rict must subscribe
six per cent and pay in three per cent of their capital and surplus to
the capital stock of the Federal Reserve Bank located in that
district. State banks and trust companies may contribute on compliance
with the same conditions as national institutions. If, in the judgment
of the organization committee, the amount of stock thus subscribed is
inadequate, the public may be asked to subscribe, and as a last resort
stock sufficient to raise the total to an adequate figure may be sold
to the Federal Government. Cooperation between these Federal Reserve
Banks and a degree of unity in their administration are provided for
through a Federal Reserve Board of seven members, two ex officio and
five to be especially appointed by the President of the United States.
For the administration of each Federal Reserve Bank, a board of
directors of nine members is provided for, six to be appointed by the
member banks and three by the Federal Reserve Board, one of those
three to be designated as Federal Reserve Agent and to be the
intermediary between the Federal Reserve Board and the bank of whose
directorate he is a member.

The proposed Federal Reserve Banks are to hold a part of the reserves
of member banks and to rediscount commercial paper, administer
exchange accounts, and conduct clearings for them. They are also to
serve as depositories for the United States government, and to issue
treasury notes obtained from the Federal Reserve Board in exchange for
rediscounted commercial bills, these notes to be redeemable on demand
by them and to be a first lien on all their assets. Their retirement,
when the need for them has passed, is provided for by the requirement
that no Federal Reserve Bank shall pay out any notes except its own,
all others being sent in to the issuing bank or to the treasury for
redemption. Against outstanding note issues a reserve of at least 40
per cent in gold must be maintained, and against deposits one of at
least 35 per cent in gold or lawful money.

This law provides remedies for the chief defects of our system;
namely, a market for commercial paper which will enable a properly
conducted bank at any time, through rediscounts, to secure notes,
legal-tender money, or checking accounts in the amounts needed; a
system of note issues which will fluctuate automatically with the
needs of commerce for hand-to-hand money; a more economical
administration of the reserve funds of the country, unatten