12 U.S.C. § 414 — Authority of Board of Governors respecting

Page 159 TITLE 12—BANKS AND BANKING § 414 1 See References in Text note below. § 413. Distinctive letter and serial number of notes; cancellation of notes unfit for circula- tion; accounting; apportionment of credit among Federal Reserve banks Federal Reserve notes shall bear upon their faces a distinctive letter and serial number which shall be assigned by the Board of Gov- ernors of the Federal Reserve System to each Federal Reserve bank. Federal Reserve notes unfit for circulation shall be canceled, de- stroyed, and accounted for under procedures pre- scribed and at locations designated by the Sec- retary of the Treasury. Upon destruction of such notes, credit with respect thereto shall be appor- tioned among the twelve Federal Reserve banks as determined by the Board of Governors of the Federal Reserve System. (Dec. 23, 1913, ch. 6, § 16 (par.), 38 Stat. 266; June 21, 1917, ch. 32, § 7, 40 Stat. 236; Jan. 30, 1934, ch. 6, § 2(b)(3), (4), 48 Stat. 338; Aug. 23, 1935, ch. 614, title II, § 203(a), 49 Stat. 704; June 12, 1945, ch. 186, § 1(a), 59 Stat. 237; July 19, 1954, ch. 547, 68 Stat. 495; Pub. L. 89–3, § 1, Mar. 3, 1965, 79 Stat. 5; Pub. L. 89–427, § 3, May 20, 1966, 80 Stat. 161; Pub. L. 90–269, § 3, Mar. 18, 1968, 82 Stat. 50.) Editorial Notes CODIFICATION Section is comprised of third par. of section 16 of act Dec. 23, 1913. For classification to this title of other pars. of section 16, see Codification note set out under section 411 of this title. AMENDMENTS 1968—Pub. L. 90–269 substituted requirement that Federal Reserve notes bear upon their faces a distinc- tive letter and serial number which shall be assigned by the Board of Governors to each Federal Reserve bank for former requirement that each Federal Reserve bank maintain reserves in gold certificates of not less than 25 percent against its Federal Reserve notes in actual circulation and former provisions respecting redemp- tion by the Treasury of Federal Reserve notes. 1966—Pub. L. 89–427 substituted provisions that Fed- eral Reserve notes unfit for circulation be canceled, de- stroyed, and accounted for under procedures prescribed and at locations designated by the Secretary of the Treasury and that credit with respect to the destruc- tion of the notes be apportioned among the twelve Fed- eral Reserve banks as determined by the Board of Gov- ernors of the Federal Reserve System for provisions that Federal Reserve notes unfit for circulation be re- turned by the Federal Reserve agents to the Comp- troller of the Currency for cancellation and destruc- tion. 1965—Pub. L. 89–3 struck out requirement that each Federal Reserve bank maintain reserves in gold certifi- cates against deposit liabilities. 1954—Act July 19, 1954, which directed striking out ‘‘Whenever Federal reserve notes issued through one Federal Reserve bank shall be received by another Fed- eral Reserve bank, they shall be promptly returned for credit or redemption to the Federal Reserve bank through which they were originally issued or, upon di- rection of such Federal Reserve bank, they shall be for- warded direct to the Treasurer of the United States to be retired. No Federal Reserve bank shall pay out notes issued through another under penalty of a tax of 10 per centum upon the face value of notes so paid out.’’, was executed, to reflect the probable intent of Congress, by striking out the third and fourth sentences, which read as follows: ‘‘Whenever Federal reserve notes issued through one Federal reserve bank shall be received by another Federal reserve bank, they shall be promptly returned for credit or redemption to the Federal re- serve bank through which they were originally issued or, upon direction of such Federal reserve bank, they shall be forwarded direct to the Treasurer of the United States to be retired. No Federal reserve bank shall pay out notes issued through another under penalty of a tax of ten per centum upon the face value of notes so paid out.’’ 1945—Act June 12, 1945, amended first sentence gen- erally by striking out ‘‘or lawful money’’ after ‘‘re- serves in gold certificates’’, substituting ‘‘25 per cen- tum’’ for ‘‘35 per centum’’ and ‘‘40 per centum’’, respec- tively. 