in a greater degree than its authors were ready to admit, the main features of the Aldrich plan.  In one important respect, however, it is different; it provides for more decentralization of control and of reserves than did the Aldrich plan.  It created not one central banking reserve, but, in the end, twelve regional, or district, banks each to keep the reserves of its district.  The Jacksonian tradition of opposition to a central bank[1] in part helps to explain this; in part the contemporary congressional investigation and discussion of the so-called “money-trust” and the consequent desire to decrease the importance of “Wall Street” and of New York city banking power.

On the accompanying map are given the outlines of the districts as constituted and altered down to 1916.[2]

[Illustration:  FEDERAL RESERVE BANK DISTRICTS]

Sec. 2. #The Federal Reserve Board#.  At the head of the banking system stands the Federal Reserve Board of seven members, five of them appointed by the President and Senate of the United States for this purpose, and two serving ex-officio—­the Secretary of the Treasury and the Comptroller of the Currency.  One of the five shall be designated by the President as Governor and one as Vice-Governor of the Board, but the Secretary of the Treasury is ex-officio chairman.  The term of the appointive members is ten years and the salary is $12,000 a year.

The powers of the board are numerous and important.  The board is made the head of a real system of banking, the twelve parts of which can, in times of emergency, and at the board’s discretion, be compelled to combine their reserves by means of lending to each other (rediscounting), to the very limit of their resources, at rates fixed by the board.  By this means the reserves of the several district banks may be “piped together” and thus be practically made into one central bank under governmental control, altho centralization was in outward form avoided by the bill.  Alongside of the Reserve Board, is placed a Federal Advisory Council, consisting of one member from the board of directors of each of the twelve district banks.  This council has only the power to confer with, make representations and recommendations to, and call for information from, the Federal Reserve Board.

Sec. 3. #Federal reserve banks#.  The twelve Federal reserve banks which opened for business November 16, 1914, are of a type of institution new in our financial history.  They are “banks for banks” belonging to the system in their respective districts.  Every national bank must, and any state bank or trust company may,[3] subscribe for stock to the amount of 6 per cent of its capital and surplus, and thus become a “member bank.”  The capital of each Federal reserve bank was to be at least $4,000,000; in fact only two of those organized (Atlanta and Minneapolis) had at their opening less than $5,000,000 capital; the largest (New York) had $21,000,000, and the average was $9,000,000.  The member banks are to receive dividends of 6 per cent, cumulative, on this stock, and net earnings above that amount are to be paid to the Government as a franchise tax.[4]