FEDERAL BANKS AND FiNANClATv ORGANIZATION 6l 



countries and to report its conclusions. The results obtained by this com- 

 mission were first published at the end of 1910 (i). They noted various 

 weaknesses which have been mentioned and favoured a greater centralization 

 of the banking system. The Commission did not however propose the 

 establishment of a single federal bank on the model of the great national 

 banks of Europe, but the creation of a Reserve Association of America 

 which would have the necessary authority and means to increase and re- 

 duce the volume of paper money in circulation as circumstances demanded. 

 It was hoped that both the Federahst party and their opponents would 

 approve this expedient. 



Congress on 23 December 191 3 voted the Act creating the Federal 

 Reserve, in accordance with, the principles and the hopes which the commis- 

 sion had enunciated. 



§ 3. The federai. reserve act. 



We will now briefly analyse the law entitled " An Act to provide for 

 the establishment of Federal reserve banks, to furnish an elastic currency, 

 to afford means of rediscounting commercial paper, to establish a more 

 effective supervision of banking in the United States, and for other pur- 

 poses ". 



Section 2 rules that as soon as ^practicable the secretary of the Treasury, 

 the Secretary of Agriculture and the Comptroller of the Currency, acting 

 as " The Reserve Bank Organization Committee, shall designate not less 

 than eight nor more than twelve cities to be known as Federal reserve 

 cities, and shall divide the continental United States, excluding Alaska, 

 into districts, each district to contain only one of such Federal reserve 

 cities... Such districts may be designated by a number... The said commit- 

 tee shall supervise the organization in each of the cities designated of a 

 Federal reserve bank... Every national banking association in the United 

 States is hereby required, and every eligible bank in the United States 

 and ever^^ trust company within the District of Columbia is hereby autho- 

 rized, to signif}' in writing, within sixty days after the passage of this Act, 

 its acceptance of the terms and provisions hereof. When the organiza- 

 tion committee shall have designated the cities in which Federal reserve 

 banks are to be organized, and fixed the geographical limits of the Federal 

 reserve districts, everj^ national banking association within that district 



(i) In 1909 the commission had indeed published a special report on the banks of the Uni- 

 ted states. Its data concerned 22,491 of some 25,000 banks existing in the States on 28 

 Apiil 1909. The banks as to which there was no precise information confined their business 

 for the most part to brokerage and exchange. 



The capital stock of the 22,491 reporting banks of all classes amounted to $ 1,800,036,368 

 and their resources aggregated $21,095,054,420.72. Banks to the number of 18,245 sub- 

 mitted supplementary statements, showing deposits aggregating $ I3.59.=^;599>850.66 to the 

 credit of 25,645,604 depositors (deposit accounts), including $5,678,735,379-65 savings and 

 time deposits, with 14,894,696 depositors. 