1934—Act Jan. 30, 1934, amended first, fifth, and sixth sentences. Statutory Notes and Related Subsidiaries CHANGE OF NAME Section 203(a) of Act Aug. 23, 1935, changed name of Federal Reserve Board to Board of Governors of the Federal Reserve System. § 414. Authority of Board of Governors respecting issuance of notes; interest; lien The Board of Governors of the Federal Reserve System shall have the right, acting through the Federal Reserve agent, to grant in whole or in part, or to reject entirely the application of any Federal Reserve bank for Federal Reserve notes; but to the extent that such application may be granted the Board of Governors of the Federal Reserve System shall, through its local Federal Reserve agent, supply Federal Reserve notes to the banks so applying, and such bank shall be charged with the amount of the notes issued to it and shall pay such rate of interest as may be established by the Board of Governors of the Federal Reserve System on only that amount of such notes which equals the total amount of its outstanding Federal Reserve notes less the amount of gold certificates held by the Federal Reserve agent as collateral security. Federal Re- serve notes issued to any such bank shall, upon delivery, together with such notes of such Fed- eral Reserve bank as may be issued under sub- chapter XIII 1 of this chapter upon security of United States 2 per centum Government bonds, become a first and paramount lien on all the as- sets of such bank. (Dec. 23, 1913, ch. 6, § 16 (par.), 38 Stat. 266; June 21, 1917, ch. 32, § 7, 40 Stat. 237; Jan. 30, 1934, ch. 6, § 2(b)(5), 48 Stat. 338; Aug. 23, 1935, ch. 614, title II, § 203(a), 49 Stat. 704; June 12, 1945, ch. 186, § 1(b), 59 Stat. 237; Pub. L. 90–269, § 4, Mar. 18, 1968, 82 Stat. 50.) Editorial Notes REFERENCES IN TEXT Subchapter XIII of this chapter, referred to in text, was in the original ‘‘section 18 of this Act’’, meaning section 18 of act Dec. 23, 1913, ch. 6, 38 Stat. 251, known as the Federal Reserve Act. Section 18 of the act was classified generally to subchapter XIII (§ 441 et seq.) of this chapter. CODIFICATION Section is comprised of fourth par. of section 16 of act Dec. 23, 1913. For classification to this title of other pars. of section 16, see Codification note set out under section 411 of this title. Page 160 TITLE 12—BANKS AND BANKING § 415 AMENDMENTS 1968—Pub. L. 90–269 repealed first sentence provisions that Board of Governors require each Federal Reserve bank to maintain on deposit in the Treasury a sum in gold certificates sufficient, in the judgment of the Sec- retary of the Treasury, for redemption of Federal Re- serve notes issued to such bank, but not less than 5 per- cent of total amount of notes issued less amount of gold certificates held by the Federal Reserve agent as collateral security, and counting and including such de- posit of gold certificates as part of the 25 percent re- serve formerly required by section 413 of this title to be maintained against Federal Reserve notes in actual cir- culation and substituted in the first, formerly second sentence, ‘‘Board of Governors of the Federal Reserve System’’ for ‘‘Board’’. 1945—Act June 12, 1945, substituted in first sentence ‘‘25 per centum reserve required by section 413 of this title to be maintained against Federal Reserve notes in actual circulation’’ for ‘‘40 per centum reserve required by section 413 of this title’’. 1934—Act Jan. 30, 1934, amended first sentence. Statutory Notes and Related Subsidiaries CHANGE OF NAME Section 203(a) of act Aug. 23, 1935, changed name of Federal Reserve Board to Board of Governors of the Federal Reserve System. § 415. Reduction of liability for outstanding notes by depositing notes and collateral and pay- ment of notes of series prior to 1928; reissue of deposited notes Any Federal Reserve bank may at any time re- duce its liability for outstanding Federal Re- serve notes by depositing with the Federal Re- serve agent its Federal Reserve notes, gold cer- tificates, Special Drawing Right certificates, or lawful money of the United States. Federal Re- serve notes so deposited shall not be reissued, except upon compliance with the conditions of an original issue. The liability of a Federal Re- serve bank with respect to its outstanding Fed- eral Reserve notes shall be reduced by an amount paid by such