the american economy a historical encyclopedia phần 9 ppt

Upon deposit with the Treasurer of the United States of any bonds of the United States in the manner pro-vided existing law relating to national banks, to receive fromthe Comptroller of

Government engages, at the earliest possible moment after

the receipt of such demand, to cause any of the books,

records, or documents so specified, which shall be in their

possession or power (or authenticated copies or extracts of

the same), to be transmitted to the said Secretary of State,

who shall immediately deliver them over to the said board of

commissioners; provided that no such application shall be

made by or at the instance of any claimant, until the facts

which it is expected to prove by such books, records, or

doc-uments, shall have been stated under oath or affirmation

ARTICLE XVI

Each of the contracting parties reserves to itself the entire

right to fortify whatever point within its territory it may

judge proper so to fortify for its security

ARTICLE XVII

The treaty of amity, commerce, and navigation, concluded

at the city of Mexico, on the fifth day of April,A.D 1831,

between the United States of America and the United

Mexican States, except the additional article, and except so far

as the stipulations of the said treaty may be incompatible

with any stipulation contained in the present treaty, is hereby

revived for the period of eight years from the day of the

exchange of ratifications of this treaty, with the same force

and virtue as if incorporated therein; it being understood that

each of the contracting parties reserves to itself the right, at

any time after the said period of eight years shall have

expired, to terminate the same by giving one year’s notice of

such intention to the other party

ARTICLE XVIII

All supplies whatever for troops of the United States in

Mexico, arriving at ports in the occupation of such troops

previous to the final evacuation thereof, although

subse-quently to the restoration of the custom-houses at such ports,

shall be entirely exempt from duties and charges of any kind;

the Government of the United States hereby engaging and

pledging its faith to establish and vigilantly to enforce, all

pos-sible guards for securing the revenue of Mexico, by

prevent-ing the importation, under cover of this stipulation, of any

articles other than such, both in kind and in quantity, as shall

really be wanted for the use and consumption of the forces of

the United States during the time they may remain in Mexico

To this end it shall be the duty of all officers and agents of the

United States to denounce to the Mexican authorities at the

respective ports any attempts at a fraudulent abuse of this

stipulation, which they may know of, or may have reason to

suspect, and to give to such authorities all the aid in their

power with regard thereto; and every such attempt, when

duly proved and established by sentence of a competent

tri-bunal, They shall be punished by the confiscation of the

property so attempted to be fraudulently introduced

ARTICLE XIX

With respect to all merchandise, effects, and property

whatsoever, imported into ports of Mexico, whilst in the

occupation of the forces of the United States, whether by

cit-izens of either republic, or by citcit-izens or subjects of any

neu-tral nation, the following rules shall be observed:

(1) All such merchandise, effects, and property, if ported previously to the restoration of the custom-houses tothe Mexican authorities, as stipulated for in the third article

im-of this treaty, shall be exempt from confiscation, although theimportation of the same be prohibited by the Mexican tariff.(2) The same perfect exemption shall be enjoyed by allsuch merchandise, effects, and property, imported subse-quently to the restoration of the custom-houses, and previ-ously to the sixty days fixed in the following article for thecoming into force of the Mexican tariff at such ports respec-tively; the said merchandise, effects, and property being,however, at the time of their importation, subject to the pay-ment of duties, as provided for in the said following article.(3) All merchandise, effects, and property described in thetwo rules foregoing shall, during their continuance at theplace of importation, and upon their leaving such place forthe interior, be exempt from all duty, tax, or imposts of everykind, under whatsoever title or denomination Nor shall they

be there subject to any charge whatsoever upon the salethereof

(4) All merchandise, effects, and property, described in thefirst and second rules, which shall have been removed to anyplace in the interior, whilst such place was in the occupation

of the forces of the United States, shall, during their ance therein, be exempt from all tax upon the sale or con-sumption thereof, and from every kind of impost orcontribution, under whatsoever title or denomination.(5) But if any merchandise, effects, or property, described

continu-in the first and second rules, shall be removed to any placenot occupied at the time by the forces of the United States,they shall, upon their introduction into such place, or upontheir sale or consumption there, be subject to the same dutieswhich, under the Mexican laws, they would be required topay in such cases if they had been imported in time of peace,through the maritime custom-houses, and had there paid theduties conformably with the Mexican tariff

(6) The owners of all merchandise, effects, or property,described in the first and second rules, and existing in anyport of Mexico, shall have the right to reship the same,exempt from all tax, impost, or contribution whatever.With respect to the metals, or other property, exportedfrom any Mexican port whilst in the occupation of the forces

of the United States, and previously to the restoration of thecustom-house at such port, no person shall be required bythe Mexican authorities, whether general or state, to pay anytax, duty, or contribution upon any such exportation, or inany manner to account for the same to the said authorities

ARTICLE XX

Through consideration for the interests of commerce erally, it is agreed, that if less than sixty days should elapsebetween the date of the signature of this treaty and therestoration of the custom houses, conformably with the stip-ulation in the third article, in such case all merchandise,effects and property whatsoever, arriving at the Mexicanports after the restoration of the said custom-houses, andpreviously to the expiration of sixty days after the day of sig-nature of this treaty, shall be admitted to entry; and no other

gen-558 Treaty of Guadalupe Hidalgo

duties shall be levied thereon than the duties established by

the tariff found in force at such custom-houses at the time of

the restoration of the same And to all such merchandise,

effects, and property, the rules established by the preceding

article shall apply

ARTICLE XXI

If unhappily any disagreement should hereafter arise

between the Governments of the two republics, whether with

respect to the interpretation of any stipulation in this treaty,

or with respect to any other particular concerning the

politi-cal or commercial relations of the two nations, the said

Governments, in the name of those nations, do promise to

each other that they will endeavour, in the most sincere and

earnest manner, to settle the differences so arising, and to

preserve the state of peace and friendship in which the two

countries are now placing themselves, using, for this end,

mutual representations and pacific negotiations And if, by

these means, they should not be enabled to come to an

agreement, a resort shall not, on this account, be had to

reprisals, aggression, or hostility of any kind, by the one

republic against the other, until the Government of that

which deems itself aggrieved shall have maturely considered,

in the spirit of peace and good neighbourship, whether it

would not be better that such difference should be settled by

the arbitration of commissioners appointed on each side, or

by that of a friendly nation And should such course be

pro-posed by either party, it shall be acceded to by the other,

unless deemed by it altogether incompatible with the nature

of the difference, or the circumstances of the case

ARTICLE XXII

If (which is not to be expected, and which God forbid) war

should unhappily break out between the two republics, they

do now, with a view to such calamity, solemnly pledge

them-selves to each other and to the world to observe the following

rules; absolutely where the nature of the subject permits, and

as closely as possible in all cases where such absolute

obser-vance shall be impossible:

(1) The merchants of either republic then residing in the

other shall be allowed to remain twelve months (for those

dwelling in the interior), and six months (for those dwelling

at the seaports) to collect their debts and settle their affairs;

during which periods they shall enjoy the same protection,

and be on the same footing, in all respects, as the citizens or

subjects of the most friendly nations; and, at the expiration

thereof, or at any time before, they shall have full liberty to

depart, carrying off all their effects without molestation or

hindrance, conforming therein to the same laws which the

citizens or subjects of the most friendly nations are required

to conform to Upon the entrance of the armies of either

nation into the territories of the other, women and children,

ecclesiastics, scholars of every faculty, cultivators of the earth,

merchants, artisans, manufacturers, and fishermen, unarmed

and inhabiting unfortified towns, villages, or places, and in

general all persons whose occupations are for the common

subsistence and benefit of mankind, shall be allowed to

con-tinue their respective employments, unmolested in their

per-sons Nor shall their houses or goods be burnt or otherwise

destroyed, nor their cattle taken, nor their fields wasted, bythe armed force into whose power, by the events of war, theymay happen to fall; but if the necessity arise to take anythingfrom them for the use of such armed force, the same shall bepaid for at an equitable price All churches, hospitals, schools,colleges, libraries, and other establishments for charitable andbeneficent purposes, shall be respected, and all persons con-nected with the same protected in the discharge of theirduties, and the pursuit of their vocations

(2) In order that the fate of prisoners of war may be viated all such practices as those of sending them into distant,inclement or unwholesome districts, or crowding them intoclose and noxious places, shall be studiously avoided Theyshall not be confined in dungeons, prison ships, or prisons;nor be put in irons, or bound or otherwise restrained in theuse of their limbs The officers shall enjoy liberty on theirparoles, within convenient districts, and have comfortablequarters; and the common soldiers shall be disposed in can-tonments, open and extensive enough for air and exercise andlodged in barracks as roomy and good as are provided by theparty in whose power they are for its own troops But if anyofficer shall break his parole by leaving the district soassigned him, or any other prisoner shall escape from thelimits of his cantonment after they shall have been designated

alle-to him, such individual, officer, or other prisoner, shall forfeit

so much of the benefit of this article as provides for his

liber-ty on parole or in cantonment And if any officer so breakinghis parole or any common soldier so escaping from the lim-its assigned him, shall afterwards be found in arms previous-

ly to his being regularly exchanged, the person so offendingshall be dealt with according to the established laws of war.The officers shall be daily furnished, by the party in whosepower they are, with as many rations, and of the same arti-cles, as are allowed either in kind or by commutation, to offi-cers of equal rank in its own army; and all others shall bedaily furnished with such ration as is allowed to a commonsoldier in its own service; the value of all which supplies shall,

at the close of the war, or at periods to be agreed uponbetween the respective commanders, be paid by the otherparty, on a mutual adjustment of accounts for the subsistence

of prisoners; and such accounts shall not be mingled with orset off against any others, nor the balance due on them with-held, as a compensation or reprisal for any cause whatever,real or pretended Each party shall be allowed to keep a com-missary of prisoners, appointed by itself, with every canton-ment of prisoners, in possession of the other; whichcommissary shall see the prisoners as often as he pleases; shall

be allowed to receive, exempt from all duties and taxes, and todistribute, whatever comforts may be sent to them by theirfriends; and shall be free to transmit his reports in open let-ters to the party by whom he is employed

And it is declared that neither the pretense that war solves all treaties, nor any other whatever, shall be considered

dis-as annulling or suspending the solemn covenant contained inthis article On the contrary, the state of war is precisely thatfor which it is provided; and, during which, its stipulationsare to be as sacredly observed as the most acknowledged obli-gations under the law of nature or nations

Treaty of Guadalupe Hidalgo 559

ARTICLE XXIII

This treaty shall be ratified by the President of the United

States of America, by and with the advice and consent of the

Senate thereof; and by the President of the Mexican Republic,

with the previous approbation of its general Congress; and

the ratifications shall be exchanged in the City of

Washington, or at the seat of Government of Mexico, in four

months from the date of the signature hereof, or sooner if

practicable

In faith whereof we, the respective Plenipotentiaries, have

signed this treaty of peace, friendship, limits, and settlement,

and have hereunto affixed our seals respectively Done in

quintuplicate, at the city of Guadalupe Hidalgo, on the

sec-ond day of February, in the year of our Lord one thousand

eight hundred and forty-eight

N P TRIST LUIS P CUEVAS BERNARDO COUTO MIGL ATRISTAIN

***

Article IX was modified and Article X was stricken by the U.S.

Congress The following are the original articles An

explanation or agreement of why the articles were stricken,

known as the protocol of Querétaro, is also included below.

***

ARTICLE IX

The Mexicans who, in the territories aforesaid, shall not

preserve the character of citizens of the Mexican Republic,

conformably with what is stipulated in the preceding Article,

shall be incorporated into the Union of the United States, and

admitted as soon as possible, according to the principles of

the Federal Constitution, to the enjoyment of all the rights of

citizens of the United States In the mean time, they shall be

maintained and protected in the enjoyment of their liberty,

their property, and the civil rights now vested in them

according to the Mexican laws With respect to political

rights, their condition shall be on an equality with that of the

inhabitants of the other territories of the United States; and

at least equally good as that of the inhabitants of Louisiana

and the Floridas, when these provinces, by transfer from the

French Republic and the Crown of Spain, became territories

of the United States

The same most ample guaranty shall be enjoyed by all

ecclesiastics and religious corporations or communities, as

well in the discharge of the offices of their ministry, as in the

enjoyment of their property of every kind, whether

individ-ual or corporate This guaranty shall embrace all temples,

houses and edifices dedicated to the Roman Catholic

wor-ship; as well as all property destined to its support, or to that

of schools, hospitals and other foundations for charitable or

beneficent purposes No property of this nature shall be

con-sidered as having become the property of the American

Government, or as subject to be, by it, disposed of or

divert-ed to other uses

Finally, the relations and communication between theCatholics living in the territories aforesaid, and their respec-tive ecclesiastical authorities, shall be open, free and exemptfrom all hindrance whatever, even although such authoritiesshould reside within the limits of the Mexican Republic, asdefined by this treaty; and this freedom shall continue, solong as a new demarcation of ecclesiastical districts shall nothave been made, conformably with the laws of the RomanCatholic Church

ARTICLE X

All grants of land made by the Mexican government or bythe competent authorities, in territories previously apper-taining to Mexico, and remaining for the future within thelimits of the United States, shall be respected as valid, to thesame extent that the same grants would be valid, to the saidterritories had remained within the limits of Mexico But thegrantees of lands in Texas, put in possession thereof, who, byreason of the circumstances of the country since the begin-ning of the troubles between Texas and the MexicanGovernment, may have been prevented from fulfilling all theconditions of their grants, shall be under the obligation tofulfill the said conditions within the periods limited in thesame respectively; such periods to be now counted from thedate of the exchange of ratifications of this Treaty: in default

of which the said grants shall not be obligatory upon theState of Texas, in virtue of the stipulations contained in thisArticle

The foregoing stipulation in regard to grantees of land inTexas, is extended to all grantees of land in the territoriesaforesaid, elsewhere than in Texas, put in possession undersuch grants; and, in default of the fulfillment of the condi-tions of any such grant, within the new period, which, as isabove stipulated, begins with the day of the exchange of rati-fications of this treaty, the same shall be null and void

THE PROTOCOL OF QUERÉTARO

In the city of Queretaro on the twenty sixth of the month

of May eighteen hundred and forty-eight at a conferencebetween Their Excellencies Nathan Clifford and Ambrose H.Sevier Commissioners of the United States of America, withfull powers from their Government to make to the MexicanRepublic suitable explanations in regard to the amendmentswhich the Senate and Government of the said United Stateshave made in the treaty of peace, friendship, limits and defin-itive settlement between the two Republics, signed inGuadalupe Hidalgo, on the second day of February of thepresent year, and His Excellency Don Luis de la Rosa,Minister of Foreign Affairs of the Republic of Mexico, it wasagreed, after adequate conversation respecting the changesalluded to, to record in the present protocol the followingexplanations which Their aforesaid Excellencies theCommissioners gave in the name of their Government and infulfillment of the Commission conferred upon them near theMexican Republic

of the Treaty of Louisiana did not intend to diminish in any

way what was agreed upon by the aforesaid article IXth in

favor of the inhabitants of the territories ceded by Mexico Its

understanding that all of that agreement is contained in the

IIId article of the Treaty of Louisiana In consequence, all the

privileges and guarantees, civil, political and religious, which

would have been possessed by the inhabitants of the ceded

territories, if the IXth article of the Treaty had been retained,

will be enjoyed by them without any difference under the

article which has been substituted

Second

The American Government, by suppressing the Xth article

of the Treaty of Guadalupe did not in any way intend to

annul the grants of lands made by Mexico in the ceded

terri-tories These grants, notwithstanding the suppression of the

article of the Treaty, preserve the legal value which they may

possess; and the grantees may cause their legitimate titles to

be acknowledged before the American tribunals

Conformably to the law of the United States, legitimate

titles to every description of property personal and real,

exist-ing in the ceded territories, are those which were legitimate

titles under the Mexican law in California and New Mexico

up to the I3th of May 1846, and in Texas up to the 2d March

1836

Third

The Government of the United States by suppressing theconcluding paragraph of article XIIth of the Treaty, did notintend to deprive the Mexican Republic of the free and unre-strained faculty of ceding, conveying or transferring at anytime (as it may judge best, the sum of the twelve millions ofdollars which the same Government of the United States is todeliver in the places designated by the amended article.And these explanations having been accepted by theMinister of Foreign Affairs of the Mexican Republic, hedeclared in name of his Government that with the under-standing conveyed by them, the same Government wouldproceed to ratify the Treaty of Guadalupe as modified by theSenate and Government of the United States In testimony ofwhich their Excellencies the aforesaid Commissioners andthe Minister have signed and sealed in quintuplicate the pres-ent protocol

[Seal] A H Sevier [Seal] Nathan Clifford [Seal] Luis de la Rosa

Treaty of Guadalupe Hidalgo 561

Gadsden Purchase Treaty

(1853)

In 1853, just five years after the signing of the Treaty of

Guadalupe Hidalgo, the United States negotiated the purchase

of a narrow strip of land in the Mesilla Valley of northern

Mexico The Gadsden Purchase, named after U.S negotiator

James Gadsden, covered approximately 30,000 square miles.

Mexico received $10 million in compensation from the United

States Used for the southern route of the railroad to the

Pacific, this land currently is located in the southern portions

of Arizona and New Mexico.

