The constructive duties of the board prescribed by law are seen to best advantage in the provision which calls for the development and application of regulations designed to control methods of business. Since the board was organized it has issued regulations defining commercial paper eligible for discount, regulations relating to the definition of savings accounts, rules for the issue and retirement of capital stock, rules for the purchase of warrants and bankers' acceptances in the open market, and a variety of others.

These regulations govern the practices of the Federal Reserve banks, and have substantially the force of law, inasmuch as the Federal Reserve Act itself calls for the exercise of these functions subject to the rules made by the board. Inasmuch as the character of the rules and regulations thus made may gradually alter the scope and methods of business done by the banks, it is clear that the work of the board in this regard is in the highest degree constructive in its nature. At times it is almost equal to the extensive limitation or modification of the provisions of the law itself.

It is difficult to say how far, when the system is fully perfected, it will be necessary for the board to alter such regulations. It may be expected that ultimately the regulations of the board will be changed but little, and that any modifications will be the outcome of observation and experience of banking and business conditions throughout the nation. By changes in the discount rate the volume of business will be controlled; but the methods of business at the banks which are dependent upon the regulations aforesaid will not be greatly altered. At present the Federal Reserve system is still in process of development, and its business practices are being worked out. This has necessitated more or less frequent changes in regulations, but such changes, as already indicated, will diminish in number as time goes on.

The Act has also placed in the hands of the Federal Reserve Board the power of changing and readjusting the reserve districts, subject to the broad general requirements that there should not be less than eight or more than twelve. How extensive such readjustments of the districts will be, experience must show; and when the time comes to make them, an important constructive function of the board will be that of determining when and how they shall be introduced. Already the board has granted a few petitions for readjustment of boundary lines between districts.

Of the same general character is the provision of the Act which calls for the establishment of branches, and which practically invests the board with the authority to oversee the establishment of such branches of Federal Reserve banks. The operation of the law in this particular intrusts to the board one of its most important duties of a constructive nature.