One of the objects of the Federal Reserve Act was to provide a universal system of domestic exchange at par. The establishment of such a system has been fraught with great difficulty, both from the complexity of the problem and from the opposition of the country banks; but when it is once in full operation it will stand as one of the great achievements of the federal reserve scheme.
The law of 1913 authorized the Federal Reserve Board as follows:
3. To require each federal reserve bank to exercise the functions of a clearing house for the member banks of its district.
Under the power of exercising the functions of a clearing house for the federal reserve banks, the board in 1915 established a clearance fund at Washington, known as the "gold settlement fund." The fund is carried in the Treasury as a special account of the Federal Reserve Board. At the time the fund was originated, each federal reserve bank was required to contribute $1,000,000 in gold, gold certificates, or gold order certificates, in addition to an amount at least equal to the net indebtedness due to all other federal reserve banks at that date; and each bank is required to keep at all times in this fund a balance of not less than $1,000,000, and this balance counts as a part of its lawful reserve.