WHEREAS a treaty between the United States of America

and the Mexican Republic was concluded and signed at the

City of Mexico on the thirtieth day of December, one

thou-sand eight hundred and fifty-three; which treaty, as amended

by the Senate of the United States, and being in the English

and Spanish languages, is word for word as follows:

IN THE NAME OF ALMIGHTY GOD:

The Republic of Mexico and the United States of America

desiring to remove every cause of disagreement which might

interfere in any manner with the better friendship and

inter-course between the two countries, and especially in respect to

the true limits which should be established, when,

notwith-standing what was covenanted in the treaty of Guadalupe

Hidalgo in the year 1848, opposite interpretations have been

urged, which might give occasion to questions of serious

moment: to avoid these, and to strengthen and more firmly

maintain the peace which happily prevails between the two

republics, the President of the United States has, for this

pur-pose, appointed James Gadsden, Envoy Extraordinary and

Minister Plenipotentiary of the same, near the Mexican

gov-ernment, and the President of Mexico has appointed as

Plenipotentiary “ad hoc” his excellency Don Manuel Diez deBonilla, cavalier grand cross of the national and distinguishedorder of Guadalupe, and Secretary of State, and of the office

of Foreign Relations, and Don Jose Salazar Ylarregui andGeneral Mariano Monterde as scientific commissioners,invested with full powers for this negotiation, who, havingcommunicated their respective full powers, and finding them

in due and proper form, have agreed upon the articles lowing:

fol-ARTICLE I.

The Mexican Republic agrees to designate the following asher true limits with the United States for the future: retainingthe same dividing line between the two Californias as alreadydefined and established, according to the 5th article of thetreaty of Guadalupe Hidalgo, the limits between the tworepublics shall be as follows: Beginning in the Gulf of Mexico,three leagues from land, opposite the mouth of the RioGrande, as provided in the 5th article of the treaty ofGuadalupe Hidalgo; thence, as defined in the said article, upthe middle of that river to the point where the parallel of 31°47’ north latitude crosses the same; thence due west one hun-dred miles; thence south to the parallel of 31° 20’ north lati-tude; thence along the said parallel of 31° 20’ to the 111thmeridian of longitude west of Greenwich; thence in a straightline to a point on the Colorado River twenty English milesbelow the junction of the Gila and Colorado rivers; thence upthe middle of the said river Colorado until it intersects thepresent line between the United States and Mexico

For the performance of this portion of the treaty, each ofthe two governments shall nominate one commissioner, tothe end that, by common consent the two thus nominated,having met in the city of Paso del Norte, three months afterthe exchange of the ratifications of this treaty, may proceed tosurvey and mark out upon the land the dividing line stipu-lated by this article, where it shall not have already been sur-veyed and established by the mixed commission, according tothe treaty of Guadalupe, keeping a journal and makingproper plans of their operations For this purpose, if theyshould judge it necessary, the contracting parties shall be at

562

liberty each to unite to its respective commissioner, scientific

or other assistants, such as astronomers and surveyors, whose

concurrence shall not be considered necessary for the

settle-ment and of a true line of division between the two

Republics; that line shall be alone established upon which the

commissioners may fix, their consent in this particular being

considered decisive and an integral part of this treaty,

with-out necessity of ulterior ratification or approval, and withwith-out

room for interpretation of any kind by either of the parties

contracting

The dividing line thus established shall, in all time, be

faithfully respected by the two governments, without any

variation therein, unless of the express and free consent of the

two, given in conformity to the principles of the law of

nations, and in accordance with the constitution of each

country respectively

In consequence, the stipulation in the 5th article of the

treaty of Guadalupe upon the boundary line therein

described is no longer of any force, wherein it may conflict

with that here established, the said line being considered

annulled and abolished wherever it may not coincide with

the present, and in the same manner remaining in full force

where in accordance with the same

ARTICLE II.

The government of Mexico hereby releases the United

States from all liability on account of the obligations

con-tained in the eleventh article of the treaty of Guadalupe

Hidalgo; and the said article and the thirty-third article of the

treaty of amity, commerce, and navigation between the

United States of America and the United Mexican States

con-cluded at Mexico, on the fifth day of April, 1831, are hereby

abrogated

ARTICLE III.

In consideration of the foregoing stipulations, the

Government of the United States agrees to pay to the

govern-ment of Mexico, in the city of New York, the sum of ten

mil-lions of dollars, of which seven milmil-lions shall be paid

immediately upon the exchange of the ratifications of this

treaty, and the remaining three millions as soon as the

boundary line shall be surveyed, marked, and established

ARTICLE IV.

The provisions of the 6th and 7th articles of the treaty of

Guadalupe Hidalgo having been rendered nugatory, for the

most part, by the cession of territory granted in the first

arti-cle of this treaty, the said artiarti-cles are hereby abrogated and

annulled, and the provisions as herein expressed substituted

therefor The vessels, and citizens of the United States shall, in

all time, have free and uninterrupted passage through the

Gulf of California, to and from their possessions situated

north of the boundary line of the two countries It being

understood that this passage is to be by navigating the Gulf of

California and the river Colorado, and not by land, without

the express consent of the Mexican government; and

pre-cisely the same provisions, stipulations, and restrictions, in all

respects, are hereby agreed upon and adopted, and shall be

scrupulously observed and enforced by the two contracting

governments in reference to the Rio Colorado, so far and forsuch distance as the middle of that river is made their com-mon boundary line by the first article of this treaty

The several provisions, stipulations, and restrictions tained in the 7th article of the treaty of Guadalupe Hidalgoshall remain in force only so far as regards the Rio Bravo delForte, below the initial of the said boundary provided in thefirst article of this treaty; that is to say, below the intersection

con-of the 31° 47’ parallel con-of latitude, with the boundary lineestablished by the late treaty dividing said river from itsmouth upwards, according to the fifth article of the treaty ofGuadalupe

ARTICLE V.

All the provisions of the eighth and ninth, sixteenth andseventeenth articles of the treaty of Guadalupe Hidalgo, shallapply to the territory ceded by the Mexican Republic in thefirst article of the present treaty, and to all the rights of per-sons and property, both civil and ecclesiastical, within thesame, as fully and as effectually as if the said articles wereherein again recited and set forth

ARTICLE VI.

No grants of land within the territory ceded by the firstarticle of this treaty bearing date subsequent to the day—twenty-fifth of September—when the minister and sub-scriber to this treaty on the part of the United States,proposed to the Government of Mexico to terminate thequestion of boundary, will be considered valid or be recog-nized by the United States, or will any grants made previously

be respected or be considered as obligatory which have notbeen located and duly recorded in the archives of Mexico

ARTICLE VII.

Should there at any future period (which God forbid)occur any disagreement between the two nations whichmight lead to a rupture of their relations and reciprocalpeace, they bind themselves in like manner to procure byevery possible method the adjustment of every difference;and should they still in this manner not succeed, never willthey proceed to a declaration of war, without having previ-ously paid attention to what has been set forth in articletwenty-one of the treaty of Guadalupe for similar cases;which article, as well as the twenty-second is here reaffirmed

ARTICLE VIII.

The Mexican Government having on the 5th of February,

1853, authorized the early construction of a plank and road across the Isthmus of Tehuantepec, and, to secure thestable benefits of said transit way to the persons and mer-chandise of the citizens of Mexico and the United States, it isstipulated that neither government will interpose any obsta-cle to the transit of persons and merchandise of both nations;and at no time shall higher charges be made on the transit ofpersons and property of citizens of the United States, thanmay be made on the persons and property of other foreignnations, nor shall any interest in said transit way, nor in theproceeds thereof, be transferred to any foreign government.The United States, by its agents, shall have the right to

rail-Gadsden Purchase Treaty 563

transport across the isthmus, in closed bags, the mails of the

United States not intended for distribution along the line of

communication; also the effects of the United States

govern-ment and its citizens, which may be intended for transit, and

not for distribution on the isthmus, free of custom-house or

other charges by the Mexican government Neither passports

nor letters of security will be required of persons crossing the

isthmus and not remaining in the country

When the construction of the railroad shall be completed,

the Mexican government agrees to open a port of entry in

addition to the port of Vera Cruz, at or near the terminus of

said road on the Gulf of Mexico

The two governments will enter into arrangements for the

prompt transit of troops and munitions of the United States,

which that government may have occasion to send from one

part of its territory to another, lying on opposite sides of the

continent

The Mexican government having agreed to protect with its

whole power the prosecution, preservation, and security of

the work, the United States may extend its protection as it

shall judge wise to it when it may feel sanctioned and

war-ranted by the public or international law

ARTICLE IX.

This treaty shall be ratified, and the respective ratifications

shall be exchanged at the city of Washington within the exact

period of six months from the date of its signature, or sooner,

if possible

In testimony whereof, we, the plenipotentiaries of the

con-tracting parties, have hereunto affixed our hands and seals at

Mexico, the thirtieth (30th) day of December, in the year of

our Lord one thousand eight hundred and fifty-three, in thethirty-third year of the independence of the Mexican repub-lic, and the seventy-eighth of that of the United States

JAMES GADSDEN, MANUEL DIEZ DE BONILLA JOSE SALAZAR YLARBEGUI

J MARIANO MONTERDE,

And whereas the said treaty, as amended, has been dulyratified on both parts, and the respective ratifications of thesame have this day been exchanged at Washington, byWILLIAM L MARCY, Secretary of State of the United States,and SENOR GENERAL DON JUAN N ALMONTE, EnvoyExtraordinary and Minister Plenipotentiary of the MexicanRepublic, on the part of their respective Governments:Now, therefore, be it known that I, FRANKLIN PIERCE,President of the United States of America, have caused thesaid treaty to be made public, to the end that the same, andevery clause and article thereof, may be observed and fulfilledwith good faith by the United States and the citizens thereof

In witness whereof I have hereunto set my hand andcaused the seal of the United States to be affixed

Done at the city of Washington, this thirtieth day of June,

in the year of our Lord one thousand eight hundred and four, and of the Independence of the United States the seventy-eighth

fifty-BY THE PRESIDENT: FRANKLIN PIERCE,

W L MARCY, Secretary of State.

564 Gadsden Purchase Treaty

Signed into law by the Northern Republican Congress during

the Civil War, the Homestead Act allowed individuals to

acquire 160 acres of public land for a nominal filing fee after

five years of residency or for $1.25 per acre after just six

months of residency Between 1862 and 1986, more than 25

percent of all public lands were disposed of under this act The

total number of acres amounted to 287,500,000

Home-steaders, enticed by the opportunity to receive free land, helped

settle the West.

Source: Congressional Globe online, 37th Congress, 2nd

session, pp 352–353, http://www.loc.gov

An act to Secure Homesteads to actual Settlers on the

Public Domain.

Be it enacted by the Senate and House of Representatives of

the United States of America in Congress assembled, That any

person who is the head of a family, or who has arrived at the

age of twenty-one years, and is a citizen of the United States,

or who shall have filed his declaration of intention to become

such, as required by the naturalization laws of the United

States, and who has never borne arms against the United

States Government or given aid and comfort to its enemies,

shall, from and after the first of January, eighteen hundred and

sixty-three, be entitled to enter one quarter section or a less

quantity of unappropriated public lands, upon which said

person may have filed a preemption claim, or which may, at

the time the application is made, be subject to preemption at

one dollar and twenty-five cents, or less, per acre; or eighty

acres or less of such unappropriated lands, at two dollars and

fifty cents per acre, to be located in a body, in conformity to

the legal subdivisions of the public lands, and after the same

shall have been surveyed: Provided, That any person owning

and residing on land may, under the provisions of this act,

enter other land lying contiguous to his or her said land,

which shall not, with the land so already owned and occupied,

exceed in the aggregate, one hundred and sixty acres

Section 2 And be it further enacted, That the person

applying for the benefit of this act shall, upon application to

the register of the land office in which he or she is about to

make such entry, make affidavit before the said register orreceiver that he or she is the head of a family, or is twenty-oneyears or more of age, or shall have performed service in thearmy or navy of the United States, and that he has neverborne arms against the Government of the United States orgiven aid and comfort to its enemies, and that such applica-tion is made for his or her exclusive use and benefit, and thatsaid entry is made for the purpose of actual settlement andcultivation, and not either directly or indirectly for the use orbenefit of any other person or persons whomsoever; andupon filing the said affidavit with the register or receiver, and

on payment of ten dollars, he or she shall thereupon be mitted to enter the quantity of land specified: Provided, how-ever, That no certificate shall be given or patent issuedtherefor until the expiration of five years from the date ofsuch entry; and if, at the expiration of such time, or at anytime within two years thereafter, the person making suchentry; or, if he be dead, his widow; or in case of her death, hisheirs or devisee; or in the case of a widow making such entry,her heirs or devisee, in the case of her death; shall prove bytwo credible witnesses that he, she, or they have resided upon

per-or cultivated the same fper-or the term of five years immediatelysucceeding the time of filing the affidavit aforesaid, and shallmake affidavit that no part of said land has been alienated,and he has borne true allegiance to the Government of theUnited States; then, in such case, he, she, or they, if at thattime a citizen of the United States, shall be entitled to apatent, as in other cases provided for by law: And, provided,further, That in case of the death of both father and mother,leaving an infant child, or children, under twenty-one years

of age, the right and fee shall enure to the benefit of saidinfant child or children; and the executor, administrator, orguardian may, at any time within two years after the death ofthe surviving parent, and in accordance with the laws of theState in which such children for the time being have theirdomicil, sell said land for the benefit of said infants, but for

no other purpose; and the purchaser shall acquire theabsolute title by the purchase, and be entitled to a patent fromthe United States, on payment of the office fees and sum ofmoney herein specified

Homestead Act

(1862)

565

Section 3 And be it further enacted, That the register of

the land office shall note all such applications on the tract

books and plats of his office, and keep a register of all such

entries, and make return thereof to the General Land Office,

together with the proof upon which they have been founded

Section 4 And be it further enacted, That no lands

acquired under the provisions of this act shall in any event

become liable to the satisfaction of any debt or debts

con-tracted prior to the issuing of the patent therefor

Section 5 And be it further enacted, That if, at any time

after the filing of the affidavit, as required in the second

sec-tion of this act, and before the expirasec-tion of the five years

aforesaid, it shall be proven, after due notice to the settler, to

the satisfaction of the register of the land office, that the

per-son having filed such affidavit shall have actually changed his

or her residence, or abandoned the said land for more than

six months at any time, then and in that event the land so

entered shall revert to the government

Section 6 And be it further enacted, That no individual

shall be permitted to acquire title to more than one quarter

section under the provisions of this act; and that the

Commissioner of the General Land Office is hereby required

to prepare and issue such rules and regulations, consistent

with this act, as shall be necessary and proper to carry its

pro-visions into effect; and that the registers and receivers of the

several land offices shall be entitled to receive the same

com-pensation for any lands entered under the provisions of this

act that they are now entitled to receive when the same

quan-tity of land is entered with money, one half to be paid by the

person making the application at the time of so doing, and

the other half on the issue of the certificate by the person to

whom it may be issued; but this shall not be construed to

enlarge the maximum of compensation now prescribed by

law for any register or receiver: Provided, That nothing tained in this act shall be so construed as to impair or inter-fere in any manner whatever with existing preemption rights:And provided, further, That all persons who may have filedtheir applications for a preemption right prior to the passage

con-of this act, shall be entitled to all privileges con-of this act:Provided, further, That no person who has served or mayhereafter serve, for period of not less than fourteen days inthe army or navy of the United States, either regular or vol-unteer, under the laws thereof, during the existence of anactual war, domestic or foreign, shall be deprived of the ben-efits of this act of account of not having attained the age oftwenty-one years

Section 7 And be it further enacted, That the fifth section

of the act entitled “An act in addition to an act more ally to provide for the punishment of certain crimes againstthe United States, and for other purposes,” approved the third

effectu-of March, in the year eighteen hundred and fifty-seven, shallextend to all oaths, affirmations, and affidavits, required orauthorized by this act

Section 8 And be it further enacted, That nothing in thisact shall be so construed as to prevent any person who hasavailed him or herself of the benefits of the first section of thisact, from paying the minimum price, or the price to whichthe same may have graduated, for the quantity of land soentered at any time before the expiration of the five years, andobtaining a patent therefor from the government, as in othercases provided by law, on making proof of settlement andcultivation as provided by existing laws granting preemptionrights

Approved, May 20, 1862.

566 Homestead Act

On January 1, 1863, President Abraham Lincoln declared that

all slaves in areas of open rebellion were free Although the

Emancipation Proclamation did not have any immediate

effect on the status of slaves in the Confederacy, after the Civil

War the United States abolished slavery with the ratification of

the Thirteenth Amendment to the Constitution The end of

slavery had a dramatic impact on the economic structure of

the South Individuals lost a large portion of their wealth as

slaves received their freedom with no compensation to the

prior owners Consequently, the primary asset of the Southern

whites remained the land, which they rented out to former

slaves who became tenant farmers.

Source: http://www.yale.edu/lawweb/avalon/emancipa.htm.

By the President of the United States of America:

A Proclamation.

