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C O P Y •
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2-7099
TEXT OF GLA.SS-STEAGALL BILL AS PASSED BY SENATE ON FEBRUARY 19 th , 1932 .
72d Congress
1 s t
Session
H. R.
9203
A bill t o improve t h e f a c i l i t i e s o f the Federal reserve system f o r t h e s e r -
vice
of
commerce, industry,
and
agr icu l tu re ,
t o
provide means
f o r
meeting
t h e
needs of member banks i n exceptional circumstances, a n d f o r other purposes.
Be i t
enacted
b y t h e
Senate
and
House
of
Representat ives
of the
United
Sta tes
of
America
i n
Congress assembled, That
t h e
Federal Reserve
A c t , a s
amended,
i s
further amended
by
insert ing, between sections
10 and 11
t h e re o f ,
a new
section
reading
a s
follows:
SEC. 10. (a)
Upon re ce iv in g
t h e
consent
of not
less than
s i x
members
of
t h e
Federal Reserve Board,
any
Federal reserve bank
may
make advances,
i n
such
amount
a s t h e
board
of
d i r e c t o r s
of
such Federal reserve bank
may
determine,
to
groups
of
f i v e
o r
more member banks
a
major i ty
of
them independently owned
and
controlled, within
i t s
d i s t r i c t upon the ir t ime
o r
demand promissory notes,
provided
t h e
bank
or
banks which receive
t h e
proceeds
of
such advances
a s
herein
provided have
no
adequate amounts
of
e l i g i b l e
o r
acceptable assets available
t o
enable such bank
o r
banks
t o
obtain sufficient credit accommodations from
t h e
Federal reserve bank through rediscounts o r advances other than a s provided i n
sec t ion 10 ( b ) . The l i a b i l i t y o f the individual banks i n each group must b e
l imi ted t o such pro por tio n o f t h e total amount advanced t o such group a s the
d e p o s i t l i a b i l i t y o f the respective banks bears t o t h e aggregate depos i t l iabi l i ty
o f a l l banks i n such group, b u t such advances may be made t o a lesser number of
such member banks i f t h e aggregate amount of the i r depos i t l i ab i l i ty cons t i tu te s
a t l e a s t 10 pe r centum o f the en t i re depos i t l i ab i l i ty o f t h e member banks within
such d i s t r i c t . Such banks sh al l
be
authorized
t o
d i s t r i b u t e
t h e
proceeds
of
such
loans t o such of their number a nd in such amount a s they may agree upon, b u t
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before so doing they shall require such recipient banks t o deposit with a sui table
t rus tee , represent ing
th e
entire group, their individual notes made
i n
favor
o f
t h e
group protected
by
such col la te ra l secur i ty
a s may be
agreed upon.
Any
Fed era l re se rv e bank making such advance sh a ll charge i n t e r e s t ther eon a t a rate
n o t
less than
1 p e r
centum above
i t s d i
..count rate
i n
e f f e c t
a t t h e
time
of mak-
i n g
such advance.
No
such note upon which advances
a r e
made
b y a
Federal reserve
bank under t h i s se cti on sh al l be eligible under sect ion 16 of t h i s Act as
co l l a te ra l s ecur i ty
f o r
Federal reserve notes.
No
ob l iga t ions
of any
for eig n government, in di vid ual , pa rt ne rs hi p, asso -
c ia t ion , o r corporation organized under t h e laws thereof shall be e l i g i b l e a s
co l l a te ra l s ecur i ty
f o r
advances under this section.
Member banks
a r e
author ized
t o
obligate themselves
i n
accordance with
t h e
provis ions of th i s s ec t ion .
