Each reserve bank has nine directors, consisting of three classes of three men each.  Classes A and B are elected by the member banks by a system of group and preferential voting designed to prevent the large banks from outvoting the smaller ones.  Directors of class A are chosen by the banks to represent them, and are expected to be bankers; those of class B, tho chosen by the banks and tho they may be stockholders, shall not be officers of any bank, and shall at the time of their election be actively engaged within the district in commerce, agriculture, or some other industrial pursuit.  Directors in class C are appointed by the Federal Reserve Board, one of them being designated as chairman of the board of directors and as Federal reserve agent.  They represent the public particularly, and may not be stockholders of any bank.

Any Federal reserve bank may: 

a.  Receive deposits from member banks and from the United States.

b.  Discount upon the indorsement of any of its member banks negotiable papers, with maturity not more than ninety days, that have arisen out of actual business transactions, but not drawn for the purpose of trading in stock and other investment securities.

c.  Purchase in the open market anywhere various kinds of negotiable paper.

d.  Deal anywhere in gold coin and bullion.

e.  Buy and sell anywhere bills, notes, revenue bonds, and warrants of the states and subdivisions in the continental United States.

f.  Fix the rate of discount it shall charge on each class of paper (subject to review by the Federal Reserve Board).

g.  Establish accounts with other Federal reserve banks and with banks in foreign countries or establish foreign branches.

h.  Apply to the Federal Reserve Board for Federal reserve notes to be issued in the manner below indicated.

Sec. 4. #Federal reserve notes#.  In 1914 there were outstanding about $750,000,000 of what we may now call the old-style bank notes (bond-secured).  These were by the new act not forcibly retired at once; but, as the law is shaped, they probably will be retired at the rate of about $25,000,000 a year, and will all disappear from circulation in thirty years.[5]

Whenever the banks having old-style bank notes outstanding desire to retire any of their circulating notes, the Federal reserve banks are required[6] to purchase the bonds in due quota (not to exceed $25,000,000 in any one year).  On the deposit of these bonds with the Treasurer of the United States, the Federal reserve banks may receive other circulating notes (essentially of the old style) called Federal reserve bank notes, or may receive 3 per cent bonds not bearing the circulating privilege.