Whereas, on the twenty-second day of September, in the

year of our Lord one thousand eight hundred and sixty-two,

a proclamation was issued by the President of the United

States, containing, among other things, the following, to wit:

“That on the first day of January, in the year of our Lord

one thousand eight hundred and sixty-three, all persons held

as slaves within any State or designated part of a State, the

people whereof shall then be in rebellion against the United

States, shall be then, thenceforward, and forever free; and the

Executive Government of the United States, including the

military and naval authority thereof, will recognize and

maintain the freedom of such persons, and will do no act or

acts to repress such persons, or any of them, in any efforts

they may make for their actual freedom

“That the Executive will, on the first day of January

afore-said, by proclamation, designate the States and parts of States,

if any, in which the people thereof, respectively, shall then be

in rebellion against the United States; and the fact that any

State, or the people thereof, shall on that day be, in good faith,

represented in the Congress of the United States by members

chosen thereto at elections wherein a majority of the

quali-fied voters of such State shall have participated, shall, in the

absence of strong countervailing testimony, be deemed

con-clusive evidence that such State, and the people thereof, arenot then in rebellion against the United States.”

Now, therefore I, Abraham Lincoln, President of the UnitedStates, by virtue of the power in me vested as Commander-in-Chief, of the Army and Navy of the United States in time ofactual armed rebellion against the authority and government

of the United States, and as a fit and necessary war measure forsuppressing said rebellion, do, on this first day of January, inthe year of our Lord one thousand eight hundred and sixty-three, and in accordance with my purpose so to do publiclyproclaimed for the full period of one hundred days, from theday first above mentioned, order and designate as the Statesand parts of States wherein the people thereof respectively, arethis day in rebellion against the United States, the following, towit: Arkansas, Texas, Louisiana, (except the Parishes of St.Bernard, Plaquemines, Jefferson, St John, St Charles, St.James Ascension, Assumption, Terrebonne, Lafourche, St.Mary, St Martin, and Orleans, including the City of NewOrleans) Mississippi, Alabama, Florida, Georgia, SouthCarolina, North Carolina, and Virginia, (except the forty-eightcounties designated as West Virginia, and also the counties ofBerkley, Accomac, Northampton, Elizabeth City, York,Princess Ann, and Norfolk, including the cities of Norfolk andPortsmouth), and which excepted parts, are for the present,left precisely as if this proclamation were not issued

And by virtue of the power, and for the purpose said, I do order and declare that all persons held as slaveswithin said designated States, and parts of States, are, andhenceforward shall be free; and that the Executive govern-ment of the United States, including the military and navalauthorities thereof, will recognize and maintain the free-dom of said persons

afore-And I hereby enjoin upon the people so declared to be free

to abstain from all violence, unless in necessary self-defence;and I recommend to them that, in all cases when allowed,they labor faithfully for reasonable wages

And I further declare and make known, that such persons

of suitable condition, will be received into the armed service

of the United States to garrison forts, positions, stations, andother places, and to man vessels of all sorts in said service

Emancipation Proclamation

(1863)

567

And upon this act, sincerely believed to be an act of justice,

warranted by the Constitution, upon military necessity, I

invoke the considerate judgment of mankind, and the

gra-cious favor of Almighty God

In witness whereof, I have hereunto set my hand and

caused the seal of the United States to be affixed

Done at the City of Washington, this first day of January,

in the year of our Lord one thousand eight hundred and sixtythree, and of the Independence of the United States ofAmerica the eighty-seventh

By the President: ABRAHAM LINCOLN WILLIAM H SEWARD, Secretary of State.

568 Emancipation Proclamation

Although the Homestead Act encouraged Americans to settle

in certain parts of the West, Congress also recognized the

need to encourage growth of timber on the prairies Under

the Timber Culture Act, settlers could claim an additional

160 acres of public land in the region for a small fee if they

planted one-quarter of the land in trees This policy not only

enticed settlers onto the Great Plains, which would become

the breadbasket of the United States, but also prevented soil

erosion.

Source: Public Statutes at Large, Vol 17, p 602.

An Act to encourage the Growth of Timber on western

Prairies.

Be it enacted by the Senate and the House of

Represen-tatives of the United States of America in Congress

assem-bled, That any person who shall plant, protect, and keep in a

healthy, growing condition for ten years forty acres of timber,

the trees thereon not being more than twelve feet apart each

way on any quarter-section of any of the public lands of the

United States shall be entitled to a patent for the whole of said

quarter-section at the expiration of said ten years, on making

proof of such fact by not less than two credible witnesses;

Provided, That only one quarter in any section shall be thus

granted

Section 2 That the person applying for the benefit of this

act shall, upon application to the register of the land-office in

which he or she is about to make such entry, make affidavit

before said register or receiver that said entry is made for the

cultivation of timber, and upon filing said affidavit with said

register and receiver, and on payment of ten dollars, he or she

shall thereupon be permitted to enter the quantity of land

specified: Provided however, That no certificate shall be given

at patent issue therefor until after the expiration of at least ten

years from the date of such entry; and if at the expiration of

such time, or at any time within three years thereafter, the

person making such entry, or if he or she be dead, his or her

heirs or legal representatives, shall prove by two credible

wit-nesses that he, she, or they have planted, and not for less than

ten years have cultivated and protected such quantity and

character of timber as aforesaid, they shall receive the patentfor such quarter-section of land

Section 3 That if at any time after the filing of said davit, and prior to the issuing of the patent for said land, itshall be proven after due notice to the party making suchentry and claiming to cultivate such timber, to the satisfac-tion of the register of the land-office that such person hasabandoned or failed to cultivate, protect and keep in goodcondition such timber, then, and in that event, said land shallrevert to the United States

affi-Section 4 That each and every person who, under the visions of an act entitled “An act to secure homesteads toactual settlers on the public domain” approved May twenti-eth, eighteen hundred and sixty-two, or any amendmentthereto, having a homestead on said public domain, who atthe end of the third year of his or her residence thereon, shallhave had under cultivation, for two years, one acre of timber,the trees thereon not being more than twelve feet apart eachway, and in a good, thrifty condition, for each and every six-teen acres of said homestead, shall upon due proof of saidfact by two credible witnesses receive his or her patent for saidhomestead

pro-Section 5 That no land acquired under provisions of thisact shall, in any event, become liable to the satisfaction ofany debt or debts contracted prior to the issuing of patenttherefor

Section 6 That the commissioner of the general office is hereby required to prepare and issue such rules andregulations, consistent with this act, as shall be necessary andproper to carry its provisions into effect; and the registers andthe receivers of the several land-offices shall be entitled toreceive the same compensation for any lands entered underthe provisions of this that they are now entitled to receivewhen the quantity of land is entered without money.Section 7 That the fifth section of the act entitled “An act

land-in addition to an act to punish crimes agaland-inst the UnitedStates, and for other purposes” approved March third, eight-een hundred and fifty-seven, shall extend to all oaths, affir-mations, and affidavits required or authorized by this act

Approved, March 3, 1873.

Timber Culture Act

(1873)

569

Timber and Stone Culture

Act (1878)

Like the Homestead and Timber Culture Acts, the Timber and

Stone Culture Act allowed Americans settlers to obtain another

160 acres of public land Under this piece of legislation the

land could be purchased for $1.25 per acre Only land located

in the far western states could be obtained in this manner.

Since much of the land remained unfit for cultivation, the

government offered it for sale at a reduced rate.

Source: Public Statutes at Large, Vol 20, pp 89–91.

An act for the sale of timber lands in the States of

California, Oregon, Nevada, and in Washington Territory.

Be it enacted by the Senate and House of Representatives

of the United States of America in Congress assembled, That

surveyed public lands of the United States within the States of

California, Oregon and Nevada and in Washington Territory,

not included within military, Indian, or other reservations of

the United States, valuable chiefly for timber, but unfit for

cultivation, and which have not been offered at public sale

according to law, may be sold to citizens of the United States,

or persons who have declared their intention to become such,

in quantities not exceeding one hundred and sixty acres to

any one person or associations of persons, at the minimum

price of two dollars and fifty cents per acre; and lands

valu-able chiefly for stone may be sold on the same terms as

tim-ber lands: Provided, That nothing herein contained shall

defeat or impair any bona-fide claim under any law of the

United States, or authorize the sale of any mining claim, or

the improvements of any bona-fide settler, or lands

contain-ing gold, silver, cinnabar, copper, or coal, or lands selected by

said States under any law of the United States donating lands

for internal improvements, education, or other purposes:

And provided further, That none of the rights conferred by

the act approved July twenty-six, eighteen hundred and

sixty-six, entitled “An act granting the right of way to ditch and

canal owners over the public lands, and for other purposes,”

shall be abrogated by this act; and all patents granted shall be

subject to any vested and accrued water rights, or rights to

ditches and reservoirs used in connection with such water

rights, as may have been acquired under and by the

provi-sions of said act; and such rights shall be expressly reserved inany patent issued under this act

Sec 2 That any person desiring to avail himself of the visions of this act shall file with the register of the proper dis-trict a written statement in duplicate, one of which is to betransmitted to the General Land Office, designating by legalsubdivisions the particular tract of land he desires to pur-chase, setting forth that the same is unfit for cultivation, andvaluable chiefly for its timber or stone; that it is uninhabited;contains no mining or other improvements, except for ditch

pro-or canal purposes, where any such do exist, save such as weremade by or belong to the applicant, nor, as deponent verilybelieves, any valuable deposit of gold, silver, cinnabar, copper,

or coal; that deponent had made no other application underthis act; that he does not apply to purchase the same on spec-ulation, but in good faith to appropriate it to his own exclu-sive use and benefit; and that he has not, directly or indirectly,made any agreement or contract, in any way or manner, withany person or persons whatsoever, by which the title which hemay acquire from the government of the United Statesshould inure, in whole or in part, to the benefit of any personexcept himself; which statement must be verified by the oath

of the applicant before the register or the receiver of the office within the district where the land is situated; and if anyperson taking such oath shall swear falsely in the premises, heshall be subject to all the pains and penalties of perjury, andshall forfeit the money which he may have paid for said lands,and all right and title to the same; and any grant or con-veyance which he may have made, except in the hands of thebona-fide purchasers, shall be null and void

land-Sec 3 That upon the filing of said statement, as provided

in the second section of this act, the register of the land office,shall post a notice of such application embracing a descrip-tion of the land by legal subdivisions, in his office, for a pe-riod of sixty days, and shall furnish the applicant a copy ofthe same for publication, at the expense of such applicant, in

a newspaper published nearest the location of the premises,for a like period of time; and after the expiration of said sixtydays, if no adverse claim shall have been filed, the persondesiring to purchase shall furnish to the register of the land-

570

office satisfactory evidence, first, that said notice of the

appli-cation prepared by the register as aforesaid was duly

pub-lished in a newspaper as herein required; secondly, that the

land is of the character contemplated in this act, unoccupied

and without improvements, other than those excepted, either

mining or agricultural, and that it apparently contains no

valuable deposits of gold, silver, cinnabar, copper, or coal; and

upon payment to the proper officer of the purchase money of

said land, together with the fees of the register and the

re-ceiver, as provided for in case of mining claims in the twelfth

section of the act approved May tenth, eighteen hundred and

seventy-two, the applicant may be permitted to enter said

tract, and, on the transmission to the General Land Office of

the papers and testimony in the case, a patent shall issue

thereon: Provided, That any person having a valid claim to

any portion of the land may object, in writing, to the issuance

of a patent to lands so held by him, stating the nature of his

claim thereto; and evidence shall be taken, and the merits of

said objection shall be determined by the officers of the

land-office, subject to appeal, as in other land cases Effect shall be

given to the foregoing provisions of this act by regulations to

be prescribed by the Commissioner of the General Land

Office

Sec 4 That after the passage of this act it shall be

unlaw-ful to cut, or cause or procure to be cut, or wantonly destroy,

any timber growing on any lands of the United States, in said

States and Territory or remove, or cause to be removed, any

timber from said public lands, with intent to export or

dis-pose of the same; and no owner, director, or agent of any

rail-road, shall knowingly transport the same, or any lumber

manufactured therefrom; and any person violating the

provi-sions of this section shall be guilty of a misdemeanor, and, on

conviction, shall be fined for every such offense a sum not lessthan one hundred nor more than one thousand dollar:Provided, That nothing herein contained shall prevent anyminer or agriculturist from clearing his land in the ordinaryworking of his mining claim, or preparing his farm for tillage,

or from taking the timber necessary to support his ments, or the taking of the timber for the use of the UnitedStates; and the penalties herein provided shall not take effectuntil ninety days after the passage of this act

improve-Sec 5 That any person prosecuted in said States andTerritory for violating section two thousand four hundredand sixty-one of the Revised Statutes of the United Stateswho is not prosecuted for cutting timber for export from theUnited States, may be relieved from further prosecution andliability therefor upon payment, into the court wherein suchaction is pending, of the sum of two dollars and fifty cents peracre for all lands on which he shall have cut or caused to becut timber, or removed or caused to be removed the same:Provided, That nothing contained in this section shall beconstrued as granting to the person hereby relieved the title

to said lands for said payment; but he shall have the right topurchase the same upon the same terms and conditions asother persons, as provided hereinbefore in this act: And fur-ther provided, that all moneys collected under this act shall

be covered into the Treasury of the United States And sectionfour thousand seven hundred and fifty-one of the RevisedStatutes is hereby repealed, so far as it relates to the States andTerritory herein named

Sec 6 That all acts and parts of this act inconsistent withthe provisions of this act are hereby repealed

Approved, June 3, 1878.

Timber and Stone Culture Act 571

Sherman Anti-Trust Act

(1890)

Initially passed to prevent big business from forming

monopolies, the Sherman Anti-Trust Act resulted in a

case against the sugar company E C Knight and

Company Although the sugar producer controlled 98

percent of the market, the Supreme Court ruled that a

monopoly did not exist However, the act was used

successfully against the American Railway Union during

the 1894 Pullman strike, when all railroad employees

went out on strike Congress would eventually pass the

Clayton Anti-Trust Act, which would be used to bust up

the trusts.

Source: Public Statutes at Large, Vol 26, pp 209–210.

An act to protect trade and commerce against unlawful

restraints and monopolies.

Be it enacted by the Senate and the House of

Representa-tives of the United States of America in Congress assembled,

Sec 1 Every contract, combination in the form and trust

or otherwise, or conspiracy, in restraint of trade or commerce

among the United States, or with foreign nations, is hereby

declared to be illegal Every person who shall make any such

contract or engage in any such combination or conspiracy,

shall be deemed guilty of a misdemeanor, and, on conviction

thereof, shall be punished by fine not exceeding five thousand

dollars, or by imprisonment not exceeding one year, or by

both said punishments, in the discretion of the court

Sec 2 Every person who shall monopolize, or attempt to

monopolize, or combine or conspire with any other person

or persons, to monopolize any part of the trade or commerce

among the several States, or with foreign nations, shall be

deemed guilty of a misdemeanor, and, on conviction thereof,

shall be punished by fine not exceeding five thousand dollars,

or by imprisonment not exceeding one year, or both said

punishments, in the discretion of the court

Sec 3 Every contract, combination in form of trust or

otherwise, or conspiracy, in restraint of trade or commerce in

any Territory of the United States or of the District of

Columbia, or in restraint of trade and commerce between

any such Territory and another, or between any such

Terri-tory or Territories and any State or States or the District ofColumbia, or with foreign nations, or between the District ofColumbia and any State or States or foreign nations, is herebydeclared illegal Every person who shall make any such con-tract or engage in any such combination or conspiracy, shall

be deemed guilty of a misdemeanor, and, on convictionthereof, shall be punished by fine not exceeding five thousanddollars, or by imprisonment not exceeding one year, or byboth said punishments, in the discretion of the court.Sec 4 The several circuit courts of the United States arehereby invested with jurisdiction to prevent and restrain vio-lations of this act; and it shall be the duty of the several dis-trict attorneys of the United States, in their respectivedistricts, under the direction of the Attorney General, toinstitute proceedings in equity to prevent and restrain suchviolations Such proceedings may be by way of petition set-ting forth the case and praying that such violation shall beenjoined or otherwise prohibited When the parties com-plained of shall have been duly notified of such petition thecourt shall proceed, as soon as may be, to the hearing anddetermination of the case; and pending such petition andbefore final decree, the court may at any time make such tem-porary restraining order or prohibition as shall be deemedjust in the premises

Sec 5 Whenever it shall appear to the court before whichany proceeding under section four of this act may be pend-ing, that the ends of justice require that the other partiesshould be brought before the court, the court may causethem to be summoned, whether they reside in the district inwhich the court is held or not; and subpoenas to that endmay be served in any district by the marshal thereof

Sec 6 Any property owned under any contract or by anycombination, or pursuant to any conspiracy (and being thesubject thereof) mentioned in section one of this act, andbeing in the course of transportation from one State toanother, or to a foreign country, shall be forfeited to theUnited States, and may be seized and condemned by like pro-ceedings as those provided by law for the forfeiture, seizure,and condemnation of property imported into the UnitedStates contrary to law

572

Sec 7 Any person who shall be injured in his business or

property by any other person or corporation by reason of

anything forbidden or declared to be unlawful by this act,

may sue therefor in any circuit court of the United States in

the district in which the defendant resides or is found,

with-out respect to the amount in controversy, and shall recover

three fold the damages by him sustained, and the costs of suit,

including a reasonable attorney’s fee

Sec 8 That the word “person,” or “persons,” wherever used

in this act shall be deemed to include corporations and ciations existing under or authorized by the laws of either theUnited States, the laws of any of the Territories, or the laws ofany State, or the laws of any foreign country

asso-Approved, July 2, 1890.

