The chief duties and obligations of membership have already been made plain in connection with the terms and conditions of admission. The member must hold its investment in the stock of the Reserve bank and must maintain its reserve either by depositing or re-discounting. There are, however, certain other obligations which grow partly out of the provisions of law and partly out of regulation and custom, as follows:

Examinations. Under the Federal Reserve Act the Reserve bank or the Reserve Board may at any time order a special examination of a member. This, however, is unusual and the practice is to accept the returns of state banking departments acting either independently or in co-operation with Reserve-system examiners.

Reports. Three classes of reports must be made by member banks, as follows:

1. Semiannual report to the Reserve bank of the district as to earnings and dividends.

2. Three reports each year on call of the Federal

Reserve Board, the dates being usually identical with those named by state banking departments.

3. Report each week on reserve condition.

Penalty for deficiency of reserves. Under the Federal Reserve Act a Federal Reserve bank may impose upon members whose reserve accounts are below the required minimum a penalty for such deficiency, which they must meet. This penalty is prescribed by the board and is at a rate equal to the ninety-day discount rate plus 2 per cent.

Free collection service. The member must undertake to collect without charge to the Reserve bank all local items sent it by the Reserve bank.