The act provides for an annual 6 per cent cumulative dividend on the paid-in capital stock of the reserve bank. Any excess of net earnings above the 6 per cent accrues to the United States as a franchise tax, except that the whole of such net earnings shall be paid into a surplus fund until it shall amount to 100 per cent of the subscribed capital stock, and thereafter 10 per cent of the net earnings shall be paid into surplus. The earnings derived by the United States from this source are, at the discretion of the Secretary of the Treasury, put into the gold reserve fund for the redemption of the greenbacks or used to reduce the government debt.

If a federal reserve bank should be dissolved or go into liquidation, any surplus remaining after the payment of its debts, dividend requirements, and the par value of the outstanding stock, would be paid to and become the property of the United States. In other words, any surplus accrued is a contingent asset of the United States government rather than of the member banks.

The Federal Reserve Act differs from the charters of most foreign central banks in that it names no specific annual franchise tax, but provides first for the payment of dividends to the stockholding banks at a moderate rate of return, leaving the excess of earnings, whatever that may be, for the government.

With the exception of real estate owned, the federal reserve banks, their capital and surplus, and the income derived therefrom, are exempt from the burden of federal, state, and local taxation.