Memorandum concerning title I, Banking Act of 1935, as introduced in Statement regarding examinations and liquidations. Amendments proposed by Governor Eccles to title II of S. 1715___ Paper eligible for rediscount with Federal Reserve banks as reported by member banks on selected call dates, Oct. 3, 1928, to Dec. 31, 1934__ Average number of officers and employees of the Federal Reserve banks during the last 6 months of 1934- Letter addressed to Hon. Carter Glass, Chairman Subcommittee on Bank- and Currency, United States Senate from Hon. James A. Farley, Post- Memorandum: Statement of depositors' balances in the Postal System Pamphlet issued by United States Chamber of Commerce, the proposed Banking Act of 1935, Analysis of title II, and summary of other pro- Pamphlet issued by United States Chamber of Commerce, proposed changes in the Federal Reserve System: The provisions of title II of the pending Banking Act of 1935, report of special committee.. Letter, dated May 21, 1935, from M. S. Eccles, Governor Federal Re- An Analysis of Banking and Money, by the New York Herald Tribune__ Telegram submitted by Senator Glass, at the request of Senator McAdoo, from A. P. Giannini, protesting against the proposed one-eighth assess- Letter addressed to Chairman Fletcher from former Senator Robert L. Owen, of Oklahoma, suggesting an amendment to the pending bill.. Statement of R. E. Gormley, of Atlanta, Ga., submitted by Mr. Elliott-- BANKING ACT OF 1935 FRIDAY, APRIL 19, 1935 UNITED STATES SENATE, SUBCOMMITTEE OF THE COMMITTEE ON BANKING AND CURRENCY, Washington, D. C. The subcommittee met, pursuant to call, at 10:30 a. m., in room 301, Senate Office Building, Senator Carter Glass presiding. Present: Senators Glass (chairman of the subcommittee), Bulkley, Byrnes, Townsend, Couzens, and Cutting. Present also: Senator Fletcher. Senator GLASS (chairman of the subcommittee). The committee will please come to order. Senator FLETCHER. Mr. Chairman, it might be appropriate at the beginning of your hearings today to insert a letter which I received from the President on February 4, 1935; and following that, the bill. I think that is desirable. Senator GLASS. I think that would be desirable. Senator FLETCHER. So I will ask to have inserted this letter addressed to me. Hon. DUNCAN U. FLETCHER, THE WHITE HOUSE, Washington, February 4, 1935. Chairman Banking and Currency Committee, United States Senate, Washington, D. C. MY DEAR MR. CHAIRMAN: I have had a number of conferences regarding three banking matters which are to some extent interrelated and which affect the Federal Deposit Insurance Corporation, the Federal Reserve System, and the Office of the Comptroller of the Currency. I have discussed these matters with Mr. Leo T. Cromley, Chairman of the Federal Deposit Insurance Corporation; Mr. Marriner S. Eccles, Governor of the Federal Reserve Board; and Mr. J. F. T. O'Connor, Comptroller of the Currency. I have asked the representatives of the various departments and agencies affected to give consideration to the matters discussed. For the information of your committee they have prepared a tentative draft of legislation and I am asking the gentlemen named to give the benefit of the results of their discussions to you as Chairman of the Banking and Currency Committee of the Senate. I shall be glad to have you call them before your committee for further information if you desire. Very sincerely yours, FRANKLIN D. ROOSEVELT. Senator FLETCHER. I assume a similar communication was addressed to Mr. Steagall, chairman of the Banking and Currency Committee of the House; and on February 5 Mr. Steagall introduced the bill in the House. The Senate was in recess on that day, and on February 6 I introduced the bill in the Senate, which may be set forth in your record as the pending bill. Senator GLASS. Yes. (The bill, S. 1715, is made a part of the record, in full, as follows:) [S. 1715, 74th Cong., 1st sess.] A BILL To provide for the sound, effective, and uninterrupted operation of the banking system, and for other purposes Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, This Act may be cited as the "Banking Act of 1935." TITLE I Section 12B of the Federal Reserve Act, as amended (U. S. C., Supp. VII, title 12, sec. 264), is further amended as follows: 1. By striking out subsection (a) and inserting in lieu thereof the following: "(a) There is hereby created a Federal Deposit Insurance Corporation (hereinafter referred to as the Corporation'), which shall insure, as hereinafter provided, the deposits of all banks which are entitled to the benefits of insurance under this section, and which shall have the right to exercise all powers hereinafter granted." 2. By adding at the end of subsection (b) the following: "In the event of a vacancy in the office of the Comptroller of the Currency, and pending the appointment of his successor, the Acting Comptroller of the Currency shall be a member of the board of directors in his place and stead. In the absence of the Comptroller of the Currency any Deputy Comptroller of the Currency may, within the limits prescribed by the Comptroller, act as a member of the board of directors in his place and stead." 3. By inserting a new subsection to read as follows: "(c) As used in this section "(1) The term 'State bank' means any bank, banking association, trust company, savings bank, or other banking institution which is engaged in the business of receiving deposits and which is incorporated under the laws of any State or the Territories of Hawaii or Alaska or which is operating under the Code of the District of Columbia (except a national bank). "(2) The term State member bank' means any State bank which is a member of the Federal Reserve System, and the term 'State nonmember bank' means any other State bank. "(3) The term 'District bank' means any State bank operating under the Code of the District of Columbia. "(4) The term 'national member bank' means any national bank located in the States of the United States, the District of Columbia, or the Territories of Hawaii or Alaska, except a national nonmember bank as hereinafter defined. "(5) The term 'national nonmember bank' means any national bank located in the Territories of Hawaii or Alaska which is not a member of the Federal Reserve System. "(6) The