Sherman Anti-Trust Act 573

Panama Canal Treaty

of 1903

The construction of the Panama Canal opened up trade

between the Pacific and the Atlantic Oceans for the

United States as well as the rest of the world Although

previous to the building of the canal ships could

circumvent South America to reach the other ocean, the

canal reduced the amount of time and cost of shipping

goods The United States controlled a 10-mile wide strip

of land along the 40-mile canal until 1978 when the canal

was ceded back to the country of Panama effective on

December 31, 1999.

Source: http://www.owecc.net/his/09/panama_canal_treaty.

htm

Concluded November 18, 1903; ratification advised by the

Senate February 23, 1904; ratified by President February 25,

1904; ratifications exchanged February 26, 1904; proclaimed

February 26, 1904 (U.S Stats., vol 33.)

The United States of America and the Republic of Panama

being desirous to insure the construction of a ship canal

across the Isthmus of Panama to connect the Atlantic and

Pacific oceans, and the Congress of the United States of

America having passed an act approved June 28, 1902, in

fur-therance of that object, by which the President of the United

States is authorized to acquire within a reasonable time the

control of the necessary territory of the Republic of

Colombia, and the sovereignty of such territory being actually

vested in the Republic of Panama, the high contracting parties

have resolved for that purpose to conclude a convention and

have accordingly appointed as their plenipotentiaries,

The President of the United States of America, John Hay,

Secretary of State, and

The Government of the Republic of Panama, Philippe

Bunau-Varilla, Envoy Extraordinary and Minister

Plenipo-tentiary of the Republic of Panama, thereunto specially

empowered by said government, who after communicating

with each other their respective full powers, found to be in

good and due form, have agreed upon and concluded the

The Republic of Panama further grants in like manner tothe United States in perpetuity all islands within the limits ofthe zone above described and in addition thereto the group

of small islands in the Bay of Panama, named, Perico, Naos,Culebra and Flamenco

ARTICLE III

The Republic of Panama grants to the United States all therights, power and authority within the zone mentioned anddescribed in Article II of this agreement and within the lim-its of all auxiliary lands and waters mentioned and described

in said Article II which the United States would possess and

574

exercise if it were the sovereign of the territory within which

said lands and waters are located to the entire exclusion of the

exercise by the Republic of Panama of any such sovereign

rights, power or authority

ARTICLE IV

As rights subsidiary to the above grants the Republic of

Panama grants in perpetuity to the United States the right to

use the rivers, streams, lakes and other bodies of water within

its limits for navigation, the supply of water or water-power

or other purposes, so far as the use of said rivers, streams,

lakes and bodies of water and the waters thereof may be

nec-essary and convenient for the construction, maintenance,

operation, sanitation and protection of the said Canal

ARTICLE V

The Republic of Panama grants to the United States in

perpetuity a monopoly for the construction, maintenance

and operation of any system of communication by means of

canal or railroad across its territory between the Caribbean

Sea and the Pacific Ocean

ARTICLE VI

The grants herein contained shall in no manner

invali-date the titles or rights of private land holders or owners of

private property in the said zone or in or to any of the lands

or waters granted to the United States by the provisions of

any Article of this treaty, nor shall they interfere with the

rights of way over the public roads passing through the said

zone or over any of the said lands or waters unless said

rights of way or private rights shall conflict with rights

herein granted to the United States in which case the rights

of the United States shall be superior All damages caused to

the owners of private lands or private property of any kind

by reason of the grants contained in this treaty or by reason

of the operations of the United States, its agents or

employ-ees, or by reason of the construction, maintenance,

opera-tion, sanitation and protection of the said Canal or of the

works of sanitation and protection herein provided for,

shall be appraised and settled by a joint Commission

appointed by the Governments of the United States and the

Republic of Panama, whose decisions as to such damages

shall be final and whose awards as to such damages shall be

paid solely by the United States No part of the work on said

Canal or the Panama railroad or on any auxiliary works

relating thereto and authorized by the terms of this treaty

shall be prevented, delayed or impeded by or pending such

proceedings to ascertain such damages The appraisal of

said private lands and private property and the assessment

of damages to them shall be based upon their value before

the date of this convention

ARTICLE VII

The Republic of Panama grants to the United States

with-in the limits of the cities of Panama and Colon and their

adja-cent harbors and within the territory adjaadja-cent thereto the

right to acquire by purchase or by the exercise of the right ofeminent domain, any lands, buildings, water rights or otherproperties necessary and convenient for the construction,maintenance, operation and protection of the Canal and ofany works of sanitation, such as the collection and disposi-tion of sewage and the distribution of water in the said cities

of Panama and Colon, which in the discretion of the UnitedStates may be necessary and convenient for the construction,maintenance, operation, sanitation and protection of the saidCanal and railroad All such works of sanitation, collectionand disposition of sewage and distribution of water in thecities of Panama and Colon shall be made at the expense ofthe United States, and the Government of the United States,its agents or nominees shall be authorized to impose and col-lect water rates and sewerage rates which shall be sufficient toprovide for the payment of interest and the amortization ofthe principal of the cost of said works within a period of fiftyyears and upon the expiration of said term of fifty years thesystem of sewers and water works shall revert to and becomethe properties of the cities of Panama and Colon respectively,and the use of the water shall be free to the inhabitants ofPanama and Colon, except to the extent that water rates may

be necessary for the operation and maintenance of said tem of sewers and water

sys-The Republic of Panama agrees that the cities of Panamaand Colon shall comply in perpetuity with the sanitary ordi-nances whether of a preventive or curative character pre-scribed by the United States and in case the Government ofPanama is unable or fails in its duty to enforce this compli-ance by the cities of Panama and Colon with the sanitaryordinances of the United States the Republic of Panamagrants to the United States the right and authority to enforcethe same

The same right and authority are granted to the UnitedStates for the maintenance of public order in the cities ofPanama and Colon and the territories and harbors adjacentthereto in case the Republic of Panama should not be, in thejudgment of the United States, able to maintain such order

ARTICLE VIII

The Republic of Panama grants to the United States allrights which it now has or hereafter may acquire to be prop-erty of the New Panama Canal Company and the PanamaRailroad Company as a result of the transfer of sovereigntyfrom the Republic of Colombia to the Republic of Panamaover the Isthmus of Panama and authorizes the New PanamaCanal Company to sell and transfer to the United States itsrights, privileges, properties and concessions as well as thePanama Railroad and all the shares or part of the shares ofthat company; the public lands situated outside of thezone described in Article II of this treaty now included inthe concessions to both said enterprises and not required inthe construction or operation of the Canal shall revert to theRepublic of Panama except any property now owned by or inthe possession of said companies within Panama or Colon orthe ports or terminals thereof

Panama Canal Treaty of 1903 575

ARTICLE IX

The United States agrees that the ports at either entrance

of the Canal and the waters thereof, and the Republic of

Panama agrees that the towns of Panama and Colon shall be

free for all time so that there shall not be imposed or collected

custom house tolls, tonnage, anchorage, lighthouse, wharf,

pilot, or quarantine dues or any other charges or taxes of any

kind upon any vessel using or passing through the Canal or

belonging to or employed by the United States, directly or

indirectly, in connection with the construction, maintenance,

operation, sanitation and protection of the main Canal, or

auxiliary works, or upon the cargo, officers, crew, or

passen-gers of any such vessels, except such tolls and charges as may

be imposed by the United States for the use of the Canal and

other works, and except tolls and charges imposed by the

Republic of Panama upon merchandise destined to be

intro-duced for the consumption of the rest of the Republic of

Panama, and upon vessels touching at the ports of Colon and

Panama and which do not cross the Canal

The Government of the Republic of Panama shall have the

right to establish in such ports and in the towns of Panama

and Colon such houses and guards as it may deem necessary

to collect duties on importations destined to other portions

of Panama and to prevent contraband trade The United

States Shall have the right to make use of the towns and

har-bors of Panama and Colon as places of anchorage, and for

making repairs, for loading, unloading, depositing, or

trans-shipping cargoes either in transit or destined for the service

of the Canal and for other works pertaining to the Canal

ARTICLE X

The Republic of Panama agrees that there shall not be

imposed any taxes, national, municipal, departmental, or of

any other class, upon the Canal, the railways and auxiliary

works, tugs and other vessels employed in the service of the

Canal, store houses, work shops, offices, quarters for laborers,

factories of all kinds, warehouses, wharves, machinery and

other works, property, and effects appertaining to the Canal

or railroad and auxiliary works, or their officers or

employ-ees, situated within the cities of Panama and Colon, and that

there shall not be imposed contributions or charges of a

per-sonal character of any kind upon officers, employees,

labor-ers, and other individuals in the service of the Canal and

railroad and auxiliary works

ARTICLE XI

The United States agrees that the official dispatches of the

Government of the Republic of Panama shall be transmitted

over any telegraph and telephone lines established for canal

purposes and used for public and private business at rates not

higher than those required from officials in the service of the

United States

ARTICLE XII

The Government of the Republic of Panama shall permit

the immigration and free access to the lands and workshops

of the Canal and its auxiliary works of all employees and

workmen of Whatever nationality under contract to work

upon or seeking employment upon or in any wise connectedwith the said Canal and its auxiliary works, with their respec-tive families, and all such persons shall be free and exemptfrom the military service of the Republic of Panama

ARTICLE XIII

The United States may import at any time into the saidzone and auxiliary lands, free of custom duties, imposts,taxes, or other charges, and without any restrictions, any andall vessels, dredges, engines, cars, machinery, tools, explosives,materials, supplies, and other articles necessary and conven-ient in the construction, maintenance, operation, sanitationand protection of the Canal and auxiliary works, and all pro-visions, medicines, clothing, supplies and other things neces-sary and convenient for the officers, employees, workmenand laborers in the service and employ of the United Statesand for their families If any such articles are disposed of foruse outside of the zone and auxiliary lands granted to theUnited States and within the territory of the Republic, theyshall be subject to the same import or other duties as like arti-cles imported under the laws of the Republic of Panama

ARTICLE XIV

As the price or compensation for the rights, powers andprivileges granted in this convention by the Republic ofPanama to the United States, the Government of the UnitedStates agrees to pay to the Republic of Panama the sum of tenmillion dollars ($10,000,000) in gold coin of the UnitedStates on the exchange of the ratification of this conventionand also an annual payment during the life of this convention

of two hundred and fifty thousand dollars ($250,000) in likegold coin, beginning nine years after the date aforesaid.The provisions of this Article shall be in addition to allother benefits assured to the Republic of Panama under thisconvention

But no delay or difference of opinion under this Article orany other provisions of this treaty shall affect or interrupt thefull operation and effect of this convention in all other respects

per-by a majority of the Commission or per-by the Umpire shall befinal

detention and delivery within said zone and auxiliary lands

to the authorities of the Republic of Panama of persons

charged with the commitment of crimes, felonies or

misde-meanors without said zone and for the pursuit, capture,

imprisonment, detention and delivery without said zone to

the authorities of the United States of persons charged with

the commitment of crimes, felonies and misdemeanors

within said zone and auxiliary lands

ARTICLE XVII

The Republic of Panama grants to the United States the

use of all the ports of the Republic open to commerce as

places of refuge for any vessels employed in the Canal

enter-prise, and for all vessels passing or bound to pass through the

Canal which may be in distress and be driven to seek refuge

in said ports Such vessels shall be exempt from anchorage

and tonnage dues on the part of the Republic of Panama

ARTICLE XVIII

The Canal, when constructed, and the entrances thereto

shall be neutral in perpetuity, and shall be opened upon the

terms provided for by Section I of Article three of, and in

conformity with all the stipulations of, the treaty entered into

by the Governments of the United States and Great Britain

on November 18, 1901

ARTICLE XIX

The Government of the Republic of Panama shall have the

right to transport over the Canal its vessels and its troops and

munitions of war in such vessels at all times without paying

charges of any kind The exemption is to be extended to the

auxiliary railway for the transportation of persons in the

ser-vice of the Republic of Panama, or of the police force charged

with the preservation of public order outside of said zone, as

well as to their baggage, munitions of war and supplies

ARTICLE XX

If by virtue of any existing treaty in relation to the

terri-tory of the Isthmus of Panama, whereof the obligations shall

descend or be assumed by the Republic of Panama, there

may be any privilege or concession in favor the Government

or the citizens and subjects of a third power relative to an

interoceanic means of communication which in any of its

terms may be incompatible with the terms of the present

convention, the Republic of Panama agrees to cancel or

modify such treaty in due form, for which purpose it shall

give to the said third power the requisite notification within

the term of four months from the date of the present

con-vention, and in case the existing treaty contains no clause

permitting its modification or annulment, the Republic of

Panama agrees to procure its modification or annulment in

such form that there shall not exist any conflict with the

stip-ulations of the present convention

ARTICLE XXI

The rights and privileges granted by the Republic of

Panama to the United States in the preceding Articles are

understood to be free of all anterior debts, liens, trusts, or

lia-bilities, or concessions or privileges to other Governments,corporations, syndicates or individuals, and consequently, ifthere should arise any claims on account of the present con-cessions and privileges or otherwise, the claimants shallresort to the Government of the Republic of Panama and not

to the United States for any indemnity or compromise whichmay be required

ARTICLE XXII

The Republic of Panama renounces and grants to theUnited States the participation to which it might be entitled inthe future earnings of the Canal under Article XV of the con-cessionary contract with Lucien N B Wyse now owned by theNew Panama Canal Company and any and all other rights orclaims of a pecuniary nature arising under or relating to saidconcession, or arising under or relating to the concessions tothe Panama Railroad Company or any extension or modifica-tion thereof; and it likewise renounces, confirms and grants tothe United States, now and hereafter, all the rights and prop-erty reserved in the said concessions which otherwise wouldbelong to Panama at or before the expiration of the terms ofninety-nine years of the concessions granted to or held by theabove mentioned party and companies, and all right, title andinterest which it now has or many hereafter have, in and to thelands, canal, works, property and rights held by the said com-panies under said concessions or otherwise, and acquired or

to be acquired by the United States from or through the NewPanama Canal Company, including any property and rightswhich might or may in the future either by lapse of time, for-feiture or otherwise, revert to the Republic of Panama, underany contracts or concessions, with said Wyse, the UniversalPanama Canal Company, the Panama Railroad Company andthe New Panama Canal Company

The aforesaid rights and property shall be and are free andreleased from any present or reversionary interest in or claims

of Panama and the title of the United States thereto upon summation of the contemplated purchase by the United Statesfrom the New Panama Canal (company, shall be absolute, sofar as concerns the Republic of Panama, excepting always therights of the Republic specifically secured under this treaty

con-ARTICLE XXIII

If it should become necessary at any time to employarmed forces for the safety or protection of the Canal, or ofthe ships that make use of the same, or the railways and aux-iliary works, the United States shall have the right, at all timesand in its discretion, to use its police and its land and navalforces or to establish fortifications for these purposes

If the Republic of Panama shall hereafter enter as a stituent into any other Government or into any union or

con-Panama Canal Treaty of 1903 577

confederation of states, so as to merge her sovereignty or

independence in such Government, union or confederation,

the rights of the United States under this convention shall not

be in any respect lessened or impaired

ARTICLE XXV

For the better performance of the engagements of this

convention and to the end of the efficient protection of the

Canal and the preservation of its neutrality, the Government

of the Republic of Panama will sell or lease to the United

States lands adequate and necessary for naval or coaling

sta-tions on the Pacific coast and on the western Caribbean coast

of the Republic at certain points to be agreed upon with the

President of the United States

ARTICLE XXVI

This convention when signed by the Plenipotentiaries ofthe Contracting Parties shall be ratified by the respectiveGovernments and the ratifications shall be exchanged atWashington at the earliest date possible

In faith whereof the respective Plenipotentiaries havesigned the present convention in duplicate and have hereuntoaffixed their respective seals

Done at the City of Washington the 18th day of November

in the year of our Lord nineteen hundred and three

JOHN HAY

P BUNAU VARILLA

578 Panama Canal Treaty of 1903

The Federal Reserve Act established the modern banking

system of the United States Designed to provide elasticity of

the money supply and to be a lender of last resort for banks,

the Federal Reserve (Fed) regulates the money supply by

increasing or decreasing interest rates The Fed also acts as a

clearinghouse for financial transactions During its nine

decades of operation the policies of the Fed have helped

stabilize the U.S economy.

Source: Public Statutes at Large, Vol 38, Part I, pp 251–275.

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 purposes.

Be it enacted by the Senate and the House of

Represen-tatives of the United States of America in Congress

assem-bled, That the short title of this Act shall be the “Federal

Reserve Act.”

Whenever the word “bank” is used in this Act, the word

shall be held to include State bank, banking association, and

trust company, except where national banks or Federal

reserve banks are specifically referred to

The terms “national bank” and “national banking

associa-tion” used in this Act shall be held to be synonymous and

interchangeable The term “member bank” shall be held to

mean any national bank, State bank, or bank or trust

com-pany which has become a member of one of the reserve

banks created by this Act The term “board” shall be held to

mean Federal Reserve Boards; the term “district” shall be held

to mean Federal Reserve district; the term “reserve bank”

shall be held to mean Federal reserve bank

FEDERAL RESERVE DISTRICTS.

