HOUSE BILL.

amount of its holdings in the capital of said Federal reserve bank, and in case a member bank goes into voluntary liquidation it shall surrender all of its holdings of the capital stock of said Federal reserve bank. In either case the shares surrendered shall be canceled and such member bank shall receive in payment therefor, under regulations to be prescribed by the Federal Reserve Board, a sum equal to its cash paid subscriptions on the shares surrendered.

SEC. 6. That if any member bank shall become insolvent and are eeiver be appointed, the stock held by-it-in said Federal-reserve-bank shall be canceled and the balance, after deducting from the amount of its cash paid subscriptions all debts due by such-insolvent bank to said Federal reserve bank, shall be paid to the receiver of the insolvent bank If any member bank shall be declared insolvent and a receiver appointed therefor, the stock held by it in said Federal reserve bank shall be canceled, and all cash-paid subscriptions on said stock, with one-half of one per centum per month from the period of last dividend, not to exceed the book value thereof, shall be first applied to all debts of the insolvent member bank to the Federal reserve bank, and the balance, if any, shall be paid to the receiver of the insolvent bank. Whenever the capital stock of a Federal reserve bank is reduced, either on account of a reduction in capital stock of any member bank or of the liquidation or insolvency of any such member such bank, the board of directors shall make and execute cause to be executed a certificate to the Comptroller of the Currency showing such reduction of capital stock and the amount repaid to such bank.

25

HITCHCOCK AMENDMENT.

The Hitchcock amendment proposes to strike out all of section 6 of the House bill and insert the following:

Sec. 6. That in case the Federal Reserve Board shall decide, after two years' operation of the reserve banks first established, that one or more additional banks herein authorized should be established it shall make the necessary change in lines of existing districts, designate the new reserve city or cities, and notify the member banks affected by such change to associate themselves with the new reserve bank or banks and change the deposit of their reserves accordingly. Stockholders in previously established reserve banks affected by the change shall be invited to exchange a portion of their stock certificates as indicated by the reserve board, and for all stock so exchanged the reserve board shall direct the transfer to the new reserve bank or banks from the old reserve bank or banks of the corresponding amount of cash capital in gold.

If sufficient stock certificates are not thus exchanged the reserve board may offer to the general public at par stock in the newly created district or districts to an amount necessary to make up the difference.

As an inducement to make the exchange of stock the reserve board may direct that the stock of the old reserve bank or banks so exchanged shall be entitled to payment in cash of its share of the accumulated surplus.

SEC. 7. That after the payment of all necessary expenses and taxes of a Federal reserve bank, the member banks shall be entitled to receive an annual dividend of five per centum on the paid-in capital stock, which dividend shall be cumulative. Onehalf of the net earnings, after the aforesaid dividend claims have been fully met, shall be paid into a surplus fund until such fund shall amount to twenty per centum of the paid-in capital stock of such bank, and of the remaining one-half sixty per centum shall be paid to the United States and forty per centum to the member banks in the ratio of their average balances with the Federal reserve bank for the preceding Whenever and so long as the surplus fund of a Federal reserve bank amounts to twenty per centum of the paid-in capital stock and the member banks shall have received the dividends at the rate of five per centum per annum hereinbefore provided for, sixty per centum of all excess earnings shall be paid to the United States and forty per centum to the member banks in proportion to their annual average balances with such Federal reserve bank;

13

year.

all earnings derived by the United States from Federal reserve banks shall constitute a sinking fund to be held for the reduction of the outstanding bonded indebtedness of the United States, said reduction to be accomplished under regulations to be prescribed by the Secretary of the Treasury. Should a Federal reserve bank be dissolved or go into

SEC. 7. That after the payment of After all necessary expenses and taxes of a Federal reserve bank have been paid or provided for, the have been paid or provided for, the member banks stockholders shall be entitled to receive an annual dividend of five six per centum on the paid-in capital stock, which dividend shall be cumulative. Onehalf of the net earnings, after the aforesaid dividend claims have been fully met, shall be paid into a surplus fund until such fund shall amount to twenty forty per centum of the paid-in capital stock of such bank, and of the remaining onehalf sixty fifty per centum shall be paid to the United States and forty per centum to the member banks in per centum to the member banks in the ratio of their average balances with the Federal reserve bank for the preceding year. Whenever and so long as the surplus fund of a Fed eral-reserve bank amounts to twenty per centum of the paid in-capital stock-and the member banks shall have received the dividends at the rate of five per centum per annum hereinbefore provided for, sixty per centum of all excess earnings shall be paid to the United States-and forty per centum to the member forty-perbanks in proportion to their annual average-balances with such Federal reserve bank; all as a franchise tax, and fifty per centum shall be paid to the United States, as a trustee for the benefit of depositors in failed national banks, the money to be kept in and losses from failures to be paid from it as a depositors' insurance fund under a division of the Treasury to be constituted and managed under such regulations as may be prescribed by the Secretary of the Treasury.

