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(m) The act placing limitations upon loans of national banks to one person.14 (n) The act restricting the national bank total indebtedness.15

(0) The act fixing penalties for false certification, embezzlement, etc.16
(p) The Revenue Act of 1921, title XI, in regard to stamp taxes.17
(q) The abolition of subtreasuries.18

(r) By the Transportation Act of 1920,19 providing for loans to railroads. (s) The Agricultural Credits Act, providing for Federal Intermediate Credit Banks.20

3. Court Decisions Affecting Federal Reserve System

The following decisions by the United States Supreme Court have had an important bearing upon the activities of the Federal Reserve Board and the Federal Reserve System generally:

(a) The case of Farmers' & Merchants' Bank of Monroe, N. C., v. Federal Reserve Bank of Richmond, Va.,21 deciding that a state law which prevented the board from establishing universal par clearance was not unconstitutional.

(b) State of Missouri ex rel. Burnes National Bank of St. Joseph v. Duncan 22 decided that a national bank of Missouri, holding a permit from the Federal Reserve Board, may act as executor.

(c) American Bank & Trust Co. v. Federal Reserve Bank of Atlanta 23 decided that Federal Reserve Banks cannot be compelled to pay exchange charges, nor abandon their superior facilities for handling and collecting checks, because their collection of checks causes country banks on which drawn to lose the profits made under the former methods of collecting checks.

(d) First National Bank of Bay City v. Fellows,24 holding that the Federal Reserve Board may grant by special permit to national banks, when not in contravention of state or local law, the right to act as trustee, executor, administrator, or registrar of stocks and bonds.

4. Activities

(a) By section 11 of the Federal Reserve Act, the board is authorized to examine, at its discretion, the accounts, books, and affairs of each Federal Re

14 R. S. § 5200, as amended by Act Sept. 24, 1918, supra, and Act Oct. 22, 1919 (41 Stat. 296 [Comp. St. Ann. Supp. 1923, § 9761]).

15 R. S. § 5202, as amended by War Finance Corporation Act (40 Stat. 512) and Act Oct. 22, 1919 (41 Stat. 297 [Comp. St. Ann. Supp. 1923, § 9764]).

16 R. S. §§ 5203, 5209, amended by Act Sept. 26, 1918 (40 Stat. 968 [Comp. St. Ann. Supp. 1919, §§ 9770, 9772]).

17 Sections 1100, 1101, and 1102 of Act Nov. 23, 1921 (42 Stat. 301, 302 [Comp. St. Ann. Supp. 1923, §§ 6318i-6318k]).

18 Act May 27, 1920 (41 Stat. 654 [Comp. St. Ann. Supp. 1923, § 6585a]).

19 Section 210 of Act Feb. 28, 1920 (41 Stat. 457 [Comp. St. Ann. Supp. 1923, § 100711/4 dd]).

20 Act March 4, 1923 (42 Stat. 1454).

21 262 U. S. 649, 43 S. Ct. 651, 67 L. Ed. 1157, 30 A. L. R. 635.

22 265 U. S. 17, 44 Sup. Ct. 427, 68 L. Ed. 881.

23 262 U. S. 643, 43 Sup. Ct. 649, 67 L. Ed. 1153.

24 First National Bank of Bay City v. Fellows ex rel. Union Trust. Co., 244 U. S. 416,

37 Sup. Ct. 734, 61 L. Ed. 1233, L. R. A. 1918C, 283, Ann. Cas. 1918D, 1169.

serve Bank and of each member bank, and to require such statements or reports as it may deem necessary.

(b) To permit, or, on the affirmative vote of at least five members of the Reserve Board, to require, Federal Reserve Banks to rediscount the discounted paper of other Federal Reserve Banks at rates of interest to be fixed by the Federal Reserve Board.

(c) To suspend for a period not exceeding 30 days, and from time to time to renew such suspension for periods not exceeding 15 days, any reserve requirements specified in this act.

(d) To supervise and regulate, through the bureau under the charge of the Comptroller of the Currency, the issue and retirement of Federal Reserve notes, and to prescribe rules and regulations under which such notes may be delivered by the Comptroller to the Federal Reserve agents applying therefor.

(e) To add to the number of cities classified as reserve and central reserve cities under existing law, in which national banking associations are subject to the reserve requirements set forth in section 20 of this act.

(f) To suspend or remove any officer or director of any Federal Reserve Bank, the cause of such removal to be forthwith communicated in writing by the Federal Reserve Board to the removed officer or director, and to said bank. (g) To require the writing off of doubtful or worthless assets upon the books and balance sheets of Federal Reserve Banks.

(h) To suspend, for the violation of any of the provisions of this act, the operations of any Federal Reserve Bank, to take possession thereof, administer the same during the period of suspension and, when deemed advisable, to liquidate or reorganize such bank.

(i) To require bonds of Federal Reserve agents.

(j) To exercise general supervision over said Federal Reserve Banks.

(k) To grant, by special permit to national banks applying therefor, when not in contravention of state or local law, the right to exercise fiduciary powers. (1) To review and determine the rates of discount which are established by the Federal Reserve Banks.

5. Organization

I. The Federal Reserve Board consists of:

The Chairman, the Secretary of the Treasury, ex officio;

The Governor;

The Vice Governor;

Four other members; and

The Comptroller of the Currency, an ex officio member.