Sec 2 As soon as practicable, the Secretary of the Treasury,

the Secretary of Agriculture and the Comptroller of the

Cur-rency, 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

con-tinental United States, excluding Alaska, into districts, eachdistrict to contain only one of such Federal reserve cities Thedetermination of said organization committee shall not besubject to review except by the Federal Reserve Board whenorganized: Provided, That the districts shall be apportionedwith due regard to the convenience and customary course ofbusiness and shall not necessarily be coterminous with anyState or States The districts thus created may be readjustedand new districts may from time to time be created by theFederal Reserve Board, not to exceed twelve in all Such dis-tricts shall be known as Federal reserve districts and may bedesignated by number A majority of the organization com-mittee shall constitute a quorum with authority to act.Said organization committee shall be authorized to employcounsel and expert aid, to take testimony, to send for personsand papers, to administer oaths, and to make such investiga-tion as may be deemed necessary by the said committee in de-termining the reserve districts and in designating the citieswithin such districts where such Federal reserve banks shall beseverally located The said committee shall supervise theorganization in each of the cities designated of a Federal re-serve bank, which shall include in its title the name of the city

in which it is situated, as “Federal Reserve Bank of Chicago.”Under regulations to be prescribed by the organizationcommittee, every national banking association in the UnitedStates is hereby required, and every eligible bank in theUnited States and every trust company within the District ofColumbia, is hereby authorized to signify in writing, withinsixty days after the passage of this Act, its acceptance of theterms and provisions hereof When the organization com-mittee shall have designated the cities in which the Federalreserve banks are to organized, and fixed the geographicallimits of the Federal reserve districts, every national bankingassociation within that district shall be required within thirtydays after notice from the organization committee, to sub-scribe to the capital stock of such Federal reserve bank in asum equal to six per centum of the paid-up capital stock andsurplus of such bank, one-sixth of the subscription to bepayable on call of the organization committee or of theFederal Reserve Board, one-sixth within three months and

Federal Reserve Act

(1913)

579

one-sixth within six months thereafter, and the remainder of

the subscription, or any part thereof, shall be subject to call

when deemed necessary by the Federal Reserve Board, said

payments to be in gold or gold certificates

The shareholders of every Federal reserve bank shall be

held individually responsible, equally and ratably, and not for

one another, for all contracts, debts, and engagements of such

bank to the extent of the amount of their subscription to

such stock at the par value thereof in addition to the amount

subscribed, whether such subscriptions have been paid up in

whole or in part, under the provisions of this Act

Any national bank failing to signify its acceptance of the

terms of this Act within the sixty days aforesaid, shall cease to

act as a reserve agent, upon thirty days notice, to be given

within the discretion of the said organization committee or

of the Federal Reserve Board

Should any national banking association in the United

States now organized fail within one year after the passage of

this Act to become a member bank or fail to comply with any

of the provisions of this Act applicable thereto, all of the

rights, privileges, and franchises of such association granted

to it under the national-bank Act, or under provisions of this

Act, shall be thereby forfeited Any noncompliance with or

violation of this Act shall, however, be determined and

adjudged by any court of the United States of competent

jur-isdiction in a suit brought for that purpose in the district or

territory in which such bank is located, under direction of the

Federal Reserve Board, by the Comptroller of the Currency in

his own name before the association shall be declared

dis-solved In cases of such noncompliance or violation, other

than the failure to become a member bank under the

provi-sions of this Act, every director who participated in or

as-sented to the same shall be held liable in his personal or

individual capacity for all the damages which said bank, its

shareholders, or any other person shall have sustained in

con-sequence of such violation

Such dissolution shall not take away or impair any remedy

against such corporation, its stockholders or officers, for any

liability or penalty which shall have been previously incurred

Should the subscriptions by banks to the stock of said

Federal reserve banks or any one or more of them be, in the

judgment of the organization committee, insufficient to

pro-vide the amount of capital required therefor, then and in that

event the said organization committee may, under conditions

and regulations to be prescribed by it, offer to public

sub-scription at par an amount of stock in said Federal reserve

banks, or any one or more of them, as said committee shall

determine, subject to the same conditions as to payment and

stock liability as provided for member banks

No individual, copartnership, or corporation other than a

member bank of its district shall be permitted to subscribe

for or to hold at any time more than $25,000 par value of

stock in any Federal reserve bank Such stock shall be known

as public stock and may be transferred on the books of the

Federal reserve bank by the chairman of the board of

direc-tors at such bank

Should the total subscriptions by banks and the public to

the stock of said Federal reserve banks, or any one or more of

them, be, in the judgment of the organization committee,insufficient to provide the amount of capital required there-for, then and in that event the said organization committeeshall allot to the United States such an amount of said stock

as said committee shall determine Said United States stockshall be paid for at par out of any money in the Treasury nototherwise appropriated, and shall be held by the Secretary ofthe Treasury and disposed of for the benefit of the UnitedStates in such manner, at such times, and at such price, notless than par, as the Secretary of the Treasury shall determine.Stock not held by member banks shall not be entitled tovoting power

The Federal Reserve Board is hereby empowered to adoptand promulgate rules and regulations governing the transfers

of said stock

No Federal reserve bank shall commence business with asubscribed capital less than $4,000,000 The organization ofreserve districts and Federal reserve cities shall not be con-strued as changing the present status of reserve cities andcentral reserve cities, except in so far as this Act changes theamount of reserves that may be carried with approvedreserve agents located therein The organization committeeshall have power to appoint such assistants and incur suchexpenses in carrying out the provisions of this Act as it shall

be deemed necessary; and such expenses shall be payable bythe Treasurer of the United States upon voucher approved bythe Secretary of the Treasury, and the sum of $100,000, or somuch thereof as may be necessary, is hereby appropriated,out of the moneys in the Treasury not otherwise appropri-ated, for the payment of such expenses

BRANCH OFFICES.

Sec 3 Each Federal reserve bank shall establish branchbanks within the Federal reserve district in which it is locatedand may do so in the district of any Federal reserve bankwhich may have been suspended Such branches shall beoperated by a board of directors under rules and regulationsapproved by the Federal Reserve Board Directors of branchbanks shall possess the same qualifications as directors of theFederal reserve banks Four of said directors shall be selected

by the reserve bank and three by the Federal Reserve Board,and they shall hold office during the pleasure, respectively, ofthe parent bank and the Federal Reserve Board The reservebank shall designate one of the directors as manager

FEDERAL RESERVE BANKS.

Sec 4 When the organization committee shall have lished Federal reserve districts as provided in section two ofthis Act, a certificate shall be filed with the Comptroller of theCurrency showing the geographical limits of such districtsand the Federal reserve city designated in each of such dis-tricts

estab-The Comptroller of the Currency shall thereupon cause to

be forwarded to each national bank located in each district,and to other banks declared to be eligible by the organizationcommittee which may apply therefor, an application blank inform to be approved by the organization committee, whichblank shall contain a resolution to be adopted by the board of

580 Federal Reserve Act

directors of each bank executing such application,

authoriz-ing a subscription to the capital stock of the Federal reserve

bank organizing in that district in accordance with the

provi-sions of this Act

When the minimum amount of capital stock prescribed

by this Act for the organization of any Federal reserve bank

shall have been subscribed and allotted, the organization

committee shall designate any five banks of those whose

applications have been received, to execute a certificate of

organization, and thereupon the banks so designated shall,

under their seals, make an organization certificate which shall

specifically state the name of such Federal reserve bank, the

territorial extent of the district over which the operations of

such Federal reserve bank are to be carried on, the city and

the State in which said bank is to located, the amount of

cap-ital stock and the number of shares into which the same is

divided, the name and place of doing business of each bank

executing such certificate, and of all banks which have

sub-scribed to the capital stock of such Federal reserve bank and

the number of shares subscribed by each, and the fact that the

certificate is made to enable those banks executing same, and

all banks which have subscribed or may thereafter subscribe

to the capital stock of such Federal reserve bank, to avail

themselves of the advantages of this Act

The said organization certificate shall be acknowledged

before a judge of some court of record or notary public; and

shall be, together with the acknowledgment thereof,

authen-ticated by the seal of such court, or notary, transmitted to the

Comptroller of the Currency, who shall file, record and

care-fully preserve the same in his office

Upon the filing of such certificate with the Comptroller of

the Currency as aforesaid, the said Federal reserve bank shall

become a body corporate and as such, and in the name

des-ignated in such organization certificate, shall have power—

First To adopt and use a corporate seal

Second To have succession for a period of twenty years

from its organization unless it is sooner dissolved by an Act

of Congress, or unless its franchise becomes forfeited by

some violation of law

Third To make contracts

Fourth To sue and be sued, complain and defend, in any

court of law or equity

Fifth To appoint by its board of directors, such officers

and employees as are not otherwise provided for in this Act,

to define their duties, require bonds of them and fix the

penalty thereof, and to dismiss at pleasure such officers or

employees

Sixth To prescribe by its board of directors, by in-laws not

inconsistent with law, regulating the manner in which its

gen-eral business may be conducted, and the privileges granted to

it by law may be exercised and enjoyed

Seventh To exercise by its board of directors, or duly

authorized officers or agents, all powers specifically granted

for the provisions of this Act and such incidental powers as

shall be necessary to carry on the business of banking within

the limitations prescribed by this Act

Eighth Upon deposit with the Treasurer of the United

States of any bonds of the United States in the manner

pro-vided existing law relating to national banks, to receive fromthe Comptroller of the Currency circulating notes in blank,registered and countersigned as provided by law, equal inamount to the par value of the bonds so deposited, suchnotes to be issued under the same conditions and provisions

of law as relate to the issue of circulating notes of nationalbanks secured by bonds of the United States bearing the cir-culating privilege, except that the issue of such notes shall not

be limited to the capital stock of such Federal reserve bank.But no Federal reserve bank shall transact any businessexcept such as is incidental and necessarily preliminary to itsorganization until it has been authorized by the Comptroller

of the Currency to commence business under the provisions

Said board shall administer the affairs of said bank fairlyand impartially and without discrimination in favor oragainst any member bank or banks and shall, subject to theprovisions of law and the orders of the Federal ReserveBoard, extend to each member bank such discounts,advancements and accommodations as may be safely andreasonably made with due regard for the claims and demands

of other member banks

Such board of directors shall be selected as hereinafterspecified and shall consist of nine members, holding officefor three years, and divided into three classes, designated asclasses A, B, and C

Class A shall consist of three members, who shall be sen by and be representative of the stock-holding banks.Class B shall consists of three members, who at the time oftheir election shall be actively engaged in their district incommerce, agriculture or some other industrial pursuit.Class C shall consist of three members who shall be desig-nated by the Federal Reserve Board When the necessary sub-scriptions to the Capital stock have been obtained for theorganization of any Federal reserve bank, the Federal ReserveBoard shall appoint the class C directors and shall designateone of such directors as chairman of the board to be selected.Pending the designation of such chairman, the organizationcommittee shall exercise the power and duties appertaining

cho-to the office of chairman in the organization of such Federalreserve bank

No Senator or Representative in Congress shall be a ber of the Federal Reserve Board or an officer or a director of

mem-a Federmem-al reserve bmem-ank

No director of class B shall be an officer, director, oremployee of any bank

No director of class C shall be an officer, director, ployee, or stockholder of any bank

em-Directors of class A and B shall be chosen in the followingmanner:

The chairman of the board of directors of the Federalreserve bank of the district in which the bank is situated or,pending the appointment of such chairman, the organization

Federal Reserve Act 581

of such chairman, the organization committee shall classify

the member banks of the districts into three groups or

divi-sions Each group shall contain as nearly as may be one-third

of the aggregate number of the member banks of the district

and shall consist, as nearly as may be, of banks of similar

cap-italization The groups shall be designated by number by the

chairman

At a regularly called meeting of the board of directors of

each member bank in the district it shall elect by ballot a

dis-trict reserve elector and shall certify his name to the chairman

of the board of directors of the Federal reserve bank of the

district The chairman shall make lists of the district reserve

electors thus named by banks in each of the aforesaid three

groups and shall transmit one list to each elector in each

group Each member bank shall be permitted to nominate to

the chairman one candidate for director of class A and one

candidate for class B The candidates so nominated shall be

listed by the chairman, indicating by whom nominated, and

a copy of said list shall, within fifteen days after its

comple-tion, be furnished by the chairman to each elector

Every elector shall, within fifteen days after the receipt of

the said list, certify to the chairman his first, second, and

other choices of a director of class A and B, respectively, upon

a preferential ballot, on a form furnished by the chairman of

the board of directors of the Federal reserve bank of the

dis-trict Each elector shall make a cross opposite the name of the

first, second, and other choices for a director of class A and

for a director of class B, but shall not vote more than one

choice for any candidate

Any candidate having a majority of all votes cast in the

col-umn of first choice shall be declared elected If no candidate

have a majority of all the votes in the first column, then there

shall be added together the votes cast by the electors for such

candidates in the second column and the votes cast for the

several candidates in the first column If any candidate then

have a majority of the electors voting, by adding together the

first and second choices, he shall be declared elected If no

candidate have a majority of electors voting when the first

and second choices shall have been added, then the votes cast

in the third column from other choices shall be added

to-gether in like manner, and the candidate then having the

highest number of votes shall be declared elected An

imme-diate report of election shall be declared

Class C directors shall be appointed by the Federal Reserve

Board They shall have been for at least two years residents of

the district for which they are appointed, one of whom shall

be designated by said board as chairman of the board of

directors of the Federal reserve bank and as “Federal reserve

agent.” He shall be a person of tested banking experience; and

in addition to his duties as chairman of the board of directors

of the federal reserve bank he shall be required to maintain

under regulations to be established by the Federal Reserve

Board a local office of said board on the premises of the

Federal reserve bank He shall make regular reports to the

Federal Reserve Board, and shall act as its official

representa-tive for the performance of the functions conferred upon it

by this Act He shall receive an annual compensation to be

fixed by the Federal Reserve Board and paid monthly by the

Federal reserve bank to which he is designated One of thedirectors of class C, who shall be a person of tested bankingexperience, shall be appointed by the Federal Reserve Board

as deputy chairman and deputy Federal reserve agent to cise the powers of the chairman of the board and Federalreserve agent in case of absence or disability of his principal.Directors of Federal reserve banks shall receive, in addi-tion to any compensation otherwise provided, a reasonableallowance for necessary expenses in attending meetings oftheir respective boards, which amount shall be paid by therespective Federal reserve banks Any compensation that may

exer-be provided by board of directors of Federal reserve banks fordirectors, officers or employees shall be subject to theapproval of the Federal Reserve Board

The Reserve Bank Organization Committee may, inorganizing Federal reserve banks, call such meetings of bankdirectors in the several districts as may be necessary to carryout the purposes of this Act, and may exercise the functionsherein conferred upon the chairman of the board of directors

of each Federal reserve bank pending the complete tion of such bank

organiza-At the first meeting of the full board of directors of eachFederal reserve bank, it shall be the duty of the directors ofclasses A, B, and C respectively, to designate one of the mem-bers of each class whose term of office shall expire in one yearfrom the first of January nearest to date of such meeting, onewhose term of office shall expire at the end of two years fromsaid date, and one whose term of office shall expire at the end

of three years from said date Thereafter every director of aFederal reserve bank chosen as hereinbefore provided shallhold office for a term of three years Vacancies that may occur

in the several classes of directors of Federal reserve banks may

be filled in the manner provided for the original selection ofsuch directors, such appointees to hold office for the unex-pired terms of their predecessors

STOCK ISSUES; INCREASE AND DECREASE OF CAPITAL.

Sec 5 The capital stock of each Federal reserve bank shall

be divided into shares of $100 each The outstanding capitalstock shall be increased from time to time as member banksincrease their capital stock and surplus or as additional banksbecome members, and may be decreased as member banksreduce their capital stock or surplus or cease to be members.Shares of the capital stock of Federal reserve banks owned bymember banks shall not be transferred or hypothecated.When a member bank increases its capital stock or surplus, itshall thereupon subscribe for an additional amount of capitalstock of the Federal reserve bank of its district equal to six percentum of the said increase, one-half of said subscription to

be paid in the manner hereinbefore provided for original scription, and one-half subject to call of the Federal ReserveBoard A bank applying for stock in a Federal reserve bank atany time after the organization thereof must subscribe for anamount of the capital stock of the Federal reserve bank equal

sub-to six per centum of the paid-up capital ssub-tock and surplus ofsaid applicant bank, paying therefor its par value plus one-half

of one per centum a month from the period of the last

divi-582 Federal Reserve Act

dend When the capital stock of any Federal reserve bank shall

have been increased either on account of the increase of

capi-tal stock of member banks or on account of the increase in the

number of member banks, the board of directors shall cause

to be executed a certificate to the Comptroller of the Currency

showing the increase in capital stock, the amount paid in, and

by whom paid When a member bank reduces its capital stock

it shall surrender a proportionate amount of its holdings in

the capital of said Federal reserve bank, and when a member

bank voluntarily liquidates it shall surrender all of its holdings

of the capital stock of said Federal reserve bank and be

released from its stock subscription not previously called In

either case the shares surrendered shall be canceled and the

member bank shall receive in payment therefor, under

regula-tions to be prescribed by the Federal Reserve Board, a sum

equal to its cash-paid subscriptions on the shares surrounded

and one-half of one per centum a month from the period of

the last dividend, not to exceed the book value thereof, less any

liability of such member bank to the Federal reserve bank

Sec 6 If any member bank shall be declared insolvent and

a receiver appointed therefor, the stock held by it in said

Federal reserve bank shall be canceled, without impairment

of its liability, and all cash-paid subscriptions on said stock,

with one-half of one per centum per month from the period

of last dividend, not to exceed the book value thereof, shall be

first applied to all debts of the insolvent member bank to the

Federal reserve bank, and the balance, if any, shall be paid to

the receiver of the insolvent bank Whenever the capital stock

of a Federal reserve bank is reduced, either on account of

reduction in capital stock of any member bank or of the

liq-uidation or insolvency of such bank, the board of directors

shall cause to be executed a certificate to the Comptroller of

the Currency showing such reduction of capital stock and the

amount repaid to such bank

DIVISION OF EARNINGS.