term 'mutual savings bank' means a bank without capital stock transacting a savings bank business, the net earnings of which inure wholly to the benefit of its depositors after payment of obligations for any advances by its organizers. "(7) The term insured bank' means any bank the deposits of which are insured in accordance with the provisions of this section, and the term 'noninsured bank' means any other bank. "(8) The term 'new bank' means a new national banking association organized by the corporation to assume the insured deposits of an insured bank closed on account of inability to meet the demands of its depositors and otherwise to perform temporarily the functions provided in this section. "(9) The term 'receiver' shall include a receiver, liquidating agent, conservator, commission, person, or other agency charged by law with the duty of winding up the affairs of a bank. "(10) The term 'beard of directors' means the board of directors of the corporation. "(11) The term 'deposit' means the unpaid balance of money or its equivalent received by a bank in the usual course of business and for which it has given or is obligated to give unconditional credit to a commercial, checking, savings, time, or thrift account, or which is evidenced by its certificate of deposit, and trust funds as provided in paragraph (5) of subsection (h) of this section, together with such other obligations of a bank as the board of directors shall find and shall prescribe by its regulations to be deposit liabilities by general usage: Provided, That any obligation of a bank which is payable only at an office of the bank located outside the States of the United States, the District of Columbia, and the Territories of Hawaii and Alaska shall not be a deposit for purposes of this section or be included as a part of total deposits or of an insured deposit. The board of directors may by regulation further define the terms used in this paragraph. "(12) The term insured deposit' means such part of the net amount of money due to any depositor for deposits in an insured bank, after deducting offsets, as shall not exceed the maximum prescribed by paragraph (1) of subsection (1) of this section. Such amount shall be determined according to such regulations as the board of directors may prescribe. In determining the amount due to any depositor there shall be added together all deposits in the bank maintained in the same capacity and the same right for his benefit either in his own name or in the names of others, except trust funds which shall be insured as provided in paragraph (5) of subsection (h) of this section. "(13) The term transferred deposit' means a deposit in a new bank or other insured bank made available to a depositor by the corporation as payment of the insured deposit of such depositor in a closed bank, and assumed by such new bank or other insured bank. "(14) The term 'effective date' means the date of enactment of the title containing this amendment." 4. By striking out in subsection (c) the following: "(c)" and inserting "(d)"; by striking out in said subsection (c) that part of the third sentence following the words "Federal Reserve banks" in said sentence and inserting a period; by striking out in subsection (d) the following: "(d)" and the first four sentences of said subsection (d); and by striking out in the fifth sentence of said subsection the following: "class B"; and by inserting at the end of subsection "(d)" the following: "The capital stock of the corporation shall consist of the shares subscribed for prior to the effective date. Such stock shall be without nominal or par value, and shares issued prior to the effective date shall be exchanged and reissued at the rate of one share for each $100 paid into the corporation for capital stock. The consideration received by the corporation for the capital stock shall be allocated to capital a: d to surplus in such amounts as the board of directors shall prescribe. Such stock shall have no vote and shall not be entitled to the payment of dividends." 5. By striking out subsection (e) and inserting in lieu thereof the following: "(e) (1) Every operating member bank, including a bank incorporated since March 10, 1933, licensed on or before the effective date by the Secretary of the Treasury shall be and continue without application or approval an insured bank and shall be subject to the provisions of this section. "(2) After the effective date any national member bank authorized to commence or resume the business of banking, State bank converting into a national member bank, or State bank becoming a member of the Federal Reserve System shall be an insured bank from the time the certificate herein prescribed shall be issued to the Corporation by the Comptroller of the Currency in the case of such national member bank, or by the Federal Reserve Board in the case of such State member bank. Provided, That in the case of an insured bank admitted to membership in the Federal Reserve System or insured State bank converting into a national member bank, such certificate shall not be required, and the bank shall continue as an insured bank. Such certificate shall state that the bank is authorized to transact the business of banking in the case of a national member bank, or is a member of the Federal Reserve System in the case of a State member bank, and that consideration has been given to the factors enumerated in subsection (g) of this section." 6. By striking out subsection (f) and inserting in lieu thereof the following: "(f) (1) Every bank not a member of the Federal Reserve System which on the effective date is a member of the Temporary Federal Deposit Insurance Fund or of the Fund for Mutuals created pursuant to the provisions of an Act approved June 16, 1933 (48 Stat. 168, ch. 89), as amended June 16, 1934 (48 Stat. 969, ch. 546), shall be and continue without application or approval an insured bank and shall be subject to the provisions of this section, unless in accordance with regulations to be prescribed by the board of directors such bank shall give to the corporation within thirty days after the effective date written notice of its election not to continue after June 30, 1935, as an insured bank and shall give to its depositors, by publication or by any reasonable |