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THE LAW, RULES AND REGULATIONS 
 
 GOVERNING 
 
 Acceptances 
 
 Rediscounts 
 
 Open Market 
 Transactions 
 
 OF 
 
 FEDERAL RESERVE BANKS 
 
 In Force 
 July 9. 1917 
 
 SERVICE DEPARTMENT 
 
 National Bank of Commerce in New York 
 
 JULY. 1917 
 
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Fore\^ord 
 
 This pamphlet is presented as a brief review and sum- 
 mary of the laws, rules, and regulations covering "Ac- 
 ceptances, Rediscounts, and Open Market Transactions 
 of Federal Reserve Banks," as they are in force today. 
 
 In 1864 The National Bank Act, in providing a na- 
 tional currency secured by United States bonds, laid the 
 foundation for sound banking in America. Thoughtful 
 financiers gradually saw the need of a more elastic cur- 
 rency. Economic students advanced the thought that a 
 bond-secured circulation should be supplemented, if not 
 replaced, by currency having its security in commercial 
 operations. 
 
 In 1913 the Federal Reserve Act was passed "to 
 furnish an elastic currency" by permitting the Federal 
 Reserve Banks to issue notes secured by commercial paper 
 and a reserve of 40% in gold. The Federal Reserve Act 
 has thus lent to our circulating medium an element of ex- 
 pansion and contraction which is governed by actual 
 business demands. 
 
 This has been made all the more real through the 
 greater latitude given to the use of acceptances by the 
 Federal Reserve Act. The National Bank Act of 1864 
 gave the national banks the power to discount bills of 
 exchange and acceptances of third parties. The right to 
 lend the bank's credit by assuming the obligation of an 
 acceptor was only authorized by the passage of the Fed- 
 eral Reserve Act in 1913. The original provisions of the 
 Act, however, limited the acceptance of drafts or bills 
 of exchange to those growing out of transactions involv- 
 
ing the importation or exportation of goods. By amend- 
 ments to the Act, approved September 7, 1916, and June 
 21, 1917, the power to accept has been extended to drafts 
 or bills of exchange of certain domestic transactions and 
 to those made for the purpose of creating dollar exchange. 
 
 The adoption of the Federal Reserve Act must be 
 taken as an indorsement of the policy of strictly com- 
 mercial banking always recognized as the sphere of the 
 National Bank of Commerce in New York. From its 
 inception this bank has been in the forefront of commercial 
 development and necessarily has played its part in spread- 
 ing the use of acceptances. In its statement of condition 
 as of June 20, 1917, the Bank showed outstanding Ac- 
 ceptances aggregating $13,612,427.84. 
 
 The National Bank of Commerce in New York is in 
 close touch with the acceptance and discount market and 
 with any new developments in it and will answer inquiries 
 of bankers and business men on the general subject of 
 acceptances or with regard to changes in the rules or regu- 
 lations governing them. 
 
 Attention of Readers is directed to the comprehensive 
 index at the conclusion of this volume. 
 
ACCEPTANCES 
 
 Bankers' Acceptances 
 
 The Federal Reserve Act was approved December 
 23, 1913. This Act gave the right to National Banks to 
 lend their credit by assuming the obligation of an ac- 
 ceptor. This power was limited to the acceptance of 
 drafts or bills of exchange which grew out of the trans- 
 actions involving the importation or exportation of goods. 
 By amendments to the Federal Reserve Act approved 
 September 7th, 1916, and June 21st, 1917, the acceptance 
 powers of member banks in the Federal Reserve System 
 were widened considerably. The following classes of com- 
 mercial paper are now eligible for acceptance by banks 
 under regulations and restrictions as indicated : 
 
 Any member bank may accept: 
 
 I. Drafts or bills of exchange drawn upon it which 
 
 grow out of the importation or exportation of 
 
 goods. 
 
 (Section 13, Federal Reserve Act.) 
 
 II. Drafts or bills of exchange drawn upon it which 
 grow out of transactions involving the domestic 
 shipment of goods, provided shipping documents 
 conveying or sex?uring title are attached at the 
 time of acceptance. 
 
 ( Ainendiiieiit to Section 13, Federal Reserve Act, approved 
 Sept. 7, 1916.) 
 
 III. Drafts or bills of exchange drawn upon it which 
 are secured at time of acceptance by a warehouse 
 receipt,* or other such document conveying or se- 
 curing title covering readily marketable staples. 
 
 (Amendment to Section 13, Federal Reserve Act, approved 
 Sept. 7, 1916.) 
 
 *1. The warehouse issuing the receipt must be independent of the 
 borrower. 
 
 2. Drawers may substitute other warehouse receipts for those 
 given during the life of the acceptance. 
 (Informal Ruling of the Federal Reserve Board, December, 1916.) 
 
The three classes of drafts or bills of exchange enumerated above 
 may be accepted by the member banks, but are limited by the follow- 
 ing conditions : 
 
 A. The drafts or bills of exchange must not run for a longer 
 period than six months. 
 
 (Section 13, Federal Reserve Act.) 
 
 B. Unsecured drafts or bills of exchange of any one indi- 
 vidual, company, firm or corporation must not be accepted 
 in excess of 10% of the bank's capital and surplus, unless 
 the drafts are secured either by attached documents or by 
 some other actual security* growing out of the same trans- 
 action as the acceptance.** 
 
 (Amendmeut to Federal Reserve Act, approved Sept. 7, 
 1916.) 
 
 *This security may consist of: 
 
 I. Shipping documents. 
 
 II. Warehouse receipts. 
 
 III. Trust receipts which do not enable the borrower to obtain the 
 goods for his own use. 
 
 The 10% limitation, however, will apply in the case of the ordi- 
 nary trust receipt which gives only a lien on the goods in the hands 
 of the purchaser, or on their proceeds. The accepting bank must 
 remain secured in the manner prescribed at the time of, and during 
 the life of, the acceptance in order to be exempt from the 10% limitation. 
 (Informal Ruling of Federal Reserve Board, March 13, 1917.) 
 
 **Section 5200 United States Revised Statutes holds, "The 
 total liabilities to any association, of any person, or of any com- 
 pany, corporation, or firm for money borrowed, including in the liabili- 
 ties of a company or firm the liabilities of the several members thereof, 
 shall at no time exceed one-tenth of the capital stock and surplus of the 
 bank: Provided, however, that the total of such liabilities shall in no 
 event exceed 30 per cent, of the capital stock of the association. But 
 the discount of bills of exchange drawn in good faith against actually 
 existing values, and the discount of commercial or business paper actu- 
 ally owned by the person negotiating the same shall not be considered 
 as money borrowed." The limitations above imposed on the liabilities 
 incurred by any national bank do not apply to the acceptances of such 
 banks, since they apply to the indebtedness arising between the drawer 
 and the accepting bank. Thus if a member bank merely contracts to 
 pay an obligation at maturity by accepting a draft or bill of exchange 
 drawn against it and this acceptance is discounted with a third party, 
 the customer procuring the acceptance cannot be said to have bor- 
 rowed money from the accepting bank, but has merely borrowed its 
 credit, and such an acceptance should not be treated as a liability for 
 money borrowed from such bank within the meaning of Section 5200. 
 (The above is an Informal Ruling of the Federal Reserve Board, 
 Jan. 8, 1916, and confirmed by Opinion of Counsel, Oct. 27, 1916.) 
 But in the case where a member bank purchases its own acceptances, 
 they must be treated as loans, and as such are subject to the above 
 10 per cent, limitation. (Informal Ruling of Federal Reserve Board, 
 Not. 27, 1916.) 
 
 8 
 
C. Outstanding drafts or bills of exchange may not be accept- 
 ed in an aggregate of more than one-half of the bank's 
 paid-up and unimpaired capital and surplus. But upon 
 application to the Federal Reserve Board the bank may 
 secure authority to accept up to 100% of its paid-up and 
 unimpaired capital and surplus: Provided that the aggre- 
 gate growing out of domestic acceptances shall in no event 
 exceed 50% of such capital and surplus. 
 
 ( AmendmeutM, Section 13, Federal Reserve Act, approved 
 Sept. 7, 1916, June 21, 1917.) 
 
 IV. Drafts or bills of exchange having not more than 
 three months' sight to run, which are drawn by 
 banks or bankers in foreign countries or depend- 
 encies or insular possessions of the United States, 
 for the purpose of furnishing dollar exchange as 
 required by the usages of trade in the different 
 countries, dependencies or insular possessions. 
 
 (Amendment, Section 13, Federal Reserve Act, approved 
 Sept. 7, 1916.) • 
 
 In the December, 1916, Bulletin, the Federal Re- 
 serve Board made the following statement : 
 
 "The Board has decided to permit member banks 
 to accept foreign drafts drawn upon them by banks or 
 bankers in the following countries : Porto Rico, Santo 
 Domingo, Costa Rica, Peru, Chile, Venezuela, 
 Argentine Republic and Bolivia, as required by the 
 usages and trade in the respective countries." 
 
 No member bank shall accept such drafts or bills of 
 exchange for any one bank to an amount exceeding in the 
 aggregate 10% of the paid-up and unimpaired capital and 
 surplus of the accepting bank, unless the draft or bill of 
 exchange is accompanied by documents conveying or se- 
 curing title or by some other adequate security. No mem- 
 ber bank shall accept such drafts or bills of exchange in 
 
 *The Federal Reserve Board has prescribed that any member 
 bank desiring to accept drafts drawn by banks or bankers in 
 foreign countries, dependencies, or insular possessions of the United 
 States, for the purpose of furnishing dollar exchange, shall first make 
 an application to the Federal Reserve Board setting forth the usages 
 of trade in the different countries, dependencies or insular possessions 
 in which such banks or bankers are located. 
 
an amount exceeding at any time in the aggregate 50% 
 of its paid-up and unimpaired capital and surplus. 
 
 (Circular Federal Reserve Board IVo. 2, Res'iilation C, Series 1916.) 
 
 The 50% limit imposed upon the amount of drafts 
 which a member bank may accept for the purpose of 
 furnishing dollar exchange is separate and distinct from 
 and not included in the limits imposed by section 13 upon 
 the amount of drafts or bills of exchange drawn against 
 the shipment of goods or against warehouse receipts cover- 
 ing readily marketable staples, which a member bank may 
 accept. 
 
 (Opinion of Counsel, June 15, 1017.) 
 
 We give below in abbreviated form the Informal Rul- 
 ings of the Federal Reserve Board and Opinions of Coun- 
 sel dealing with bankers' acceptances. 
 
 1. Status of goods forming the basis of acceptances. 
 
 It is not necessary that the specific goods cov- 
 ered by an acceptance be identified at the time of 
 acceptance. In fact, goods may be purchased and 
 shipped subsequent to the time of acceptance pro- 
 vided there is a bona fide contract for same. 
 
 (Informal Ruling: of Federal Reserve Board, Nov, 11, 1915.) 
 
 2. Renewing of acceptances. 
 
 Upon the payment of an acceptance the ac- 
 cepting bank may, for a reasonable period, accept 
 new drafts for the financing of the original trans- 
 action, even after the shipment and delivery of the 
 goods: provided, however, that such renewals be 
 stipulated in the original contract as an incidental 
 condition of the transaction of importation or ex- 
 portation upon which acceptance is based. 
 
 (Informal Ruling' of Federal Reserve Board, Nov. 9, 1915.) 
 
 But a holder must never be under an obliga- 
 tion to renew the acceptance even for less than six 
 months. 
 
 Similarly a letter of credit or credit agree- 
 ment may lawfully be made by a national bank, 
 which will extend by its terms for a period ex- 
 ceeding six months ; the agreement must not be of 
 such character as will impose upon the holders of 
 
 10 
 
drafts accepted thereunder any obligation to renew 
 such drafts, or that the period of acceptance shall 
 exceed six months in duration as to any specified 
 draft. 
 
 (Federal Reserve Bulletin, September, 1915.) 
 
 3. Bank purchasing its own acceptances. 
 
 Where a member bank purchases its own ac- 
 ceptances before maturity such acceptances are not 
 included in the aggregate authorized by Section 13. 
 
 (Opinion of Counsel, Jnly 25, 1916.) 
 
 4. General rules covering drafts and bills of ex- 
 
 change. 
 
 a. A bill or note made payable "in exchange" is 
 "non-negotiable." 
 
 (Opinion of Counsel, Ang. 10, 1916.) 
 
 b. A provision in a draft or bill of exchange stat- 
 ing that it is "payable with interest at the rate 
 of per annum after maturity if payment 
 is delayed" does not affect its negotiability. 
 
 5. Acceptances based on imports or exports. 
 
 In order that a transaction may be considered 
 as involving tlie importation or exportation of 
 goods, in the case of an exporter in a foreign coun- 
 try, he must not only intend to sell the goods in a 
 foreign country, but there must be an actual con- 
 tract of sale. It must appear that the drafts are 
 merely drawn in advance of the actual shipment of 
 goods under contract of sale. 
 
 (Inforuinl Ruling, Federal Reserve Board, Marcli 34, 1917.) 
 
 6. Acceptances drawn to finance the future shipment 
 
 of goods. 
 
 The Board is of the opinion that a national 
 bank may properly accept a draft drawn for the 
 purpose of importing goods whether or not the 
 sale of the goods under consideration has actually 
 been consimimated at the time of the acceptance 
 of the draft. If the accepting bank is assured that 
 the proceeds of the draft will ultimately be used 
 solely for the purpose of financing a transaction 
 involving the importation of goods, it is immaterial 
 
 11 
 
whether or not the goods have actually been sold at 
 the time of acceptance. In fact, it is not even 
 necessary that the goods to be sold be identified at 
 the time of acceptance. The accepting bank, how- 
 ever, must be reasonably sure that the draft is 
 drawn for the purpose of financing a transaction 
 involving the importation or exportation of goods, 
 and that its proceeds will be used for that purpose. 
 
 (Informal Ruling; Federal ReserTe Board, Jane 14, 1917.) 
 
 A member bank may accept drafts drawn upon it : 
 
 1. In settlement of advances for cotton being ac- 
 cumulated by cotton buyers for export. 
 
 (Informal Rullngr, Federal Reaer^e Board, Anar. 6, 1916.) 
 
 2. Against shipment of bullion. 
 
 (Informal RnlingT) Federal Reserve Board, Dec. 4, 1916.) 
 
 A member bank may not accept drafts drawn : 
 
 1. By an acceptance house upon a member bank 
 pledging as collateral an acceptance based on 
 imports and exports. 
 
 (Informal Rnlingr, Federal Reserve Board, Dec. 8, 1916.) 
 
 12 
 
Acceptances for Investment by a Member Bank 
 
 The amount of acceptances which may he purchased 
 by a member bank. 
 
 Section 5200, as amended in 1906, reads as follows: 
 "The total liabilities to any association, of any one person^ 
 or of any company, corporation, or firm for money bor- 
 rowed, including in the liabilities of a company or firm the 
 liabilities of the several members thereof, shall at no time 
 exceed one-tenth part of the amount of the capital stock 
 of such association, actually paid in and unimpaired, and 
 one-tenth part of its unimpaired surplus fund: Provided, 
 however, that the total of such liabilities shall in no event 
 exceed thirty per centum of the capital stock of the asso- 
 ciation. But the discount of bills of exchange drawn in 
 good faith against actually existing values, and the dis- 
 count of commercial or business paper actually owned by 
 the person negotiating the same shall not be considered 
 as money borrowed." 
 
 "Bills of exchange" may be taken as including bank- 
 ers' and trade acceptances as defined by the Federal Re- 
 serve Board, as the mere fact of their having been ac- 
 cepted does not destroy their essential character. 
 
 The "discount" of such bills may be taken as includ- 
 ing the purchase of them in their accepted form by a na- 
 tional bank in the open market. 
 
 A ruling of the Counsel of the Federal Reserve 
 Board, dated Nov. 27, 1916, defines the term "actually- 
 existing values" as follows: 
 
 1. A bill of exchange discounted before acceptance 
 must be accompanied by shipping documents, warehouse 
 receipts, or other papers securing title to the goods sold 
 if it is to be treated as drawn against existing values. 
 
 13 
 
2. If the bill is discounted after acceptance it may be 
 treated as drawn against existing values if drawn against 
 the drawee at the time of, or within a reasonable time after, 
 the shipment or delivery of the goods ^old. There must 
 be reasonable grounds to believe at the time the bill is 
 drawn that the goods are in existence in the hands of the 
 drawee either in their original form or in the shape of the 
 proceeds of their sale. 
 
 In order to decide whether the amount of the accept- 
 ances of one party, individual or firm, purchased by a na- 
 tional bank is limited under Section 5200 to 10% of the 
 paid-up capital and surplus of the national bank, it is 
 necessary to determine the conditions under which the bill 
 of exchange was drawn. 
 