Sec 7 After all necessary expenses of a Federal reserve

bank have been paid or provided for, the stockholders shall be

entitled to receive an annual dividend of six per centum on

the paid-in capital stock, which dividend shall be cumulative

After the aforesaid dividend claims have been fully met, all

the net earnings shall be paid to the United States as a

fran-chise tax, except that one-half of such net earnings shall be

paid into a surplus fund until it shall amount to forty per

centum of the paid-in capital stock of such bank

The net earnings derived by the United States from Federal

reserve banks shall, in the discretion of the Secretary, be used

to supplement the gold reserve held against outstanding

United States notes, or shall be applied to the reduction of the

outstanding bonded indebtedness of the United States under

regulations to be prescribed by the Secretary of the Treasury

Should a Federal reserve bank be dissolved or go into

liquida-tion, any surplus remaining, after the payment of all debts,

dividend requirements as hereinbefore provided, and the par

value of the stock, shall be paid to and become the property of

the United States and shall be similarly applied

Federal reserve banks, including the capital stock and

sur-plus therein, and the income derived therefrom shall be

exempt from Federal, State, and local taxation, except taxes inreal estate

Sec 8 Section fifty-one hundred and fifty-four, UnitedStates Revised Statutes, is hereby amended to read as follows:Any bank incorporated by special law of any State or of theUnited States or organized under the general laws of any State

or of the United States and having an unimpaired capital ficient to entitle it to become a national banking associationunder the provisions of the existing laws may, by the vote ofthe shareholders owning not less than fifty-one per centum

suf-of the capital stock suf-of such bank or banking association, withthe approval of the Comptroller of the Currency be con-verted into a national banking association, with any nameapproved by the Comptroller of the Currency:

Provided, however, That said conversion shall not be incontravention of the State law In such case the articles ofassociation and organization certificate may be executed by amajority of the directors of the bank or banking institution,and the certificate shall declare that the owners of fifty-oneper centum of the capital stock have authorized the directors

to make such certificate and to change or convert the bank orbanking institution into a national association A majority ofthe directors, after executing the articles of association andthe organization certificate, shall have the power to execute allother papers and do whatever may be required to make itsorganization perfect and complete as a national association.The shares of any such bank may continue to be for the sameamount as they were before the conversion, and the directorsmay continue to be directors of the association until othersare elected or appointed in accordance with the provisions ofthe statutes of the United States When the Comptroller hasgiven to such bank or banking association a certificate thatthe provisions of this Act have been complied with, such bank

or banking association, and all its stockholders, officers, andemployees, shall have the same powers and privileges, andshall be subject to the same duties, liabilities, and regulations,

in all respects, as shall have been prescribed by the FederalReserve Act and by the national banking Act for associationsoriginally organized as national banking associations

STATE BANKS AS MEMBERS.

Sec 9 Any bank incorporated by special law of any State, ororganized under the general laws of any State or of the UnitedStates, may make application to the reserve bank organizationcommittee, pending organization, and thereafter to the FederalReserve Board for the right to subscribe to the stock of theFederal reserve bank organized or to be organized within theFederal reserve district where the applicant is located Theorganization committee or the Federal Reserve Board, undersuch rules and regulations as it may prescribe, subject to theprovisions of this section, may permit the applying bank tobecome a shareholder in the Federal reserve bank of the district

in which the applying bank is located Whenever the tion committee or the Federal Reserve Board shall permit theapplying bank to become a stockholder in the Federal reservebank of the district, stock shall be issued and paid for under therules and regulations in this Act provided for national bankswhich become stockholders in Federal reserve banks

organiza-Federal Reserve Act 583

The organization committee or the Federal Reserve Board

shall establish by-laws for the general government of its

con-duct in acting upon applications made by the State banks and

banking associations and trust companies for stock

owner-ship in Federal reserve banks Such by-laws shall require

applying banks not organized under Federal law to comply

with the reserve and capital requirements and to submit to

the examination and regulation prescribed by the

organiza-tion committee or by the Federal Reserve Board No applying

bank shall be admitted to membership in a Federal reserve

bank unless it possesses a paid-up unimpaired capital

suffi-cient to entitle it to become a national banking association in

the place where it is situated, under the provisions of the

national banking Act

Any bank becoming a member of the Federal reserve bank

under the provisions of this section shall, in addition to the

regulations and restrictions hereinbefore provided, be required

to conform to the provisions of law imposed on the national

banks respecting the limitation of liability which may be

incurred by any person, firm, or corporation to such banks, the

prohibition against making purchase of loans on stock of such

banks, and the withdrawal or impairment of capital, or the

payment of unearned dividends, and to such rules and as the

Federal Reserve Board may, in pursuance thereof, prescribe

Such banks, and the officers, agents, and employees

thereof, shall also be subject to the provisions of and to the

penalties prescribed by sections fifty-one hundred and

ninety-eight, two hundred, two hundred and one, and

fifty-two hundred and eight, and fifty-fifty-two hundred and nine of the

Revised Statutes The member banks shall also be required to

make reports of the conditions and of the payments of

divi-dends to the comptroller, as provided in sections fifty-two

hundred and eleven and fifty-two hundred and twelve of the

Revised Statutes, and shall be subject to the penalties

pre-scribed by section fifty-two hundred and thirteen for the

fail-ure to make such report

If at any time it shall appear to the Federal Reserve Board

that a member bank has failed to comply with the provisions

of this section or the regulations of the federal Reserve Board,

it shall be within the power of the said board, after hearing, to

require such bank to surrender its stock in the Federal reserve

bank; upon such surrender the Federal reserve bank shall pay

the cash-paid subscriptions to the said stock with interest at

the rate of one-half of one per centum per month, computed

from the last dividend, if earned, not to exceed the book value

thereof, less any liability to said Federal reserve bank, except

the subscription liability not previously called, which shall be

canceled, and said Federal reserve bank shall, upon notice

from the Federal Reserve Board, be required to suspend said

bank from further privileges of membership, and shall within

thirty days of such notice cancel and retire its stock and make

payment therefor in the manner herein provided The Federal

Reserve Board may restore membership upon due proof of

compliance with the conditions imposed by this section

FEDERAL RESERVE BOARD.

Sec 10 A Federal Reserve Board is hereby created which

shall consist of seven members, including the Secretary of the

Treasury and the Comptroller of the Currency, who shall bemembers ex officio, and five members appointed by thePresident of the United States, by and with the advice andconsent of the Senate In selecting the five appointive mem-bers of the Federal Reserve Board, not more than one ofwhom shall be selected from any one Federal reserve district,the President shall have due regard to a fair representation ofthe different commercial, industrial and geographical divi-sions of the country The five members of the Federal ReserveBoard appointed by the President and confirmed as aforesaidshall devote their entire time to the business of the FederalReserve Board and shall each receive an annual salary of

$12,000, payable monthly with actual necessary travelingexpenses, and the Comptroller of the Currency, as ex officiomember of the Federal Reserve Board, shall, in addition tothe salary now paid him as Comptroller of the Currency,receive the sum of $7,000 annually for his services as member

by the President to serve for two, one for four, one for six, onefor eight, and one for ten years, and thereafter each member

so appointed shall serve for a term of ten years unless soonerremoved for cause by the President Of the five persons thusappointed, one shall be designated by the President as gover-nor and one as vice governor of the Federal Reserve Board.The governor of the Federal Reserve Board, subject to itssupervision, shall be the active executive officer TheSecretary of the Treasury may assign offices in the Depart-ment of the Treasury for the use of the Federal Reserve Board.Each member of the Federal Reserve Board shall within fif-teen days after notice of appointment make and subscribe tothe oath of office

The Federal Reserve Board shall have the power to levysemiannually upon the Federal reserve banks, in proportion

to their capital stock and surplus, an assessment sufficient topay its estimated expenses and the salaries of its membersand employees for the half year succeeding the levying ofsuch assessment, together with any deficit carried forwardfrom the preceding half year

The first meeting of the Federal Reserve Board shall beheld in Washington, District of Columbia, as soon as may beafter the passage of this Act, at a date to be fixed by theReserve Bank Organization Committee The Secretary of theTreasury shall be ex officio chairman of the Federal ReserveBoard No member of the Federal Reserve Board shall be anofficer or director of any bank, banking institution, trustcompany, of Federal reserve bank nor hold stock in any bank,banking institution, or trust company; and before enteringupon his duties as a member of the Federal Reserve Board heshall certify under oath to the Secretary of the Treasury that

he has complied with this requirement Whenever a vacancyshall occur, other than by expiration of term, among the five

584 Federal Reserve Act

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 the 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

thirty days after the next session of the Senate convenes

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 agents

appears to conflict with the powers of the Secretary of the

Treasury, such powers shall be exercised subject to the

super-vision 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 shall be amended so as to read as follows: 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 the

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

Currency and shall perform his duties under the general

directions of the Secretary of the Treasury

Sec 11 The Federal Reserve Board shall be authorized and

empowered:

(a) To examine at its discretion the accounts, books and

affairs of each Federal reserve bank and of each member bank

and to require such statements and reports as it may deem

necessary The said board shall publish once each week a

statement showing the condition of each Federal reserve

bank and a consolidated statement for all Federal reserve

banks Such statements shall show in detail the assets and

lia-bilities of the Federal reserve banks, single and combined,

and shall furnish full information regarding the character of

the money held as reserve and the amount, nature and

matu-rities of the paper and other investments owned or held by

Federal reserve banks

(b) To permit, or, on the affirmative vote of at least five

members of the Reserve Board to require Federal reserve

banks to rediscount the discounted paper of other Federal

reserve banks at rates of interest to be fixed by the Federal

Reserve Board

(c) To suspend for a period not exceeding thirty days, and

from time to time to renew such suspension for periods not

exceeding fifteen days, any reserve requirement specified in

this Act: Provided, That it shall establish a graduated tax

upon the amounts by which the reserve requirements of this

Act may be permitted to fall below the level hereinafter

spec-ified: And provided further, That when the gold reserve heldagainst Federal reserve notes falls below forty per centum theFederal Reserve Board shall establish a graduated tax of notmore than one per centum per annum upon such deficiencyuntil the reserve falls to thirty-two and one-half per centum,and when said reserve falls below thirty-two and one-half percentum, a tax at the rate increasingly of not less than one andone-half per centum per annum upon each two and one-halfper centum or fraction thereof that such reserve falls belowthirty-two and one-half per centum The tax shall be paid bythe reserve bank, but the reserve bank shall add an amountequal to said tax to the rates of interest and discount fixed bythe Federal Reserve Board

(d) To supervise and regulate the bureau under the charge

of the Comptroller of the Currency the issue and retirement

of Federal reserve notes, and to prescribe rules and tions under which such notes may be delivered by theComptroller to the Federal reserve agents applying therefor.(e) To add to the number of cities classified as reserve andcentral reserve cities under existing law in which nationalbanking associations are subject to the reserve requirementsset forth in section twenty of this Act; or to reclassify existingreserve and central reserve cities or to terminate their desig-nation as such

regula-(f) To suspend or remove any officer or director of anyFederal reserve bank, the cause of such removal to be forth-with communicated in writing by the Federal Reserve Board

to the removed officer or director and to said bank

(g) To require the writing off of doubtful or worthless assetsupon the books and balance sheets of Federal reserve banks.(h) To suspend, for the violation of any of the provisions

of this Act, the operations of any Federal reserve bank, to takepossession thereof, administer the same during the period ofsuspension, and, when deemed advisable, to liquidate orreorganize such bank

(i) To require bonds of Federal reserve agents, to make ulations for the safeguarding of all collateral, bonds, Federalreserve notes, money or property of any kind deposited in thehands of such agents, and said board shall perform the duties,functions, or services specified in this Act, and make all rulesand regulations necessary to enable said board effectively toperform the same

reg-(j) To exercise general supervision over said Federalreserve banks

(k) To grant by special permit to national banks applyingtherefor, when not in contravention of State or local law, theright to act as trustee, executor, administrator, or registrar ofstocks and bonds under such rules and regulations as the saidboard may prescribe

(l) To employ such attorneys, experts, assistants, clerks, orother employees as may be deemed necessary to conduct thebusiness of the board All salaries and fees shall be fixed inadvance by said board and shall be paid in the same manner

as the salaries of the members of said board All such neys, experts, assistants, clerks, and other employees shall beappointed without regard to the provisions of the Act ofJanuary sixteenth, eighteen hundred and eighty-three (vol-ume twenty-two, United States Statutes at Large, page four

attor-Federal Reserve Act 585

hundred and three), and amendments thereto, or any rule or

regulation made in pursuance thereof: Provided, That

noth-ing herein shall prevent the President from placnoth-ing said

employees in the classified service

FEDERAL ADVISORY COUNCIL.

Sec 12 There is hereby created a Federal Advisory Council,

which shall consist of as many members as there are Federal

reserve districts Each Federal reserve bank by its board of

directors shall annually select from its own Federal reserve

district one member of said council, who shall receive such

compensation and allowances as may be fixed by his board of

directors subject to the approval of the Federal Reserve

Board The meetings of said advisory council shall be held at

Washington, District of Columbia, at least four times each

year, and oftener if called by the Federal Reserve Board The

council may in addition to the meetings above provided for

hold such other meetings in Washington, District of

Columbia, or elsewhere, as it may deem necessary, may select

its own officers and adopt its own methods of procedure, and

a majority of its members shall constitute a quorum for the

transaction of business Vacancies in the council shall be filled

by the respective reserve banks, and members selected to fill

vacancies, shall serve for the unexpired term

The Federal Advisory Council shall have power, by itself or

through its officers, (1) to confer directly with the Federal

Reserve Board on general business conditions; (2) to make

oral or written representations concerning matters within the

jurisdiction of said board; (3) to call for information and to

make recommendations in regards to discount rates,

redis-count business, note issues, reserve conditions in the various

districts, the purchase of gold or securities by reserve banks,

open-market operations by said banks, and the general affairs

of the reserve banking system

POWERS OF FEDERAL RESERVE BANKS.

Sec 13 Any Federal reserve bank may receive from any of

its member banks, and from the United States, deposits of

current funds in lawful money, national-bank notes, Federal

reserve notes, or checks and drafts upon solvent member

banks, payable upon presentation; or, solely for exchange

purposes, may receive from other Federal reserve banks

deposits of current funds in lawful money, national-bank

notes, or checks and drafts upon solvent member or other

Federal reserve banks, payable upon presentation

Upon the indorsement of any of its member banks, with a

waiver of demand, notice and protest by such bank, any

Federal reserve bank may discount notes, drafts, and bills of

exchange arising out of actual commercial transactions; that

is, notes, drafts, and bills of exchange issued or drawn for

agricultural, industrial, or commercial purposes, or the

pro-ceeds of which have been used, or are to be used, for such

purposes, the Federal Reserve Board to have the right to

determine or define the character of the paper thus eligible

for discount, within the meaning of this Act Nothing in this

Act contained shall be construed to prohibit such notes,

drafts, and bills of exchange, secured by staple agricultural

products, or other goods, wares, or merchandise from being

eligible for such discount; but such definition shall notinclude notes, drafts, or bills covering merely investments orissued or drawn for the purpose of carrying or trading instocks, bonds, or other investment securities, except bondsand notes of the Government of the United States Notes,drafts, and bills admitted to discount under the terms of thisparagraph must have a maturity at the time of discount ofnot more than ninety days: Provided, That notes, drafts, andbills drawn or issued for agricultural purposes or based onlive stock and having a maturity not exceeding six monthsmay be discounted in an amount to be limited to a percent-age of the capital of the Federal reserve bank, to be ascer-tained and fixed by the Federal Reserve Board

Any Federal reserve bank may discount acceptances whichare based on the importation or exportation of goods andwhich have a maturity at time of discount of not more thanthree months, and indorsed by at least one member bank.The amount of acceptances so discounted shall at no timeexceed one-half the paid-up capital stock and surplus of thebank for which the rediscounts are made

The aggregate of such notes and bills bearing the signature

or indorsement of any one person, company, firm, or tion rediscounted for any one bank shall at no time exceed tenper centum of the unimpaired capital and surplus of said bank;but this restriction shall not apply to the discount of bills ofexchange drawn in good faith against actually existing values.Any member bank may accept drafts or bills of exchangedrawn upon it and growing out of transactions involving theimportation or exportation of goods not more than sixmonths sight to run; but no bank shall accept such bills to anamount equal at any time in the aggregate to more than one-half of its paid-up capital stock and surplus

corpora-Section fifty-two hundred and two of the Revised Statutes

of the United States is hereby amended so as to read as lows: No national banking association shall at any time beindebted, or in any way liable, to an amount exceeding theamount of its capital stock at such time actually paid in andremaining undiminished by losses or otherwise, except onaccount of demands of the nature following:

fol-First Notes of circulation

Second Moneys deposited with or collected by the ation

associ-Third Bills of exchange or drafts drawn against moneyactually on deposit to the credit of the association, or duethereto

Fourth Liabilities to the stockholders of the associationfor dividends and reserve profits

Fifth Liabilities incurred under the provisions of theFederal Reserve Act

The rediscount by any Federal reserve bank of any billsreceivable and of domestic and foreign bills of exchange, and

of acceptances authorized by this Act, shall be subject to suchrestrictions, limitations, and regulations as may be imposed

by the Federal Reserve Board

chase and sell in the open market, at home or abroad, either

from or to domestic or foreign banks, firms, corporations, or

individuals, cable transfers and bankers’ acceptances and bills

of exchange of the kinds and maturities by this Act made

eli-gible for rediscount, with or without the indorsement of a

member bank

Every Federal reserve bank shall have power:

(a) To deal in gold coin and bullion at home or abroad, to

make loans thereof, exchange Federal reserve notes for gold,

gold coin or bullion, giving therefor, when necessary,

accept-able security, including the hypothecation of United States

bonds or other securities which Federal reserve banks are

authorized to hold;

(b) To buy and sell, at home or abroad, bonds and notes of

the United States, and bills, notes, revenue bonds, and

war-rants with a maturity from date of purchase of not exceeding

six months, issued in anticipation of the collection of taxes or

in anticipation of the receipt of assured revenues by any State,

county, district, political subdivision, or municipality in the

continental United States, including irrigation, drainage and

reclamation districts, such purchases to be made in

accor-dance with rules and regulations prescribed by the Federal

Reserve Board;

(c) To purchase from member banks and to sell, with or

without its indorsement, bills of exchange arising out of

com-mercial transactions, as hereinbefore defined;

(d) To establish from time to time, subject to review and

determination of the Federal Reserve Board, rates of discount

to be charged by the Federal reserve bank for each class of

paper, which shall be fixed with a view of accommodating

commerce and business;

(e) To establish accounts with other Federal reserve banks

for exchange purposes and, with the consent of the Federal

Reserve Board, to open and maintain banking accounts in

foreign countries, appoint correspondents, and establish

agencies in such countries wheresoever it may deem best for

the purpose of purchasing, selling, and collecting bills of

exchange, and to buy and sell with or without its

endorse-ment, through such correspondents or agencies, bills of

exchange arising out of actual commercial transactions

which have not more than ninety days to run and which bear

the signature of two or more reasonable parties

GOVERNMENT DEPOSITS.

