Should any national bank fail within one year after the passage of the act to become a member bank, or to comply with the act, its franchises under the national banking act or under this act shall be forfeited, but only upon suit in a United States court of competent jurisdiction, brought where the bank is located, under the direction of the reserve board, by the comptroller of the currency. In case of any such noncompli ance, other than the failure to become a member bank, every participating or as senting director is held personally liable for all damages such bank, its shareholders, or any other person shall have sustained. If the subscription by banks to the federal reserve banks or any one or more of them be, in the judgment of the committee, in sufficient to provide the necessary capital, the committee may offer to public sub scription at par such amount of reserve bank stock as the committee may determine. No individual, partnership or corporation, other than a member bank of its district, can subscribe for or hold at any time more than $25,000 par value of reserve bank stock. Such stock is to be known as public stock and may be transferred on the books of the reserve bank by the chairman of its board of directors. If the total bank and public sub scriptions to the stock of the reserve banks or one or more of them be insufficient to pro vide the necessary capital, the committee shall allot to the United States such amount of stock as it shall determine, to be paid for by the United States at par out of any mon ey in the treasury not otherwise appropri ated.
Stock not held by member banks shall not be entitled to voting power.
No reserve bank shall commence business with less than $4,000,000 subscribed capital. The organization of the reserve districts and reserve cities shall not change the pres ent status of reserve cities and central re serve cities, except in so far as the act changes the amount of reserves that may be carried with approved reserve agents lo cated therein.
Branch Offices. Each reserve bank shall establish branch banks within the district, to be operated by directors under the rules of the reserve board. Branch bank directors shall possess the same qualifications as di rectors of the 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 pleas ure, respectively, of the parent bank and the federal reserve board. The reserve bank shall designate one of the directors as man ager.
Federal Reserve Banks. When the mini mum amount of stock prescribed by this act for the organization of any reserve bank shall have been subscribed and allotted, the committee shall designate any five banks of those whose applications have been received, to organize a reserve bank. When the or ganization certificate has been filed with the comptroller, the reserve bank shall become a body corporate with the ordinary powers, for a period of twenty years, and may ap point by its board of directors such officers and employes not otherwise provided for in the act and dismiss them at pleasure. It
may deposit with the United States treasurer bonds of the United States as provided by existing laws and receive circulating notes equal to the par value of the bonds; but the issue thereof shall not be limited to the capital stock of such reserve bank.
Reserve banks shall be conducted under control of 'directors with the usual powers and those prescribed by law ; they shall ad minister their affairs "fairly and impartial ly and without discrimination in favor of or against any member bank or banks and shall, subject to the provisions of law and the orders of the reserve board, extend to each member bank such discounts, advance ments and accommodations as may be safely and reasonably made, with due regard for the claims and demands of other member banks." The board of directors shall consist of nine members, holding office for three years, and divided in classes, of three each, desig nated as classes A, B, and C. Class A shall be chosen by the stockholding banks. Class B shall be persons actively engaged in their district in commerce, agriculture or some other industrial pursuit. Class C shall be designated by the reserve board, which shall designate one of them as chairman. No senator or representative in congress shall be a member of the reserve board or an offi cer or director of a reserve bank.
No director of class B shall be an offi cer, director or employe of any bank. No director of class C shall be an officer, di rector, employe, or stockholder of any bank.
An elaborate plan for the choice of direc tors of classes A and B is provided, for which see the act.
Class C directors shall be appointed by the reserve board; they shall have been at least two years residents of the district. One of them shall be appointed chairman of the board and as "federal reserve agent" ; he shall be a person of "tested banking ex perience." Another member of class C, of like experience, shall be deputy chairman and deputy reserve agent.
Stock Issues. Reserve banks may increase their capital stock and surplus as member banks increase their capital stock, or addi tional banks become members or decrease it as member banks decrease their capital stock or surplus or cease to be members. Such stock owned by member banks shall not be transferred or hypothecated. When a member bank increases its capital stock or surplus, it must subscribe for an addition al amount of capital stock equal to six per cent. of the increase, and may upon a reduc tion of its capital surrender a proportionate amount, or upon liquidation surrender all its holdings, receiving back its cash-paid sub scriptions and one-half of one per cent. a month from the period of the last dividend, not to exceed the book value thereof, less any liability to the reserve bank.