64 UNITED STATES - CREDIT 



same terms and conditions as National Bank notes, except that they shall 

 not be limited to the amount of the capital stock of the Federal Reserve 

 Bank issuing them. Thus the circulation of notes will eventually be ap- 

 preciably simplified and unified. 



The law perfects the machiner\^ for controlling the banks. In addi- 

 tion to the inspections by the Comptroller of the Currenc}', inspections of 

 any bank by the Federal Reserve Bank of its district can be authorized 

 by the Federal Reserve Board. The Federal Reserve Banks are them- 

 selves inspected annually and their member banks can obtain that they be 

 inspected specially. 



As regards the special interests of agriculture — every National Bank 

 not situated in a central reserve town may make loans on cultivated, un- 

 mortgaged land within its district, for a term of no more than five years, 

 of amounts not exceeding 50 per cent, of the value of the property offered 

 as securit3^ Each of these banks may thus lend as much as 25 per cent, 

 of its capital and reser^^es or one third of its term deposits and continue 

 as previous^ to receive term deposits and pay interest on them. 



The Federal Reserve Board will have the right to add other towns 

 from time to time to the list of those in which the National Banks may 

 not thus grant loans secured by landed property. 



Federal Reserv^e Banks within the territory of the United States do no 

 business with the public directly but only with each other and with the Na- 

 tional Banks. Their deposits emanate only from their stockholders ' and 

 the government of the United States. By means of the notes they issue 

 they may rediscount the commercial paper of their respective National 

 Banks and discount the notes and acceptances of foreign banks. They 

 may open branches abroad which may transact all normal banking busi- 

 ness directl}'. 



Both abroad and at home these banks are the government's fiscal 

 agents, and as such recover taxes and duties, pay arrears of the pubhc 

 debt, etc. 



§ 4. The workixg of the federal reserve banks. 



As soon as the Act had been passed the organization committee got 

 to work. Its first difficult}^ was to fix the number of the districts in which 

 there should be banks, for the interests of the different States could not be 

 neglected. 



It was decided that there should be twelve districts, and that the 

 banks should have their sites in Boston, New York, Philadelphia, Cleve- 

 land, Richmond, Atlanta, Chicago, St. lyOtiis, oVIinneapohs, Kansas City, 

 Dallas and San Francisco. The notice provided by the Act was giveil to 

 the various banks and on 18 Ma}- the decree for the organization of the 

 Federal Reserv^e Banks was drawn up. The banks of each district were 

 then divided into three equal groups, according to the amount of capital 

 and property they held. At the beginning of July 1914 each group in the 