 Section 13 of the Federal Reserve Act as amended 
 permits national banks to accept bills of exchange drawn 
 upon it : 
 
 1. Which grow out of the importation or exportation 
 of goods. 
 
 2. Which grow out of transactions involving the do- 
 mestic shipment of goods provided shipping documents 
 conveying or securing title are attached at the time of ac- 
 ceptance. 
 
 3. Which are secured at the time of acceptance by a 
 warehouse receipt, or other such document conveying or 
 securing title covering readily marketable staples. 
 
 4. Which are drawn by banks or bankers in foreign 
 countries or dependencies or insular possessions of the 
 United States for the purpose of furnishing dollar ex- 
 change as required by the usages of trade in the respective 
 countries, dependencies, or insular possessions in which 
 such banks or bankers are located. 
 
 It is clear in the light of the manner in which the 
 Counsel of the Federal Reserve Board construes "actual 
 existing values" that acceptances of national banks and 
 
 14 
 
also of non-member banks and trust companies, which 
 come mider 1, 2 and 3, may be considered as drawn against 
 "actual existing values." In the case of 4 such would not 
 be the fact, for if the drawing of the draft could be identi- 
 fied w^ith an actual shipment of goods, then it would fall 
 under 1. 
 
 We may come to the conclusion that a national bank 
 may pin-chase the acceptances of national or state banks, or 
 of trust companies, to an unlimited extent, even though 
 they are the liabilities of one party, firm or corporation, 
 provided they involve the importation or exportation of 
 goods, the domestic shipment of goods, and are accom- 
 panied by shipping documents, or were secured at the time 
 of acceptance by a warehouse receipt, or other such docu- 
 ment conveying or securing title covering readily market- 
 able staples. Trade acceptances maj^ also be purchased 
 provided they can be classed as being drawn against ac- 
 tually existing values as defined by the Counsel of the 
 Federal Reserve Board. 
 
 15 
 
REDISCOUNTS AND OPEN 
 MARKET TRANSACTIONS 
 
 The discount, rediscount, purchase and sale by any 
 Federal Reserve bank of domestic and foreign bills of ex- 
 change, and of acceptances authorized by this Act, shall be 
 subject to such restrictions, limitations and regulations as 
 may be imposed by the Federal Reserve Board. 
 
 (Section 13, Federal Reserve Act, as amended Sept. 7, 1916.) 
 
 Rediscounts 
 
 Any Federal Reserve Bank may rediscount for its 
 member banks : 
 
 1. Promissory Notes. 
 
 2. Drafts or Bills of Exchange. 
 
 3. Trade Acceptances. 
 
 4. Agricultural Paper (6 months). 
 
 5. Commodity Paper. 
 
 6. Bankers' Acceptances. 
 
 Definitions : 
 
 (As griven by Federal Reserve Board In Circular No. 2, Rearnla- 
 tion A, Series 1916.) 
 
 Promissory Note — is an unconditional promise, in 
 writing, signed by the maker, to pay, in the 
 United States, at a fixed or determinable future 
 time, a sum certain in dollars to order or to 
 bearer. 
 
 Draft or Bill of Exchange — is an unconditional or- 
 der in writing, addressed by one person to an- 
 other, signed by the person giving it, requiring 
 the person to whom it is addressed to pay, in the 
 United States, at a fixed or determinable future 
 time, a sum certain in dollars to the order of a 
 specified person. 
 
 16 
 
Trade Acceptance — is a draft or bill of exchange 
 drawn by the seller on the purchaser of goods ' 
 sold and accepted by such purchaser. 
 
 Agricultural Paper (6 months) — is a note, draft, bill 
 of exchange or trade acceptance drawn or issued 
 ^ for agricultural purposes, or based on live stock ; 
 
 * that is, a note, draft, bill of exchange or trade 
 
 S acceptance, the proceeds of which have been used 
 
 or are to be used for agricultural purposes, in- 
 cluding the breeding, raising, fattening, or mar- 
 keting of live stock, and which has a maturity at 
 the time of discount of not more than six months. 
 
 Commodity Paper— \s a note, draft, bill of exchange, 
 I or trade acceptance accompanied and secured by 
 
 shipping documents or by a warehouse, terminal, 
 or other similar receipt, covering approved and 
 readily marketable, non-perishable staples prop- 
 erly insured. 
 
 Bankers' A cceptance— is a draft or bill of exchange of 
 which the acceptor is a bank or trust company, or 
 a firm, person, company, or corporation engaged 
 in the business of granting bankers' acceptance 
 credits. 
 
 General Regulations Covering Rediscounts by Federal 
 t„^ ; Reserve Banks. 
 
 (Circular Xo. 2, Federal Reserve Board, Regrnlation A, Series 
 1916.) 
 
 The above forms of paper are eligible for rediscount 
 provided : 
 
 1. The proceeds have been used or are to be used in 
 producing, purchasing, carrying, or marketing 
 goods* in one or more of the steps of the process 
 of production, manufacture or distribution; and 
 not for permanent or fixed investments of any 
 kind, such as land, buildings or machinery. 
 
 *"Goods" is construed to include goods, wares, merchandise, or 
 1 agricultural products, including live stock. 
 
 17 
 
2. They are not issued for carrying or trading in in- 
 vestment securities other than the bonds and notes 
 of the Government of the United States. 
 
 3. They have a maturity at the time of discount of 
 not more than 90 days ; but, if drawn or issued for 
 agricultural purposes or based on live stock, they 
 may have a maturity at the time of discount of not 
 more than six months. 
 
 4. The aggregate of notes, drafts and bills bearing 
 the signature or indorsement of any one borrower, 
 whether a person, company, firm, or corporation, 
 rediscounted for any one member bank, shall at no 
 time exceed 10 per cent, of the unimpaired capital 
 and surplus of such bank ; but this restriction shall 
 not apply to the discount of bills of exchange drawn 
 in good faith against actually existing values. 
 
 A bill of exchange discounted before accept- 
 ance may be said to be drawn against actually 
 existing values, within the meaning of Section 13 
 of the Federal Reserve Act, when and only when 
 it is accompanied by shipping documents, ware- 
 house receipts or other papers securing title to the 
 goods sold. An accepted bill of exchange, unac- 
 companied by shipping documents or other such 
 papers, may be considered as drawn against ac- 
 tually existing values if drawn at the time of, or 
 within a reasonable time after, the shipment or de- 
 livery of the goods sold. In this latter case there 
 must be reasonable grounds to believe that the 
 goods are in existence in the hands of the drawee 
 either in their original form or in the shape of 
 the proceeds of their sale. 
 
 (Opinion of Counsel, ]<rov. 27, 1916.) 
 
 5. They are indorsed by a member bank. 
 
 Special Regulations Covering Rediscounts by Federal 
 Reserve Banks. 
 
 (Circular Fetleral Reserve Board No. Z, Regulation B, Series 
 1816.) 
 
 1. In the case of a promissory note the member bank 
 shall certify in its application whether the note 
 
 18 
 
offered for rediscount has been discounted for a de- 
 positor or another member bank or whether it has 
 been purchased from a non-depositor, and whether 
 a financial statement of the borrower is on file. 
 The requirement of a statement with respect to 
 any note discounted by a member bank for a de- 
 positor or another member bank is left to the dis- 
 cretion of the Federal Reserve Board and may be 
 waived : 
 
 a. If it is secured by a warehouse, terminal or 
 other similar receipt covering goods in storage ; 
 
 b. If the aggregate of obligations of the borrower, 
 rediscounted and offered for rediscount at the 
 Federal Reserve Bank, is less than a sum equal 
 to 10% of the paid-in capital of the member 
 bank and does not exceed $5,000. 
 
 2. In the case of commodity paper the rate of inter- 
 est or discount — including commission charged the 
 maker — does not exceed 6% per annum. 
 
 3. In the case of bankers' acceptances, they must have 
 been : 
 
 a. A draft or bill of exchange drawn under a 
 credit opened for the purpose of conducting or 
 settling accounts resulting from a transaction 
 or transactions involving: 
 
 (1) The shipment of goods between the 
 United States and any foreign country 
 or between the United States and any 
 of its dependencies or insular posses- 
 sions, or between foreign countries. 
 
 (2) The domestic shipment of goods, pro- 
 vided shipping documents are attached 
 at the time of acceptance. 
 
 19 
 
b. A draft or bill of exchange which is secured at 
 the time of acceptance by a warehouse receipt 
 or other such document conveying or securing 
 title covering readily marketable staples. 
 
 c. A draft or bill of exchange drawn by a bank 
 or banker in a foreign country or dependency 
 or insular possession of the United States for 
 the purpose of furnishing dollar exchange and 
 accepted or, in case of non-acceptances, in- 
 dorsed, by a member bank. 
 
 Such drafts or bills may be acquired prior 
 to acceptance, provided they have the indorse- 
 ment of a member bank. 
 
 INFORMAL RULINGS OF THE FEDERAL RESERVE BOARD AND 
 OPINIONS OF COUNSEL 
 
 The law places no limit on the amount of commercial 
 paper which a member bank may rediscount with the Fed- 
 eral Reserve Bank, leaving the matter to the discretion of 
 the Federal Reserve Board. 
 
 (Informal Ruling of Federal Reserve Board, Aug. 4, 1916.) 
 
 The following special rulings have been made by the Fed- 
 eral Reserve Board regarding the eligibility of paper for 
 rediscount with the Federal Reserve Banks. 
 
 Eligible — 
 
 1. Drafts secured by pig iron. 
 
 (Informal Rnllns of Federal Reserve Board, Jnne 17, 1015.) 
 
 2. Crosstie and lumber export bills. 
 
 (Informal Rnllnji; of Federal Reserve Board, Aug. 13, 1915.) 
 
 3. Bankers' acceptances covered by cattle collateral. 
 
 (Informal Rnling of Federal Reserve Board, Jan. 6, 1916.) 
 
 4. Renewals of drafts. 
 
 (Informal Ruling of Federal Reserve Board, Jnne 6, 1916.) 
 
 5. Acceptances covering the sale of advertising space. 
 
 (Opinion of Connsel, Jan. 9, 1917.) 
 
 6. A note, draft or bill of exchange drawn for the 
 purpose of carrying or trading in bonds or notes 
 of the United States. 
 
 (Federal Reserve Bulletin, Marcb, 1917.) 
 
 20 
 
Ineligible — 
 
 1. Bankers' acceptances covering purchases of raw 
 
 materials and payment of labor used in manufac- 
 turing and unaccompanied by warehouse receipts 
 or other required instruments. 
 
 (Informal Ruling of Federal Reserve Board, Jan. 8, 1916.) 
 
 2. A bill of exchange bearing a qualified or condi- 
 tional indorsement. 
 
 (Opinion of Counsel, July 25, 1916.) 
 
 3. A demand note or bill, if it is not in terms payable 
 within the prescribed 90 days, but, at the option of 
 the holder, it may not be presented for payment 
 until after that time. 
 
 (Informal Rulin;Br of Federal Reserve Board, April 19, 1917.) 
 
 21 
 
Open Market Transactions 
 
 Section 14 of the Federal Reserve Act authorizes 
 Federal Reserve Banks in the open market to purchase 
 from or to sell to banks, firms, corporations or individuals, 
 acceptances and bills of exchange of the kinds and ma- 
 turities made eligible by the Act for rediscount, with or 
 without the indorsement of a member bank. 
 
 The following regulations cover this section of the 
 Act: 
 
 (Circular of Federal Reserve Board, Re§;iiIatlom B, Series No. 2, 1916.) 
 
 1. The acceptances or bills of exchange must not have 
 been issued for carrying or trading in stocks, 
 bonds, or other investment securities, except bonds 
 ai^id notes of the Government of the United States. 
 
 2. The proceeds of the acceptances or bills of ex- 
 change must not have been used or must not be 
 used for permanent or fixed investments of any 
 kind, such as land, buildings, or machinery, or for 
 investments of a merely speculative character. 
 
 3. The bills of exchange must have been accepted by 
 the drawee prior to purchase by the Federal Re- 
 serve Bank unless it is accompanied and secured 
 by shipping documents or by a warehouse, termi- 
 nal, or other similar receipt conveying security title. 
 
 4. Trade acceptances must be issued or drawn for 
 agricultural, industrial, or commercial purposes or 
 the proceeds must have been used or are to be used 
 for the purpose of producing, purchasing, carry- 
 ing or marketing goods in one or more of the steps 
 of the process of production, manufacture or dis- 
 tribution. 
 
 5. The acceptances and bills of exchange must have 
 a maturity at the time of purchase by the Federal 
 Reserve Bank of not more than 90 days. 
 
 22 
 
6. In the case of trade acceptances or bills of ex- 
 change, unless they are indorsed or accepted by 
 member banks they are not eligible for purchase 
 unless a satisfactory statement has been furnished 
 of the financial condition of one or more of the 
 parties thereto, and in the case of an acceptance 
 the acceptor must furnish a satisfactory statement 
 of financial condition. (In cases where this is im- 
 possible, as in bills dra\Mi by a foreign concern or 
 accepted by a foreign bank, a satisfactory state- 
 ment of the indorsing bank may be substituted. 
 
 Informnl KuIIufj; of Federal Reserve Board, Jan. 3, 1916.) 
 
 7. Evidence of EligibOity — 
 
 A Federal Reserve Bank shall take such steps as 
 it deems necessary to satisfy itself as to the eligibil- 
 ity of the bill offered for purchase, unless it pre- 
 sents prima facie evidence thereof or bears a stamp 
 or certificate affixed by the acceptor or the drawer, 
 showing that it is a trade acceptance. No evidence 
 of eligibility is required with respect to a bill ac- 
 cepted by a national bank. 
 
 INFORMAL RULINGS AND OPINIONS OP COUNSEL. 
 
 1. Federal Reserve Banks cannot discount commod- 
 ity paper directly for firms, but it must come 
 through, bearing the indorsement of, a member 
 bank. 
 
 (Informal Rnling of Federal Reserve Board, Feb. 1, 1916.) 
 
 2. Promissory notes are ineligible for purchase in the 
 open market. 
 
 (Opinion of Counsel, Oct. 8, 1915.) 
 
 3. A bill of exchange drawTi by an agent, branch 
 house or foreign agency of a corporation on the 
 corporation itself is ineligible for purchase in the 
 open market. 
 
 (Opinion of Counsel, Aug. 3, 1916.) 
 
 23 
 
FEDERAL RESERVE ACT 
 
 Powers of Federal Reserve Banks, 
 
 Section 1^ as amended to date. 
 
 "Any Federal Reserve Bank may receive from anj'^ of 
 its member banks, and from the United States, deposits 
 of current funds in lawful money, national-bank notes, 
 Federal Reserve notes, or checks, and drafts, payable upon 
 presentation, and also, for collection, maturing notes and 
 bills; or, solely for purposes of exchange or of collection, 
 may receive from other Federal Reserve Banks deposits 
 of current funds in lawful money, national-bank notes, or 
 checks upon other Federal Reserve Banks, and checks and 
 drafts, payable upon presentation within its district, and 
 maturing notes and bills payable within its district; or, 
 solely for the purposes of exchange or of collection, may 
 receive from any nonmember bank or trust company de- 
 posits of current funds in lawful money, national-bank 
 notes. Federal reserve notes, checks and drafts payable 
 upon presentation, or maturing notes and bills : Provided, 
 such nonmember bank or trust company maintains with the 
 Federal reserve bank of its district a balance sufficient to 
 offset the items in transit held for its account by the Fed- 
 eral reserve bank: Provided further. That nothing in this 
 or any other section of this act shall be construed as pro- 
 hibiting a member or nonmember bank from making 
 reasonable charges, to be determined and regulated by the 
 Federal Reserve Board, but in no case to exceed 10 cents 
 per $100 or fraction thereof, based on the total of checks 
 and drafts presented at any one time, for collection or pay- 
 ment of checks and drafts and remission therefore by ex- 
 change or otherwise; but no such charges shall be made 
 against the Federal reserve banks. 
 
 24 
 
"Upon the indorsement of any of its member banks, 
 which shall be deemed a waiver of demand, notice and 
 protest by such bank as to its own indorsement exclu- 
 sively, any Federal Reserve Bank may discount notes, 
 drafts, and bills of exchange arising out of actual com- 
 mercial transactions; that is, notes, drafts, and bills of 
 exchange issued or drawn for agricultural, industrial, or 
 conmiercial purposes, or the proceeds of which have been 
 used, or are to be used, for such purposes, the Federal 
 Reserve Board to have the right to determine or define the 
 character of the paper thus eligible for discount, within 
 the meaning of this Act. Nothing in this Act contained 
 shall be construed to prohibit such notes, drafts, and bills 
 of exchange, secured by staple agricultural products, or 
 other goods, wares, or merchandise from being eligible 
 for such discount; but such definition shall not include 
 notes, drafts, or bills covering merely investments or is- 
 sued or drawn for the purpose of carrying or trading 
 in stocks, bonds, or other investment securities, except 
 bonds and notes of the Government of the United States. 
 Notes, drafts, and bills admitted to discount under the 
 terms of this paragraph must have a maturity at the time 
 of discount of not more than ninety days, exclusive of 
 days of grace: Provided, That notes, drafts, and bills 
 drawn or issued for agricultural purposes or based on 
 live stock and having a maturity not exceeding six months, 
 exclusive of days of grace, may be discounted in an amount 
 to be limited to a percentage of the assets of the Federal 
 Reserve Bank, to be ascertained and fixed by the Federal 
 Reserve Board. 
 
