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notes has shrunk to a point that requires this excess use of gold. It was never contemplated that more than 40 per cent of gold should be required in support of Federal reserve notes. The substitution of Government obligations for commercial paper simply carries out the policy expressed in the original Federal reserve act.

The purpose is to afford a means of relief to banks that find themselves in urgent need of accommodations when willing to enter into joint liability. It is believed that this bill, without undue expansion, will result in easier credit which will aid in ending bank failures and in improvement of business conditions generally.

In conformity with section 2a, of Rule XIII, of the House Rules, there is herewith printed in full section 10 of the Federal reserve act with the two proposed new subsections 10 (a) and 10 (b) printed in italics; also there is printed the second paragraph of section 16 of the Federal reserve act, as amended, with the part stricken out shown in brackets and the part added shown in italics; as follows:

SEC. 10. A Federal Reserve Board is hereby created which shall consist of eight members, including the Secretary of the Treasury and the Comptroller of the Currency, who shall be members ex officio, and six members appointed by the President of the United States, by and with the advice and consent of the Senate. In selecting the six appointive members of the Federal Reserve Board, not more than one of whom shall be selected from any one Federal reserve district, the President shall have due regard to a fair representation of the financial, agricultural, industrial, and commercial interests, and geographical divisions of the country. The six members of the Federal Reserve Board appointed by the President and confirmed as aforesaid shall devote their entire time to the business of the Federal Reserve Board and shall each receive an annual salary of $12,000, payable monthly, together with actual necessary traveling expenses, and the Comptroller of the Currency, as ex officio member of the Federal Reserve Board, shall, in addition to the salary now paid him as Comptroller of the Currency, receive the sum of $7,000 annually for his services as a member of said board.

The Secretary of the Treasury and the Comptroller of the Currency shall be ineligible during the time they are in office and for two years thereafter to hold any office, position, or employment in any member bank. The appointive members of the Federal Reserve Board shall be ineligible during the time they are in office and for two years thereafter to hold any office, position, or employment in any member bank, except that this restriction shall not apply to a member who has served the full term for which he was appointed. Of the six members thus appointed by the President one shall be designated by the President to serve for two, one for four, one for six, one for eight and the balance of the members for ten years, and thereafter each member so appointed shall serve for a term of ten years, unless sooner removed for cause by the President. Of the six persons thus appointed, one shall be designated by the President as governor and one as vice governor of the Federal Reserve Board. The governor of the Federal Reserve Board, subject to its supervision, shall be the active executive officer. Secretary of the Treasury may assign offices in the Department of the Treasury for the use of the Federal Reserve Board. Each member of the Federal Reserve Board shall within fifteen days after notice of appointment make and subscribe to the oath of office.

The

The Federal Reserve Board shall have power to levy semiannually upon the Federal reserve banks, in proportion to their capital stock and surplus, an assessment sufficient to pay its estimated expenses and the salaries of its members and employees for the half year succeeding the levying of such assessment, together with any deficit carried forward from the preceding half year.

The first meeting of the Federal Reserve Board shall be held in Washington, District of Columbia, as soon as may be after the passage of this act, at a date to be fixed by the Reserve Bank Organization Committee. The Secretary of the Treasury shall be ex officio chairman of the Federal Reserve Board. No member of the Federal Reserve Board shall be an officer or director of any bank, banking institution, trust company, or Federal reserve bank nor hold stock in any bank, banking institution, or trust company; and before entering upon his duties as a member of the Federal Reserve Board he shall certify under oath to the Secretary of the Treasury that he has complied with this requirement. Whenever a

vacancy shall occur, other than by expiration of term, among the six members of the Federal Reserve Board appointed by the President, as above provided, a successor shall be appointed by the President, with the advice and consent of the Senate, to fill such vacancy, and when appointed he shall hold office for the unexpired term of the member whose place he is selected to fill.

The President shall have power to fill all vacancies that may happen on the Federal Reserve Board during the recess of the Senate by granting commissions which shall expire with the next session of the Senate.

Nothing in this act contained shall be construed as taking away any powers heretofore vested by law in the Secretary of the Treasury which relate to the supervision, management, and control of the Treasury Department and bureaus under such department, and wherever any power vested by this act in the Federal Reserve Board or the Federal reserve agent appears to conflict with the powers of the Secretary of the Treasury, such powers shall be exercised subject to the supervision and control of the Secretary.

The Federal Reserve Board shall annually make a full report of its operations to the Speaker of the House of Representatives, who shall cause the same to be printed for the information of the Congress.

Section three hundred and twenty-four of the Revised Statutes of the United States shall be amended so as to read as follows:

"SEC. 324. There shall be in the Department of the Treasury a bureau charged with the execution of all laws passed by Congress relating to the issue and regulation of national currency secured by United States bonds and, under the general supervision of the Federal Reserve Board, of all Federal reserve notes, the chief officer of which bureau shall be called the Comptroller of the Currency and shall perform his duties under the general directions of the Secretary of the Treasury.

"No Federal reserve bank shall have authority hereafter to enter into any contract or contracts for the erection of any branch bank building of any kind or character, or to authorize the erection of any such building, if the cost of the building proper, exclusive of the cost of the vaults, permanent equipment, furnishings, and fixtures, is in excess of $250,000: Provided, That nothing herein shall apply to any building under construction prior to June 3, 1922."

