Block signal and automatic train-control safety devices.-The Urgent Deficiency Appropriation Act approved October 22, 1913, contained an appropriation of $25,000 to enable the Commission to investigate and test block signals and appliances for the automatic control of railway trains and appliances or systems intended to promote the safety of railway operation, including experimental tests of such systems and appliances as shall be furnished in completed shape to the Commission for investigation and test, free of cost to the Government, in accordance with the provisions of joint resolution approved June 30, 1916, and Sundry Civil Appropriation Act approved May 27, 1908. Provision was made in the Sundry Civil Appropriation Acts approved August 1, 1914, March 3, 1915, July 1, 1916, June 12, 1917, and July 1, 1918, for continuing the investigation and testing of these systems and appliances.

By the amendment approved February 28, 1920, the Commission is authorized to require carriers to install automatic train-stop or train-control devices or other safety devices in compliance with specifications upon the whole or any part of the carrier's railroad, but it is provided that any order made by the Commission in the premises shall be issued and published at least 2 years before the date specified for its fulfillment.

Housing Standards Act.-This act, approved June 27, 1934, was enacted for the purpose of encouraging improvement in housing standards and conditions, and authorizes the Commission, by order, to permit carriers subject to the act to give reduced rates for the transportation of commodities hauled under the provisions of the act.

Railroad Retirement Act.—This act, approved August 29, 1935, as amended by the act of June 24, 1937, creates a Railroad Retirement Board of three members, and it directs the Commission, upon request of the Board or upon complaint of any party interested, to determine after hearing whether any line of railroad operated by electric power, is in fact a street, interurban, or suburban electric railway, exempt from the terms of the act.

Railroad Labor Act.-By act approved June 21, 1934, a National Railroad Adjustment Board and a National Mediation Board, to provide for the prompt disposition of disputes between carriers and their employees, is provided for, and by the terms of the act, the Commission is directed, upon request of the Board or upon complaint of any interested party, to determine after hearing whether any line of railroad operated by electric power is a street, interurban, or suburban electric railway, exempt from the provisions of the act.

By an act approved June 14, 1937, the act of February 22, 1935, was so amended as to continue until June 30, 1939, the prohibition against making shipments of petroleum and its products in interstate or foreign commerce, produced in violation of State law.

By the Carriers Taxing Act, approved June 29, 1937, which provides for the payment of excise taxes by certain carriers and the payment of income taxes by the carriers employees, but does not apply to either street, suburban, or interurban electric railways, unless such railways are operated as parts of general steam-railroad systems of transportation, the Interstate Commerce Commission is authorized and directed, upon request of the Commissioner of Internal Revenue, or upon complaint of any party interested, to determine, after hearing, whether any line operated by electric power falls within the terms of said exception.

NATIONAL MEDIATION BOARD

The National Mediation Board was organized under the provisions of Public Act No. 442, Seventy-third Congress, approved June 21, 1934, entitled "An act to provide for the prompt disposition of disputes between carriers and their employees, and for other purposes", known as "the Railway Labor Act." It is an independent agency in the executive branch of the Government and is composed of three members appointed by the President, by and with the advice and consent of the Senate. The Board annually designates a member to act as chairman and maintains its principal office in the District of Columbia, but it may meet at any other place.

The Railway Labor Act applies to express companies, sleeping-car companies, and carriers by railroad subject to the Interstate Commerce Act, provides that such carriers, their officers, agents, and employees shall exert every reasonable effort to make and maintain agreements concerning rates of pay, rules, and working conditions, and to settle all disputes, whether arising out of the application of such agreements or otherwise. All disputes between a carrier and its

employees shall be considered, and, if possible, decided with all expedition, in conference between representatives designated and authorized so to confer, respectively, by the carriers and by the employees thereof interested in the dispute.

The Railway Labor Act also applies to every common carrier by air engaged in interstate or foreign commerce, and every carrier by air transporting mail for or under contract with the United States Government, and every air pilot or other person who performs any work as an employee or subordinate official of such carrier or carriers, subject to its or their continuing authority to supervise and direct the manner of rendition of his service.

The act also provides that representatives for the purpose of the act shall be designated by the respective parties. The Mediation Board investigates and certifies disputes arising among a carrier's employees as to who are the representatives designated and authorized in accordance with the requirements of the act. The Board may take a secret ballot of the employees involved or utilize any other appropriate method of ascertaining the names of the representatives. The act established the National Railroad Adjustment Board, composed of 36 members, 18 of whom are selected by the carriers and 18 by such labor organizations as have been or may be organized in accordance with section 2 of the act. The Adjustment Board, located at Chicago, Ill., was created to handle disputes growing out of grievances or out of the interpretation or application of agreements concerning rates of pay, rules, or working conditions. The Adjustment Board is divided into four divisions, as outlined in section 3 (h) of the act.