Sec 15 The moneys held in the general fund of the

Treasury except the five per centum fund for the redemption

of outstanding national-bank notes and the funds provided

in this Act for the redemption of Federal reserve notes may,

upon the direction of the Secretary of the Treasury, be

deposited in Federal reserve banks, which banks, when

required by the Secretary of the Treasury, shall act as fiscal

agents of the United States; and the revenues of the

Government or any part thereof may be deposited in such

banks, and disbursements may be made by checks drawn

against such deposits

No public funds of the Philippine Islands, or of the

postal savings, or any Government funds, shall be deposited

in the continental United States in and bank not belonging

to the system established by this Act: Provided, however,That nothing in this Act shall be construed to deny the right

of the Secretary of the Treasury to use member banks asdepositories

NOTE ISSUES.

Sec 16 Federal reserve notes, to be issued at the discretion

of the Federal Reserve Board for the purpose of makingadvances to Federal reserve banks through the Federal reserveagents as hereinafter set forth and for no other purpose, arehereby authorized The said notes shall be obligations of theUnited States and shall be receivable by all national andmember banks and Federal reserve banks and for all taxes,customs, and other public dues They shall be redeemed ingold on demand at the Treasury Department of the UnitedStates, in the city of Washington, District of Columbia, or ingold or lawful money at any Federal reserve bank

Any Federal reserve bank may make application to thelocal Federal reserve agent for such amount of the Federalreserve noted hereinbefore provided for as it may require.Such application shall be accompanied with a tender to thelocal Federal reserve agent of collateral in amount equal tothe sum of the Federal reserve notes thus applied for andissued pursuant to such application The collateral securitythus offered shall be notes and bills, accepted for rediscountunder the provisions of section thirteen of this Act, and theFederal reserve agent shall each day notify the Federal ReserveBoard of all issues and withdrawals of Federal reserve notes

to and by the Federal reserve bank to which it is accredited.The said Federal Reserve Board may at any time call upon aFederal reserve bank for additional security to protect theFederal reserve notes issued to it

Every Federal reserve bank shall maintain reserves in gold

or lawful money of not less than thirty-five per centumagainst its deposits and reserves in gold of not less than fortyper centum against its Federal reserve notes in actual circu-lation, and not offset by gold or lawful money depositedwith the Federal reserve agent Notes so paid out shall bearupon their faces a distinctive letter and serial number, whichshall be assigned by the Federal Reserve Board to eachFederal reserve bank Whenever Federal reserve notes issuedthrough one Federal reserve bank shall be received by an-other Federal reserve bank they shall be promptly returnedfor credit or redemption to the Federal reserve bank throughwhich they were originally issued No Federal reserve bankshall pay out notes issued through another under penalty of

a tax of ten per centum upon the face value of notes so paidout Notes presented for redemption at the Treasury of theUnited States shall be paid out of the redemption fund andreturned to the Federal reserve banks through which theywere originally issued, and thereupon such Federal reservebank shall, upon demand of the Secretary of the Treasury,reimburse such redemption fund in lawful money or, if suchFederal reserve notes have been redeemed by the Treasurer

in gold or gold certificates, then such funds shall be bursed to the extent deemed necessary by the Secretary ofthe Treasury in gold or gold certificates, and such Federalreserve bank shall, so long as any of its Federal reserve notes

reim-Federal Reserve Act 587

remain outstanding, maintain with the Treasurer in gold an

amount sufficient in the judgment of the Secretary to

pro-vide for all redemptions to be made by the Treasurer Federal

reserve notes received by the Treasury, otherwise than for

redemption, may be exchanged for gold out of the

redemp-tion fund hereinafter provided and returned to the reserve

bank through which they were originally issued, or they may

be returned to such bank for the credit of the United States

Federal reserve notes unfit for circulation shall be returned

by the Federal reserve agents to the Comptroller of the

Currency for cancellation and destruction

The Federal Reserve Board shall require each Federal

reserve bank to maintain on deposit in the Treasury of the

United States a sum in gold sufficient in the judgment of the

Secretary of the Treasury for the redemption of the Federal

reserve notes issued to such bank, but in no event less than

five per centum; but such deposit of gold shall be counted

and included as part of the forty per centum reserve

herein-before required The board shall have the right, acting

through the Federal reserve agent, to grant in whole or in part

or to reject entirely the application of any Federal reserve

bank for Federal reserve notes; but to the extent that such

application may be granted the Federal Reserve Board shall,

through its local Federal reserve agent, supply Federal reserve

notes to the bank so applying, and such bank shall be charged

with the amount of such notes and shall pay such rate of

interest on said amount as may be established by the Federal

Reserve Board, and the amount of such Federal reserve notes

so issued to any such bank shall, upon delivery, together with

such notes of such Federal reserve bank as may be issued

under section eighteen of this Act upon security of United

States two per centum Government bonds, become a first

and paramount lien on all the assets of such bank

Any Federal reserve bank may at any time reduce its

liabil-ity for outstanding Federal reserve notes by depositing, with

the Federal reserve agent, its Federal reserve notes, gold, gold

certificates, or lawful money of the United States Federal

reserve notes so deposited shall not be reissued, except upon

compliance with the conditions of an original issue

The Federal reserve agent shall hold such gold, gold

cer-tificates, or lawful money available exclusively for exchange

for the outstanding Federal reserve notes when offered by the

reserve bank of which he is a director Upon the request of the

Secretary of the Treasury the Federal Reserve Board shall

require the Federal reserve agent to transmit so much of said

gold to the Treasury of the United States as may be required

for the exclusive purpose of the redemption of such notes

Any Federal reserve bank may at its discretion withdraw

collateral deposited with the local Federal reserve agent for

the protection of its Federal reserve notes deposited with it

and shall at the same time substitute therefor other like

col-lateral of equal amount with the approval of the Federal

reserve agent under regulations to be prescribed by the

Federal Reserve Board

In order to furnish suitable notes for circulation as

Federal reserve notes, the Comptroller of the Currency shall,

under the direction of the Secretary of the Treasury, cause

plates and dies to be engraved in the best manner to guard

against counterfeits and fraudulent alterations, and shallhave printed therefrom and numbered such quantities ofsuch notes of the denominations of $5, $10, $20, $50, $100,

as may be required to supply the Federal reserve banks Suchnotes shall be in form and tenor as directed by the Secretary

of the Treasury under the provisions of this Act and shallbear the distinctive numbers of the several reserve banksthrough which they are issued

When such notes have been prepared, they shall bedeposited in the Treasury, or in the subtreasury or mint of theUnited States nearest the place of business of each Federalreserve bank and shall be held for the use of such bank sub-ject to the order of the Comptroller of the Currency for theirdelivery, as provided for by this Act

The plates and dies to be procured by the Comptroller ofCurrency for the printing of such circulating notes shallremain under his control and direction, and the expensesnecessarily incurred in executing the laws relating to theprocuring of such notes, and all other expenses incidental totheir issue and retirement, shall be paid by the Federal reservebanks, and the Federal Reserve Board shall include in its esti-mate of expenses levied against the Federal reserve banks asufficient amount to cover the expenses herein provided for.The examination of plates, dies, bed pieces, and so forth,and regulations relating to such examination of plates, dies,and so forth, of national-bank notes provided for in sectionfifty-one hundred and seventy-four Revised Statutes, ishereby extended to include notes herein provided for.Any appropriation heretofore made out of the generalfunds of the Treasury for engraving plates and dies, the pur-chase of distinctive paper, or to cover any other expense inconnection with the printing of national-bank notes or notesprovided for by the Act of May thirtieth, nineteen hundredand eight, and any distinctive paper that may be on hand atthe time of the passage of this Act may be used in the discre-tion of the Secretary for the purposes of this Act, and shouldthe appropriations heretofore made be insufficient to meetthe requirements of this Act in addition to circulating notesprovided for by existing law, the Secretary is hereby author-ized to use so much of any funds in the Treasury not other-wise appropriated for the purpose of furnishing the notesaforesaid: Provided, however, That nothing in this sectioncontained shall be construed as exempting national banks orFederal reserve banks from their liability to reimburse theUnited States for any expenses incurred in printing and issu-ing circulating notes

Every Federal reserve bank shall receive on deposit at parfrom member banks or from Federal reserve banks checks anddrafts drawn upon any of its depositors, and when remitted by

a Federal reserve bank, checks and drafts drawn by any itor in any other Federal reserve bank or member bank uponfunds to the credit of said depositor in said reserve bank ormember bank Nothing herein contained shall be construed asprohibiting a member bank from charging its actual expenseincurred in collecting and remitting funds, or for the exchangesold to its patrons The Federal Reserve Board shall, by rule, fixthe charges to be collected by the member banks from itspatrons whose checks are cleared through the Federal reserve

depos-588 Federal Reserve Act

bank and the charge which may be imposed for the service

and clearing or collection rendered by the Federal reserve

bank The Federal Reserve Board shall make and promulgate

from time to time regulations governing the transfer of funds

and charges therefor among Federal reserve banks and their

branches, and may at their discretion exercise the functions of

a clearing house for such Federal reserve banks, or may

desig-nate a Federal reserve bank to exercise such functions, and

may also require each such bank to exercise the functions of a

clearing house for its member banks

Sec 17 So much of the provisions of section fifty-one

hundred and fifty-nine of the Revised Statutes of the United

States, and section four of the Act of June twentieth, eighteen

hundred and seventy-four, and section eight of the Act of July

twelfth, eighteen hundred and eighty-two, and of any other

provisions of existing statutes as require that before any

national banking associations shall be authorized to

com-mence banking business it shall transfer and deliver to the

Treasurer of the United States a stated amount of United

States registered bonds is hereby repealed

REFUNDING BONDS.

Sec 18 After two years from the passage of this Act, and at

any time during a period of twenty years thereafter, any

mem-ber bank desiring to retire the whole or any part of its

circu-lating notes, may file with the Treasurer of the United States an

application to sell for its account, at par and accrued interest,

United States bonds securing circulation to be retired

The Treasurer shall, at the end of each quarterly period,

furnish the Federal Reserve Board with a list of such

applica-tions, and the Federal Reserve Board may, in its discretion,

require the Federal reserve banks to purchase such bonds

from the banks whose applications have been filed with the

Treasurer at least ten days before the end of any quarterly

period at which the Federal Reserve Board may direct the

purchase to be made: Provided, That Federal reserve banks

shall not be permitted to purchase an amount to exceed

$25,000,000 of such bonds in any one year, and which

amount shall include bonds acquired under section four of

this Act by the Federal reserve bank

Provided further, That the Federal Reserve Board shall

allot to each Federal reserve bank such proportion of such

bonds as the capital and surplus of such bank shall bear to the

aggregate capital and surplus of all the Federal reserve banks

Upon notice from the Treasurer of the amount of bonds

so sold for its account, each member bank shall duly assign

and transfer, in writing, such bonds to the Federal reserve

bank purchasing the same, and such Federal reserve bank

shall, thereupon, deposit lawful money with the Treasurer of

the United States for the purchase price of such bonds, and

the Treasurer shall pay to the member bank selling such

bonds any balance due after deducting a sufficient sum to

redeem its outstanding notes secured by such bonds, which

notes shall be canceled and permanently retired when

redeemed

The Federal reserve banks purchasing such bonds shall be

permitted to take out an amount of circulating notes equal to

the par value of such bonds

Upon the deposit with the Treasurer of the United States

of bonds so purchased, or any bonds with the circulatingprivilege acquired under section four of this Act, any Federalreserve bank making such deposit in the manner provided byexisting law, shall be entitled to receive from the Comptroller

of the Currency circulating notes in blank, registered andcountersigned as provided by law, equal in amount to the parvalue of the bonds so deposited Such notes shall be the obli-gations of the Federal reserve bank procuring the same, andshall be in form prescribed by the Secretary of the Treasury,and to the same tenor and effect as national-bank notes nowprovided by law They shall be issued and redeemed underthe same terms and conditions as national-bank notes exceptthat they shall not be limited to the amount of the capitalstock of the Federal reserve bank issuing them

Upon application of any Federal reserve bank, approved

by the Federal Reserve Board, the Secretary of the Treasurymay issue, in exchange for United States two per centumgold bonds bearing the circulation privilege, but againstwhich no circulation is outstanding, one-year notes of theUnited States without the circulation privilege, to an amountnot to exceed one-half of the two per centum bonds so ten-dered for exchange, and thirty-year three per centum goldbonds without the circulation privilege for the remainder ofthe two per centum bonds so tendered: Provided, That at thetime of such exchange the Federal reserve bank obtainingsuch one-year gold notes shall enter into an obligation withthe Secretary of the Treasury binding itself to purchase fromthe United States for gold at the maturity of such one-yearnotes, an amount equal to those delivered in exchange forsuch bonds, if so requested by the Secretary, and at eachmaturity of one-year notes so purchased by such Federalreserve bank, to purchase from the United States such anamount of one-year notes as the Secretary may tender tosuch bank, not to exceed the amount issued to such bank inthe first instance, in exchange for the two per centum UnitedStates gold bonds; said obligation to purchase at maturitysuch notes shall continue in force for a period not to exceedthirty years

For the purpose of making the exchange herein providedfor, the Secretary of the Treasury is authorized to issue at parTreasury notes in coupon or registered form as he may pre-scribe in denominations of one hundred dollars, or any mul-tiple thereof, bearing interest at the rate of three per centumper annum, payable quarterly, such Treasury notes to bepayable not more than one year from the date of their issue

in gold coin of the present standard value, and to be exempt

as to principal and interest from the payment of all taxes andduties of the United States except as provided by this Act, aswell as from taxes in any form by or under any State, munic-ipal, or local authorities And for the same purpose, theSecretary is authorized and empowered to issue United Statesgold bonds at par, bearing three per centum interest payablethirty years from date of issue, such bonds to be of the samegeneral tenor and effect and to be issued under the same gen-eral terms and conditions as the United States three per cen-tum bonds without the circulation privilege now issued andoutstanding

Federal Reserve Act 589

Upon application of any Federal reserve bank, approved

by the Federal Reserve Board, the Secretary may issue at par

such three per centum bonds in exchange for the one-year

gold notes herein provided for

BANK RESERVES.

