ty of frequent

renewals

fron using this more convenient form of

borrowing fron the Federal reserve banks.

The

Eoard is of

the opinion

however, that the

maturity

of

promissory

notes of member

ba ks

secured

by Government bonds should not be extended beyond fifteen days since

i t

is

theoretically

unsound to

perillit the issue of

Federal

reserve notes

against

promissory notes secured by Government bonds

as

collateral.

Proposed forms of bil ls to effect each of

the

tlendments recom-

mended above

are

published

in the appendix to

this Report.

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DRAFTS OF

BILLS

TO EFFECT

A.'I ENDMENTS

RECOMMENDED IN

THIS REPORT.

l

X 5093 a

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(41)

A

:BILL

L

X-5093-a

To amend

section

9

of the Federal

ReGerve Act alid

for other p u ~ ; o s e s

E IT ENACTED :BY T1 :::E SEI:ATE .AJ.;n HOUSE

OF

P:ill?3.ES:Bl7T.A.T 'V".8S OF THE

Ulr ::::.ED

STATES OF AHERICA

IN COUGP3SS

.ASS:ill.::BLED,

Tl1at

the

s e c o ~ 1 d

_;>ara-

graph

of

section 9

of the Federal

Reserve

Act oe amended by

changing

the

period at the end thereof

to a

conma

a.nd by adding the

following

words:

provided, however,

that the

esta blisbmont

or operation

of any

branch

or branches

in

a

foreign

country or dependency

or

insular

possession of

the

United States shall ~ o t

affect

the

right

of

any such State baruc to

retain

or acquire stock in a Federal

re

serve

bank.

11

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(

2.

if

.A

:SIL1

X 50 93 a

35C

...

To amend Section 4

cf the

Federal f.e;:;erve

.Act

a.nd

for

other pur"t_':'Oses.

:.SE

IT

ENACTED :SY THE SENATE lUJD

HOUS3

OF

REPBES::c:aTATIVJJS

07 TIQ: m;ITED

STAT .SS OF . U£EiiiCA HT CQ}TGRESS

.ASSEl.i:BL:SD, That

Section

4 of

the .Act approved

Dece1::.ber

23,

1913, lmown as the Federal

Reserve Act,

as amended, be

further

m e ~ d e d

by striking out

that

part of said

section

which reads as follows:

No

director of Class B

shall be an officer,

director

or

employee

of

any

bank.

No director of Class

C

shall

be

an

officer,

director,

er.:rployee or

stocld1older

of any

bank.

And by substituting therefor

the

following:

11

Ho director of Class

:S

shall be an

officer,

director,

or

e ~ ~ l o y e e

of

any batik, other than a

mutual

savings baruc

not

having

a capital stock represented by

shares.

No

director of Class

C

shall

be

an t ff icer, director,

employee

or

stockholder of

any bank,

other

than

a

mutual

savings

bank

not having

a

capital stock

represented

by shares.

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l

A :BILL

X-5093-a

To

amend

Section

6

and Section

9

of the Federal Reserve

Act

and

for other p U ~ o s e s .

:BE IT ENACTED :BY TilE SENATE A:m HOUSE OF P E P B Z S 3 T T i ~ : : I V E S OF TEE

UNI : :ED

STil. rES

OF

A l i ; ~ I C A

IN

CONGRESS .ASS:3MBLED, That Section

5

of

the

Act

of

December

23, 1913,

known

as

the

Federal Reserve

Act be

amended and

re-enacted to

read· as follows:

11

Sec.

6. If any member bank shAll be declared insolvent and

a receiver appointed tncrefor, the stock h e l ~ by i t in said Federal

reserve

bank shall be canceled,

without

imyairraent of i t s ia

bili ty, and al l

cash-paid

subscriptions

on

said

stoCk, with

one

half

of one

per

centum

per

month from

the period

of las t dividend,

not to exceed the book value thereof, shall be

f i rs t applied

to

al l

debts of the insolvent member

ba<1k

to the Federal reserve bank,

and the

balance, i f

any,

shall

be

paid

to

the

receiver

of

the

in

solvent bank.

If

any

national

bank which

has

not

g o ~ 1 e into

l iquidation

as

provided

in

Section 5220 of the Revised Statutes

and for

which a

receiver has not

already

been appointed for other lawful cause,

shall discontinue

i t s banking

operations for a period of 60 days

the Comptroller of the Currency may, i f he deems i t advisable,

appoint a receiver for such

bank.

The

stock held by the said na

tional bank in the Federal

reserve

ba11k

of

i t s

distr ict

shall

thereu?on be

canceled and

said

national

bank

shall

receive

in

pay

ment

therefor,

under regulations

to

be

prescribed

by

the

Federal

Reserve Board,

a ~

equal

to

i t s cash

paid

subscriptions

on

the

shares canceled and one-half

of

one

per

centum a month from

the

period

of

the

las t dividend, not to

exceed

the book value thereof,

less ~ r

l iabi l i ty of such national bank to the Federal reserve

bank.

Whenever the capital

stock

of a Federal reserve bank is re

duced either on account of a reduction in capital stoCk of any

oember bank

or

of the liquidation or insolvency of such bank

t r

on

account of

the

appointment

of a

receiver for

a

national

bank

following discontinuance of

i t s banking operations

as provided

in

this section, the

board

of

directors shall

cause

to be executed

a

certif icate

to the Comptroller of the Currency

showing

such

re

duction of capital stock and the amount repaid to such bank.