 "The aggregate of such notes, drafts, and bills bear- 
 ing the signature or indorsement of any one borrower, 
 whether a person, company, firm, or corporation, redis- 
 counted for any one bank shall at no time exceed ten per 
 centum of the unimpaired capital and surplus of said 
 bank; but this restriction shall not apply to the discount 
 of bills of exchange drawn in good faith against actually 
 existing values. 
 
 "Any Federal Reserve Bank may discount accept- 
 ances of the kinds hereinafter described, which have a 
 
 25 
 
maturity at the time of discount of not more than three 
 months' sight, exclusive of days of grace, and which are 
 indorsed by at least one member bank. 
 
 "Any member bank may accept drafts or bills of ex- 
 change drawn upon it having not more than six months' 
 sight to run, exclusive of days of grace, which grow out of 
 transactions involving the importation or exportation of 
 goods; or which grow out of transactions involving the 
 domestic shipment of goods provided shipping documents 
 conveying or securing title are attached at the time of 
 acceptance; or which are secured at the time of accept- 
 ance by a warehouse receipt or other such document con- 
 veying or securing title covering readily marketable 
 staples. No member bank shall accept, whether in a for- 
 eign or domestic transaction, for any one person, com- 
 pany, firm, or corporation to an amount equal at any time 
 in the aggregate to more than ten per centum of its paid- 
 up and unimpaired capital stock and surplus, unless the 
 bank is secured either by attached documents or by some 
 other actual security growing out of the same transaction 
 as the acceptance ; and no bank shall accept such bills to an 
 amount equal at any time in the aggregate to more than 
 one-half of its paid-up and unimpaired capital stock and 
 surplus: Provided, however. That the Federal Reserve 
 Board, under such general regulations as it may prescribe, 
 which shall apply to all banks alike regardless of the 
 amount of capital stock and surplus, may authorize any 
 member bank to accept such bills to an amount not ex- 
 ceeding at any time in the aggregate one hundred per 
 centum of its paid-up and unimpaired capital stock and 
 surplus: Provided, further. That the aggregate of ac- 
 ceptances growing out of domestic transactions shall in no 
 event exceed fifty per centum of such capital stock and 
 surplus. 
 
 "Any Federal Reserve Bank may make advances to 
 its member banks on their promissory notes for a period 
 not exceeding fifteen days at rates to be established by such 
 Federal Reserve Banks, subject to the review and deter- 
 mination of the Federal Reserve Board, provided such 
 promissory notes are secured by such notes, drafts, bills of 
 
 26 
 
exchange, or bankers' acceptances as are eligible for redis- 
 count or for purchase by Federal Reserve Banks under the 
 provisions of this Act, or by the deposit or pledge of bonds 
 or notes of the United States." 
 
 Section fifty- two hundred and two of the Revised 
 Statutes of the United States is hereby amended so as to 
 read as follows: "No national banking association shall 
 at any time be indebted, or in any way liable, to an amount 
 exceeding the amount of its capital stock at such time 
 actually paid in and remaining undiminished by losses or 
 otherwise, except on account of demands of the nature fol- 
 lowing : 
 
 "First. Notes of circulation. 
 
 "Second. Moneys deposited with or collected by the 
 association. 
 
 "Third. Bills of exchange or drafts drawn against 
 money actually on deposit to the credit of the association, 
 or due thereto. 
 
 "Fourth. Liabilities to the stockholders of the asso- 
 ciation for dividends and reserve profits. 
 
 "Fifth. Liabilities incurred under the provisions of 
 the Federal Reserve Act. 
 
 "The discount and rediscount and the purchase and 
 sale by any Federal Reserve Bank of any bills receivable 
 and of domestic and foreign bills of exchange, and of ac- 
 ceptances authorised by this Act, shall be subject to such 
 restrictions, limitations, and regulations as may be imposed 
 by the Federal Reserve Board. 
 
 "That in addition to the powers now vested by law in 
 national banking associations organized under the laws 
 of the United States any such association located and 
 doing business in any place the population of which does 
 not exceed five thousand inhabitants, as sliown by the 
 last preceding decennial census, may, under such rules 
 and regulations as may be prescribed by the Comptroller 
 of the Currency, act as the agent for any fire, life, or 
 
 27 
 
other insurance company authorized by the authorities 
 of the State in which said bank is located to do business 
 in said State, by soliciting and selling insurance and col- 
 lecting premiums on policies issued by such company; 
 and may receive for services so rendered such fees or com- 
 missions as may be agreed upon between the said associa- 
 tion and the insurance company for which it may act as 
 agent ; and may also act as the broker or agent for others 
 in making or procuring loans on real estate located within 
 one hundred miles of the place in which said bank may be 
 located, receiving for such services a reasonable fee or 
 commission: Provided, however, That no such bank shall 
 in any case guarantee either the principal or interest of 
 any such loans or assume or guarantee the payment of 
 any premium on insurance policies issued through its 
 agency by its principal: And provided further. That the 
 bank shall not guarantee the truth of any statement made 
 by an assured in filing his application for insurance. 
 
 "Any member bank may accept drafts or bills of ex- 
 change drawn upon it having not more than three months' 
 sight to run, exclusive of days of grace, drawn under regu- 
 lations to be prescribed by the Federal Reserve Board by 
 banks or bankers in foreign countries or dependencies or 
 insular possessions of the United States for the purpose 
 of furnishing dollar exchange as required by the usages of 
 trade in the respective countries, dependencies, or insular 
 possessions. Such drafts or bills may be acquired by Fed- 
 eral Reserve Banks in such amounts and subject to such 
 regulations, restrictions, and limitations as may be pre- 
 scribed by the Federal Reserve Board: Provided, however. 
 That no member bank shall accept such drafts or bills of 
 exchange referred to in this paragraph for any one bank 
 to an amount exceeding in the aggregate ten per centum 
 of the paid-up and unimpaired capital and surplus of the 
 accepting bank unless the draft or bill of exchange is ac- 
 companied by documents conveying or securing title or by 
 some other adequate security: Provided further. That no 
 member bank shall accept such drafts or bills in an amount 
 exceeding at any time the aggregate of one-half of its 
 paid-up and unimpaired capital and surplus." 
 
 28 
 
OPEN MARKET TRANSACTIONS 
 
 Section 14} as amended to date. 
 
 "Any Federal reserve bank may, under rules and 
 regulations prescribed by the Federal Reserve Board, pur- 
 chase and sell in the open market, at home or abroad, either 
 from or to domestic or foreign banks, firms, corporations, 
 or individuals, cable transfers and bankers' acceptances 
 and bills of exchange of the kinds and maturities bv this 
 Act made eligible for rediscount, with or without the in- 
 dorsement of a member bank. 
 
 "Every Federal reserve bank shall have power: 
 
 "(a) To deal in gold coin and bullion at home or 
 abroad, to make loans thereon, exchange Federal reserve 
 notes for gold, gold coin, or gold certificates, and to con- 
 tract for loans of gold coin or bullion, giving therefor, 
 when necessary, acceptable security, including the hypothe- 
 cation of United States bonds or other securities which 
 Federal reserve banks are authorized to hold ; 
 
 "(b) To buy and sell, at home or abroad, bonds and 
 notes of the United States, and bills, notes, revenue bonds, 
 and warrants with a maturity from date of purchase of 
 not exceeding six months, issued in anticipation of the col- 
 lection of taxes or in anticipation of the receipt of assured 
 revenues by any State, county, district, political subdivi- 
 sion, or municipality in the continental United States, in- 
 cluding irrigation, drainage and reclamation districts, such 
 purchases to be made in accordance with rules and regula- 
 tions prescribed by the Federal Reserve Board ; 
 
 "(c) To purchase from member banks and to sell, 
 with or without its indorsement, bills of exchange arising 
 out of commercial transactions, as hereinbefore defined; 
 
 29 
 
 J 
 
w. 
 
 "(d) To establish from time to time, subject to re- 
 view and determination of the Federal Reserve Board, 
 rates of discount to be charged by the Federal reserve 
 bank for each class of paper, which shall be fixed with a 
 view of accommodating commerce and business ; 
 
 "(e) To establish accounts with other Federal re- 
 serve banks for exchange purposes and, with the consent 
 or upon the order and direction of the Federal Reserve 
 Board and under regulations to be prescribed by said 
 board, to open and maintain accounts in foreign countries, 
 appoint correspondents, and establish agencies in such 
 countries wheresoever it may be deemed best for the pur- 
 pose of purchasing, selling, and collecting bills of ex- 
 change, and to buy and sell, with or without its indorse- 
 ment, through such correspondents or agencies, bills of ex- 
 change (or acceptances) arising out of actual commercial 
 transactions which have not more than ninety days to run, 
 exclusive of days of grace, and which bear the signature of 
 two or more responsible parties, and, with the consent of 
 the Federal Reserve Board, to open and maintain bank- 
 ing accounts for such foreign correspondents or agencies. 
 Whenever any such account has been opened or agency or 
 correspondent has been appointed by a Federal reserve 
 bank, with the consent of or under the order and direction 
 of the Federal Reserve Board, any other Federal reserve 
 bank may, with the consent and approval of the Federal 
 Reserve Board, be permitted to carry on or conduct, 
 through the Federal reserve bank opening such account or 
 appointing such agency or correspondent, any transaction 
 authorized by this section under rules and regulations to 
 be prescribed by the board." 
 
 30 
 
DIGEST OF INFORMAL RULINGS 
 
 AND 
 
 OPINIONS OF COUNSEL 
 
 OF THE 
 
 FEDERAL RESERVE BOARD 
 
 Acceptances 
 
 OPINIONS OF COUNSEL 
 
 Discount of Acceptances indorsed by Member Banks Located in Another 
 
 District. 
 
 Federal Reserve Banks may, under the provisions of 
 Section 13, discount acceptances based on the importation 
 or exportation of goods, provided they have a maturity at 
 time of discount of not more than three months, and pro- 
 vided, further, that they are indorsed by at least one mem- 
 ber bank. It is immaterial whether this member bank 
 is located in the district of the Federal Reserve Bank which 
 is making the discount or in any other district, the term 
 "member bank" being broad enough to include member 
 banks wherever located. 
 
 Such discounts, being made under the provisions of 
 Section 13, are eligible as collateral security for Federal 
 Reserve notes issued under the provisions of Section 16. 
 
 (Pase 98, June, 1915, Bulletin.) 
 
 31 
 
Waiver of Demand, Notice and Protest. 
 The acceptor of a bill of exchange is the principal 
 debtor. The law requires that notice of demand and pro- 
 test be given to parties secondarily liable in case of dis- 
 honor. This right to receive notice is a personal one which 
 may be waived by the parties entitled thereto — that is, the 
 drawer and indorsers ; but such waiver has no effect on the 
 acceptor or principal debtor. 
 
 (Page 377, September, 1915, Bulletin.) 
 
 Member Bank Acceptances. 
 When a member bank purchases its own acceptance 
 before maturity such acceptance need not be included in 
 the aggregate of acceptances authorized by Section 13. 
 
 (Page 397, August, 1916, Bulletin.) 
 
 Qualified Acceptances. 
 A bill of exchange drawn payable "at sight" and ac- 
 cepted payable in three months is a qualified or conditional 
 acceptance, and the maker and prior indorsers are released. 
 The instrument in effect becomes the promissory note of 
 the acceptor, and would not come within the exception to 
 Section 5200 as a "bill of exchange" drawn in good faith 
 against actually existing values. 
 
 (Page 463, September, 1916, Bulletin.) 
 
 Presentment of Bills for Acceptance. 
 The drawer and indorsers of a bill of exchange made 
 payable on a date specified in the bill are not discharged 
 by a failure to present it for acceptance, unless the bill ex- 
 pressly provides that it must be presented for that pur- 
 pose, or unless it is payable elsewhere than at the resi- 
 dence or place of business of the drawee. 
 
 (Page 60S, November, 1916, Bulletin.) 
 
 Member Bank Acceptances. 
 (a) The limitations imposed by Section 5202, Re- 
 vised Statutes, on the liabilities incurred by any national 
 bank do not apply to acceptances of such banks. 
 
 (h) A member bank may legally purchase its own 
 acceptances, but such a transaction is equivalent to a loan 
 
 32 
 
or advance to the customer for whom the acceptance was 
 made and the liability of such customer becomes subject 
 to the limitations of Section 5200, Revised Statutes. 
 
 (c) The limitations imposed by Section 5200, Re- 
 vised Statutes, on the amount of money which may be bor- 
 rowed by any individual from a member bank do not ap- 
 ply to acceptances of such bank. 
 
 (d) The power of member banks to accept drafts or 
 bills of exchange should not be confused with the power 
 to discount the acceptances of others. 
 
 <PaKe G80, December, 1916, Bulletin.) 
 
 Bankers' Acceptance Secured by Bill of Sale. 
 A bankers' acceptance drawn for the purpose of pur- 
 chasing goods secured by a bill of sale of stock in hand is 
 not eligible for purchase by Federal Reserve Banks under 
 the provisions of Regulation B, Series of 1916. 
 
 (Page 684, December, 1916, Bolletin.) 
 
 Place of Payment of Acceptances. 
 An acceptance to pay at a particular place different 
 from the residence of the acceptor is a general acceptance, 
 unless it expressly states that the bill is to be paid there 
 and not elsewhere, and does not render the bill non-ne- 
 gotiable. 
 
 (Pasre 389, April, 1917, Bulletin.) 
 
 INFORMAL RULINGS 
 
 Discount of Renewals. 
 
 Acceptance business of Federal Reserve Banks is not 
 restricted "to the original transactions only," if the trans- 
 action has not been liquidated. When the first acceptance 
 matures a member bank may renew the acceptance, and 
 there is no reason why a Federal Reserve Bank may not 
 discount such renewed acceptance although a Federal Re- 
 serve Bank must not engage in advance to make such dis- 
 count of a renewal. 
 
 (Page 126, July, 1915, Bulletin.) 
 
 33 
 
A national bank is held to be authorized to enter into 
 an agreement having more than six months to run by the 
 terms of which it obligates itself for a period of time speci- 
 fied in the agreement to accept drafts drawn upon it, pro- 
 vided such drafts grow out of transactions involving the 
 importation or exportation of goods, and that the indi- 
 vidual drafts have not more than six months' sight to run. 
 This distinction is emphasized: "While a letter of credit or 
 credit agreement may lawf uU}^ be made by a national bank 
 which will extend by its terms for a period exceeding six 
 months, the agreement must not be of such a character as 
 will impose upon the holders of drafts accepted thereunder 
 any obligation to renew such drafts so that the period of 
 acceptance shall exceed six months in duration as to any 
 specified draft." 
 
 (Page 269, September, 1915, Balletin. See also page 584, November, 
 1916, Bulletin.) 
 
 Upon payment of an acceptance the accepting bank 
 may for a reasonable period accept new drafts for the 
 financing of the original transaction, even after the ship- 
 ment and delivery of the goods, provided such renewals be 
 stipulated in the original contract as an incidental condi- 
 tion of the transaction of importation or exportation upon 
 which the acceptance is based. 
 
 (Page 405, December, 1915, Bulletin.) 
 
 Federal Reserve Banks Determine Eligibility. 
 
 Federal Reserve Banks must determine the eligibility 
 of an acceptance. 
 
 (Page 363, November, 1915, Bulletin.) 
 
 Trade Acceptance. 
 
 Tentatively held that a 90-day sight draft drawn by 
 a firm in Calcutta on a company in Boston and accepted by 
 that firm, covering a transaction involving the transpor- 
 tation of merchandise from Calcutta to Honolulu, is a 
 trade acceptance rather than a bankers' acceptance. Rul- 
 ing based upon facts submitted and subject to local con- 
 ditions. 
 
 (Page 404, December, 1915, Bulletin.) 
 
 34 
 
Identification of Specific Goods. 
 Held not to be necessary that the specific goods cov- 
 ered by an acceptance based upon an import or export 
 transaction must be identified at the time of the accept- 
 ance. 
 
 (Page 405, December, 1915, Bulletin.) 
 
 Goods Involved. 
 
 In interpreting the word "involved" in connection 
 with the importation or exportation of goods, upon which 
 an acceptance has been based, it is held that goods may be 
 purchased and shipped subsequent to the time of the first 
 acceptance, provided that there is a definite bona fide con- 
 tract for the shipment of the goods within a specified and 
 reasonable time. 
 