The parties, or either party, to a dispute may invoke the services of the National Mediation Board in any of the following cases: (a) A dispute covering changes in rates of pay, rules, or working conditions not adjusted by the parties in conference; (b) any other dispute not referable to the National Railroad Adjustment Board and not adjusted in conference between the parties or where conferences are refused.

The Mediation Board may proffer its services in case any labor emergency is found by it to exist at any time.

When mediation services are requested or proffered the Board is authorized to put itself promptly in communication with the parties to the controversy and use its best efforts by mediation to bring the parties to agreement. When unsuccessful in bringing about an adjustment through mediation the Board shall at once endeavor to induce the parties to submit the controversy to arbitration in accordance with the provisions of the act. The failure or refusal of either party to submit a controversy to arbitration shall not be construed as a violation of any legal obligation imposed upon such party by the terms of the Railway Labor Act or otherwise.

When an agreement to arbitrate has been filed with the Mediation Board a board of arbitration shall be chosen in the following manner:

The representatives of the carrier or carriers and of the employees shall each name one arbitrator (or two if the agreement to arbitrate so designates); the arbitrators thus chosen shall select the remaining arbitrator or arbitrators. On failure of the arbitrators named by the parties to agree on the remaining arbitrators during a period stipulated in the act, it shall be the duty of the Mediation Board to name such remaining arbitrator or arbitrators.

The agreement to arbitrate shall be in writing and shall stipulate, among other things, that the respective parties to the award will each faithfully execute the same. Copies of arbitration awards shall be furnished to the respective parties to the controversy, to the clerk's office of the district court of the United States for the district wherein the controversy arose or the arbitration is entered into, to the Mediation Board, and to the Interstate Commerce Commission.

If a dispute between a carrier and its employees is not adjusted under the foregoing provisions of the act and should, in the judgment of the Mediation Board, threaten substantially to interrupt interstate commerce to a degree such as to deprive any section of the country of essential transportation service, the Mediation Board shall notify the President, who may thereupon in his discretion create a board to investigate and report respecting such dispute. The act also provides that after the creation of such board no change in the conditions out of which the dispute arose shall be made by either party to the controversy during a period of 60 days.

The Mediation Board makes an annual report to Congress of its activities and of the activities of each of the four divisions of the National Railroad Adjustment Board.

FEDERAL RESERVE SYSTEM

The Federal Reserve System was established pursuant to authority contained in the act of Congress approved December 23, 1913, known as the Federal Reserve Act, the purposes of which, as stated in the preamble, are "To provide for the establishment of Federal Reserve banks, to furnish an elastic currency, to afford means of rediscounting commercial paper, to establish a more effective supervision of banking in the United States, and for other purposes.' The system comprises the Board of Governors of the Federal Reserve System, which exercises supervisory functions, the Federal Advisory Council, which acts in an advisory capacity to the Board of Governors, the Federal Open Market Committee, the 12 Federal Reserve banks situated in different sections of the United States, and the member banks, which include all national banks in the United States and such State banks and trust companies as have voluntarily applied to the Board of Governors for membership and have been admitted to the System.

The Federal Reserve banks are located in Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco. There are also in operation 25 branches and 2 agencies of the Federal Reserve banks, all of which are located in other cities of the United States, except 1 agency in Habana, Cuba.

The capital stock of the Federal Reserve banks is entirely owned by the member banks and may not be transferred or hypothecated. Every national bank in existence in the United States at the time of the establishment of the Federal Reserve System was required to subscribe to the capital stock of the Federal Reserve bank of its district in an amount equal to 6 percent of the subscribing bank's paid-up capital and surplus. A like amount of Federal Reserve bank stock must be subscribed for by every national bank in the United States organized since that time and by every State bank or trust company (except mutual savings banks) upon becoming a member of the Federal Reserve System; and, when a member bank increases or decreases its capital or surplus, it is required to alter its holdings of Federal Reserve bank stock in the same proportion. A mutual savings bank which is admitted to membership in the Federal Reserve System must subscribe for Federal Reserve bank stock in an amount equal to six-tenths of 1 per centum of its total deposit liabilities; and thereafter such subscription must be adjusted semiannually on the same percentage basis. One-half of the subscription of each member bank must be fully paid and the remainder is subject to call by the Board of Governors of the Federal Reserve System; but call for payment of the remainder has not been made.

