(d) The fifth paragraph (12 U.S.C. 323) of such section 9 is hereby repealed. (e) The first sentence of the paragraph which, prior to the repeal made by subsection (d) of this section, was the ninth paragraph (12 U.S.C. 327) of such section 9, is amended by striking out "stock" and inserting in lieu thereof "certificate of membership".

(f) The paragraph which, prior to the repeal made by subsection (d) of this section, was the tenth paragraph (12 U.S.C. 328) of such section 9, is amended (1) by striking out, in the first sentence thereof, "all of its holdings of capital stock” and inserting in lieu thereof "certificate of membership", (2) by striking out the second proviso of the first sentence thereof, (3) by striking out, in the last sentence thereof, "stock holdings" and inserting in lieu thereof "certificate of membership", and (4) by striking out, in the last sentence thereof, “a refund of its cash paid subscription with interest at the rate of one-half of one per centum per month from date of last dividend, if earned, the amount refunded in no event to exceed the book value of the stock at that time, and shall likewise be entitled to".

(g) The paragraph which, prior to the repeal made by subsection (d) of this section, was the sixteenth paragraph (12 U.S.C. 333) of such section 9, is amended (1) by striking out, in the first sentence thereof, ", except that any such savings bank shall subscribe for capital stock of the Federal reserve bank an amount equal to six-tenths of 1 per centum of its total deposit liabilities as shown by the most recent report of examination of such savings bank preceding its admission to membership", (2) by striking out all the remaining sentences of such paragraph except the last sentence thereof, and (3) by striking out, in the last sentence of such paragraph, ", except as otherwise hereinbefore provided with respect to capital stock".

(h) The paragraph which, prior to the repeal made by subsection (d) of this section, was the twenty-second paragraph (12 U.S.C. 337) of such section 9, is amended (1) by striking out, in the second sentence thereof, "stock", and inserting in lieu thereof "certificate of membership", and (2) by striking out, in the last sentence thereof, "stock", and inserting in lieu thereof "certificates of membership".

(i) The last paragraph (12 U.S.C. 338) of such section 9 is amended by striking out, in the last sentence thereof, "stock", and inserting in lieu thereof "certificates of membership".

SEC. 7. The first sentence of the third paragraph of section 10 of the Federal Reserve Act is amended by striking out "capital stock and surplus" and inserting in lieu thereof "net earnings for the immediately preceding half year period". SEC. 8. The amendments made by the first seven sections of this Act shall take effect on the thirty-first day after the date of enactment of this Act. SEC. 9. (a) Not later than 31 days after the date of enactment of this Act, each holder of stock in any Federal reserve bank shall surrender such stock to such bank, which shall, as of the thirty-first day after the date of enactment of this Act, cancel and retire the same and pay or credit to such former holder the par value thereof, plus interest at the rate of one-half of one per centum per month from the date of the last dividend, less a membership fee of $10, which shall not be refundable.

(b) Upon the cancellation and retirement of Federal Reserve bank stock as provided in subsection (a) of this section, each Federal reserve bank shall issue to each such former holder thereof a certificate attesting its membership in such Federal reserve bank and in the Federal Reserve System.

SEC. 10. The eleventh paragraph of section 9 of the Federal Reserve Act is amended to read as follows:

"Any applying bank shall be eligible for membership if it is an insured bank as defined in subsection (h) of section 3 of the Federal Deposit Insurance Act. The capital stock of a state member bank shall not be reduced except with the prior consent of the Board of Governors of the Federal Reserve System."

[H.R. 9631, 88th Cong., 2d sess.]

A BILL To increase to twelve the number of members of the Federal Reserve Board, and for other purposes

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That (a) the first and second paragraphs (12 U.S.C. 241 and 242) of section 10 of the Federal Reserve Act are amended to read as follows:

"The Federal Reserve Board (referred to in this Act as the 'Board') shall be composed of twelve members, one of whom shall be the Secretary of the Treasury, who shall be the chairman, and eleven of whom shall be appointed by the President by and with the advice and consent of the Senate. Each appointive member shall be appointed for a term expiring on June 30 of one of the first four calendar years succeeding the year in which he is appointed, as designated by the President at the time of nomination, subject to the limitation that not more than three members of the Board may have terms scheduled to expire within the same calendar year. The President may remove any appointive member from office. In selecting the members of the Board, the President shall have due regard to a fair representation of the financial, agricultural, industrial, commercial, labor, and consumer interests, and geographical divisions of the country. The appointive members of the Board shall devote their entire time to the business of the Board.

