The principle of double liability is applied to stock holders of the reserve banks as well as to those of the national banks. Stockholders of national banks are held for all debts of the bank to the extent of their double liability. Those of reserve banks are held liable in the same way, but the liability is distributed equally and ratably and one is not liable for another.
3. Control of reserve the stock of each reserve bank is owned by the member banks in its dis trict and the stock may not be transferred or hypothe cated. Each reserve bank is under the immediate control of a board of nine directors, divided into three classes, as follows: Class A, three members chosen by, and representative of, the member banks; Class B, three members chosen by member banks and rep resentative of general business interests aside from banking; Class C, three members chosen by the Federal Reserve Board. One member of Class C who is a man of tested banking experience is desig nated by the Reserve Board as Federal Reserve agent and chairman of the board of directors of the reserve bank. He is looked upon as the personal representa tive of the Reserve Board within the bank. The di rectors are authorized to employ such help as is deemed necessary for the operation of the bank. Each of the banks has a governor who corresponds to the president of an ordinary bank.
4. Federal Reserve the reserve banks are under the supervision and control of the Fed eral Reserve Board, which consists of seven mem bers, as follows: the Secretary of the Treasury, ex-officio; the Comptroller of the Currency, ex-of ficio; and five members appointed by the President of the United States with the consent of the Senate. The Comptroller, by virtue of his membership on the Board, receives $7,000 annually in addition to his regular salary. The five appointed members receive an annual salary of $12,000 each and they serve for rotating terms of ten years, that is, one goes out of office every second year. Two of these five are desig nated by the President as governor and deputy gov ernor respectively of the Board. The governor is the active executive officer. The office of the Board is at Washington, D. C.
As we go along we shall find that the Federal Re serve Board has extensive powers over the operation of the reserve banks and, thru them, even over the member banks. Member bank, as distinguished from
national bank, means any bank, national or state, which has subscribed to the stock of a Federal Reserve bank and has become thereby a member of the Federal Reserve system.
5. Federal Advisory is a Federal Advisory Council consisting of twelve members, one elected and paid by each reserve bank. The Ad visory Council is empowered to confer with the Re serve Board on general business conditions, to make representations about matters under the jurisdiction of the Board, and to make recommendations regard ing discount rates and other operations of the reserve banks. The Council acts in an advisory capacity only, and it has no direct voice in the control of the system. It meets at Washington at least four times a year.
In all probability, most of the members of the Council will always be prominent bankers selected from the various districts. Their work on the Coun cil need not interfere seriously with their regular oc cupations. They will bring to the Board a great deal of valuable advice which will be especially wel come because it comes from men actually engaged in the field of banking. It must be remembered, how ever, that the Council has no effective means of en forcing its opinions. It is modeled, in a way, after the stockholders' committee of the Reichsbank and is supposed to voice the opinion and look after the in terests of stockholders, but it does not have even as much power as its German counterpart.
6. Comptroller of the Currency.—Making the Comptroller of the Currency a member of the Board does not in any way change his responsibility as ex ecutive in charge of enforcing the National Banking Act, nor does it alter his responsibility to the Secre tary of the Treasury and to Congress. His presence on the Board establishes a connecting link between that body and the office which supervises the national banking system as such, that is, as distinguished from the Federal Reserve system, which includes state as well as national banks. Many think that the func tions of the Comptroller's office should be taken over by the Board and that the office should be abolished.