“ After all necessary expenses of a Federal reserve bank have been paid or provided for, the stockholders shall be entitled to receive an annual dividend of six per centum on the paid-in capital stock, which dividend shall be cumulative. After the aforesaid dividend claims have been fully met, all the net earnings shall be paid to the United States as a franchise tax, except that one-half of such net earnings shall be paid into a surplus fund until it shall amount to forty per centum of the paid-in capital stock of such bank. ”
Summary
The Federal Reserve Act (1913) established the framework for the U.S. central banking system, creating the Federal Reserve Board and defining the structure, regulations, and duties of Federal Reserve banks. Central to the Act are provisions concerning capital stock, dividend payments, and the distribution of surplus funds to the United States, along with procedures for discounting commercial instruments and managing monetary policy via open-market operations.
It outlines the roles of the Treasury, the Comptroller of the Currency, and the Board’s directors, highlighting accountability, regional representation, and the relationship between federal supervision and banking entities. The text emphasizes the Act’s function in maintaining financial stability while promoting economic growth through robust structural and fiscal protections.
Quotes from Federal Reserve Act ()
“ Upon the indorsement of any of its member banks, with a waiver of demand, notice and protest by such bank, any Federal reserve bank may discount notes, drafts, and bills of exchange arising out of actual commercial transactions; that is, notes, drafts, and bills of exchange issued or drawn for agricultural, industrial, or commercial purposes, or the proceeds of which have been used, or are to be used, for such purposes, the Federal Reserve Board to have the right to determine or define the character of the paper thus eligible for discount, within the meaning of this Act. ”
“ The shareholders of every Federal reserve bank shall be held individually responsible, equally and rateably, and not one for another, for all contracts, debts, and engagements of such bank to the extent of the amount of their subscriptions to such stock at the par value thereof in addition to the amount subscribed, whether such subscriptions have been paid up in whole or in part, under the provisions of this Act. ”