After all necessary expenses of a Federal Reserve bank have been paid or provided for, its stockholding member banks are entitled to receive an annual dividend of 6 percent on the paid-in capital stock, which dividend is cumulative. After these dividend claims have been fully met, the net earnings are paid into the surplus fund of the Federal Reserve bank. In case of liquidation or dissolution of a Federal Reserve bank, any surplus remaining after payment of all debts, dividends, and the par value of its capital stock becomes the property of the United States Government. Federal Reserve banks, including the capital stock and surplus therein and the income derived therefrom, are exempt from Federal, State, and local taxation, except taxes upon real estate.

The board of directors of each Federal Reserve bank is composed of nine members, equally divided into three classes, designated class A, class B, and class C. Directors of class A are representative of the stockholding member banks. Directors of class B must be actively engaged in their district in commerce, agriculture, or some other industrial pursuit, and may not be officers, directors, or employees of any bank. Class C directors may not be officers, directors, employees, or stockholders of any bank. The six class A and B directors are elected by the stockholding member banks, while the Board of Governors of the Federal Reserve System appoints the three class C directors. The term of office of each director is 3 years, so arranged that the term of one director of each class expires each year.

One of the class C directors appointed by the Board is designated as chairman of the board of directors of the Federal Reserve bank and as Federal Reserve agent, and in the latter capacity he is required to maintain a local office of the Board on the premises of the Federal Reserve bank. Another class C director is appointed by the Board as deputy chairman.

Each Federal Reserve bank has as its chief executive officer a president appointed for a term of 5 years by its board of directors with the approval of the Board of Governors of the Federal Reserve System. There is also a first vice president appointed in the same manner and for the same term.

Federal Reserve banks are authorized, among other things, to discount for their member banks notes, drafts, bills of exchange, and bankers' acceptances of short maturities arising out of commercial, industrial, or agricultural transactions, and short-term paper secured by obligations of the United States; to make advances to their member banks upon their promissory notes for periods not exceeding 90 days upon the security of paper eligible for discount or purchase and for periods not exceeding 15 days upon the security of obligations of the United States and certain other securities; to make advances upon security satisfactory to the Federal Reserve banks to member banks for periods not exceeding 4 months at a rate of interest at least one-half of 1 percent higher than that applicable to discounts and advances of the kinds mentioned above; in certain exceptional circumstances and under certain prescribed conditions, to make advances to groups of member banks; under certain prescribed conditions, to grant credit accommodations to furnish working capital for established industrial or commercial businesses for periods not exceeding 5 years, either through the medium of financing institutions or, in exceptional circumstances, directly to such businesses, and to make commitments with respect to the granting of such accommodations; in unusual and exigent circumstances when authority has been granted by at least five members of the Board of Governors, to discount for individuals, partnerships, or corporations, under certain prescribed conditions, notes, drafts, and bills of exchange of the kinds and maturities made eligible for discount for member banks; to make advances to individuals, partnerships, or corporations upon their promissory notes secured by direct obligations of the United States for periods not exceeding 90 days; to purchase and sell in the open market bankers' acceptances and bills of exchange of the kinds and maturities eligible for discount, obligations of the United States, and certain other securities; to receive and hold on deposit the reserve balances of member banks; to issue Federal Reserve notes and Federal Reserve bank notes; to act as clearing houses and as collecting agents for their member banks, and under certain conditions for nonmember banks, in the collection of checks and other instruments; to act as depositaries and fiscal agents of the United States; and to exercise other banking functions specified in the Federal Reserve Act.

Federal Reserve notes are a first and paramount lien on all the assets of the Federal Reserve banks through which they are issued and are also obligations of the United States. They are issued against the security of gold certificates and of commercial and agricultural paper discounted or purchased by Federal Reserve banks, and, until June 30, 1939, when authorized by the Board of Governors, may also be secured by direct obligations of the United States. Every Federal Reserve bank is required to maintain reserves in gold certificates of not less than 40 percent against its Federal Reserve notes in actual circulation and is also required to maintain reserves in gold certificates or lawful money of not less than 35 percent against its deposits.

Federal Reserve bank notes are the obligations of the Federal Reserve bank procuring them and are redeemable in lawful money of the United States on presentation at the United States Treasury or at the bank of issue. They may be issued against the security of direct obligations of the United States in an amount equal to the face value of such obligations and against the security of notes, drafts, bills of exchange, or bankers' acceptances in an amount equal to not more than 90 percent of the estimated value thereof. Each Federal Reserve bank must maintain on deposit in the Treasury of the United States in lawful money a redemption fund equal to 5 percent of its liability on Federal Reserve bank notes in actual circulation, or such other amount as may be required by the Treasurer of the United States with the approval of the Secretary of the Treasury, and is required to pay a tax of one-fourth of 1 percent each half year upon the average amount of its Federal Reserve bank notes in circulation. No such Federal Reserve bank notes may be issued after the President shall have declared by proclamation that the emergency recognized by him in his proclamation of March 6, 1933, has terminated.