"The appointive members of the Board shall be ineligible during the time they are in office and for two years thereafter to hold any office, position, or employment in any member bank, except that this restriction shall not apply to a member who has served the full term for which he was appointed. The President shall designate one of the appointive members of the Board as Vice Chairman to serve as such for a term of four years, or until the expiration of his term of office as a member, whichever is less. The Vice Chairman of the Board. subject to its supervision, shall be its active executive officer. Each appointive member of the Board shall within fifteen days after notice of appointment make and subscribe to the oath of office. Upon the expiration of their terms of office, appointive members of the Board shall continue to serve until their successors are appointed and have qualified. An appointive member of the Board who has served more than two years shall not be eligible for reappointment for a term beginning earlier than four years after the expiration of his most recent term of office."

(b) The Board of Governors of the Federal Reserve System established under authority of the Federal Reserve Act as in effect prior to the effective date of the amendment made by subsection (a) of this section is abolished. Each member of the Board of Governors of the Federal Reserve System in office immediately prior to the taking effect of this subsection shall be paid one year's salary at his then current rate in addition to any other pay and benefits which he may by law be entitled to receive.

(c) On and after the effective date of subsection (a) of this section, any reference (other than the reference in subsection (b) of this section) to the Board of Governors of the Federal Reserve System in any law, rule, or regulation of the United States or any department or agency thereof shall be deemed a reference to the Federal Reserve Board.

SEC. 2. (a) Section 12 of the Federal Reserve Act (12 U.S.C. 261 and 262) is amended to read as follows:

"FEDERAL ADVISORY COMMITTEE

"SEC. 12. In order to provide for full representation of the public interest at the highest level in the making of monetary policy, the President shall appoint a Federal Advisory Committee (referred to hereafter in this section as the 'Committee') which shall consist of the Comptroller of the Currency, the Chairman of the Board of Directors of the Federal Deposit Insurance Corporation, and not more than fifty other members who shall serve for a term of one year. Any person appointed to fill a vacancy shall serve for the unexpired portion of the term of his predecessor. The Federal Reserve Board shall pay the members of the Committee a per diem allowance of $50 for each day of their attendance at meetings of the Committee, together with their actual necessary travel expenses to attend such meetings. The meetings of the Committee shall be held at Washington, District of Columbia, at least four times each year, and oftener if called by the Federal Reserve Board. The Committee may in addition to the meetings above provided for hold such other meetings in Washington, District of Columbia, or elsewhere, as it may deem necessary, may select its own officers and adopt its own methods of procedure, and a majority of its members shall constitute a quorum for the transaction of business.

"The Committee shall have power, by itself or through its officers, (1) to confer directly with the Federal Reserve Board on general business conditions; (2) to make oral or written representations concernings matters within the jurisdiction of said Board; (3) to call for information and to make recommendations in regard to discount rates, rediscount business, note issues, reserve conditions in the various districts, the purchase and sale of gold or escurities by Reserve banks, open-market operations by said banks, and the general affairs of the Reserve banking system."

(b) The Federal Advisory Council created by section 12 of the Federal Reserve Act as in effect prior to the amendment made by this section is abolished.

SEC. 3. (a) All of the powers, duties, and functions of the Federal Open Market Committee are hereby transferred to the Federal Reserve Board. The Federal Open Market Committee is abolished.

(b) All personnel, property, records, and unexpended balances of appropriations of the Federal Open Market Committee are hereby transferred to the Federal Reserve Board.

(c) Section 12A of the Federal Reserve Act (12 U.S.C. 263) is amended to read as follows:

"OPEN MARKET OPERATIONS

"SEC. 12A. (a) No Federal Reserve bank shall engage or decline to engage in open-market operations under section 14 of this Act except in accordance with the direction of and regulations adopted by the Board. The Board shall consider, adopt, and transmit to the several Federal Reserve banks regulations relating to the open-market transactions of such banks.

