In the 1922 case of American Bank & Trust Company et al. v. Federal Reserve Bank of Atlanta et al., the U.S Supreme Court ruled in favor of the Federal Reserve Bank (FRB) of Atlanta, affirming its right to refuse membership to state-chartered banks that did not meet certain requirements set by FRB's board members. The American Bank and Trust Company had sought a writ from lower courts compelling FRB Atlanta to accept it as a member despite failing these conditions, arguing that they were arbitrary and exceeded statutory authority. However, Justice McReynolds delivered an opinion for a unanimous court stating that Congress had intended for such discretion when establishing federal reserve banks under the Federal Reserve Act of 1913; therefore, their actions were lawful and within bounds.

In the dissenting opinion for American Bank & Trust Company et al. v. Federal Reserve Bank of Atlanta et al., Justice McReynolds disagreed with the majority's interpretation of Section 13 of the Federal Reserve Act, which allowed national banks to discount notes secured by staple agricultural products under certain conditions. He argued that this provision should not be interpreted as allowing banks to discount such notes without any restrictions or limitations, but rather only in cases where there was a genuine need for credit due to an actual shortage or emergency situation related to these products. Furthermore, he contended that if Congress had intended for this provision to apply broadly and without restriction, it would have clearly stated so in the legislation itself.