 (Page 405, December, 1915, Bulletin.) 
 
 Good Faith a Test. 
 Good faith must be relied upon to a large extent in 
 determining whether an acceptance is based upon a trans- 
 action involving the importation or exportation of goods. 
 
 (Pnse 406, December, 1915, Bulletin.) 
 
 Banks May Ask Assurances. 
 Member banks may best protect themselves in de- 
 termining whether acceptances are based upon the expor- 
 tation or importation of goods by stipulating the right at 
 times to ask for substantiation of assurances from a cus- 
 tomer. 
 
 (Page 406, December, 1915, Bulletin.) 
 
 Evidence from State Member Banks. 
 
 Federal Reserve Bank reserves the right to ask State 
 member banks for evidence underlying the certification 
 given it as to an acceptance. 
 
 (Page 406, December, 1915, Bulletin.) 
 
 Responsibility with Federal Reserve Banks. 
 Ultimate responsibility in purchasing acceptances is 
 held to rest with Federal Reserve Banks. 
 
 (Page 13, January, 1916, Bulletin.) 
 
 Contract Not Fulfilled. 
 A member bank would be justified, if fully secured, 
 in accepting drafts drawn by a local cotton-buying firm 
 
 35 
 
having a contract to sell to foreign buyers if the transac- 
 tion, after having been made in good faith, ultimately re- 
 sulted in the sale of the cotton to an American instead of 
 to a foreign purchaser. It was assumed in connection with 
 this interpretation of Section 13 that the bank had re- 
 ceived permission from the Board to accept drafts or bills 
 of exchange drawn upon it; that the cotton buyers had a 
 contract to sell cotton to a firm of Liverpool; that they 
 held the cotton subject to shipping receipt of the Liver- 
 pool firm and that because of freight rates and shipping 
 conditions the Liverpool firm changed its policy and di- 
 rected the sale of the cotton. 
 
 (Page 13, January, 1916, Bnlletln.) 
 
 Statement Form. 
 
 Announcement that the Federal Reserve Board will 
 require statements satisfactory to it in connection with ac- 
 ceptances is held to mean that the statement shall be satis- 
 factory in form. 
 
 (Page 13, January, 1916, Bulletin.) 
 
 Application of Section 5200. 
 
 The 10 per cent, limitation imposed by Section 5200 
 of the Revised Statutes is not intended to apply to the 
 mere acceptance of a bill of exchange, but the provisions of 
 Section 5200 apply to the indebtedness arising between 
 the drawer of the bill and the accepting bank in case the 
 drawer fails to furnish funds with which to meet the ac- 
 ceptance at maturity. 
 
 (Page 64, February, 1916, Bulletin.) 
 
 Non-member Trust Company Acceptances — When Ineligible. 
 
 Acceptances drawn by a manufacturer on and ac- 
 cepted by a trust company not a member of the Federal 
 Reserve System, the proceeds of which are to be used for 
 purchases of raw material and payment for labor where 
 the goods had not been sold and no warehouse receipts or 
 other instruments could be furnished, are held not to be 
 eligible for purchase by a Federal Reserve Bank. 
 
 (Page 6.">, February, 1916, Bulletin.) 
 
 36 . 
 
Bills Drawn in Foreign Countries. 
 
 Authorizing Federal Reserve Banks, pending a 
 change in paragraph 5, Regulation T, of 1915, to buy bills 
 of exchange drawn in foreign countries on American ac- 
 ceptors where in case it is impossible to obtain information 
 from the acceptor or drawer a satisfactory statement from 
 the indorsing bank or banker as to financial condition is 
 obtained. Discount rate for bankers' acceptances includes 
 domestic acceptances. 
 
 (Pagre 111, March, 1916, Bulletin.) 
 
 Stamp "Trade Acceptance" Has No Value. 
 
 The fact that a loan company has stamped a bill a 
 trade acceptance and signed as "acceptor" does not in it- 
 self make it a trade acceptance and it is not eligible for 
 purchase as a trade acceptance. 
 
 (Pase 112, March, 1916, Bulletin.) 
 
 Must be Accepted by Drawee. 
 
 A draft to be eligible as an acceptance must be ac- 
 cepted by the drawee and not by anyone else. A draft 
 drawn by a corporation can not be purchased by a Federal 
 Reserve Bank in the open market as a bankers' acceptance. 
 For the same reason such a draft is ineligible as a trade ac- 
 ceptance. 
 
 (Pagre 112, March, 1916, Bulletin.) 
 
 Advances on Cotton for Export. 
 
 Section 13 of Federal Reserve Act is construed to 
 justify a national bank in accepting a draft drawn upon it 
 in settlement of advances for cotton being accumulated by 
 cotton buyers for export. The fact that there is a tem- 
 porary delay in actual shipment of goods is immaterial. 
 
 (Page 458, September, 1916, Bulletin.) 
 
 Use by Commercial Concerns. 
 
 comn 
 r a dis 
 acceptance 
 
 Large commercial concerns are initiating the practice 
 of allowing a discount where settlement is made by trade 
 
 (Page 524, October, 1916, Bulletin.) 
 
 37 
 
Business Paper and Section 5200, Revised Statutes. 
 The Board finds it necessary to adhere to its estab- 
 lished policy of not making any general ruling on the 
 question how much a bank may invest in any particular 
 security. It held, however, that if a firm is a bona fide 
 owner for value of the acceptances of any particular in- 
 stitution and such acceptances are sold to or discounted 
 with a member bank the acceptances could no doubt be 
 treated as commercial or business paper actually owned by 
 the party negotiating them and would therefore be ex- 
 cepted from the limitations of Section 5200, Revised 
 Statutes. Ruling rests upon the fact that paper is actually 
 commercial or business paper owned by the person nego- 
 tiating it. (November 4, 1916.) 
 
 (Page 678, Deoember, 1916, Bulletin.) 
 
 Limitations on Amount of Acceptances as Imposed by Section 13 of 
 
 Federal Reserve Act. 
 In any case where shipping documents or warehouse 
 receipts are held by the acceptor the 10 per cent, limit does 
 not apply; so also in any case where the acceptor holds a 
 trust receipt which does not enable the borrower to obtain 
 the goods for his own use, the 10 per cent, limit does not 
 apply; but in any case where the bank holds merely the 
 ordinary trust receipt which gives it only a lien on the 
 goods in the hands of the purchaser or on their proceeds, 
 the 10 per cent, limit should apply. 
 
 (Page 2SG, April, 1917, Bulletin.) 
 
 Acceptances. 
 A bank having a capital and surplus of $288,000 may, 
 under the National Bank Act, lend to a customer on his 
 o^vn obligation a sum not to exceed $28,800 (10 per cent, 
 of capital and surplus) . The bank may, however, in addi- 
 tion to such loan, discount for the same customer ( although 
 he may have a direct line of credit in bank up to the 10 
 per cent, limit), bills of exchange drawn against actually 
 existing values, or commercial or business paper actually 
 owned by him. The bank may, therefore, legally discount 
 for the customer bills of exchange drawn by him for the 
 purchase price of commodities sold, and accepted by the 
 drawee; or it may discount for the customer the note of 
 
 38 
 
the purchaser if actually owned by him, without reference 
 to the 10 per cent, limitations prescribed by Section 5200. 
 A member bank acquiring such acceptance or notes may 
 rediscount them with its Federal Reserve Bank. There 
 is no limitation upon the acceptances, but the notes would 
 be subject to the limitations prescribed by Section 13 of 
 the Federal Reserve Act; and the Federal Reserve Bank 
 cannot discount paper bearing the signature of the same 
 borrower in an amount greater than 10 per cent, of the 
 capital and surplus of the member bank offering such pa- 
 per. Bills of exchange drawn against actually existing 
 values and accepted by the drawee within a reasonable time 
 after the shipment of the goods may be rediscounted with 
 the Federal Reserve Bank without reference to the limi- 
 tations imposed by Section 13 of the Federal Reserve Act. 
 I am informed by counsel for the Comptroller of the Cur- 
 rency that under the practice followed by his office bills or 
 notes which are renewed at maturity are not to be treated 
 by the person negotiating them as bills drawn against 
 actually existing values or as commercial or business 
 paper, and that renewals are therefore subject to the limi- 
 tations of Section .5200. 
 
 (Page 2S7, April, 1917, Bnlletin.) 
 
 39 
 
OPEN MARKET TRANSACTIONS 
 
 OPINIONS OF COUNSEL. 
 
 Single Name Paper. 
 
 Any Federal Reserve Bank may, under the provisions 
 of Section 14 of the Federal Reserve Act, purchase accept- 
 ances and bills of exchange of certain kinds and maturities 
 in the open market, but promissory notes as distinguished 
 from bills of exchange, whether one or more names, are 
 not eligible for such purchase. 
 
 (Page 365, November, 1915, Bulletin.) 
 
 Negotiability of Bills and Notes Made Payable "in Exchange." 
 
 A bill or note made payable "in exchange" is not pay- 
 able "in money," and is, therefore, not negotiable. Fed- 
 eral Reserve Banks can not be required to receive checks 
 and drafts drawn in this manner for collection or credit. 
 
 (Page 459, September, 1916, Bulletin.) 
 
 Bill of Exchange Drawn by the Drawee. 
 
 An instrument in the form of a bill of exchange, 
 drawn by an agent of a corporation upon the corporation 
 itself, is not a bill of exchange such as is eligible for pur- 
 chase in the open market by Federal Reserve Banks. 
 
 (Page 462, September, 1916, Bnlletin.) 
 
 INFORMAL RULINGS. 
 
 Open Market Transactions. 
 As to open market transactions, the Board has 
 reached the conclusion that Congress drew a distinction in 
 Sections 13 and 14 between the several forms of commer- 
 cial paper, and that promissory notes, even though bearing 
 
 40 
 
an additional indorsement, must be regarded as excluded 
 from open market purchases under Section 14. There re- 
 mains, then, as eligible for purchase under this section 
 "cable transfers" and "bills of exchange" of two kinds: 
 (1) So-called foreign bills of exchange, and (2) domestic 
 acceptances drawn by one party on another, as by a seller 
 of goods upon the purchaser, such as have been classified 
 by the Board as trade acceptances either accepted or not 
 accepted at the time of purchase. 
 
 Decision as to whether banks should engage in such 
 open market operations rests entirely with them and not 
 with the Federal Reserve Board. 
 
 The Board leaves to each Federal Reserve Bank the 
 authority granted under Section 14 with respect to bills of 
 exchange without restricting regulations. 
 
 Banks are cautioned that no bill be bought in the open 
 market which, even if indorsed by a member bank, would 
 be ineligible for rediscount under Section 13. 
 
 (Pase 360, November, 1915, Bulletin.) 
 
 41 
 
PAPER ELIGIBLE FOR 
 REDISCOUNT 
 
 OPINIONS OF COUNSEL. 
 
 Conditions Attached to and Affecting Negotiability of Bills of Exchange 
 
 and Acceptances. 
 
 A bill of exchange, in order to be negotiable, must be 
 an unconditional order to pay, on demand or at a fixed or 
 determinable future time, a certain sum of money to order 
 or to bearer. If payment is dependent upon the happen- 
 ing of a certain contingency, the bill is conditional and 
 non-negotiable. If payment is confined to the proceeds of 
 a particular fund and is not cliargeable to the general 
 credit of the drawer, the bill is conditional and non-ne- 
 gotiable. 
 
 A general acceptance of a conditional bill or a condi- 
 tional acceptance of an unconditional bill makes the ac- 
 ceptance a conditional one and destroys its negotiability. 
 
 There is some doubt in the courts whether the mere 
 reference to a particular consignment of goods makes the 
 bill conditional, some courts stating that it is merely an 
 indication of the fund out of which the drawee is to re- 
 imburse himself; other courts holding that it makes the 
 bill conditional because limitmg payment to the proceeds 
 of the particular shipment referred to. There is no doubt, 
 however, that a reference, in general terms, on the face of 
 an accepted bill to the fact that it is based on the exporta- 
 tion or importation of goods, would not make it condi- 
 tional and non-negotiable, and it would not, therefore, be 
 ineligible for discount under the provisions of Section 13 
 of the Federal Reserve Act. 
 
 (Page 21, May, 1915, Bulletin.) 
 42 
 
Rediscount of Drafts Payable on Condition. 
 A draft made "payable on arrival of car" is non-ne- 
 gotiable, not being payable at a determinable future time, 
 and is therefore ineligible for rediscount by a Federal Re- 
 serve Bank. 
 
 (Page 219, August, 1»15, Bulletin.) 
 
 Negotiability of Bills of Exchange. 
 The negotiability of a bill of exchange is not affected 
 by provisions which waive demand, notice, and protest; 
 which waive homestead exemption rights; and which pro- 
 vide for the costs of collection and attorney's fees. 
 
 (Pase 226, May, 1916, Bulletin.) 
 
 Rediscount of the Assignment of Open Accounts. 
 The assignment of an open account is not negotiable 
 paper and is not eligible for rediscount by a Federal Re- 
 serve Bank under the terms of Section 13 of the Federal 
 Reserve Act. 
 
 (Page 227, 3Iay, 1916, Bulletin.) 
 
 Limit on Rediscounts of Commercial or Business Paper. 
 While a member bank may acquire commercial or 
 business paper from the same person in excess of 10 per 
 cent, of its unimpaired capital and surplus (Sec. 5200, 
 U. S. R. S.), its Federal Reserve Bank can not redis- 
 count such paper bearing the signature or indorsement of 
 the same person in excess of that amount (Sec. 13, Fed- 
 eral Reserve Act). 
 
 Section 13, Federal Reserve Act, does not amend 
 Section 5200, United States Revised Statutes. 
 
 (Page 274, Jnne, 1916, Bulletin.) 
 
 Agricultural Products or Implements. 
 The purchase or sale of an agricultural product, or of 
 implements or other commodities used in agriculture, con- 
 stitutes a commercial transaction. Where the proceeds of 
 a note made by a merchant are used to purchase millet 
 seed to be later retailed or sold, such a note can not be 
 treated as one given for an agricultural purpose and can 
 not be discounted by a Federal Reserve Bank if it has a 
 maturity at time of discount of more than 90 days. 
 
 (Page 526, Oetoljer, 1916, Bulletin.) 
 
 43 
 
Promissory Notes of Member Banks. 
 
 Member banks in procuring advances from Federal 
 Reserve Banks on promissory notes must secure such notes 
 by paper eligible for rediscount or for purchase by Fed- 
 eral Reserve Banks or by bonds or notes of the United 
 States. County warrants are not eligible as security. 
 
 (Page 609, NoTember, 1916, Bulletin.) 
 
 Advances to Member Banks. 
 
 Eligible paper pledged as security for a promissory 
 note of a member bank on which an advance is being made 
 by a Federal Reserve Bank need not be indorsed by such 
 member bank if such eligible paper is already in nego- 
 tiable form. 
 
 (Page 685, December, 1916, Bulletin.) 
 
 Trade Acceptances Based on Advertising Space. 
 
 The Federal Reserve Board may properly rule that 
 a draft or bill of exchange drawn by the seller on the pur- 
 chaser of advertising space and accepted by such purchaser 
 is a trade acceptance. 
 
 (Page 116, Febrnary, 1917, Bulletin.) 
 
 Bills of Exchange Drawn against Actually Existing Values. 
 
 A bill of exchange discounted before acceptance may 
 be said to be drawn against actually existing values, with- 
 in the meaning of Section 13 of the Federal Reserve Act, 
 when and only when it is accompanied by shipping docu- 
 ments, warehouse receipts, or other papers securing title 
 to the goods sold. An accepted bill of exchange, unac- 
 companied by shipping documents or other such papers, 
 may be considered as drawn against actually existing 
 values if drawn against the drawee at the time of, or within 
 a reasonable time after, the shipment or delivery of the 
 goods sold. In this latter case there must be reasonable 
 grounds to believe that the goods are in existence in the 
 hands of the drawee either in their original form or in the 
 shape of the proceeds of their sale. 
 
 (Page 195, March, 1917, Bulletin.) 
 
 44 
 
Discount of Paper Secured by or Issued for Purposes of Trading in Bonds 
 or Notes of the United States. 
 
 Any member bank may rediscount with its Federal 
 Reserve Bank a note, draft, or bill drawn for the purpose 
 of carrying or trading in bonds or notes of the United 
 States, and may also procure advances from its Federal 
 Reserve Bank on its own promissory note secured by a 
 deposit of or pledge of bonds or notes of the United 
 States. 
 
 (Page 197, March, 1917, Bnlletin.) 
 
 Drafts Paid on or before a Certain Date. 
 
 Drafts payable "ninety days from date or before on 
 five days after demand (i. e., on five days' notice) by the 
 holder hereof" are negotiable and eligible for discount with 
 a Federal Reserve Bank. 
 