"(b) The time, character, and volume of all purchases and sales of paper described in section 14 of this Act as eligible for open-market operations shall be governed with a view to accommodating commerce and business and with regard to their bearing upon the general credit situation of the country and in coordination with the policy and responsibility of the Federal Government as set forth in section 2 of the Employment Act of 1946.”

SEC. 4. (a) The Comptroller General shall make, under such rules and regulations as he shall prescribe, an audit for each calendar year of the Federal Reserve Board and the Federal Reserve banks and their branches.

(b) In making the audit required by subsection (a), representatives of the General Accounting Office shall have access to all books, financial records, reports, files, and other papers, things, or property belonging to or in use by the entities being audited, and they shall be afforded full facilities for verifying transactions with balances or securities held by depositaries, fiscal agents, and custodians of such entities.

(c) The Comptroller General shall, at the end of six months after the end of the year, or as soon thereafter as may be practicable, make a report to the Congress on the results of the audit required by subsection (a), and he shall make any special or preliminary reports he deems desirable for the information of the Congress. A copy of each report made under this subsection shall be sent to the President of the United States, the Federal Reserve Board, and the Federal Reserve banks. In addition to other matters, the report shall include such comments and recommendations as the Comptroller General may deem advisable, including recommendations for attaining a more economical and efficient administration of the entities audited, and the report shall specifically show any program, financial transaction, or undertaking observed in the course of the audit which in the opinion of the Comptroller General has been carried on without authority of law.

(d) The Comptroller General is authorized to employ such personnel as may be necessary to carry out the audit required by subsection (a), without regard to the civil service and classification laws, including services as authorized by section 15 of the Act of August 2, 1946, as amended (5 U.S.C. 55a), at rates not to exceed $100 per diem. The expenses of the audit shall be paid out of assessments made under section 10 of the Federal Reserve Act.

SEC. 5. Subsections (a) and (b) of the first section and sections 2 and 3 shall take effect on the first day of the third calendar month which begins after the date of enactment of this Act. All other provisions of this Act shall be effective upon enactment.

[H.R. 9685, 88th Cong., 2d sess.]

A BILL To amend the Federal Reserve Act to provide that interest received by the Federal Reserve banks on obligations of the United States shall be covered into the Treasury as miscellaneous receipts, to authorize appropriations for the expenses of the Federal Reserve banks and the Board of Governors of the Federal Reserve System, and for other purposes

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That section 7 of the Federal Reserve Act is amended by inserting immediately after the section heading the following new paragraph:

"The full amount of all interest and discounts received by Federal Reserve banks on obligations of the United States shall be paid or credited by such banks to the Secretary of the Treasury and covered into the Treasury as miscellaneous receipts. To the extent that the income of such banks from other sources is insufficient for the payment of their expenses, there are hereby authorized to be appropriated such sums as may be necessary."

SEC. 2. (a) The third paragraph (12 U.S.C. 243) of section 10 of the Federal Reserve Act is amended to read as follows:

"There are hereby authorized to be appropriated such sums as may be neces sary to pay the expenses of the Board of Governors of the Federal Reserve System and the salaries of its members and employees. Subject to the availability of appropriations, the Board may maintain, enlarge, or remodel its office building in the District of Columbia and shall have sole control of such building and space therein."

(b) The fourth paragraph (12 U.S.C. 244) of section 10 of the Federal Reserve Act is amended by striking out the third sentence.

SEC. 3. The first section and section 2 of this Act shall take effect on the first day of the first fiscal year which begins after the date of enactment of this Act. During the period between the date of enactment of this Act and the effective date of the first two sections, the several Federal Reserve banks and the Board of Governors of the Federal Reserve System shall take such steps as may be necessary to change their accounting period from the calendar year to the fiscal year and otherwise to bring their accounting practices and procedures into conformity with those employed by other agencies of the United States operated with appropriated funds.

[H.R. 9686, 88th Cong., 2d sess.]

