FEDERAL BANKS AND FINANCIAL ORGANIZATION 69 



may apply to the Federal Reserve Board for permission " to establish 

 branches in foreign countries or dependencies or insular possessions of the 

 United States for the furtherance of the foreign commerce of the United 

 States and to act if required to do so as fiscal agents of the United States ". 

 Owing to the initial deposit of the reserves of member banks and the 

 transfer allowed by this Act the Federal Banks now hold about a quarter 

 of the country's grand stock of gold. 



* 

 * * 



Such is in outHne the financial and banking sstem instituted in 1913 

 and revised in 1916. It is seen to have involved no radical upheaval of the 

 previous organization. It merely added some new wheels which centra- 

 hzed, and in some respects gave a new direction to, the complex and some- 

 what unequal mechanism constructed since the beginning of the repubUc. 

 The State Banks, the National Banks, the sub-treasuries, the circulation 

 emanating from banks in direct contact with the people and secured by 

 Federal debt bonds, were not abolished. They subsist. But the concen- 

 tration of a considerable part of the national gold reserves in a small num- 

 ber of Federal banks, which could issue Federal notes in case of need, 

 makes incontestably a regularizing force in the money market, and will 

 probably ensure the normal course of commercial and banking operations 

 in times of crisis. 



This centralizing tendency is equally appHed to agriculture by the Act 

 of 17 Jidy 1916 on agricultural credit. Under this Act also the territory 

 is divided into twelve districts, in this case in accordance with the needs 

 of the different districts for agricultural credit. A Federal land bank is 

 instituted in each of these districts and may open branches within their 

 respective limits. The Federal land banks are individually ruled by ad- 

 ministrative boards and collectively by a Federal board of agricultural 

 credit. The minimum subscribed capital — $4,000,000 in the case of 

 Federal Reserve Banks — is $750,000 in the case of Federal banks of agri- 

 cultural credit ; and as the former receive it from the National Banks so 

 do the latter receive it from national associations of agricultural credit, 

 the government of the United States supplying any deficiency in the case 

 of both. Banks of both categories act as fiscal agents of the government 

 and receive deposits of public funds. 



Ever>^ Federal Reserve bank can buy and sell land bonds issued in 

 accordance with the agricultural credit Act, .exactl> as they can under- 

 take analogous operations involving district, county and municipal bonds. 



Federal land banks are inspected according to the rules applicable to 

 National and to Federal Reserve Banks. 