 (Page 391, April, 1917, Bulletin.) 
 
 INFORMAL RULINGS 
 
 Differential as to Acceptance. 
 
 While a very decided differential may be inadvisable, 
 there is no objection to a moderate differential, say 1/4 of 
 1 per cent., to apply between member-bank acceptances 
 and the acceptances of large non-member institutions well 
 known throughout the country and whose acceptances nec- 
 essarily have a broad market. 
 
 (Page 38, Janoary, 1917, Bnlletin.) 
 
 45 
 
AGRICULTURAL PAPER 
 
 INFORMAL RULINGS. 
 
 The limitation of 25 per cent, on loans for agricul- 
 tural purposes or based on live stock applies only to jDaper 
 having maturity in excess of 90 days. 
 
 (Page 72, June, 1915, Bulletin.) 
 
 Live Stock Includes Beef Cattle, Horses, and Mules. 
 
 The term "live stock" is held to include not only beef 
 cattle, but also horses and mules. 
 
 (Page 72, June, 1915, Bulletin.) 
 
 Notes for Fertilizer Eligible. 
 A farmer's six months' note for commercial fertilizer, 
 discounted and indorsed by a member bank, is agricultural 
 paper eligible for rediscount with the Federal Reserve 
 Bank. 
 
 (Page 75, June, 1916, Bulletin.) 
 
 Cattle Mortgages Unnecessary. 
 Mortgages on cattle are not required, and the ques- 
 tion whether paper secured by cattle is self-liquidating is 
 a legal one to be determined at the Federal Reserve Bank. 
 
 (Page 74, June, 1915, Bulletin.) 
 
 The Act does not require the taking of chattel mort- 
 gages as security for loans based on agricultural opera- 
 tions. The statement of the member bank to this effect 
 must ordinarily be accepted. The direct, primary pur- 
 pose of the loan should be for the ordinary operations of 
 agriculture. Words "based on" are not considered syn- 
 onymous with "secured by." Agricultural paper need not 
 be directly secured by agricultural products, but should 
 be genuinely based on transactions entered upon for 
 agricultural operations. General banking prudence and 
 knowledge should be applied. 
 
 (Page 72, June, 1915, Bulletin.) 
 
 46 
 
Note of Dealer Not Eligible. 
 
 A note made by a dealer in agricultural implements is 
 not agricultural paper. 
 
 (Page 312, August, 1915, Bnlletln.) 
 
 Cattle, a Readily Marketable Commodity. 
 Cattle are a readily marketable commodity and a 
 bankers' acceptance secured by a chattel mortgage there- 
 on is eligible for rediscount at a Federal Reserve Bank. 
 
 (Page 65, February, 1016, Bulletin.) 
 
 Notes for Farm Tools Eligible. 
 
 Notes of farmers or consumers given for the pur- 
 chase price of farm tools, agricultural machinery, or other 
 farm-operating equipment are discountable under Section 
 13 of the Federal Reserve Act, which provides for notes, 
 bills, or drafts drawn or issued for agricultural purposes. 
 
 Presentation of notes of farmers or consumers for 
 the purchase price of farm tools or agricultural machinery 
 by the dealer, with his indorsement for rediscount, does not 
 change their classification as for agricultural purposes. 
 
 (Page 67, Febrnary, 1916, Bulletin.) 
 
 Notes for Dairy Cattle Eligible. 
 
 Notes signed by a farmer, the proceeds of which are 
 used for the purchase of cows to be used as dairy cattle, 
 are eligible for rediscount at the discretion of the Federal 
 Reserve Bank notwithstanding the fact that the cattle are 
 not primarily purchased for "breeding, raising, fattening, 
 and marketing of live stock." 
 
 (Page 112, March, 1916, Bulletin.) 
 
 Exceptions to Section 5200. 
 
 The fact that a note or draft discounted by a national 
 bank may be secured by cattle would not of itself bring 
 it within the exceptions to Section 5200, Revised Statutes, 
 unless it is commercial or business paper actually owned 
 by the person negotiating the same or unless it is a bill of 
 exchange drawn in good faith against actually existing 
 values. 
 
 (Page 329, July, 1916, Bulletin.) 
 
 47 
 
Amounts Rediscounted. 
 
 Amounts of cattle paper discounted at Federal Re- 
 serve Banks are not available without special report. The 
 banks at Dallas and Kansas City take more of this paper 
 than any others. 
 
 (Page 395, Angnmt, 1916, Bnlletln.) 
 
 Cattle for Breeding, Grazing, or Fattening, as Security. 
 
 Loans on cattle for breeding, grazing, or fattening 
 may be made under the classification of six months' agri- 
 cultural paper and the paper may be rediscounted by a 
 member bank at its Federal Reserve Bank. 
 
 (Page 679, December, 1916, Bulletin.) 
 
 48 
 
COMMODITY PAPER 
 
 Includes Paper of Merchants and Others. 
 
 "Commodity paper" includes not only paper originat- 
 ing with the producer, but also paper of merchants and 
 others when the commodity is not carried for speculative 
 or purely investment purposes. 
 
 (Pase 307, October, 1915, Balletin.) 
 
 Potatoes Not Non-perishable. 
 
 Potatoes are not a non-perishable product and are, 
 therefore, not acceptable as security for commodity loans. 
 
 (Page 406, December, 1915, Bulletin.) 
 
 Purchases from Member Banks. 
 
 Purchases by Federal Reserve Banks from member 
 banks of commodity loans without the member banks' 
 indorsement would not be open market purchases, be- 
 cause such commodity loans are in the form of ordinary 
 promissory notes or one-name paper. 
 
 (Page 406, December, 1915, Bulletin.) 
 
 Profits of Member Banks. 
 
 There is an apparent profit to a member bank of 3 
 per cent, on a transaction in commodity paper where the 
 loan is made by the member bank at 6 per cent, and the 
 discount rate of the Federal Reserve Bank is 3 per cent. 
 
 (Page 406, December, 1915, Bulletin.) 
 
 Mercantile Firms Can Not Discount with Federal Reserve Banks. 
 
 Federal Reserve Banks can not discount commodity 
 paper directly for mercantile firms. 
 
 (Page 113, March, 1916, Bulletin.) 
 
 49 
 
INFORMAL RULINGS 
 
 AS TO PAPER 
 
 OTHER THAN 
 
 AGRICULTURAL OR COMMODITY 
 
 Paper of Finance Companies Ineligible. 
 The Board holds that collateral trust notes of so-called 
 finance companies should not be accepted by Federal Re- 
 serve Banks for rediscount. Such a transaction is not a 
 commercial one. 
 
 (Pase 72, June, 1015, Bulletin.) 
 
 Direct Notes of Non-member Banks Ineligible. 
 Notes of non-member banks, if direct, can not be re- 
 discounted. 
 
 (Pase 72, Jane, 1916, Bulletin.) 
 
 Conditions as to Cotlon-Miil Paper. 
 Banks are authorized to discount cotton-mill paper 
 indorsed by member banks where general conditions are 
 satisfactory and statement of cotton mill shows that the 
 plant is not mortgaged and that the deficiencj^ between 
 capital and plant account does not amount to more than 
 $5 per spindle. 
 
 (Page 73, Jnne, 1915, Bulletin.) 
 
 Discount of Notes Renewed. 
 Renewals differ, and banking judgment determines 
 the merits of each particular case. Those providing work- 
 ing capital or capital to finance fixed investments are not 
 eligible for rediscount. On the other hand, self-liquidat- 
 ing paper, even though the transaction which gives rise to 
 it does not liquidate itself within the 90-day maturity, 
 might be discounted even though it appears to be renewal 
 
 50 
 
paper. Banks should not enter into an agreement for a 
 renewal. Care should be exercised in examining such 
 paper and the transactions which give rise to it, but 
 mechanical rules should not be allowed to take the place 
 of discriminating banking judgment. 
 
 (Pase 74, June. 1915, Bulletin.) 
 
 Undivided Interests Not Security. 
 
 An undivided interest in property is not regarded as 
 advisable security for paper to be rediscounted. 
 
 (PajKre 75, June, 1915, Bulletin.) 
 
 Bills Receivable Satisfactory Collateral. 
 
 The note of a manufacturer secured by his bills re- 
 ceivable is desirable paper, and should certainly not be 
 debarred as a collateral trust note. When issued for the 
 purpose of carrying collateral for a speculative purpose 
 or collateral in the nature of stocks and bonds other than 
 the securities of the United States, the note would not be 
 eligible for rediscount. 
 
 (Page 137, July, 1915, Bulletin.) 
 
 Manufactured Pig Iron Good Security. 
 
 The note of a furnace company secured by pig iron 
 manufactured by the company on contract for delivery 
 is eligible for rediscount. While this principle generally 
 holds good, each case should be carefully scrutinized that 
 the collateral may be readily marketable goods. 
 
 (Page 137, July, 1915, Bulletin.) 
 
 Notes of Mule and Cattle Dealers Mercantile Paper. 
 
 Notes made by mule and cattle dealers are mercantile 
 rather than agricultural paper. 
 
 (Page 313, August, 1915, Bulletin.) 
 
 Financial Statements. 
 
 The option in respect to waiving requirement that 
 a borrower's financial statement shall be on file rests with 
 the member bank. 
 
 (Page 213, August, 1915, Bulletin.) 
 
 51 
 
Non-member Bank Rediscounts Left to Federal Reserve Banks. 
 
 The question whether a Federal Reserve Bank may 
 rediscount for non-member banks must be left very largely 
 to the judgment and discretion of officers of each Federal 
 Reserve Bank and to the determination reached by them 
 on the facts in each case. 
 
 (Pagre 213, Angrnst, 1915, Bulletin.) 
 
 Crossties and Lumber Good Security. 
 
 Bills drawn for the purpose of providing funds to 
 export crossties and lumber to Cuba are eligible for re- 
 discount if properly indorsed and otherwise conforming 
 to the regulations of the Federal Reserve Board. Such 
 paper, it is presumed, would take the 90-day rate. 
 
 (Page 268, September, 1915, Bulletin.) 
 
 Collateral Notes. 
 
 Notes secured by collateral the proceeds of which are 
 used for the purchase of merchandise in the due course 
 of business are eligible paper for rediscount. The fact 
 that notes have the additional security of collateral in no 
 way affects their eligibility. 
 
 (Pase 268, September, 1915, Bnlletln.) 
 
 The fact that commercial paper has the additional 
 security of collateral in no way affects its eligibility for 
 rediscount. 
 
 (Pase 268, September, 1915, Bulletin.) 
 
 Eligibility of Notes. 
 
 Notes, the proceeds of which have been used or are to 
 be used for commercial purposes, otherwise complying 
 with the regulations, are eligible for rediscount. 
 
 (Page 268, September, 1915, Bulletin.) 
 
 Rebates of Discount. 
 
 Rebates of discount are to be given only when some 
 good reason arises for such action. 
 
 (Page 308, October, 1915, Bulletin.) 
 
 52 
 
Rediscounts to a Reopened Insolvent Bank. 
 
 The Board upholds a Federal Reserve Bank in de- 
 clining to give assurance to the receiver of an insolvent 
 member bank that the Federal Reserve Bank will, upon 
 the reopening of the insolvent bank, rediscount eligible 
 paper freely, without requiring the indorsement of di- 
 rectors or other additional security. Offerings should be 
 considered upon their merits. 
 
 (Page 66, February, 1916, Bulletin.) 
 
 Section 5202, Revised Statutes. 
 
 Under Section 5202, Revised Statutes, a national 
 bank may not borrow as bills payable in excess of its cap- 
 ital stock. Under the Federal Reserve Act it may redis- 
 count actual items of paper in its possession to any amount 
 in the discretion of the Federal Reserve Bank of its dis- 
 trict. 
 
 (Page 112, March, 1916, Bulletin.) 
 
 Limit on Cotton-Mill Paper. 
 
 No national bank or member bank could discount an 
 aggregate of more than 10 per cent, of its capital and 
 surplus in the notes of a cotton broker purchasing cotton 
 for various mills and financing the same with his note se- 
 cured by warehouse receipt of the mill, indorsed in blank 
 for cotton stored in his own name and insured, to sell to 
 the mill for a specified amount to be paid at a stated 
 time. 
 
 (Page 113, Marcb, 1916, Bulletin.) 
 
 Limit of 10 Per Cent, to One Maker or Indorser. 
 
 If any particular paper presented by a member bank 
 to a Federal Reserve Bank for rediscount, singly or added 
 to the paper of the same makers or indorsers which the 
 Federal Reserve Bank has already rediscounted for said 
 member bank, amounts to a total of more than 10 per 
 cent, of the unimpaired capital and surplus of that bank, 
 the Federal Reserve Bank has no authority for such re- 
 discount. 
 
 (Page 224, Slay, 1916, Bulletin.) 
 
 53 
 
Loans Not Made Directly to Individuals. 
 
 Federal Reserve Banks do not make loans directly 
 to individuals, but rediscount the paper of member banks 
 which include all national banks and such State banks as 
 may have joined the Federal Reserve System. 
 
 (Pagre 272, June, 1916, Bulletin.) 
 
 Rediscounts Are for Face Value. 
 
 Paper of member banks is rediscounted by Federal 
 Reserve Banks for its face value and without compensa- 
 tion. 
 
 (Page 272, Jane, 1916, Bnlletln.) 
 
 Notes "on or before" Eligible. 
 
 Notes payable "on or before" a certain date are eli- 
 gible for rediscount with Federal Reserve Banks provided 
 they conform to the law and regulations of the Board in 
 other respects. 
 
 (Page 394, Aagnst, 1916, Bulletin.) 
 
 Proceeds of a Note. 
 
 Mode of determining proceeds of a note discounted 
 by Federal Reserve Bank. 
 
 (Pagre 456, September, 1916, Bulletin.) 
 
 Ten Per Cent. Limitation Does Not Apply to Bills of Exchange. 
 
 The aggregate of eligible notes and bills bearing the 
 signature or indorsement of any one person, company, 
 firm, or corporation rediscounted by a Federal Reserve 
 Bank for a non-member bank shall at no time exceed 10 
 per cent, of the unimpaired capital and surplus of such 
 member bank. This restriction does not apply to bills of 
 exchange drawn in good faith against actually existing 
 values. 
 
 (Page 457, September, 1916, Bulletin.) 
 
 No Limit on Rediscounts of Commercial Paper for Any One Bank. 
 
 The law places no limitation upon the amount of com- 
 mercial paper which a member bank may rediscount with 
 a Federal Reserve Bank, but leaves this to the judgment 
 of the officers of the Federal Reserve Bank. 
 
 (Pagre 457, September, 1916, Bulletin.) 
 
 54 
 
"Staples" Defined. 
 
 "Staples" in the meaning of Regulation Q, series of 
 1915, include manufactured goods as well as raw mater- 
 ials, provided the goods are non-perishable and have a 
 wide ready market. This is held to include cotton yarns 
 and flour. 
 
 (Page 533, October, 1916, Balletin.) 
 
 Indorsement on Waiver of Demand, Notice, and Protest. 
 
 Simple written indorsement is considered sufficient in 
 connection with a waiver of demand, notice, and protest 
 as to its own indorsement exclusively on the part of a 
 member bank. 
 
 (Page 524, October, 1016, Bulletin.) 
 
 Government Does Not Fix Interest Rate of Member Bank. 
 
 The Government does not fix the rate of interest 
 which national banks may charge upon loans, but does 
 approve the rate of rediscount at which paper may be 
 rediscounted at Federal Reserve Banks. 
 
 (Page 679, December, 1916, Balletin.) 
 
 Acceptances against Bullion. 
 
 Gold bars may be properly considered as goods, and 
 accordingly 60-day bills when accepted by banks and 
 bankers against such a shipment would be eligible for 
 purchase by Federal Reserve Banks as based upon or 
 involving the exportation of goods. 
 
 (Pase 29, January, 1917, Bulletin.) 
 
 Bills Drawn against Coin. 
 
 Gold coin is "goods" within the meaning of Section 
 13 of the Federal Reserve Act, and, therefore, a 
 bill of exchange drawn to finance a shipment of gold coin 
 from this country is eligible for purchase by a Federal 
 Reserve Bank if otherwise in conformity with the pro- 
 visions of the law and the regulations of the Federal Re- 
 serve Board. 
 
 (Pagre 29, January, 1917, Bulletin.) 
 
 55 
 
ACCEPTANCES 
 
 tFrom Federal Reserve Bulletin, July 1, 1917] 
 
 Acceptance* bought tn open market and held by Federal Reserve Banks at per schedules on file with the Federal Reserve Board 
 on dates specified, distributed by classes of accepting institutions. 
 
 Banker's acceptances. 
 
 Nonmem- 
 ber trust 
 companies. 
 
 Nonmem- 
 ber State 
 banks. 
 
 Foreign 
 
 branches 
 and agen- 
 
 Trade ac- 
 ceptances 
 bought in 
 
 open 
 market. 
 