SEC. 2 . The
Federal Reserve
Ac t , a s
amended,
i s
further amended
by
adding,
immediately after such
new
sec t ion
10 ( a ) , a n
addi t ional
new
section reading
a s
fo l lows:
x
SBC. 1 0 . ( b)
Un t il March
3 , 1934, and in
exceptional
and
exigent circum-
stances,
and
when
any
member bank, having
a
c a p i t a l
of
$2,000,000
o r
l e s s ,
ha s
no f u r t h e r e l i g i b l e and acceptable assets available t o enable i t t o obtain
adequate credit accommodations through rediscounting a t t h e Federal reserve bank
or any other method provided by t h i s A ct other than that provided by Section 10
( a ) , a n y
Federal reserve bank, subject
i n
each case
t o
a f f i rma t ive ac t ion
by not
less than s i x members o f t h e Federal Reserve Board may make advances to such
member bank o n i t s time o r demand promissory notes secured t o t h e s a t i s f a c t i o n o f
such Federal reserve bank; PROVIDED, That
( l )
each such note sh al l bea r i n t e r e s t
a t a ra te n o t less than 1 p e r centum p e r annum hi gh er than t h e highest discount
r a t e i n e f f e c t a t such Federal reserve bank on the date o f such note; (2) the
Federal Reserve Board
mgy by
regula t ion l imi t
and
de f ine
t h e
c la s ses
o f
assfets
which may be accepted a s secur i ty f o r advances made under authority o f th is
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sect ion; and (3) no note accepted f o r a n y such advance shall b e e l i g i b l e a s
co l l a t e ra l secu r i ty
f o r
Federal reserve notes.
«2To ob l i ga t ions of any for ei gn government, indi vid ual , pa rt ne rs hi p, asso cia-
t ion ,
o r
corporation organized under
t h e
laws thereof shall
b e
e l i g i b l e
a s
c o l l a t -
era l secur i ty
f o r
advances under th is s ec ti on.
SEC. 3 . The second paragraph o f sect ion 16 of th e Federal 3eserve A c t , a s
amended,
is ar .
ended
to
read
a s
follows:
Any Federal reserve bank: may make application t o t h e local Federal reserve
agent
f o r
svcli amount
of the
Federal reserve notes hereinbefore provided
f o r a s
i t may
re qui re . Such app lic at ion sh al l
b e
accompanied with
a
tender
to t h e
local Federal reserve agent
o f
c o l l a t e r a l
i n
amount equal
to t he sum of th e
Federal reserve notes thus applied
f o r a n d
issued pursuant
to
such application.
I h e
co l la t era l s ecur i ty thus of f ere d shal l
b e
n o te s , d r a f t s , b i l l s
o f
exchange,
o r acceptances acquired under t h e provis ions o f sect ion 13 of t h i s A c t , o r b i l l s
of
exchan.-e indorsed
by a
member bank
of any
Federal reserve d i s t r i c t
a n d p u r -
chased under t h e provis ions o f sec t ion 14 of t h i s A c t , o r cancers' acc ept anc es
purchased under t h e orovis ions of said sect ion 1 4 , o r gold o r g o l d c e r t i f i c a t e s :
PROVIDED, EOTCEVER, That, u n t i l March
3 , 1934 ,
should
t h e
Federal Reserve Board
deem
i t i n t h e
pub l i c i n t e res t ,
i t may ,
upon
th e
a f f i rm at ive vo te
o f n o t
less
than a major i ty o f i t s members, authorize t h e Federal reserve banks t o o f f e r ,
an d th e
Federal reserve agents
t o
accept ,
a s
such co l l at er al sec uri ty , d i rec t
ob l igat ions
o f t h e
United States.
On
March
3 , 193 4 , o r
sooner should
t h e
Federal
Reserve Board so decide, such aut hor iza tio n sha ll termin ate and such obligations
of the
United States
b e
r e t i r e d
a s
secur i ty
f o r
Federal reserve notes.
In no
event sha l l such co l l at er al s ec uri ty b e less than th e amount o f Federal reserve
notes applied f o r . T he Federal re se rve agent sh al l each day n o t i f y t h e Federal
Reserve Board
of a l l
i s sues
an d
withdrawals
of
Federal reserve notes
to and by
t h e
Federal reserve bank
to
which
h e i s
accred i ted .
The
said Federal Reserve
Board
.nay at any
time call upon
a
Federal reserve bank
f o r
addi t iona l secur i ty
to
pro tect th e Federal reserve notes issued to i t .