26

All net earnings derived by the United States from Federal reserve banks shall consti tute-a-sinking fund to be held for be applied to the reduction of the outstanding bonded indebtedness of the United States, said reduction to be accomplished under regulations to be prescribed by the Secretary of to be prescribed by the Secretary of the Treasury. Should a Federal Should a Federal reserve bank be dissolved or go into

The Hitchcock amendment proposes to strike out all of section 7 of the House bill and insert the following:

Sec. 7. That after the payment of all necessary expenses and taxes, including its share of the expenses of the Federal Reserve Board, the stockholders of each Federal reserve bank shall be entitled to receive an annual dividend of five per centum on the paid-in capital stock, which dividend shall be cumulative. shall be cumulative. Net earnings over and above expenses and the aforesaid dividend shall be applied as follows: Twenty-five per centum of such net earnings to be carried to a surplus fund until such fund shall amount to twenty per centum of the paid-in capital stock of such reserve bank, and thirty-seven and one-half per centum of said net earnings shall be set aside in a trust fund to be known as the depositors insurance fund and shall be used for the payment of the depositors of insolvent member banks under rules and regulations made by the board. When, in the judgment of the board, there has been accumulated in such depositors' insurance fund a sufficient sum fully to insure the payment of

25

the depositors of insolvent member banks, the board shall have power to suspend the setting aside and accumulation of the said thirty-seven and one-half per centum of such earnings, and thereafter such thirty-seven and one-half per centum of such earnings shall be paid to the United States, except that in the event the depositors' insurance fund is depleted by the payment of depositors of insolvent member banks such fund shall be replenished by again setting aside such thirty-seven and one-half per centum of the earnings or so much thereof as, in the judgment of the board, may be neces

sary. The remaining net earnings shall be paid to the United States: Provided, That the amount so paid shall be applied to the purchase, at par, with accrued interest, of the two per centum bonds of the United States, said bonds then to be retired; or if such bonds can not be so purchased said amount shall be applied to the purchase of other interestbearing obligations of the

United

HOUSE BILL.

liquidation, the surplus fund of said bank, after the payment of all debts and dividend requirements as hereinbefore provided for, shall be paid to and become the property of the United States.

Every Federal reserve bank incorporated under the terms of this Act and the capital stock therein held by member banks shall be exempt from Federal, State, and local taxation, except in respect to taxes upon real estate.

14

SEC. 8. That any national banking association heretofore organized may upon application at any time within one year after the passage of this Act, and with the approval of the Comptroller of the Currency, be granted, as herein. provided, all the rights, and be subject to all the liabilities, of national banking associations organized subsequent to the passage of this Act: Provided, That such application on the part of such associations shall be authorized by the consent in writing of stockholders owning not less than a majority of the capital stock of the association. Any national banking association now organized which shall not, within one year after the passage of this Act, become a national banking association under the provisions hereinbefore stated, or which shall fail to comply with any of the provisions of this Act applicable thereto, shall be dissolved; but such dissolution shall not take away or impair any remedy against such corporation, its stockholders or officers, for any liability or penalty which shall have previously been incurred.

OWEN AMENDMENT.

liquidation, the surplus fund of said kank any surplus remaining, after the payment of all debts, and dividend requirements as hereinbefore provided, for, and the par value of the stock, shall be paid to and become the property of the United States and shall be similarly applied.

Every Federal reserve bank incorporated under the terms of this Act and, the capital stock and suplus therein, held by member banks and the income derived therefrom shall be exempt from Federal, State, and local taxation, except in respect to taxes upon real estate.

SECTION 8.

The Owen amendment proposes to eliminate this section of the House bill.

HITCHCOCK AMENDMENT.

States, which obligations shall thereupon be retired.

Every Federal reserve bank incorporated under the terms of this Act and the capital stock therein held by member banks and the income derived therefrom shall be exempt from Federal, State, and local taxation, except in respect to taxes upon real estate.

The Hitchcock amendment proposes to strike out all of section 8 and insert the following:

27

Sec. 8. That within six months after a national bank shall have been notified by the Federal Reserve Board of its allotment of stock under section two of this Act, said national bank shall hold a meeting of its stockholders and decide by a majority vote whether it will become a member bank under the terms of this Act or whether it will give up its charter as a national bank. In case the stockholders of said national bank shall decide that said national bank shall become a member bank, the officers of said bank, upon a blank provided by the board, shall forward the formal acceptance by said national bank of the terms of this Act to the board, properly attested before a notary public. In case any national bank shall fail to forward its acceptance to the board within six months from the time said board makes the allotment of stock to said bank, it shall be deemed to have declined to become a member bank and shall thereupon have six months within which to surrender its charter and abandon its existence as a national bank. In any case, however, every national bank shall be and is required to accept the allotment of stock as provided in section two, which stock may be freely sold and disposed of as other assets of the bank: Provided, however, That any national bank acting as a reserve agent in a reserve or central reserve city shall be required to accept the terms of this Act within six months from the date of notification of its allotment of stock, or, upon failure to do so, shall cease to be a reserve agent for national banks.