SEC. 10. (a) Upon receiving the consent of not less than a majority of the Federal Reserve Board, any Federal reserve bank may make advances, for a period not exceeding one year from the date of the approval of this act, in such amount as the board of directors of such Federal reserve bank may determine to groups of five or more independently owned and controlled member banks within its district upon their time or demand promissory notes: Provided, That such banks have no adequate amount of eligible and acceptable assets to obtain sufficient accommodation through rediscounting at the Federal reserve bank. The liability of the individual banks in each group must be limited to such proportion of the total amount advanced to such group as the deposit liability of the respective banks bears to the aggregate deposit liability of all banks in such group. Such banks shall be authorized to distribute the proceeds of such loans to such of their number and in such amount as they may agree upon, but before so doing they shall require such recipient banks to deposit with a suitable trustee, representing the entire group, their individual notes made in favor of the group protected by such collateral security as may be agreed upon. Any Federal reserve bank making such advance shall charge interest or discount thereon at a rate not less than 1 per centum above its discount rate in effect at the time of making such advance. No such note upon which advances are made by a Federal reserve bank under this section shall be eligible under section 16 of this act as collateral security for Federal reserve notes.

No obligations of any foreign government, individual, partnership, association, or corporation organized under the laws thereof shall be eligible as collateral security for advances under this section.

Member banks are authorized to obligate themselves in accordance with the provisions of this section.

"SEC. 10 (b). In exceptional and exigent circumstances, and for a period not exceeding one year from the date of the approval of this act, and when ɩny member bank has no further eligible and acceptable assets available to enable it to obtain adequate credit accommodations from the Federal reserve bank through rediscounting or any other method provided by this act other than that provided by section 10 (a), any Federal reserve bank, pursuant to affirmative action by not less than a majority of the Federal Reserve Board may make advances to such member bank on its time or demand promissory notes secured to the satisfaction of such Federal reserve bank:

Provided, That, (1) each such note shall bear interest at a rate not less than 1 per centum per annum higher than the highest discount rate in effect at such Federal reserve bank on the date of such note; (2) the Federal Reserve Board may by regulation limit and define the classes of assets which may be accepted as security for advances made under authority of this section; and (3) no note accepted for any such advance shall be eligible as collateral security for Federal reserve notes.

No obligations of any foreign government, individual, partnership, association, or corporation organized under the laws thereof shall be eligible as collateral security for advances under this section.

The second paragraph of section 16, as amended, follows:

Any Federal reserve bank may make application to the local Federal reserve agent for such amount of the Federal reserve notes herein before provided for as it may require. Such application shall be accompanied with a tender to the local Federal reserve agent of collateral in amount equal to the sum of the Federal reserve notes thus applied for and issued pursuant to such application. The collateral security thus offered shall be notes, drafts, bills of exchange, or acceptances acquired under the provisions of section thirteen of this act, or bills of exchange indorsed by a member bank of any Federal reserve district and purchased under the provisions of section fourteen of this act, or bankers' acceptances purchased under the provisions of said section fourteen, or gold or gold certificates [; but in no event shall such collateral security, whether gold, gold certificates, or eligible paper, be less than the amount of Federal reserve notes applied for.]: Provided, however, That, at any time within twelve months from the date of the approval of this Act, should the Federal Reserve Board deem it in the public interest, it may, upon the affirmative vote of not less than a majority of its members holding office at the time, authorize the Federal reserve banks to offer, and the Federal reserve agents to accept, as such collateral security, direct obligations of the United States. At the expiration of one year from the approval of this Act, or sooner should the Federal Reserve Board so decide, such authorization shall terminate and such obligations of the United States be retired as security for Federal reserve notes. In no event shall such collateral security be less than the amount of Federal reserve notes applied for. The Federal reserve agent shall each day notify the Federal Reserve Board of all issues and withdrawals of Federal reserve notes to and by the Federal reserve bank to which he is accredited. The said Federal Reserve Board may at any time call upon a Federal reserve bank for additional security to protect the Federal reserve notes issued to it.

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1st Session

No. 477

TO AMEND SECTION 3 OF THE FLOOD CONTROL ACT OF MAY 15, 1928

FEBRUARY 15, 1932.-Committed to the Committee of the Whole House on the state of the Union and ordered to be printed

Mr. WILSON, from the Committee on Flood Control, submitted the following

REPORT

[To accompany H. R. 4668]

The Committee on Flood Control, to which was referred the bill (H. R. 4668) to amend the first paragraph of section 3 of the Mississippi River flood control act (Public Act, No. 391, 70th Cong.), approved May 15, 1928, having considered the same, report it to the House with the following amendment with the recommendation that it do pass as amended.

On page 1, line 9, after the word "lands" insert "including compensation for damages to improvements thereon at the time of the taking,".

The new matter proposed to be inserted in section 3 of the flood control act of May 15, 1928, with the above amendment is as follows:

SEC. 3. In the execution of the adopted project, the United States shall provide flowage rights over all lands including compensation for damages to improvements thereon at the time of the taking, which are not now between the existing levees and the low-water channel of the Mississippi River and which will be between the levee lines of the adopted project and the low-water channel of the Mississippi River by reason of setbacks, extensions, or other changes in the levee lines on the main stem of the Mississippi River between Cape Girardeau, Missouri, and the Head of the Passes. The States or levee districts may provide for the United States, upon its request and at its expense, such flowage rights, and the United States shall reimburse the States or levee districts in full for all payments made and expense incurred in providing such flowage rights upon proof that they have been obtained at fair valuation and at reasonable expense.

Prior to the passage of the flood control act all rights of way for levees had been provided by the States and local interests, and levees had been constructed upon such rights of way practically along the entire stretch of the Mississippi River involved in the project. Between the then existing levee lines and the low-water channel of the Mississippi River there were certain land areas. Flowage rights over such lands are not provided for in this amendment, since conditions have not been changed.

HR-72-1-VOL 1- 44

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