FEDERAI, BANKS AND FINANCIAL ORGANIZATION 65 



various districts elected two directors of a Federal Reserve Bank. This 

 somewhat complicated procedure allows the small banks to be represented 

 on the directors' boards of their respective Federal Reserve Banks. 



The election ended the task of the organization Committee and on 10 

 August the Federal Reserve Board was sworn in. It comprises in addition 

 to its statutory members an expert in foreign banking and investing, a 

 Southern banker, a jurist, an economist, and a railway expert. It had first 

 to nominate the three representatives of the government in the directors' 

 boards of the Federal Reserve Bank. Meanwhile the interior organization 

 of the. banks was studied by a technical committee. It was judged well 

 to divide the powers of the boards of directors into two. The chairman, 

 appointed by the Federal Reserve Board from the three official represen- 

 tatives, is this board's intermediary as regards the direction and superin- 

 tendence of the business of a bank, and the governor — whom the directors 

 appoint from their own number — is the effective president. The direc- 

 tors have been well chosen for their financial capabilities and have greatly 

 ministered to the scheme's development. Each Federal Reserve Bank is 

 largely an independent institution, managed by local persons. Its offi- 

 cials and directors can speak with authority for the different local interests 

 they represent. 



The opinions of the governors, supported by their boards of directors 

 and amplified by the Federal Advisory Council, have had much weight in 

 this first period of the activity of the new banking machinery. 



In October 1914 the work of organization was far from complete, 

 but in view of the conditions created by the European war it was thought 

 well not to defer the opening of the banks. The opening day was fixed 

 for 16 November and the first payment of capital was made on i November. 

 Of the 7,493 National Banks which were active only eighteen refused their 

 subscription. The first contribution was slightly over $18,000,000 ; and 

 the aggregate nominal capital was about $106,800,000, that is slightly 

 less than $14,000 for each stockholding bank. Succeeding pa^^ments 

 were made on i February and i May 1915. The other half of the sub- 

 scribed capital stock will probably not be called for so soon. In June 1916 

 the paid-up capital amounted to $54,864,000. 



In addition the Federal Reserve Banks disposed on the opening day 

 of the part of the reserves of the stockholding banks which was to be trans- 

 ferred to them under the Act. The banks of the central reserve towns thus 

 transferred a sum equal to 7 per cent, of the deposits they held, the banks 

 of reserve towns made a preliminarv^ deposit of 3 per cent, and the others 

 one of 2 per cent. (i). The Federal Reserve Banks also received at one 

 time about $ 230,000,000, which with the first payment of capital brought 

 their available funds up to about $ 250,000,000. These transferences were 

 made quite easilj' and conveniently. 



(i) The deposits of the two lattei were completed on 16 November 191 5 and 16 May and 16 

 November 1916, and their transferred reserves thus came to be 6 and 5 per cent., respectively. 



