ARGUMENTS IN THE NEGATIVE 
banks, three selected 28 representatives from industry and three designated by the 
Federal Reserve Board—a central body consisting of the Secretary of the Treasury, 
the Controller of the Currency and six other members appointed by the President 
with the consent of the Senate. This board is given, by law, the power to exercise 
general supervision over federal reserve banks. It is in terms empowered to examine 
the affairs of each federal reserve bank and to publish weekly a statement showing the 
condition of each bank as well as a consolidated statement of all the banks in the system. 
It is also specifically empowered to permit or, in certain cases, to require federal re- 
serve banks to rediscount the discounted paper of other reserve banks and to suspend, 
for a limited time, reserve requirements, and it is empowered to review and determine 
rates of discount to be charged by federal reserve banks ‘which shall be fixed with a 
view of accommodating commerce and: business.’ 
“Furthermore, a Federal Advisory Council is created by the act with a delegate 
member from each federal reserve bank. This council is authorized to confer with 
the Federal Reserve Board on general business conditions, to make oral or written 
representations concerning matters within the jurisdiction of the board and to call for 
information and to make recommendations in regard to discount rates, rediscount busi- 
ness, note issues, reserve conditions in the various districts, the purchase and sale of 
gold and securities by reserve banks, open-market operations by these banks and the 
general affairs of the reserve banking system. 
“The foregoing outline shows the broad purposes of the act and the wide powers 
of supervision and control given to the Federal Reserve Board over the whole reserve 
system. The congressional report of Senator Glass stated the objects of the act as 
follows: 
“‘l. Establishment of a more nearly uniform rate of discount throughout 
the United States, and thereby the furnishing of a certain kind of preventive 
against overexpansion of credit which should be similar in all parts of the 
country. 
“2. General economy of reserves in order that such reserves might be held 
ready for use in protecting the banks of any section of the country and for en. 
abling them to go on meeting their obligations instead of suspending payments 
as so often in the past. 
‘3. Furnishing of an elastic currency by the abolition of the existing bond- 
secured note issue in whole or in part, and the substitution of a freely issued and 
adequately protected system of bank notes which should be available to all in 
stitutions which had the proper class of paper for presentation. - 
“‘4, Management and commercial use of the funds of the government which 
are now isolated in the treasury and sub-treasuries in large amounts. 
“ ‘5. General supervision of the banking business and furnishing of stringent 
and careful oversight. 
“ ‘6. Creation of market for commercial paper.’ 
“To carry out the purposes of the act, federal reserve banks, subject to the super- 
vision of the Federal Reserve Board, are authorized to act as government depositaries 
Reserve Board 
Advisory Council 
Objects of Reserve 
Act 
Discount Rate 
Economy in Reserves 
Elastic Currency 
Commercial Use of 
Idle Public Funds 
Supervision of 
Banking 
Market for 
Commercial Paper 
Powers of Reserve 
Banks 
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