The system of examination of banks is so thoroughly established in this country that we naturally expect to find provisions of this kind in the Reserve Act. The law requires the comptroller to appoint examiners to make examinations of member national banks twice a year. The foreign branches of the national banks are also subject to examination by the comptroller. If a member bank is a state institution, the Federal Reserve Board may authorize the acceptance of state examinations, but special examinations by the Board may be ordered at any time. The state banks must also make not less than three reports to the Reserve Board.

The Federal Reserve Board is given broad powers of examination. It may, at its discretion, examine the reserve banks as well as member banks and may similarly require reports from them. Moreover, under its permission, or even under that of the federal reserve agent, a federal reserve bank may make examination of its member banks On the other hand, on joint application of ten membei banks, the Board must order a special examination of any federal reserve bank.

Control of discount rate

Guarantee of gold standard

Examinations

Adequate publicity is also assured. The Federal Reserve Board is required to make an annual report to Congress through the Speaker of the House. It must also issue a weekly statement showing the position of each reserve bant and a consolidated statement for the reserve system as a whole. The statement must show the character and amount of reserve money and amount, nature, and maturity of paper and other investments held by the federal reserve banks.

The above analysis of the Federal Reserve Act shows that it is based on a sound understanding of the needs to be met. Whether the law will in full measure attain the ends sought must be determined by experience. In the law itself, the caviling critic can find imperfections, repetitions inconsistencies, and ambiguities. But to the economic student familiar with American legislative methods, the Federal Reserve System will stand as a remarkable achieve ment in constructive legislation.

Selected References

Thomas Conway, Jr., and Ernest M. Patterson, The Operation of the New Bank Act (1914).

C. W. Barron, The Federal Reserve Act (1914).

United States Federal Reserve Board Index - Digest of Federal Reserve Act and Amendments (down to and including Act of March 3, 1915).

H. P. Willis, The Federal Reserve (1915); American Banking (1916), Chapters XVI-XVIII inclusive.

Publicity

System a great achievement