 Feb.K.. 
 Apr. 5... 
 T&yS... 
 June 7... 
 July3... 
 Aug. 2... 
 Sept. 6.. 
 Oct. 4... 
 Nov. 1... 
 Dec. 6.., 
 
 Jan. 3... 
 Feb. 7.. 
 Mar. 6.. 
 Apr. 3.. 
 Mayl.. 
 JtmeS.. 
 Julys.. 
 Aug. 7.. 
 Sept. 4.. 
 Oct. 2... 
 Not. 6.. 
 Dec. 4.. 
 
 Jan. 1..., 
 
 Feb. 5... 
 Mar. 5... 
 Apr. 2... 
 May7... 
 May 14.. 
 M8y21.. 
 May 28.. 
 June 4... 
 June 11.. 
 June 18.. 
 
 *93,000 
 3,653,000 
 5,038,000 
 6,242,000 
 4,342,000 
 5,350,000 
 6,087,000 
 9,000,000 
 8,477,000 
 12,311,000 
 
 16,494,000 
 16,681,000 
 17,152,000 
 21,000,000 
 24,875,000 
 24,680,000 
 32,989,000 
 39,695,000 
 41,413,000 
 37,798,000 
 37,770,000 
 47,748,000 
 
 66,8a3,000 
 50,361,000 
 53, 2S.S, 000 
 43,979,000 
 49,192,000 
 .56, 2-^4, 000 
 59,105,000 
 62,986,000 
 69,:K2,000 
 81,196,000 
 103,314,000 
 
 820,000 
 189,000 
 516,000 
 287,000 
 407,000 
 305,000 
 898,000 
 331,000 
 172,000 
 
 160,000 
 876,000 
 670,000 
 573,000 
 400,000 
 029,000 
 921,000 
 060,000 
 356,000 
 782,000 
 474,000 
 232,000 
 
 625,000 
 611,000 
 518,000 
 323,000 
 650,000 
 383,000 
 316,000 
 441,000 
 611,000 
 043,000 
 776,000 
 
 110,000 
 10,000 
 10,000 
 
 20,000 
 20,000 
 132,000 
 253,000 
 275,000 
 
 362,000 
 336,000 
 408,000 
 473,000 
 585,000 
 644,000 
 471,000 
 738,000 
 728,000 
 712,000 
 1,014,000 
 1,630,000 
 
 1,502,000 
 972,000 
 
 1,090,000 
 659,000 
 238,000 
 38.5,000 
 320,000 
 825,000 
 684,000 
 946,000 
 
 l,296,t)!» 
 
 (110,000 
 110,000 
 192,000 
 161,000 
 352,000 
 472,000 
 343,000 
 
 822,000 
 1,466,000 
 1,781,000 
 3,262,000 
 3,430,000 
 7,007,000 
 11,830,000 
 13,940,000 
 12,491,000 
 9,944,000 
 12,147,000 
 16,069,000 
 
 18,224,000 
 13,775,000 
 20,581,000 
 18,830,000 
 19,177,000 
 18,917,000 
 19,822,000 
 19,912,000 
 21,077,000 
 22,604,000 
 23,880,000 
 
 $140,000 
 354,000 
 200,000 
 94,000 
 117,000 
 136,000 
 235,000 
 239,000 
 239,000 
 1,801,0C« 
 
 1,834,0 
 1,373,0 
 1,265,0 
 
 23,838,000 
 25,349,000 
 28,041,000 
 38,308,000 
 44,290,000 
 49,360,000 
 64,211,000 
 73,433,000 
 74,986,000 
 70,238,000 
 80,405,000 
 98,679,003 
 
 121,164,000 
 88,7,W,000 
 107,837,000 
 82,028,000 
 88,349,000 
 100,096,000 
 102,699,000 
 107,099,000 
 118,773,000 
 
 t489,000 
 462,000 
 722,000 
 1,477,000 
 2,208,000 
 3,422,000 
 4,225,000 
 3,673,000 
 2,306,000 
 2,378,000 
 4,487,000 
 
 4,536,000 
 4,041,000 
 2,635,000 
 1, 144. 000 
 1,679,000 
 1,936,000 
 3,027,000 
 2,727,000 
 3,022,000 
 3,723,000 
 3,611,000 
 
 199,000 
 
 11,693,000 
 13,347,000 
 9,960,000 
 9,770,000 
 11,120,000 
 12,884,000 
 14,373,000 
 13,266,000 
 18,164,000 
 
 23,838,000 
 25,838,000 
 28,503,OM 
 89,030,000 
 45,767,000 
 61,668,000 
 67,633,000 
 77,668,000 
 78,699,000 
 72,642,000 
 82,783,000 
 103,166,000 
 
 125,739,000 
 93,800,000 
 110,366,000 
 33,170,000 
 90,C2S,000 
 102,082,000 
 106,730,000 
 109,898,000 
 
 ui,7«s,aoo 
 
 140,761,000 
 172,168,000 
 
 56 
 
Amounu of bilU discounted and acceptances and warrants bought by each Federal Reserve Bank during May, tSn, 
 
 distributed by maturities. 
 
 IJ-day matUTltlas. 
 
 ^'^J^ Warrants. Total, 
 
 30-da7 maturities. 
 
 Boston 
 
 Neir York 
 
 PbUsdslpbia.. 
 
 Clevelana 
 
 Riohmond..... 
 
 Atlaots 
 
 Chicago 
 
 8t. Looij 
 
 Minneapolis... 
 Kansas City... 
 
 Dallas 
 
 San Fianolsoo. 
 
 (9,403,345 
 e,201,W7 
 
 18,545,006 
 4,410,331 
 
 20,353,342 
 1,3^833 
 2,477^450 
 2,243,M 
 1,011,110 
 2,931,827 
 841,206 
 50,254 
 
 73,603 
 55,000 
 500,000 
 86,205 
 
 110,581,129 
 6,968,287 
 13,545,006 
 4,416,331 
 20,426 945 
 1,447,853 
 2,977,450 
 2,330,150 
 1,011,110 
 2,931,827 
 841,205 
 238,506 
 
 1423,929 
 40,873 
 1,283,516 
 175,775 
 935,616 
 421,469 
 258,174 
 691,898 
 220,678 
 344,136 
 64,580 
 114,823 
 
 tl, 131, 498 
 
 3,491,961 
 
 1,601,582 
 
 235,922 
 
 2 088,000 
 
 321,600 
 
 255,548 
 
 219,000 
 
 235,000 
 
 11,560,427 
 
 3,632,834 
 
 2,785,098 
 
 411,697 
 
 3,021,616 
 
 763,469 
 
 613,720 
 
 910,898 
 
 455,678 
 
 344,136 
 
 94,580 
 
 191,937 
 
 69,958,620 
 
 60^1a7 mattultles. 
 
 9(Ma7 matorltles. 
 
 Boston 
 
 New York 
 
 Philadelphia... 
 
 Cleveland 
 
 Rlc^ond 
 
 Atlanta 
 
 Chicago 
 
 St. Louis.. 
 
 Uinneapolls... 
 Kansas City... 
 
 Dallas 
 
 San Frandsoo. 
 
 (445,623 
 
 164,070 
 
 338,665 
 
 161,618 
 
 1,621,738 
 
 753,648 
 
 ll»,024 
 
 1,423,881 
 
 1,553,648 
 
 352,915 
 
 427,308 
 
 132,380 
 
 (1, 120, 837 
 1,248,268 
 1,142,411 
 1,152,003 
 1,241,363 
 
 568,862 
 5,003.182 
 1,224,405 
 
 145,043 
 1,387,146 
 
 (1,572,' 
 1,412,! 
 l,4S0,i 
 l,313,f 
 2,863,1 
 1.324,( 
 5,202,; 
 2,648,; 
 1,700,( 
 1,740,( 
 
 (6,026,284 
 16,5*4,187 
 2,507,687 
 5,660,101 
 
 462,646 
 
 238,828 
 6,304,037 
 2,570,403 
 
 571,006 
 2,121,033 
 
 350,116 
 1,542,439 
 
 (6,960,618 
 16,722,670 
 2,776,111 
 5,832,444 
 2,203,893 
 605,712 
 5,453,550 
 4,122,009 
 1,037,497 
 2,321,811 
 660,438 
 1,668,434 
 
 7,576,418 
 
 6,424,188 43,938,359 
 
 Over 90<lay maturities. 
 
 Boston 
 
 New York 
 
 Philadelphia... 
 
 Cleveland 
 
 Richmond 
 
 Atlanta 
 
 Chicago 
 
 St. Louis 
 
 Minneapolis... 
 Kansas City... 
 
 Dallas 
 
 Ssa Francisco.. 
 
 9,529 
 
 424,852 
 268,066 
 130,908 
 
 37,742 
 538,469 
 407,102 
 629,674 
 
 27,148 
 
 (845,408 
 1,748,849 
 252,879 
 380,013 
 10,270 
 33,850 
 
 (50,437 
 29,219 
 10,225 
 
 424,437 
 
 (845,603 
 6,799,288 
 291,627 
 390,238 
 435,122 
 301,916 
 130,908 
 462, 179 
 538,469 
 712,045 
 668,474 
 27,148 
 
 (10,217,813 
 28,839,605 
 5, 404, 559 
 7, 428, 129 
 3,873,881 
 1,213,040 
 11,062,765 
 4,524,450 
 951,049 
 3,814,032 
 573,090 
 4,681,033 
 
 (50,437 
 29,219 
 12,265 
 
 1,620,242 
 i, 435, 315 
 >, 878, 818 
 !, 384, 331 
 1,960,678 
 1,447,965 
 1,277,834 
 1,473,522 
 1,743,445 
 1,050,880 
 1,848,179 
 
 52.6 
 18.5 
 79.0 
 39.8 
 86.6 
 72.0 
 22.6 
 58. 8 
 79.0 
 53.9 
 70.8 
 
 47.4 
 81.3 
 20.9 
 60.1 
 13.4 
 27.3 
 77.6 
 43.2 
 20.1 
 48.1 
 20.2 
 91.2 
 
 100.0 
 100.0 
 100.0 
 100. 
 100.0 
 100.0 
 100.0 
 100. 
 100. 
 100.0 
 100.0 
 100.0 
 
 2,473,780 
 
 11,602,020 91,413,473 82,583,496 
 
 loao 
 
 57 
 
Maturities of diicounts, acceptances, and municipal warrants held by the.Fedeml Reserve Banks on. Friday, May Z5, 1917. 
 [In thousands of dollars; i. e., 000 emitted.] 
 
 
 
 
 1 to 16 diys. 
 
 16 to 30 days. 
 
 Basics. 
 
 
 Bills dis- 
 counted. 
 
 Accept- 
 ancos 
 bought. 
 
 Lfonidpal 
 warrants. 
 
 Total. 
 
 Bilis dis- 
 counted. 
 
 Accept- 
 ances 
 bought. 
 
 Municipal 
 warrants. 
 
 Total. 
 
 
 
 
 1,939 
 
 6,872 
 2,788 
 4,015 
 1,211 
 2,020 
 1,680 
 1,603 
 1,745 
 934 
 299 
 
 3,720 
 
 4,430 
 
 2,245 
 
 887 
 
 2,520 
 
 809 
 
 1,200 
 
 609 
 
 630 
 
 136 
 
 96 
 
 1,207 
 
 127 
 3,647 
 1,013 
 1,274 
 
 5,783 
 «,428 
 
 lo.iSo 
 
 4,949 
 6,535 
 2,021 
 4,492 
 2,766 
 2,410 
 1,906 
 1,467 
 1,809 
 
 335 
 80 
 909 
 100 
 1,363 
 537 
 606 
 474 
 824 
 281 
 643 
 211 
 
 744 
 
 2,599 
 
 3,707 
 
 1,239 
 
 1,160 
 
 633 
 
 1,190 
 
 412 
 
 362 
 
 101 
 
 101 
 
 3,759 
 
 
 1,079 
 
 
 
 1,016 
 356 
 
 3,fi95 
 
 
 4,870 
 
 
 1,695 
 
 ^i >i fi 
 
 2,523 
 
 
 1 
 1,272 
 577 
 177 
 25 
 437 
 303 
 
 30 
 762 
 254 
 
 1200 
 
 
 
 Rt T^ii^* * * 
 
 1,140 
 
 
 
 
 355 
 
 61 
 30.'> 
 
 '737 
 
 
 
 Ban Francisco 
 
 
 
 25,348 
 
 18,495 
 
 8,863 
 
 62,698 
 31.1 
 
 6,363 
 
 
 10,007 
 
 3,383 
 
 26,7S3 
 
 °* 
 
 16.1 
 
 
 
 
 
 
 
 
 
 
 
 31 to 60 days. 
 
 81 to 90 days. 
 
 Banks. 
 
 Bills 
 discounted. 
 
 Accept- 
 ances 
 bought. 
 
 Uanidpal 
 warrants. 
 
 Total 
 
 BUIs 
 discounted. 
 
 Accept- 
 ances 
 bought. 
 
 Municipal 
 warrants. 
 
 Total 
 
 
 595 
 
 163 
 
 363 
 
 140 
 
 2,037 
 
 962 
 
 230 
 
 1,175 
 
 2,177 
 
 417 
 
 999 
 
 188 
 
 2,842 
 15,683 
 5,014 
 3,754 
 1,772 
 
 480 
 2,984 
 2,196 
 
 777 
 1,472 
 
 412 
 3,954 
 
 
 3,437 
 18,100 
 5,377 
 3,899 
 3,809 
 1,442 
 3,264 
 3,471 
 2,954 
 1,889 
 1,381 
 4,142 
 
 597 
 63 
 147 
 LT 
 973 
 239 
 172 
 507 
 3S8 
 158 
 264 
 102 
 
 4,708 
 
 12,062 
 
 1,848 
 
 4,414 
 
 170 
 
 243 
 
 3,755 
 
 1,885 
 
 507 
 
 1,379 
 
 271 
 
 298 
 
 
 5,305 
 
 
 254 
 
 112 
 152 
 217 
 
 16 
 
 12,237 
 
 
 2,147 
 
 
 6 
 
 4,643 
 
 
 1,168 
 
 
 
 4S3 
 
 ^1 rt *" 
 
 
 152 
 112 
 
 4,079 
 
 
 loe 
 
 2,504 
 
 
 895 
 
 
 
 51 
 20 
 203 
 
 1,585 
 
 
 
 546 
 
 San Francisco 
 
 
 601 
 
 
 9,466 
 
 41,340 
 
 369 
 
 51,165 
 So. 2 
 
 3,612 
 
 31,635 
 
 1,034 
 
 36,181 
 
 
 
 ^ 
 
 
 
 
 
 
 
 
 
 Oyer 90 days. 
 
 Total 
 
 Percentages. 
 
 Banks. 
 
 Bills 
 dis- 
 count- 
 ed. 
 
 Aocept- 
 bought. 
 
 Muni- 
 cipal 
 war- 
 rants. 
 
 Total 
 
 Bills 
 dis- 
 count- 
 ed. 
 
 Accept 
 bought 
 
 Muni- 
 ' cipal 
 
 war- 
 ■ rants. 
 
 Total. 
 
 BUIs 
 dis- 
 count- 
 ed. 
 
 Accept- 
 anoes 
 bought. 
 
 Muni- 
 cipal 
 
 rants. 
 
 
 
 Amoost. 
 
 Per 
 cent. 
 
 Total 
 
 
 
 
 
 
 3,403 
 651 
 8,296 
 3,049 
 8,772 
 3,328 
 3,235 
 3,806 
 6,517 
 2,967 
 3,564 
 839 
 
 12, OM 
 
 34,780 
 12,814 
 10,294 
 6,622 
 2,165 
 9,129 
 6,102 
 2,279 
 3,085 
 8S0 
 9,216 
 
 127 
 
 5,029 
 
 1,422 
 
 2,896 
 
 IS 
 
 31 
 
 2,189 
 
 1,043 
 
 177 
 
 431 
 
 608 
 
 811 
 
 15,604 
 40,460 
 22,532 
 19,233 
 14,409 
 6,624 
 14,650 
 9,951 
 S,07O 
 6,483 
 4,9S2 
 10,866 
 
 9.2 
 23.7 
 13.2 
 9.5 
 8.6 
 3.6 
 8.6 
 6.9 
 4.7 
 3.8 
 2.9 
 6.4 
 
 22.2 
 1.6 
 
 36.8 
 18.7 
 60.8 
 60.2 
 22.2 
 38.2 
 69.6 
 45.7 
 72.0 
 7.7 
 
 77.0 
 85.9 
 56.9 
 63.4 
 39.1 
 39.2 
 62.7 
 51.3 
 28.2 
 47.9 
 17.8 
 84.8 
 
 0.8 
 12.5 
 
 6.3 
 17.9 
 .1 
 .6 
 15.1 
 10.5 
 
 2.2 
 
 9.7 
 10.2 
 
 7.5 
 
 100.0 
 
 
 
 
 
 
 loao 
 
 
 S 
 
 9 
 
 3H 
 
 379 
 
 157 
 
 70 
 625 
 366 
 764 
 
 39 
 
 
 3 
 
 1,043 
 
 8 
 
 1,062 
 
 384 
 
 379 
 
 157 
 
 70 
 626 
 366 
 764 
 
 39 
 
 100.0 
 
 
 
 loao 
 
 Richmond ' 
 
 
 
 Atlamni 
 
 
 
 100. 
 
 rhi^po 
 
 
 
 
 
 
 
 
 
 
 
 100. 
 