bank to the Secretary of the Treasury under section 4 of the Old Series Currency Adjustment Act. (Dec. 23, 1913, ch. 6, § 16 (par.), 38 Stat. 267; June 21, 1917, ch. 32, § 7, 40 Stat. 237; Jan. 30, 1934, ch. 6, § 2(b)(5), 48 Stat. 339; Aug. 23, 1935, ch. 614, title II, § 203(a), 49 Stat. 704; Pub. L. 87–66, § 8(a), June 30, 1961, 75 Stat. 147; Pub. L. 90–269, § 5, Mar. 18, 1968, 82 Stat. 50; Pub. L. 90–349, § 5(b), June 19, 1968, 82 Stat. 189.) Editorial Notes REFERENCES IN TEXT Section 4 of the Old Series Currency Adjustment Act, referred to in text, which was classified to section 913 of former Title 31, was repealed by Pub. L. 97–258, § 5(b), Sept. 13, 1982, 96 Stat. 1068, the first section of which enacted Title 31, Money and Finance. CODIFICATION Section is comprised of the fifth par. of section 16 of act Dec. 23, 1913. Section was formerly comprised of the fifth and sixth pars. of section 16 of act Dec. 23, 1913, be- fore repeal of the sixth par. by Pub. L. 90–269, see 1968 Amendment note below. For classification to this title of other pars. of section 16, see Codification note set out under section 411 of this title. AMENDMENTS 1968—Pub. L. 90–349 added Special Drawing Right cer- tificates to the types of deposits which Federal Reserve banks may use in reducing their liability for out- standing Federal Reserve notes. Pub. L. 90–269 struck out second par. (sixth par. of section 16 of Act Dec. 23, 1913), which read as follows: ‘‘The Federal Reserve agent shall hold such gold cer- tificates or lawful money available exclusively for ex- change for the outstanding Federal Reserve notes when offered by the Reserve bank of which he is a director. Upon the request of the Secretary of the Treasury the Board of Governors of the Federal Reserve System shall require the Federal Reserve agent to transmit to the Treasurer of the United States so much of the gold certificates held by him as collateral security for Fed- eral Reserve notes as may be required for the exclusive purpose of the redemption of such Federal Reserve notes, but such gold certificates when deposited with the Treasurer shall be counted and considered as if col- lateral security on deposit with the Federal Reserve agent.’’ 1961—Pub. L. 87–66 provided for reduction of liability for outstanding notes by payment of notes of series prior to 1928. 1934—Act Jan. 30, 1934, struck out ‘‘gold’’ wherever it appeared before ‘‘gold certificates,’’ and inserted ‘‘cer- tificates’’ after ‘‘gold’’ wherever latter stood alone. Statutory Notes and Related Subsidiaries CHANGE OF NAME Section 203(a) of act Aug. 23, 1935, changed name of Federal Reserve Board to Board of Governors of the Federal Reserve System. § 416. Withdrawal of collateral deposited to pro- tect notes and substitution of other collat- eral; retirement of notes; payment of notes of series prior to 1928; recovery of collateral; reissue of deposited notes Any Federal Reserve bank may at its discre- tion withdraw collateral deposited with the local Federal Reserve agent for the protection of its Federal Reserve notes issued to it, and shall at the same time substitute therefor other col- lateral of equal amount with the approval of the Federal Reserve agent under regulations to be prescribed by the Board of Governors of the Fed- eral Reserve System. Any Federal Reserve bank may retire any of its Federal Reserve notes by depositing them with the Federal Reserve agent or with the Treasurer of the United States, and such Federal Reserve bank shall thereupon be entitled to receive back the collateral deposited with the Federal Reserve agent for the security of such notes. Any Federal Reserve bank shall further be entitled to receive back the collateral deposited with the Federal Reserve agent for the security of any notes with respect to which such bank has made payment to the Secretary of the Treasury under section 4 of the Old Series Cur- rency Adjustment Act. Federal Reserve notes so deposited shall not be reissued except upon com- pliance with the conditions of an original issue. (Dec. 23, 1913, ch. 6, § 16 (par.), 38 Stat. 267; June 21, 1917, ch. 32, § 7, 40 Stat. 237; Aug. 23, 1935, ch. 614, title II, § 203(a), 49 Stat. 704; Pub. L. 87–66, § 8(b), June 30, 1961, 75 Stat. 147; Pub. L. 90–269, § 6, Mar. 18, 1968, 82 Stat. 50.)