A BILL To require the payment of interest on certain funds of the United States held on deposit in commercial banks, to provide for reimbursement of commercial banks for services performed for the United States, and for other purposes

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That (a) no deposit exceeding such amount as the Secretary of the Treasury may by regulation prescribe may be maintained in any commercial bank to the credit of the Treasury Department or any bureau or officer thereof unless such bank pays a reasonable rate of interest thereon.

(b) The first sentence of the thirteenth paragraph (12 U.S.C. 371a) of the Federal Reserve Act is amended by inserting "(other than a deposit to the credit of the Treasury Department or any bureau or officer thereof)" immediately after "pay any interest on any deposit".

(c) The first sentence of section 18(g) of the Federal Deposit Insurance Act (12 U.S.C. 1828 (g)) is amended by inserting "(other than deposits to the credit of the Treasury Department or any bureau or officer thereof)" immediately after "the payment of interest on demand deposits".

SEC. 2. The Secretary of the Treasury shall pay such compensation for services performed by a commercial bank for the Treasury Department or any bureau or officer thereof as may be justified, taking into consideration both the value of such services and the value of benefits conferred on such bank by the United States, Federal Reserve banks, and any departments or agencies of the United States.

[H.R. 9687, 88th Cong., 2d sess.]

A BILL To amend the Federal Reserve Act and the Federal Deposit Insurance Act by eliminating the prohibition against the payment of interest on demand deposits

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That section 19 of the Federal Reserve Act is amended by striking out the following paragraph (12 U.S.C. 371a):

"No member bank shall, directly or indirectly, by any device whatsoever, pay any interest on any deposit which is payable on demand: Provided, That nothing herein contained shall be construed as prohibiting the payment of interest in accordance with the terms of any certificate of deposit or other contract entered into in good faith which is in force on the date on which the bank becomes subject to the provisions of this paragraph; but no such certificate of deposit or other contract shall be renewed or extended unless it shall be modified to conform to this paragraph, and every member bank shall take such action as may be necessary to conform to this paragraph as soon as possible consistently with its contractual obligations: Provided further, That this paragraph shall not apply to any deposit of such bank which is payable only at an office thereof located outside of the States of the United States and the District of Columbia: Provided further, That until the expiration of two years after the date of enactment of the Banking Act of 1935 this paragraph shall not apply (1) to any deposit made by a savings bank as defined in section 12B of this Act, as amended, or by a mutual savings bank, or (2) to any deposit of public funds made by or on behalf of any State, county, school district, or other subdivision or municipality, or to any deposit of trust funds if the payment of interest with respect to such deposit of public funds or of trust funds in required by State law. So much of existing law as requires the payment of interest with respect to any funds deposited by the United States, by any Territory, District, or possession thereof (including the Philippine Islands), or by any public instrumentality, agency, or officer of the foregoing, as is inconsistent with the provisions of this section as amended, is hereby repealed."

SEC. 2. Section 18(g) of the Federal Deposit Insurance Act (12 U.S.C. 1828 (g)) is amended by striking out the following sentence: "The Board of Directors shall by regulation prohibit the payment of interest on demand deposits in insured nonmember banks and for such purpose it may define the term 'demand deposits'; but such exceptions from this prohibition shall be made as are now or may hereafter be prescribed with respect to deposits payable on demand in member banks by section 19 of the Federal Reserve Act, as amended, or by regulation of the Board of Governors of the Federal Reserve System."

[H.R. 9749, 88th Cong., 2d sess.]

A BILL To amend the Federal Reserve Act to provide for Federal Reserve support of Government bonds when market yields equal or exceed 44 percent

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That subsection (c) of section 12A of the Federal Reserve Act (12 U.S.C. 263(c)) is amended to read as follows:

"(c) The time, character, and volume of all purchases and sales of paper described in section 14 of this Act as eligible for open-market operations shall be so governed as to maintain the market prices of obligations of the United States at such levels, not less than those required to produce a market yield not in excess of 44 percent on any such obligation, as may in the discretion of the Committee be appropriate with a view to accommodating commerce and business and with respect to their bearing upon the credit situation of the country."

The CHAIRMAN. The committee will please come to order.

The Federal Reserve System recently reached its 50th birthday, which I think is a good time for a general checkup. More than 30 years have gone by since the Federal Reserve System received any