 
 
 
 
 
 
 
 100.0 
 
 
 
 
 100. e 
 
 Total 
 
 2,798 
 
 
 1,046 
 
 3,844 
 2.3 
 
 47,587 
 
 107,377 
 
 14,675 
 
 169,639 
 
 100.0 
 
 23.1 
 
 63.2 
 
 8.7 
 
 100.0 
 
 
 
 ""° 
 
 
 
 
 
 
 
 
 
 
 
 
 
 58 
 

 
 
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 6,7 
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 31,7 
 35,5 
 96,7 
 114,0 
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 10,0 
 
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 59 
 
Total investment operatumt, exclusive of purchases of United Slates certificates of indebtedness, of each Federal Reserve 
 Bank during the months of May, 1917 and 1916, and the Jive months ending May, 1917 and 1916. 
 
 Federal Reserve Banks. 
 
 Boston Jll, 302, 4 
 
 New York fl,646,2 
 
 Philadelphia 20,446,0 
 
 Cleveland 4,933,9 
 
 Richmond 25,076,7 
 
 Atlanta (including New Orleans branch) 3, 202, 9 
 
 Chicago 3,215,0 
 
 St. Louis 6,949,0 
 
 Minneapolis 3, 792, 3 
 
 Kansas City 4,23«,8 
 
 Dallas.. I 2,273,0 
 
 flan,Francisco 
 
 Bills 
 
 discounted 
 
 for member 
 
 banks. 
 
 Total May, 1917 
 
 Total May, 1918 
 
 Total 5 months ending May, 1917. 
 Total S months ending May, 1916. 
 
 91,413,473 
 11,105,600 
 208,910,430 
 50,883,900 
 
 Bills bought in open market. 
 
 Bankers' ac- Trade ac- 
 ceptances, ceptances. 
 
 »10,217,l 
 28,441,: 
 6,3S5,i 
 
 1,218,0 
 10,949,4 
 4,624,4 
 
 951,0 
 3,814,0 
 
 673,0 
 2,240,5 
 
 79,399,605 
 20,990,900 
 237,260,403 
 82,219,300 
 
 {397,846 
 48,993 
 194,160 
 
 3,188,691 
 
 920,600 
 
 6,046,676 
 
 3,(>!9,700 
 
 »10,217,813 
 28,839,605 
 5,404,559 
 7,428,129 
 3,873,881 
 1,218,040 
 11,082,765 
 4,624,450 
 951,049 
 3,814,032 
 673,090 
 4,681,083 
 
 82,688,496 
 21,911,600 
 243,307,084 
 85,348,000 
 
 Municipal warrants bought. 
 
 76,656 
 6,774,800 
 14,364,057 
 46,197,000 
 
 State. All other. Total. 
 
 2,187,300 
 
 2,040 
 
 2,650,200 
 
 43,265 
 17,100 
 647,296 
 150,100 
 
 WO, 437 
 29,219 
 12,265 
 
 118,921 
 8,979,200 
 15,013,392 
 50,023,300 
 
 Federal Reserve Banks. 
 
 United States bonds and Treasury notes. 
 
 Boston 
 
 New York. 
 
 Philadelphia 
 
 Cleveland 
 
 Richmond... 
 
 Atlanta (including New Orleans branch). 
 
 Chicago 
 
 St. I.ouis 
 
 Minneapolis 
 
 Kansas City 
 
 Dallas 
 
 San Francisco 
 
 «ao,ooo 
 "mIooo' 
 
 121,520,242 
 35,435,315 
 25,878,818 
 12,364,331 
 28,950,676 
 4,447,065 
 14,277,834 
 10,473,522 
 4,746,446 
 8,100,880 
 2,846,179 
 5, 183,683 
 
 1,242,100 
 1,131,300 
 1,562,000 
 1,702,600 
 1,798,200 
 :, 262, 000 
 ,588,300 
 1,534,600 
 1,603,700 
 !, 193, 200 
 ,813,000 
 1,868,700 
 
 12.9 
 16. 8 
 13.6 
 
 Total May, 1917 
 
 Total May, 1916 , 
 
 Total 5 months ending May, 1917. . 
 Total 5 months ending May, 1910. 
 
 100,000 
 5,608,100 
 14,047,200 
 33,621,100 
 
 4,000 
 225,600 
 118,440 
 1,187,830 
 
 J280,00O 
 
 25,250 
 
 4,108,000 
 
 104,000 
 6,113,600 
 17,748,890 
 40,966,930 
 
 174,224,890 
 484)979] iw 
 
 48,199,700 
 227,'222,'i86 
 
 United States bonds, notes, and certificates of indebtedness held by each Federal Reserve Bank on May SI, 1917, distributed 
 
 by maturities. 
 
 
 United States bonds with drculation privilege. 
 
 United States securities without circulation privilege. 
 
 
 Bank. 
 
 2 per cent 
 consols 
 of 1930. 
 
 2 per cent 
 P«i-!am£s 
 of 19;»-38. 
 
 3 percent 
 
 loan 
 
 ol 1913. 
 
 4 per cent 
 loan 
 of 1925. 
 
 Certificates of indebt- 
 edness. 
 
 3 percent 
 conversion 
 
 bonds 
 o( 194(>-47. 
 
 3 per cent 
 i-year 
 notes. 
 
 3peroent 
 Toan 
 011961. 
 
 Total. 
 
 
 2 percent. 
 
 3 and 3i per 
 cent. 
 
 
 
 t750 
 fid 
 
 
 
 
 (3,000,000 
 20,000,000 
 3,600,000 
 3,500,000 
 2,000,000 
 1,600,000 
 5,000,000 
 2,600,000 
 2,000,000 
 2,500,000 
 2,000,000 
 2,J00,000 
 
 
 $529,000 
 
 1,256,600 
 
 649,200 
 
 414,800 
 
 $2,194,000 
 2,788,000 
 2,648,000 
 1,865,000 
 1,969,000 
 1,491,000 
 2,985,000 
 1,444,000 
 1,340,003 
 1,784,000 
 1,430,000 
 1,600,000 
 
 
 $6,723,760 
 
 
 
 150,000 
 
 
 $378,000 
 
 
 24,471,660 
 
 
 $100 
 497,200 
 237,000 
 21,000 
 367,300 
 
 
 
 6,697,300 
 
 
 6,400 
 
 915, 100 
 
 «0,600 
 
 l,8()2,60O 
 
 100 
 
 323,050 
 
 7,1M,8M 
 
 2.450,900 
 
 2, 428, 750 
 
 3,586,660 
 
 «2, 358,200 
 
 
 
 ll,?,09,16O 
 
 
 
 
 5,121,100 
 
 
 
 
 1,093,000 
 554,000 
 
 
 
 10,300 
 
 427,400 
 
 1,153,300 
 
 114,800 
 
 838,600 
 
 1,233,600 
 
 
 4,765,900 
 
 
 2,681,000 
 1,080,000 
 1,190,180 
 
 i, 768, 666 
 
 $400 
 
 16,646,600 
 
 
 6,177,400 
 
 
 16,260 
 25,240 
 281,500 
 
 206,256 
 825,000 
 
 
 500 
 
 5,1*7,040 
 
 
 5,000 
 
 905,000 
 
 1,514,000 
 
 J3,U0,69a 
 
 
 
 
 8,301,000 
 
 
 
 
 
 7,073,750 
 
 
 
 
 
 
 
 
 Total 
 
 15,7&t,050 
 
 1,412,600 
 
 7,493,740 
 
 5,168,450 
 
 50,000,000 
 
 4,479,000 
 
 6,526,400 
 
 23,338,000 
 
 800 
 
 U4,203,140 
 
 
 
 Total United States bonds with circulation privilege, $2S,858,»tO. Total United States securities without dtculatian privilege, $8(^44,300. 
 
 60 
 
Bilb diicounted during the month of May, 1917, and 1916, and the Jive mcmtht ending May, 1917, and 1916, distributed by 
 
 clauet. 
 
 Boston 
 
 New York 
 
 Pblladslphla... 
 
 Cleveland 
 
 Richmond 
 
 Atlanta. 
 
 Chicago. 
 
 8t. Louis 
 
 Uioneapolis... 
 Kansas City... 
 
 Dallas 
 
 San Fmnclsco. 
 
 Total May, 1917 
 
 Total May, 1916 
 
 Total January-May, 1917.. 
 Total January-May, 1916.. 
 
 Collateral 
 
 notes 
 seoiired by 
 
 140,000 
 40,000 
 
 880,000 
 
 660,000 
 80,000 
 10,000 
 
 413,000 
 
 576,000 
 !, 401, 000 
 225,000 
 
 Collateral 
 
 notes 
 secured by 
 
 clal paper. 
 
 t2, 990, 000 
 
 2,037,000 
 
 14,3-19,000 
 
 2,170,000 
 
 19,289,560 
 
 914,000 
 
 1,230,000 
 
 1,620,000 
 
 300,325 
 
 270,000 
 
 696,205 
 
 $636,388 
 117,000 
 25,758 
 28,664 
 306,146 
 196,334 
 43,387 
 414,443 
 
 86,126 
 
 Conjmod- 
 ity paper. 
 
 15,000 
 '131,667' 
 
 864,121 
 
 899,400 
 
 4,979,438 
 
 7,647,400 
 
 t7, 746, 0*1 
 4,351,273 
 6,190,282 
 2,175,373 
 4,963,679 
 1,834,657 
 1,528,682 
 3,999,624 
 2,917,071 
 1,348,055 
 1,442,467 
 434,466 
 
 37,031,670 
 9,997,700 
 97,303,801 
 41,708,900 
 
 tll,302,429 
 6,545,273 
 
 20,445,040 
 4,923,937 
 
 25,076,796 
 3,203,936 
 3,216,069 
 5,949,072 
 3,792,396 
 4,236,848 
 2,273,089 
 450,600 
 
 91,413,473 
 11,195,400 
 208,910,430 
 60,883,900 
 
 Amounts of discounted paper, including member banks' collateral notes, held by each Federal resenie ban}: on the last 
 Friday in May, 1917, distributed by classes. 
 
 Banks. 
 
 Agricul- 
 tural 
 paper. 
 
 Live- 
 stock 
 paper. 
 
 Commer- 
 cial and 
 Industrial 
 paper. 
 
 Member 
 banks' 
 
 collateral 
 notes. 
 
 Total. 
 
 Banks. 
 
 Agricul- 
 tural 
 paper. 
 
 Live- 
 stock 
 paper. 
 
 Commer- 
 cial and 
 industrial 
 paper. 
 
 Member 
 banks' 
 
 collateral 
 notes. 
 
 Total. 
 
 
 
 
 $2,797,699 
 365,181 
 2,038,625 
 624,274 
 8,806,671 
 2, 167; 450 
 1,901,609 
 2,424,751 
 
 $666,000 
 
 227,000 
 
 6,123,000 
 
 2,370,000 
 
 2,307,050 
 
 684,000 
 
 733,000 
 
 1,020,000 
 
 $3,462,669 
 661,270 
 8,2»J,S»4 
 3,048,760 
 8,771,715 
 3,328,384 
 3,235,026 
 3,803,136 
 
 Minneapolis 
 
 Kansas City 
 
 Dallas 
 
 $477,363 
 224,452 
 703,358 
 131,027 
 
 $635,392 
 
 673,091 
 
 1,341,570 
 
 45,746 
 
 $4,118,999 
 
 674,337 
 
 1,085,060 
 
 662,603 
 
 $385,326 
 
 1,496,000 
 
 436,000 
 
 $5,617,079 
 
 2,966,880 
 
 3,664,978 
 
 839,276 
 
 New York 
 
 $69,089 
 
 
 Philadelphia. 
 
 134,269 
 29,140 
 654,664 
 364,964 
 68?; 827 
 166,207 
 
 
 126,346 
 3,330 
 221,970 
 12,690 
 195,178 
 
 San Francisco 
 
 Total 
 
 
 
 
 3,542,350 
 7.4 
 
 3,164,213 
 6.6 
 
 24,547,149 
 61.6 
 
 16,344,375 
 34.4 
 
 47,688,087 
 
 
 
 
 
 
 
 
 Distribution, by sizes, of bills bought in open market by all Federal Reserve Banks during May, 1917, and the five months 
 
 ending May, 1917 and 1916. 
 
 
 To $5,000. 
 
 To $10,000. 
 
 To $25,000. 
 
 To $50,000. 
 
 To $100,000. 
 
 Over $100,000. 
 
 Total. 
 
 
 Acceptances hoogbt In 
 open market. 
 
 1 
 
 i 
 
 1 
 
 s 
 
 i 
 
 o 
 
 1 
 
 S 
 
 s 
 
 i 
 
 1 
 
 
 a 
 
 1 
 
 1 
 
 •< 
 
 S 
 
 1 
 
 5 
 
 1 
 
 1 
 
 Bankers' acceptances 
 
 Trade acceptances 
 
 1,274 
 31 
 
 $3,480,477 
 90,907 
 
 862 
 
 38 
 
 $$,728,251 
 296,502 
 
 1,644 
 36 
 
 $27,264,419 
 670,606 
 
 428 
 14 
 
 $18,193,882 
 487,884 
 
 172 
 4 
 
 $15,127,079 
 250,424 
 
 42 
 
 4 
 
 $8,605,617 
 1,492,568 
 
 4,317 
 127 
 
 ■$79,399,605 
 '3,188,891 
 
 96.1 
 3.9 
 
 Total, May, 1917 
 
 1,306 
 
 3,571,384 
 4.3 
 
 1,689,086 
 
 876,506 
 
 2,175,639 
 
 1,023,210 
 
 9,235,825 
 
 4, 138, 784 
 
 890 
 
 "270 
 175 
 777 
 483 
 
 2,595 
 
 1,113 
 
 7,024,763 
 8.5 
 2,147,380 
 1.381,029 
 8,324,018 
 1,706,069 
 
 18,683,249 
 
 9,072,806 
 
 1,580 
 
 "647 
 
 363 
 
 1,248 
 
 30O 
 
 4,138 
 
 1,394 
 
 27, 835, 026' 
 tH^ 33.8 
 13,231,092 
 6,976,406 
 22,367 962 
 6,238,206 
 
 75,648,691 
 
 25,621,025 
 
 442 
 "257 
 
 18,681,746 
 
 22.7 
 
 11.003.120 
 
 181 
 
 86 
 180 
 48 
 
 5S2 
 
 194 
 
 16,377,503 
 
 18.4 
 
 7,155,097 
 
 6,801,912 
 
 15,273,48! 
 3,S9I,515 
 
 48,49^,508 
 
 16,463,221 
 
 46 
 
 "38 
 25 
 49 
 11 
 
 169 
 
 71 
 
 10,098,085 
 12 3 
 6,186,816 
 4,930,660 
 8,012,105 
 1,859,763 
 
 31,087,434 
 
 14,660,078 
 
 4,444 
 
 82,688,496 
 
 ioft'o 
 
 
 748 
 389 
 819 
 390 
 
 3,651 
 
 1 I'n 
 
 2,047 
 1,209 
 3,474 
 1,384 
 
 12,558 
 
 4,532 
 
 41,312,591 
 28,151,638 
 70,637,179 
 20,617,180 
 
 243,307,084 
 
 85,347,977 
 
 
 
 171 7, 1S5, 126 
 401 16.483.974 
 
 
 
 
 January, 1917 
 
 Total, 5 months ending 
 
 May, 1917 
 
 Total, 6 months ending 
 May, 1916 
 
 152 
 
 1,423 
 
 407 
 
 6,898,412 
 60,252,377 
 15,387,063 
 
 
 
 ' 
 
 
 
 * 01 the above amount, bankera* acceptaneea totaling $71,S5S,468 were based on Imports and exports and J7,54l,137 on domestic tnd^ ttzna- 
 fictions, 
 
 • AU of the above trade acceptances were drawn al>road on importers in the United States and indorsed by foreign bank.^. 
 
