On the whole, this seems desirable as it would result in greater unity of action and would eliminate a certain amount of duplication. The Advisory Council, at its meeting on November 16, 1915, recommended that the Federal Reserve Act be amended so that the work of the Comptroller's office might be absorbed and administered by the Federal Reserve Board.
7. Secretary of the Treasury.—The Secretary of the Treasury assumes his work as Chairman of the Board in addition to all his other duties. Thru this connection the Board is informed of the policies of the Treasury Department, and often of those of the whole administration. On the other hand, the Sec retary receives from the Board much helpful advice and information concerning the conditions and op eration of banks in the country. It is stated spe cifically in the Act that the Board is not given any of the powers previously exercised by the Secretary within his department and that, wherever there may be apparent conflict of jurisdiction, the Board shall be subject to the will of the Secretary.
The reserve banks act as depositories of govern ment funds and as fiscal agents for the government. It is expected that government deposits will be with drawn gradually from the national banks which now hold them, and placed with the reserve banks. The matter is left to the discretion of the Secretary. It is to be hoped that the Treasury Department will stop meddling in the affairs of national banks now that the reserve banks have been established. The use of reserve banks as fiscal agents will have the good effect of placing the funds of the government where they may be useful instead of locking them up in treasury vaults. The hoarding of money by the government has often aggravated a currency stringency in seasons when government receipts were exceeding disburse ments. On the other hand, when disbursements ran ahead money was arbitrarily thrown into circulation whether it was needed or not.
8. Bureau of Audit and Examination.—The Board has organized the Bureau of Audit and Examination and assigned to it the duties which the name implies. Its most important work, so far, is examining the re serve banks and state banks which are members of the system. It also examines state banks which apply for admission.
9. Division of Reports and Statistics.—The Divi sion of Reports and Statistics collects information desired by the Board, analyzes it and presents it in such form as will make it possible for the Board to reach conclusions as quickly and accurately as pos sible. The twelve reserve banks telegraph the main items in their statements to Washington every Wednesday, or Tuesday if Wednesday is a holiday. These are analyzed and combined so as to be ready as soon as possible for the meeting of the discount committee Wednesday afternoon, or at least for the Board meeting on Thursday. The reserve banks also forward daily reports showing paper purchased, name of maker, rate, maturity, etc. These reports are ana lyzed and laid before the Board, which uses them as a basis for its conclusions regarding various ques tions of policy such, for example, as changes in the discount rates.
Another important division is that of Clearing. The work of this office will be discussed later.
10. Operations of the reserve banking operations are carried on by the twelve regional banks, instead of by a central institution as provided for in the Aldrich Plan. These reserve banks are essen tially bankers' banks, and they have very slight deal ings with the public directly. For example, individ uals cannot borrow or deposit at the reserve banks. A part of the reserves of member banks are collected in twelve reservoirs instead of in one central bank. Some of the principal duties and powers of the re serve banks are outlined below. The most important ones will be considered in detail later.
(a) They may accept deposits only from the United States, member banks of their respective dis tricts, and, for exchange and collection purposes only, from other reserve banks and non-member state banks and trust companies. Government funds, except the five per cent redemption funds, may be deposited either in the reserve banks or in member banks.
(b) From their own member banks and from other reserve banks they are required to receive for deposit, at par, checks and demand drafts drawn on any bank which is a member of the reserve system or on any non-member bank the checks of which can be col lected at par.