Our previous experience with a central national bank, in 1791-1811 and again in 1816-1836, had shown that such an institution, despite its financial success, was likely to fall a victim of politics, as jealousy of the money power is too prevalent and too effective a vote-winner to be neglected by demagogic politicians. Therefore in setting up the present federal reserve system Congress showed political astuteness by establishing it along regional lines, giving it a degree of local autonomy and placing it close to the people, and by naming the centralized institution "board" instead of "bank." It is with this board that supreme control of the system is lodged.
The board is composed of seven members, consisting of the Secretary of the Treasury and the Comptroller of the Currency, who are members ex officio, and five additional members who are appointed by the President with the advice and consent of the Senate. These additional members must be chosen with due regard to a fair representation of the different commercial, industrial, and geographical divisions of the country, not more than one coming from the same reserve district. The five members must give their entire time to the services of the board and each receives an annual salary of $12,000; the Comptroller in addition to his regular salary receives $7,000 for his services on the board. In order to eliminate favoritism to banks, no members of the board are eligible, during the time they are in office and for two years thereafter, to hold any office, position, or employment in any member bank; nor while in office may they be an officer, director, or stockholder in any bank, banking institution, trust company or federal reserve bank. Of the five members, at least two must be persons experienced in banking or finance. The term of office is 10 years unless the member is sooner removed by the President; one member's term expires every two years, so that at all times the board will have an experienced majority and a continuity of policy. Of the five members, one is designated by the President as governor and one as vice-governor of the board, the governor being the active executive officer of the board. Membership on the board gives the Secretary of the Treasury certain powers in addition to those previously possessed by him, and none of his powers as Secretary are qualified or limited because of his membership on the board.