Broad supervisory powers are vested in the Board of Governors of the Federal Reserve System which has its offices in Washington. The Board of Governors is composed of seven members appointed by the President with the advice and consent of the Senate. In selecting these seven members, the President is required to have due regard to a fair representation of the financial, agricultural, industrial, and commercial interests, and geographical divisions of the country. No two members may be from the same Federal Reserve district.

Among the more important duties of the Board of Governors is the review and determination of discount rates charged by the Federal Reserve banks on their discounts and advances. Each member of the Board of Governors is also a

member of the Federal Open Market Committee whose membership, in addition, includes five representatives of the Federal Reserve banks, each such representative being elected annually by the boards of directors of certain specified Federal Reserve banks. Open-market operations of the Federal Reserve banks are conducted under regulations adopted by the committee with a view to accommodating commerce and business and with regard to their bearing upon the general credit situation of the country; and no Federal Reserve bank may engage or decline to engage in open-market operations except in accordance with the direction of and regulations adopted by the committee.

In connection with its supervision of Federal Reserve banks the Board of Governors is also authorized to make examinations of such banks; to require statements and reports from such banks; to require the establishment or discontinuance of branches of such banks; to supervise the issue and retirement of Federal Reserve notes; and to exercise special supervision over all relationships and transactions of the Federal Reserve banks with foreign banks or bankers.

For the purpose of preventing the excessive use of credit for the purchase or carrying of securities, the Board of Governors is authorized to regulate the amount of credit that may be initially extended and subsequently maintained on any security (with certain exceptions) registered on a national securities exchange. Certain other powers have been conferred upon the Board which are likewise designed to enable it to prevent an undue diversion of funds into speculative operations.

The Board of Governors also passes on the admission of State banks and trust companies to membership in the Federal Reserve System and on the termination of membership of such banks; it has the power to examine member banks and affiliates of member banks; it receives condition reports from State member banks and their affiliates; it limits by regulation the rate of interest which may be paid by member banks on time and savings deposits; it is authorized, in its discretion, to issue voting permits to holding-company affiliates of member banks entitling them to vote the stock of such banks at any or all meetings of shareholders of the member bank; it may issue general regulations permitting interlocking relationships in certain circumstances between member banks and organizations dealing in securities or, under the Clayton Antitrust Act, between member banks and other banks; it has the power to remove officers and directors of a member bank for continued violations of law or unsafe or unsound practices in conducting the business of such bank; it may, in its discretion, suspend member banks from the use of the credit facilities of the Federal Reserve System, for making undue use of bank credit for speculative purposes or for any other purpose inconsistent with the maintenance of sound credit conditions; it may, within certain limitations and in order to prevent injurious credit expansion or contraction, change the requirements as to reserves to be maintained by member banks against deposits; it passes on applications of State member banks to establish out-of-town branches; it passes on applications of national banks for authority to exercise trust powers or to act in fiduciary capacities; it may grant authority to national banks to establish branches in foreign countries or dependencies or insular possessions of the United States, or to invest in the stock of banks or corporations engaged in international or foreign banking; and it supervises the organization and activities of corporations organized under Federal law to engage in international or foreign banking. Another function of the Board is the operation of a settlement fund, by which balances due to and from the various Federal Reserve banks arising out of their own transactions or transactions of their member banks or of the United States Government are settled in Washington through telegraphic transfer of funds without physical shipments of currency. In exercising its supervisory functions over the Federal Reserve banks and member banks, the Board of Governors promulgates regulations, pursuant to authority granted by the law, governing certain of the above-mentioned activities of Federal Reserve banks and member banks. To meet its expenses and to pay the salaries of its members and its employees, the Board makes semiannual assessments upon the Federal Reserve banks in proportion to their capital stock and surplus. The Board keeps a complete record of all action taken by it and by the Federal Open Market Committee on any question of policy, and in the annual report which it makes to the Speaker of the House of Representatives for the information of Congress as required by law, it includes a full account of all such action and also a copy of the records required to be kept in that connection.

The Federal Advisory Council acts in an advisory capacity, conferring with the Board of Governors on general business conditions and making recommenda