11

Sec. 2. That the

eighth

paragraph of

Section

9 of

the

Federal Re

serve Act

as

amended be amended

and

re-enacted te

read

as

follews:

f

at

any time i t shall appear to the Federal

Reserve

~ o r d that a member patik has failed to comply with the provisions

of this section or the regulations of the Federal

Reserve

Board

made

pursuant thereto, or

has ceased

to exercise banking

functions

without

a

receiver or

l iquidating agent having been appointed

there

for, i t

shall

be

within

the

power

of the

board

after

hearing

to

re

quire

such

barik

to

surrender

i t s

stock

in

the Federal reserve barik

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it.3a)

and to forfeit l l rights and privileges of m e m ~ e r s h i p

The Federal

Reserve

]oard may

restore

membership

u ~ o n

due

proof

of

compliance

with

the

concli

tions

iri i?Osed

y

this

section. u

:\ 5093a

7/17/2019 frsbog_mim_v28_0345.pdf


( 4)

A BILL

To

amend

Section

9

of the Federal Reserve

Act and

Section

5240

of

the

Revised

Statutes of

the

United States, and for other

purposes.

BE IT ENACTED BY THE S:El TATE AND HOUSE OF REPRESENTATIVES OF THE

UNITED

STATES GF Ali{EEI CA UT

CONGRESS

ASSEMBLED,

That the

seventh

paragraph of

Section 9

of

the Federal

Reserve

Act, as amended, is

further amended by striking out the l s t sentence thereof and in

sert ing

the

following:

The expenses

of l l examinations,

other

than those

made

by State

authorit ies,

may, in the discretion of the

Federal Reserve Board, be assessed against

the

b n l ~

ex

amined and, when so assessed,

s r ~ l l

be paid by the banks

examined. Copies of the reports

of

such examinations

may, in the discretion of the

Federal

Reserve Board, be

furnished to

the State

authorit ies

having

s u ~ e r v i s i o n of

such banks, to

officers,

directors

or

receivers of such

banks, and to any other pro 9er -persons.

Sec.

2.

That

section fifty-two

hundred

and

forty,

United

States

Revised

Statutes, as

amended by Section 21

of the

Federal Reserve

Act,

is

further amended by striking out the second

sentence

of

the

third

paragraph

thereof

and inserting

in

l ieu thereof the following:

The

expense of

such

examinations

may,

in

the

dis

cretion of

the

Federal Reserve Board, be assessed against

the banks examined,

and,

when so assessed, shall be naid

by the banks examined.

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36C:

X-5093-a

A

BILL

To amend section 4

of

the Federal Reserve Act and for

other

purposes.

BE IT

ENACTED

Y

THE SENATE Alm

HOUSE

OF REPRE-

SENTATIVES

OF THE

UNITED STATES

OF . .\iERICA IN CONGRESS

ASSEEBLED,

That

the

fourth

subdivision

of the

fourth

paragraph of

section

4 of the Federal Reserve Act be

amended to

read

as

follows:

Fourth.

To

sue

and

be sued complain

and

defend

in

any court of law or equity;

but no

attachment,

injunction or execution,

shall

be issued against such

bank or

t s

property before final judgment in any

suit ,

action,

or proceeding in any State, county,

municipal

or

United

States court.

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( 6)

~ Z 5 0 9 3 a

A

:BILL

To amend section 12 of the Act enti t led An Act to amend the Judicial

Code and

to

further define the jurisdiction of the circui t

courts

of

appeals

and of

the

Supreme Court,

and for other purposes,

ap

proved

February 13, 1925 and for other

purposes.

Be t enacted bx the Senate and House of Representatives of the

United States of America in Congress assembled, that section 12 of the

Act

enti t led

And

Act

to

amend

the Judicial

Code

and to further

de

fine the jurisdiction of the

circuit courts

of

appeals

and of the

Supreme Court,

and

for

other

purposes,

approved February

13, 1925

be

amended and reenacted to read

as

follows:

Sec. 12.

That no distr ict court

shall

have jurisdic

tion of any action or suit by or against any

corporation

upon the ground that t was incorporated by or under

an

ct

of Congress: Provided, That

this

section shall not apply to

any suit, action,

or

proceeding brought by or against a Fed

eral

Land :Batik,

Joint

Stock Land

:Bank,

Federal

reserve

bank

or

any

corporation

incorporated

by

or

~ n e r

an Act

of

Congress

wherein

the Government of the United States

is

the owner of

more than one-half of t s

capital

stock.

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(:f/:7

:X. 5093 a.

A PILL

To

amend

section

13 of the

Federal

Reserve

ACt,

and

for

other

p ~ o s e s

BE IT ENACTED :SY THE S E l ~ A T E

AJ:ffi HOUSE

OF

REP2ESJNTATIVES OF

THE

UNITED

ST ATES

OF

AiAERICA IN

CONGRESS ASSEM:SLED

7

That

the seventh para-

graph

of

section

13 of the

Federal

Reserve Act, as amended, be amended

and reenacted to read as follows:

Any

Federal reserve

bank

may

make

advances

for

periods not

exceeding

fifteen days

to

i ts

member

banks

on their promissory notes secured by the deposit or

pledge of

bonds or

notes

of

the United

States or

of

bondso.f

the War Finance Corporation, or when auth-

orized

by

the Federal

Reserve :Soard

and subject to

such conditions, regulations,

limitations, andre-

strictions the said board may prescribe, may

make

advances f.or

periods not exceeding

ninety days

to i t s member banks on their

promissory

notes

secured

by such

notes, drafts, i l l

of exchange,

or

bankers

acceptances

as are eligible for rediscount or

for

purchase

by

Federal reserve

banks

under the

provi-

sions ·of th

Act.

All such advances .shall be

made

at

rates

of

interest to

be established by such

Fed-

eral reserve banks,

subject to the review and

deter-

mination

of the Federal Reserve :Soard.

·.···

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