To advise and consult with the Federal Reserve Board and to keep it in touch with business and banking conditions and needs throughout the country, the Act creates a Federal Advisory Council, composed of one representative of each reserve bank selected annually by its board of directors. This Council is to meet at Washington at least four times a year, and oftener if called by the Reserve Board. It may hold additional meetings either in Washington or elsewhere, and may select its own officers and adopt its own methods of procedure. The Council has power by itself or through its officers to do three specific things: "(1) to confer directly with the Federal Reserve Board on general business conditions; (2) to make oral or written representations concerning matters within the jurisdiction of said board; (3) to call for information and to make recommendations in regard to discount rates, rediscount business, note issues, reserve conditions in the various districts, the purchase and sale of gold or securities by reserve banks, open market operations by said banks, and the general affairs of the reserve banking system."
The advantages of this regional bank plan of organization and control as contrasted with a central bank are stated by Professor Sprague thus: "Banks managed by local people are much less likely to give rise to sectional antagonism than branches of a single institution; rates of discount can be more readily adjusted to differences in the demand and supply of capital in the various parts of the country; above all, the plan of regional banks permits a nice adjustment between banking and government influence in the management. Government supervision of a central bank and whatever control may be deemed advisable cannot be made effective without at the same time placing the details of operation in the hands of government officials. Under the plan for regional banks, purely banking matters, such as the making of loans, are made the concern of boards of directors, a majority of the members of which is chosen by bankers; while government supervision and a certain measure of control is vested in a board, the Federal Reserve Board, entirely appointed by the President of the United States. This form of organization is flexible enough to permit at any time in the future the extension either of government or of banking influence in the management."1