Powers of Federal Reserve Banks. Such bank may receive from any of its member banks and the United States deposits of current funds in lawful money,- national bank notes, federal reserve notes, or checks and drafts upon solvent member banks or other federal reserve banks, payable upon presentation; or, solely for exchange par poses. may receive from other reserve banks deposits of current funds in lawful money, national-bank notes, etc. Upon the indorse ment of any of its member banks, with a waiver of demand, notice and protest, a re serve bank may discount notes, drafts and bills of exchange arising out of actual com mercial transactions, that is, issued or drawn for agricultural, industrial or com mercial purposes, or the proceeds of which , have been used, or are to be used, for such purposes. This shall not include notes, etc., covering merely investments or issued or drawn for the purpose of carrying or trad- I ing in stocks, bonds or other investment se-' curities, except government bonds and notes. Such notes, drafts and hills discounted must have a maturity at the time of discount of not more than ninety days, except that if drkwn or issued for agricultural purposes or based on live stock and having a matu rity not exceeding six months, they may be discounted in an amount to be limited to a percentage of the capital of the reserve bank, to be ascertained and fixed by the re serve board.
A reserve bank may discount acceptances based on importation or exportation of goods and having a maturity at the time of dis count of not more than three months and endorsed by at least one member bank, but the amount thereof shall at no time exceed more than one-half of the paid-up capital and surplus of the bank for which the re discounts are made. The aggregate of such notes and bills bearing the signature and endorsement of any one person, firm or corporation, rediscounted for any one bank, shall at no time exceed ten per cent. of the unimpaired capital and surplus of such bank; but this restriction shall not apply to the discount of bills of exchange drawn in good faith against actually existing values.
A member bank may accept drafts and bills of exchange drawn on it and growing out of transactions involving the importa tion and exportation of goods having not more than six months sight to run ; but no bank shall accept such bills to an amount equal at any time in the aggregate to more than one-half its paid-up capital stock and surplus.
R. S. § 5202, is amended so as to provide that no national bank shall at any time he indebted to an amount exceeding its unim paired capital stock except on account of demands of the following nature: Notes of circulation; moneys deposited with or col lected by it; bills of exchange or drafts drawn against money actually on deposit or due thereto; liabilities to its stockholders for dividends and reserve profits ; and lia bilities incurred under the act.
The rediscount by any reserve bank of bills receivable and of domestic and foreign bills of exchange and acceptances shall be subject to the regulations of the reserve board.
Open-Market Operations. Any reserve bank may, under the rules of the reserve board, purchase and sell in the open market either from or to domestic or foreign banks, etc., transfers and bankers' acceptanc es and bills of exchange of the kind and ma turities as by this act made eligible for re discount with or without the endorsement of a member bank.' It shall have power to deal in gold coin and bullion and make loans thereon; to buy and sell bonds and notes of the United States and bills, notes, revenue bonds and warrants with maturity from date of purchase of not exceeding six months is sued in anticipation of the collection of taxes or of the assured revenue of any state, coun ty, district, political subdivision or munici pality in the continental United States, in cluding irrigation, drainage and reclamation districts, but under the rules of the reserve board. It may purchase from member banks and sell, with or without endorsement, bills of exchange arising out of busines transac tions as thereinbefore defined. It may estab lish from time to time, subject to review by the reserve board, rates of discount for each class of paper, which shall be fixed with a view of accommodating commerce and busi ness.
It may establish accounts with other re serve banks for exchange purposes and with the consent of the reserve board open and maintain banking accounts in foreign coun tries. ' Note Issues. Federal reserve notes to be issued at the discretion of the reserve board for the purpose of making advances to fed eral reserve banks are authorized. They are notes of the United States and "shall be re ceivable by all national and member banks and federal reserve banks and for all taxes, customs and other public dues. They shall be redeemed in gold on demand at the treas ury department of the United States or in gold or lawful money at any federal re serve bank." The federal reserve bank, in applying to the federal reserve agent for federal reserve notes, shall tender to such agent collateral in amount equal to the sum of the notes thus applied for, which shall consist of notes and bills accepted for rediscount under the act. The reserve board may at any time call upon the reserve bank for additional security to protect the reserve notes issued to it.