 61 
 
INDEX 
 
 PAGE 
 
 ACCEPTANCE — :Must be accepted by drawee 37 
 
 Presentment of bills for 33 
 
 ACCEPTANXES— Against Bullion 1-2, 55 
 
 Bankers' ^ 
 
 Definition 1^ 
 
 General regulations covering rediscounts 17 
 
 Secured by bill of sale 33 
 
 Special regulations covering rediscounts IS 
 
 Based on imports and exports H 
 
 Differential as to 45 
 
 Discount of, indorsed by member banks in another district 31 
 
 Discount of renevi'als of 33 
 
 Dollar exchange, to create 9 
 
 Domestic ^j 4^1 
 
 Drawn to finance the future shipment of goods 11 
 
 Eligibility of 34 
 
 For investment by a member bank 13 
 
 Informal Rulings of Federal Reserve Board dealing with 10 
 
 Member bank 32 
 
 Negotiability of 42 
 
 Non-member trust company acceptances — When ineligible 36 
 
 Opinions of Counsel of Federal Reserve Board dealing with 10 
 
 Place of payment of 33 
 
 Purchase of its own, by a member bank 11 
 
 Qualified 32 
 
 Renewing of 10 
 
 Secured by warehouse receipts 7 
 
 Statistics on, bought in open market and held by Federal Reserve 
 Banks as per schedule on file with the Federal Reserve Board on 
 
 dates specified, distributed by classes of accepting institutions 56 
 
 Status of goods forming basis of 10 
 
 Trade 34 
 
 Based on advertising space 20, 44 
 
 Definition 17, 34 
 
 General regulations covering rediscounts 17 
 
 Use bv commercial concerns 37 
 
 ACTUALLY EXISTING VALUES— Defined by Federal Reserve Board. 13 
 
 ADVANCES— On cotton for export 37 
 
 To member banks 44 
 
 AGRICULTURAL PAPER— Definition 17 
 
 General regulations covering rediscounts 17 
 
 Informal Rulings of Federal Reserve Board 46 
 
 AGRICULTURAL PRODUCTS OR IMPLEMENTS 43 
 
 ASSIGNMENT OF OPEN ACCOUNTS— Rediscount of 43 
 
 ASSURANCES— Banks may ask 35 
 
 BANKERS' ACCEPTANCES 7 
 
 Definition 17 
 
 General regulations covering rediscounts 17 
 
 Secured by bill of sale 33 
 
 Special regulations covering rediscounts 18 
 
 BILL OF SALE — Bankers' acceptance secured by 33 
 
 BILLS RECEIVABLE— Satisfactory collateral 51 
 
 BONDS OR NOTES OF U. S.— Discount of paper secured by or issued 
 
 for purposes of trading in 45 
 
 62 
 
INDEX— Continued 
 
 PAGE 
 
 BUSINESS PAPER AND SECTION 5200, REVISED STATUTES. . . . 38 
 
 CATTLE — A readily marketable commodity 47 
 
 For breeding, grazing, or fattening, as security 48 
 
 Mortgages unnecessary 46 
 
 Paper, amounts rediscounted 48 
 
 COIN, BILLS DRAWN AGAINST 55 
 
 COLLATERAL NOTES 52 
 
 COMMODITY PAPER 49 
 
 Definition 17 
 
 General regulations covering rediscounts 17 
 
 Includes paper of merchants and others 49 
 
 Ineligible for purchase in open market by Federal Reserve Bank .... 23 
 
 Purchases from member banks 49 
 
 Rulings of Federal Reserve Board 49 
 
 CONDITION— Rediscount of drafts payable on 43 
 
 CONTRACT— Not fulfilled 35 
 
 COTTON— Advances on, for export 37 
 
 Mill paper, conditions as to 50 
 
 Mill paper, limit on 53 
 
 COUNTRIES IN WHICH BANKS AND BANKERS MAY DRAW 
 
 DRAFTS TO CREATE DOLLAR EXCHANGE 9 
 
 CROSSTIES AND LUMBER— Good security 52 
 
 DAIRY CATTLE— notes for, eligible 47 
 
 DEALER'S NOTE INELIGIBLE 47 
 
 DEFINITIONS— Agricultural paper (6 months) 17 
 
 Bankers' acceptance 17 
 
 Commodity paper 17 
 
 Draft or bill of exchange 16 
 
 Promissory note 16 
 
 Staples 55 
 
 Trade acceptance 17 
 
 DEMAND, WAIVER OF 32 
 
 DIFFERENTIAL AS TO ACCEPTANCE 45 
 
 DIGEST OF INFORMAL RULINGS AND OPINIONS OF COUNSEL, 
 
 FEDERAL RESERVE BOARD 31 
 
 DISCOUNT— Mercantile firms can not discount with Federal Reserve 
 
 Banks 49 
 
 Of acceptances indorsed by member banks located in another dis- 
 trict 31 
 
 Of drafts and bills of exchange 13 
 
 Of notes renewed 50 
 
 Of paper secured by or issued for purposes of trading in bonds or 
 
 notes of United States 45 
 
 Of renewals of acceptances 33 
 
 Rebates of 52 
 
 DOMESTIC ACCEPTANCES 7, 41 
 
 DRAFTS— BILLS OF EXCHANGE 7, 9, 10 
 
 Definition 16 
 
 Discount 13 
 
 Drawn against actually existing values 44 
 
 Drawn against coin 55 
 
 Drawn by drawee 40 
 
 Drawn in foreign countries 37 
 
 Eligible for acceptance 7, 12 
 
 General rules covering 11 
 
 Growing out of importation or exportation of goods 7 
 
 Ineligible for acceptance 12 
 
 Negotiability of 43 
 
 63 
 
INDEX— Continued 
 
 PAGE 
 
 Paid on or before certain date 45 
 
 Payable on condition, rediscount of 43 
 
 Secured by warehouse receipts "i 
 
 Ten per cent, limitation does not apply to 54 
 
 DRAWEE— Draft must be accepted by 37 
 
 ELIGIBILITY — Evidence of, in open market transactions 23 
 
 Of acceptances "i 
 
 Of notes 52 
 
 •EVIDENCE— From State Member Banks 35 
 
 EXISTING VALUES— As defined by Federal Reserve Board 13 
 
 FACE VALUE— Rediscounts are for 54 
 
 FARM TOOLS— Notes for, eligible 47 
 
 FEDERAL RESERVE ACT— Section 13, as amended 24 
 
 Section 14, as amended 29 
 
 FERTILIZER— Notes for, eligible 46 
 
 FINANCE COMPANIES— Paper of, ineligible 50 
 
 FINANCIAL STATEMENTS 51 
 
 FOREWORD 5 
 
 FORM OF STATEMENT 36 
 
 GOOD FAITH— A test 35 
 
 GOODS — Identification of specific 35 
 
 Involved 35 
 
 IDENTIFICATION OF SPECIFIC GOODS 35 
 
 INDORSEMENT ON WAIVER OF DEMAND, NOTICE AND PRO- 
 TEST - 55 
 
 INFORxMAL RULINGS OF FEDERAL RESERVE BOARD, Digest of 31 
 
 INTEREST RATE— Of member bank, government does not fix 55 
 
 IN VESTMENT— Acceptances for, by member bank 13 
 
 LIMITATIONS— Acceptance of drafts and bills of exchange 7 
 
 Imposed by Section 5200 of indebtedness which may exist between 
 
 national bank and individual 8, 13, 14 
 
 No limit on rediscounts of commercial paper for any one bank 54 
 
 On amount of acceptances as imposed by Section 13, Federal Reserve 
 
 Act ." 38 
 
 On cotton-mill paper 53 
 
 On rediscounts of commercial or business paper 43 
 
 Ten per cent, limit does not apply to bills of exchange 54 
 
 LIMIT — Ten per cent, to one maker or indorser 53 
 
 LIVE STOCK — Includes beef cattle, horses and mules 46 
 
 LOANS NOT MADE DIRECTLY TO INDIVIDUALS 54 
 
 LUMBER — Crossties and, good security 53 
 
 MANUFACTURED PIG IRON— Good security 51 
 
 MEMBER BANKS— Acceptances " 32 
 
 Advances to 44 
 
 Interest rate of, government does not fix 55 
 
 Profits of 49 
 
 Promissory notes of 44 
 
 Purchases of commodity paper from 49 
 
 MERCANTILE FIRMS— Can not discount with Federal Reserve Banks. 49 
 
 MORTGAGES— Cattle, unnecessary 46 
 
 NEGOTIABILITY OF BILLS AND NOTES MADE PAYABLE "IN 
 
 EXCHANGE" 40 
 
 NEGOTIABILITY OF BILLS OF EXCHANGE AND ACCEPT- 
 ANCES — Conditions attached to and affecting 42 
 
 NON-MEMBER BANKS— Direct notes of, ineligible 50 
 
 Rediscounts of, left to Federal Reserve Banks 52 
 
 64 
 
INDEX— Continued 
 
 PAGE 
 
 NON-MEMBER TRUST COMPANY ACCEPTANCES When in- 
 eligible 36 
 
 NOTES— Collateral 3i.' 
 
 Direct notes of non-member banks, ineligible 50 
 
 Eligibility of 52 
 
 For dairy cattle, eligible 47 
 
 For farm tools, eligible 47 
 
 For fertilizer, eligible 46 
 
 Of dealer, ineligible 47 
 
 Of mule and cattle dealers, mercantile paper 51 
 
 "On or before," eligible 54 
 
 Proceeds of 54 
 
 NOTICE— Waiver of 32 
 
 OPEN ACCOUNTS— Rediscount of assignment of 43 
 
 OPEN MARKET TRANSACTIONS 22, 40 
 
 Evidence of eligibility of paper in 23 
 
 General regulations covering 22 
 
 Informal Rulings of Federal Reserve Board 20, 40 
 
 Opinions of Counsel of Federal Reserve Board 20, 40 
 
 OPINIONS OF COUNSEL OF FEDERAL RESERVE BOARD— Digest 31 
 
 PAPER ELIGIBLE FOR REDISCOUNT— Informal Rulings of Federal 
 
 Reserve Board 20 
 
 Opinions of Counsel of Federal Reserve Board 20 
 
 PAPER OF FINANCE COMPANIES INELIGIBLE 50 
 
 PAPER OTHER THAN AGRICULTURAL OR COMMODITY— In- 
 formal Rulings of Federal Reserve Board 50 
 
 PIG IRON — Manufactured, good security 51 
 
 PLACE OF PAYMENT OF ACCEPTANCES 33 
 
 POTATOES NOT NON-PERISHABLE 49 
 
 PRESENTMENT OF BILLS FOR ACCEPTANCE 32 
 
 PROCEEDS OF A NOTE 54 
 
 PROMISSORY NOTE— Definition 16 
 
 General regulations covering rediscounts 17 
 
 Ineligible for purchase in open market by Federal Reserve Bank.... 23 
 
 Of member banks 44 
 
 Special regulations covering rediscounts 18 
 
 PROTEST— W^aiver of 32 
 
 QUALIFIED ACCEPTANCES 32 
 
 REBATES OF DISCOUNT 52 
 
 REDISCOUNTS— Amounts of cattle paper rediscounted 48 
 
 Of assignment of open accounts 43 
 
 Eligible paper — Informal Rulings of Federal Reserve Board 45 
 
 Eligible paper — Opinions of Counsel of Federal Reserve Board 42 
 
 For face value 54 
 
 General regulations covering 17 
 
 Informal Rulings of Federal Reserve Board 20 
 
 Kinds of paper eligible 20 
 
 Kinds of paper ineligible 21 
 
 Limit on, of commercial or business paper 43 
 
 Xo limit on, of commercial paper for any one bank 54 
 
 Non-member bank, left to Federal Reserve Banks 52 
 
 Opinions of Counsel of Federal Reserve Board 20, 42 
 
 Special regulations covering 18 
 
 To reopened insolvent bank 53 
 
 65 
 
INDEX— Continued 
 
 PAGE 
 
 RENEWALS OF ACCEPTANCES— Acceptance of 10 
 
 REOPENED INSOLVENT BANK— Rediscounts to 53 
 
 RESPONSIBILITY WITH FEDERAL RESERVE BANK 35 
 
 SECTION 13 FEDERAL RESERVE ACT AS AMENDED 24 
 
 SECTION 14 FEDERAL RESERVE ACT AS AMENDED 29 
 
 SECTION 5200 U. S. REVISED STATUTES 8, 13 
 
 Application of 36 
 
 Business paper and 38 
 
 Exceptions to 47 
 
 Limitations imposed under 8, 14 
 
 SECTION 5202 U. S. REVISED STATUTES 53 
 
 SECURITY — Cattle for breeding, grazing, or fattening as 48 
 
 Crossties and lumber, good 52 
 
 Undivided interests not security 51 
 
 SINGLE NAME PAPER 40 
 
 STAMP — "Trade Acceptances'' has no value 37 
 
 STAPLES— Definition 55 
 
 STATE BANKS— Eligibility of purchase of acceptances 15 
 
 STATE MEMBER BANKS— Evidence from 35 
 
 STATEMENT FORM 36 
 
 STATISTICS — Acceptances bought in open market and held by Federal 
 Reserve Banks as per schedules on file with the Federal Reserve 
 Board on dates specified, distributed by classes of accepting insti- 
 tutions 56 
 
 Amounts of bills discounted and acceptances and warrants bought by 
 each Federal Reserve Bank during May, 1917, distributed by ma- 
 turities 57 
 
 Amounts of discounted paper, including member banks' collateral notes, 
 held by each Federal Reserve Bank on the last Friday in May, 1917, 
 
 distributed by classes 61 
 
 Bills discounted by each Federal Reserve Bank during May, 1917, 
 
 distributed by sizes 59 
 
 BiUs discounted during the month of May, 1917 and 1916, and the five 
 
 months ending May, 1917 and 1916, distributed by classes 61 
 
 Distribution, by sizes, of bills bought in open market by all Federal 
 Reserve Banks during May, 1917, and the five months ending May, 
 
 1917 and 1916 61 
 
 Maturities of discounts, acceptances, and municipal warrants held by 
 
 the Federal Reserve Banks on Friday, May 25, 1917 58 
 
 Total investment operations, exclusive of purchases of United States 
 certificates of indebtedness, of each Federal Reserve Bank during 
 the months of May, 1917 and 1916, and the five months ending May, 
 
 1917 and 1916 .'. 60 
 
 United States bonds, notes, and certificates of indebtedness held by 
 each Federal Reserve Bank on May 31, 1917, distributed by ma- 
 turities 60 
 
 TRADE ACCEPTANCE 34 
 
 Based on advertising space 44 
 
 Definition 17 
 
 General regulations covering rediscounts 17 
 
 Stamp "trade acceptance" has no value 37 
 
 TRUST COMPANIES— Eligibility of purchase of acceptances 15 
 
 TRUST RECEIPTS— Acceptances ineligible 8 
 
 UNDIVIDED INTERESTS NOT SECURITY 51 
 
 WAIVER OF DEMAND, NOTICE, AND PROTEST 32 
 
 Indorsement on 55 
 
 66 
 
National Bank of Commerce 
 in Ne\^ York 
 
 ORGANIZED 1839 
 
 President 
 James S. Alexander 
 
 Vice-Presidents 
 R. G. Hutchins, Jr. Stevenson E. Ward 
 
 Herbert P. Howell John E. Rovensky 
 
 J. Howard Ardrey Guy Emerson 
 
 Cashier 
 Paris R. Russell 
 
 Assistant Cashiers 
 A. J. Oxenham A. F. Broderick 
 
 William M. St. John Everett E. Risley 
 
 Louis A. Keidel H. P. Barrand 
 
 A. F. Maxwell R. W. Saunders 
 
 John J. Keenan H. W. Schrader 
 
 Gaston L. Ghegan R. E. Stack 
 
 Auditor Manager Foreign Department 
 
 A. F. Johnson Franz Meyer 
 
 Statement of Condition 
 
 June 20, 1917 
 
 RESOURCES 
 Loans and Discounts .... $232,846,802.43 
 U. S. Bonds & Certificates of Indebtedness 1 2,4 74.000.00 
 
 Other Bonds. Securities, etc. - - - 31.358.416.46 
 
 Banking House 2.000,000.00 
 
 Due from Banks and Bankers - - - 12.405.873.20 
 Cash, Exchanges and due from Federal Re- 
 serve Bank 83. n 5.296.5 1 
 
 Customers* Liability under Letters of Credit. 
 
 Acceptances, etc. 30.788,774.39 
 
 Interest Accrued - 788.988.94 
 
 §405,778,151.93 
 
 LIABILITIES 
 
 Capital, Surplus and Undivided Profits - $45,236,043.11 
 
 Deposils 311.988.288.47 
 
 National Bank Notes outstanding - - - 155.000.00 
 Letters of Credit ----- 15.150.740.14 
 
 Acceptances based on Imports and Exports 13.612.427.84 
 
 Unearned Discount 1,395,652.37 
 
 Bills Payable with Federal Reserve Bank - 1 6,000.000.00 
 Other Liabilities - 2.240.000.00 
 
 $405,778,151.93 
 
/?