Sec 19 Demand deposits within the meaning of this Act

shall comprise all deposits payable within thirty days, and

time deposits shall comprise all deposits payable after thirty

days, and all savings accounts and certificates of deposit which

are subject to not less than thirty days’ notice before payment

When the Secretary of the Treasury shall have officially

announced, in such manner as he may elect, the

establish-ment of a Federal reserve bank in any district, every

sub-scribing member bank shall establish and maintain reserves

as follows:

(a) A bank not in a reserve or central reserve city as now

or hereafter defined shall hold and maintain reserves equal to

twelve per centum of the aggregate amount of its demand

deposits and five per centum of its time deposits, as follows:

In its vaults for a period of thirty-six months after said

date five-twelfths thereof and permanently thereafter

four-twelfths

In the Federal reserve bank of its district, for a period of

twelve months after said date, two-twelfths, and for each

suc-ceeding six months an additional one-twelfth, until

five-twelfths have been so deposited, which shall be the amount

permanently required

For a period of thirty-six months after said date the

bal-ance of the reserves may be held in its own vaults, or in the

Federal reserve bank, or in national banks in reserve or

cen-tral reserve cities as now defined by law

After said thirty-six months’ period said reserves, other

than those hereinbefore required to be held in the vaults of

the member bank and in the Federal reserve bank, shall be

held in the vaults of the member bank or in the Federal

reserve bank, or in both, at the option of the member bank

(b) A bank in a reserve city, as now or hereafter defined,

shall hold and maintain reserves equal to fifteen per centum

of the aggregate amount of its demand deposits and five per

centum of its time deposits, as follows:

In its vaults for a period of thirty-six months after said

date six-fifteenths thereof, and permanently thereafter

five-fifteenths

In the Federal reserve bank of its district for a period of

twelve months after the date aforesaid at least

three-fifteenths, and for each succeeding six months an additional

one-fifteenth, until six-fifteenths have been so deposited,

which shall be the amount permanently required

For a period of thirty-six months after said date the

bal-ance of the reserves may be held in its own vaults, or in the

Federal reserve bank, or in national banks in reserve or

cen-tral reserve cities as now defined by law

After thirty-six months’ period all of said reserves, except

those hereinbefore required to be held permanently in the

vaults of the member bank and in the Federal reserve bank,

shall be held in its vaults or in the Federal reserve bank, or in

both, at the option of the member bank

(c) A bank in a central reserve city, as now or hereafterdefined, shall hold and maintain a reserve equal to eighteenper centum of the aggregate amount of its demand depositsand five per centum of its time deposits, as follows:

In its vaults six-eighteenths thereof

In the Federal reserve bank seven-eighteenths

The balance of said reserves shall be held in its own vaults

or in the Federal reserve bank, at its option

Any Federal reserve bank may receive from the memberbanks as reserves, not exceeding one-half of each installment,eligible paper as described in section fourteen properlyindorsed and acceptable to the said reserve bank

If a State bank or trust company is required by law of itsState to keep its reserves either in its own vaults or withanother State bank or trust company, such reserve deposits sokept in such State bank or trust company shall be construed,within the meaning of this section, as if they were reservedeposits in a national bank in a reserve or central reserve cityfor a period of three years after the Secretary of the Treasuryshall have officially announced the establishment of a Federalreserve bank in the district in which such State bank or trustcompany is situate Except as thus provided, no memberbank shall keep on deposit with any nonmember bank a sum

in excess of ten per centum of its own paid-up capital andsurplus No member bank shall act as the medium or agent

of a nonmember bank in applying for or receiving discountsfrom a Federal reserve bank under the provisions of this Actexcept by permission of the Federal Reserve Board

The reserve carried by a member bank with a Federalreserve bank may, under the regulations and subject to suchpenalties as may be described by the Federal Reserve Board,

be checked against and withdrawn by such member bank forthe purpose of meeting existing liabilities: Provided, however,That no bank shall at any time make new loans or shall payany dividends unless and until the total reserve required bylaw is fully restored

In estimating the reserves required by this Act, the net ance of amounts due to and from other banks shall be taken

bal-as the bbal-asis for bal-ascertaining the deposits against which thereserves shall be determined Balances in reserve banks due

to member banks shall, to the extent herein provided, becounted as reserves

National banks located in Alaska or outside the tal United States may remain nonmember banks, and shall inthat event maintain reserves and comply with all the condi-tions now provided by law regulating them; or said banks,except in the Philippine Islands, may, with the consent of theReserve Board, become member banks of any one of thereserve districts, and shall, in that event, take stock, maintainreserves, and be subject to all the other provisions of this Act.Sec 20 So much of sections two and three of the Act ofJune twentieth, eighteen hundred and seventy-four, entitled

continen-“An Act fixing the amount of United States notes, providingfor a redistribution of the national-bank currency, and forother purposes,” as provides that the fund deposited by anynational banking association with the Treasurer of the UnitedStates for the redemption of its notes shall be counted as a part

of its lawful reserve as provided in the Act aforesaid, is hereby

590 Federal Reserve Act

repealed And from and after the passage of this Act such fund

of five per centum shall in no case be counted by any national

banking association as a part of its lawful reserve

BANK EXAMINATIONS.

Sec 21 Section fifty-two hundred and forty, United States

Revised Statutes, is amended to read as follows:

The Comptroller of the Currency, with the approval of the

Secretary of the Treasury, shall appoint examiners who shall

examine every member bank at least twice in each calendar

year and oftener if considered necessary: Provided, however,

That the Federal Reserve Board may authorize examination

by the State authorities to be accepted in the case of State

banks and trust companies and may at any time direct the

holding of a special examination of State banks or trust

com-panies that are stockholders in any Federal reserve bank, or of

any other member bank, shall have power to make a

thor-ough examination of all the affairs of the bank and in so

doing so he shall have power to administer oaths and to

examine any of the officers and agents thereof under oath

and shall make a full and detailed report of the condition of

said bank to the Comptroller of the Currency

The Federal Reserve Board, upon the recommendation of

the Comptroller of the Currency, shall affix the salaries of all

bank examiners and make report thereof to Congress The

expense of the examinations herein provided for shall be

assessed by the Comptroller of the Currency upon the banks

examined in proportion to assets or resources held by the

banks upon the dates of examination of the various banks

In addition to the examinations made and conducted by

the Comptroller of the Currency, every Federal reserve bank

may, with the approval of the Federal reserve agent or the

Federal Reserve Board, provide for special examination of

member banks within its district The expenses of such

examinations shall be borne by the bank examined Such

examinations shall be so conducted as to inform the Federal

reserve bank of the condition of its member banks and of the

lines of credit which are being extended by them Every

Federal reserve bank shall at times furnish to the Federal

Reserve Board such information as may be demanded

con-cerning the condition of any member bank within the district

of the said Federal reserve bank

No bank shall be subject to visitatorial powers other than

such as are authorized by law, or vested in the courts of

jus-tice or such as shall be or shall have been exercised or directed

by Congress, or by either House thereof or by any committee

of Congress or of either House duly authorized

The Federal Reserve Board shall, at least once a year, order

an examination of each Federal reserve bank, and upon joint

application of ten member banks the Federal Reserve Board

shall order a special examination and report of the condition

of any Federal reserve bank

Sec 22 No member bank or any officer, director, or

employee thereof shall hereafter make any loan or grant any

gratuity to any bank examiner Any bank officer, director, or

employee violating this provision shall be deemed guilty of a

misdemeanor and shall be imprisoned not exceeding one

year or fined not more than $5,000, or both; and may be fined

a further sum equal to the money so loaned or gratuity given.Any examiner accepting a loan or gratuity from any bankexamined by him or from an officer, director, or employeethereof shall be guilty of a misdemeanor and shall be impris-oned not exceeding one year or fined not more than $5,000,

or both; and may be fined a further sum equal to the money

so loaned or gratuity given; and shall forever thereafter bedisqualified from holding office as a national-bank examiner

No national-bank examiner shall perform any other servicefor compensation while holding such office for any bank orofficer, director, or employee thereof

Other than the usual salary or director’s fee paid to anyofficer, director, or employee of a member bank and otherthan a reasonable fee paid by said bank to such officer, direc-tor, or employee for services rendered to such bank, no offi-cer, director, employee, or attorney of a member bank shall be

a beneficiary of or receive, directly or indirectly, any fee, mission, gift, or other consideration for or in connection withany transaction or business of the bank No examiner, public

com-or private, shall disclose the names of the bcom-orrowers com-or thecollateral for loans of a member bank to other than theproper officers of such bank without first having obtained theexpress permission in writing from the Comptroller of theCurrency, or from the board of directors of such bank, exceptwhen ordered to do so by a court of competent jurisdiction,

or by direction of the Congress of the United States, or ofeither House thereof, or any committee of Congress or ofeither House duly authorized Any person violating any pro-vision of this section shall be punished by a fine not exceed-ing $5,000 or by imprisonment not exceeding one year, orboth

Except as provided in existing laws, this provision shall nottake effect until sixty days after the passage of this Act Thestockholders of every national banking association shall beheld individually responsible for all contracts, debts, andengagements of such association, each to the amount of hisstock therein, at the par value thereof in addition to theamount invested in such stock The stockholders in anynational banking association who shall have transferred theirshares or registered the transfer thereof within sixty days nextbefore the date of the failure of such association to meet itsobligations, or with knowledge of such impending failure,shall be liable to the same extent as if they had made no suchtransfer, to the extent that the subsequent transferee fails tomeet such liability; but this provision shall not be construed

to affect in any way any recourse which such shareholdersmight otherwise have against those in whose names suchshares are registered at the time of such failure

LOANS OF FARM LANDS.

Sec 24 Any national banking association not situated in acentral reserve city may make loans secured by improved andunencumbered farm land, situated within its Federal reservedistrict, but no such loan shall be made for a longer time thanfive years, nor for an amount exceeding fifty per centum of theactual value of the property offered as security Any such bankmay make such loans in an aggregate sum equal to twenty-fiveper centum of its capital and surplus or to one-third of its

Federal Reserve Act 591

time deposits and such banks may continue hereafter as

heretofore to receive time deposits and to pay interest on the

same

The Federal Reserve Board shall have the power from time

to time to add to the list of cities in which national banks

shall not be permitted to make loans secured upon real estate

in the manner described in this section

FOREIGN BRANCHES.

Sec 25 Any banking association possessing a capital and

surplus of $1,000,000 or more may file application with the

Federal Reserve Board, upon such conditions and under such

regulations as may be prescribed by the said board, for the

purpose of securing authority to establish branches in foreign

countries or dependencies of the United States for the

fur-therance of the foreign commerce of the United States, and to

act, if required to do so, as fiscal agents of the United States

Such application shall specify, in addition to the name and

capital of the banking association filing it, the place or places

where the banking operations proposed are to be carried on,

and the amount of capital set aside for the conduct of its

for-eign business The Federal Reserve Board shall have the power

to approve or to reject such application if, in its judgment, the

amount of capital proposed to be set aside for the conduct of

foreign business is inadequate, or if for other reasons the

granting of such application is deemed inexpedient

Every national banking association which shall receive

authority to establish foreign branches shall be required at all

times to furnish information concerning the condition of

such branches to the Comptroller of the Currency upon

demand, and the Federal Reserve Board may order special

examinations of the said foreign branches at such time or

times as it may deem best Every national banking association

shall conduct the accounts of each foreign branch

independ-ently of the accounts of other foreign branches established by

it and of its home office, and shall at the end of each fiscal

period transfer to its general ledger the profit or loss accruing

at each branch as a separate item

Sec 26 All provisions of law inconsistent with or

super-seded by any of the provisions of this Act are to the extent and

to that extent only hereby repealed: Provided, Nothing in this

Act contained shall be construed to repeal the parity

provi-sion or proviprovi-sions contained in an Act approved March

four-teenth, nineteen hundred, entitled “An Act to define and fix

the standard of value, to maintain the parity of all forms of

money issued or coined by the United States, to refund the

public debt, and for other purposes,” and the Secretary of the

Treasury may for the purpose of maintaining such parity and

to strengthen the gold reserve, borrow gold on the security of

United States bonds authorized by section two of the Act last

referred to or for one-year gold notes bearing interest at a rate

not to exceed three per centum per annum, or sell the same if

necessary to obtain gold When the funds of the Treasury on

hand justify, he may purchase and retire such outstanding

bonds and notes

The provisions of the Act of May thirtieth, nineteen dred and eight, authorizing national currency associations,the issue of additional national-bank circulation, and creat-ing a National Monetary Commission, which expires by lim-itation under the terms of such Act on the thirtieth day ofJune, nineteen hundred and fourteen, are hereby extended toJune thirtieth, nineteen hundred and fifteen, and sectionsfifty-one hundred and fifty-three, fifty-one hundred andseventy-two, fifty-one hundred and ninety-one, and fifty-twohundred and fourteen of the Revised Statutes of the UnitedStates, which were amended by the Act of May thirtieth, nine-teen hundred and eight, are hereby reenacted to read as suchsections read prior to May thirtieth, nineteen hundred andeight, subject to such amendments or modifications as areprescribed in this Act: Provided, however, That section nine

hun-of the Act first referred to in this section is hereby amended

so as to change the tax rates fixed in said Act by making theportion applicable thereto read as follows:

National banking associations having circulating notessecured otherwise than by bonds of the United States, shallpay for the first three months a tax at the rate of three percentum per annum upon the average amount of such of theirnotes in circulation as are based upon the deposit of suchsecurities, and afterwards an additional tax rate of one-half ofone per centum per annum for each month until a tax of sixper centum per annum is reached, and thereafter such tax ofsix per centum per annum upon the average amount of suchnotes

Sec 28 Section fifty-one hundred and forty-three of theRevised Statutes is hereby amended and reenacted to read asfollows: Any association formed under this title may, by thevote of the shareholders owning two thirds of its capitalstock, reduce its capital to any sum not below the amountrequired by this title to authorize the formation of associa-tions; but no such reduction shall be allowable which willreduce the capital of the association below the amountrequired for its outstanding circulation, nor shall any reduc-tion be made until the amount of the proposed reduction hasbeen reported to the Comptroller of the Currency and suchreduction has been approved by the said Comptroller of theCurrency and by the Federal Reserve Board, or by the organ-ization committee pending the organization of the FederalReserve Board

Sec 29 If any clause, sentence, paragraph, or part of thisAct shall for any reason be adjudged by any court of compe-tent jurisdiction to be invalid, such judgment shall not affect,impair, or invalidate the remainder of this Act, but shall beconfined in its operation to the clause, sentence, paragraph,

or part thereof directly involved in the controversy in whichsuch judgment shall have been rendered

Sec 30 The right to amend, alter, or repeal this Act ishereby expressly reserved

Approved, December 23, 1913.

592 Federal Reserve Act

The Federal Trade Commission (FTC), established as an

independent government agency in 1915, enforces antitrust

laws and ensures that American businesses engage in fair

competition The five-member commission focuses on the

prevention of interlocking directorates, monitors the

acquisition of capital stock, and deals with issues such as false

advertising The FTC also enforces the Trust in Lending Act.

The only industries that the commission does not have

jurisdiction over are banks and common carriers.

Source: Public Statutes at Large, Vol 38 Part I, pp 717–724.

An Act To create a Federal Trade Commission, to define its

powers and duties, and for other purposes.

Be it enacted by the Senate and the House of

Represen-tatives of the United States of America in Congress

assem-bled, That a commission is hereby created and established, to

be known as the Federal Trade Commission (hereinafter

referred to as the commission), which shall be composed of

five commissioners, who shall be appointed by the President,

by and with the advice and consent of the Senate Not more

than three of the commissioners shall be members of the

same political party The first commissioners appointed shall

continue in office for terms of three, four, five, six, and seven

years, respectively, from the date of the taking effect of this

Act, the term of each to be designated by the President, but

their successors shall be appointed for terms of seven years,

except that any person chosen to fill a vacancy shall be

appointed only for the unexpired term of the commissioner

whom he will succeed The commissioner shall choose a

chairman from its own membership No commissioner shall

engage in any other business, vocation, or employment Any

commissioner may be removed by the President for

ineffi-ciency, neglect of duty, or malfeasance in office A vacancy in

the commission shall not impair the right of the remaining

commissioners to exercise all the powers of the commission

The commission shall have an official seal, which shall be

judicially noticed

Sec 2 That each commissioner shall receive a salary of

$10,000 a year, payable in the same manner as the salaries of

the judges of the courts of the United States The commissionshall appoint a secretary, who shall receive a salary of $5,000

a year, payable in like manner, and it shall have the authority

to employ and fix the compensation of such attorneys, cial experts, examiners, clerks, and other employees as it mayfrom time to time find necessary for the proper performance

spe-of its duties and as may be from time to time appropriated for

by Congress

With the exception of the secretary, a clerk to each missioner, the attorneys, and such special experts and exam-iners as the commission may from time to time findnecessary for the conduct of its work, all employees of thecommission shall be part of the classified civil service, andshall enter the service under such rules and regulations asmay be prescribed by the Civil Service Commission

com-All of the expenses of the commission, including all sary expenses for transportation incurred by the commis-sioners or by employees under their orders, in making anyinvestigation, or upon official business in any other placesthan in the city of Washington, shall be allowed and paid onthe presentation of itemized vouchers therefor approved bythe commission

neces-Until otherwise provided by law, the commission may rentsuitable offices for its use

The Auditor for the State and other Departments shallreceive and examine all accounts of expenditures of the com-mission

Sec 3 That upon the organization of the commission andelection of its chairman, the Bureau of Corporations and theoffices of Commissioner and Deputy Commissioner ofCorporations shall cease to exist; and all pending investiga-tions and proceedings of the Bureau of Corporations shall becontinued by the commission

All clerks and employees of the said bureau shall be ferred to and become clerks and employees of the commis-sion at their present grades and salaries All records, papers,and property of the said bureau shall become records, papers,and property of the commission, and all unexpected fundsand appropriations for the use and maintenance of the saidbureau, including any allotment already made to it by the

trans-Federal Trade Commission

(1915)

593