II. The Staff.


Assistant Secretary.

General Counsel.

Fiscal Agent.

Chief Clerk.


III. Divisions.

(a) Chief of Division of Examination and Chief Examiner.

(b) Director, Division of Research and Statistics.

(c) Chief, Division of Bank Operation.

(d) Chief, Division of Federal Reserve Issue and Redemption.

6. Publications

(a) Digest of Rulings of the Federal Reserve Board, obtainable from the Chief Clerk of the Board at $2 per copy.

(b) Federal Reserve Bulletin, published monthly by the Federal Reserve Board, obtainable from the Chief Clerk of the Board, Washington, D. C.

(c) Regulations of the Federal Reserve Board, 1924. Government Printing Office.


1. Origin and Mission



The Board of Tax Appeals was created by the Revenue Act of June 2, 1924,1 and is under the immediate direction of the President. The act provides that the board and its divisions shall hear and determine appeals filed under sections 274, 279, 308, and 312.

2. History

Twelve members of the board were appointed for the two-year term ending June 1, 1926, on June 2, 1924, and entered on duty July 16, 1924. The nucleus of the board thus appointed promptly undertook the preparation of rules of practice and methods of procedure. Since that time the board has heard a large number of tax appeals and has rendered decisions thereon.

"Criticism of the income tax and a large part of the dissatisfaction with it are the result of delay and uncertainty in the final determination of a taxpayer's liability. Taxes can usually be paid within a short time after the receipt of the income on which the tax is based without serious embarrassment. The payment, however, of a large additional tax on income received several years previous and which may have since its receipt either been wiped out by subsequent losses or invested in nonliquid assets may force a taxpayer into bankruptcy and often causes financial sacrifice and hardship. Provision should be made for the prompt and final determination of a taxpayer's liability and such was the purpose in the suggestion for a Board of Tax Appeals.

"The provisions of the bill, however, with reference to the board, make it in all its essentials practically a court of record. The board is to be bound by formal rules of evidence and procedure. In each case a formal record must be prepared and all oral testimony in cases involving more than $10,000 must be reduced to writing and an opinion in addition to the findings of fact and a decision must be written. A taxpayer is entitled to appeal to the board before any assessment can be made. The reduction in the salary of the members of the board from $10,000 as recommended by the Treasury to $7,500, and the reduction of the term of office of the original appointees from the ten years recommended to two years, make it difficult to secure for membership on the board men with training, experience and ability. This Board of Tax Appeals, unable to secure the proper type of men for membership, hampered and burdened with rules of procedure and evidence and forced to prepare a record, a finding of fact, and a decision in practically every case, will be unable to handle the business which will come to it. The result will be greater delay in the final settlement of tax cases, and may ultimately result in the complete breakdown of the administrative machinery for the collection of taxes." 2

1 Revenue Act June 2, 1924 (Pub. No. 176, 68th Cong. [33 Stat. 253]).

2 Statement by President Coolidge, Annual Report of the Secretary of the Treasury, 1924, p. 266.

"The new law gave taxpayers an additional sixty days within which to determine whether they desired to go to the Board of Tax Appeals, and thereafter an additional thirty days was given by the board's rules for getting the case at issue. As the result of the necessary delay in getting cases at issue and the unfamiliarity of all, both within the Bureau of Internal Revenue and among taxpayers generally with the new law, the number of cases on the board's dockets have not yet necessitated the appointment of additional members within the maximum of 28 authorized under the law. The board is functioning satisfactorily, and at present is keeping up to date with its calendar. The experiment is one which is yet too new to provide a basis for comment, and the board should be permitted to continue along the lines indicated by the Congress without further amendment to the law until it has an opportunity to demonstrate its value to the taxpayer and to the government."

3. Activities

The board, formed in three divisions for administrative purposes, sits on each office day, except Fridays and Saturdays, to hear appeals which have been called from the day calendar, at 9:30 a. m. of each day, and assigned to the respective divisions by the chairman.

The board functions very much in the manner of a court. Its hearings are open to the public, and its reports are public records, open to the inspection of the public.

4. Organization

Under the provisions of the act, the President may appoint such number of members, not more than 28, as he determines to be necessary to serve for a period of two years after the enactment of the act. The terms of office of all members expire at the end of such two-year period, when seven members may be appointed for terms which shall expire, two at the end of the fourth year, two at the end of the sixth year, two at the end of the eighth year, and one at the end of the tenth year after the expiration of such two-year period. The terms of office of each of their successors shall expire at the end of the tenth year after the expiration of their predecessors' terms.

The twelve members originally appointed, of which one is the chairman, constitute the present board. There is also a secretary.

The principal office of the board is at Washington, but provision has been made for hearings at certain points within the United States, with a view to securing reasonable opportunity to taxpayers to appear before the board or any of its divisions with as little inconvenience and expense as is practicable.

5. Publications

(a) The reports of the board are published at the Government Printing Office, and such authorized publication, under the act, becomes competent evidence thereof in all courts of the United States and of the several states, without any further proof or authentication thereof. Such reports are known as "United States Board of Tax Appeals Reports," and are obtainable from the Superintend

3 Annual Report, Secretary of the Treasury, 1924, pp. 15, 16.

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