Commercial, Agricultural And Live Stock Paper

Notes, drafts, and bills admitted to discount under terms of this paragraph must have a maturity at the time of discount of not more than ninety days, exclusive of days of grace, with the exception of notes, drafts and bills drawn or issued for agricultural purposes or based on live stock, which may have a maturity of not exceeding six months, exclusive of days of grace. These 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.

Opinions Of Counsel And Rulings Relating to Maturity of Promissory Notes EligiblE foR RediscoUnt

Notes Payable On Or Before A Certain Date

A bill payable "on or before" a certain date is negotiable paper, and. it otherwise in conformity with the provisions of law and the Federal Reserve bank is eligible for discount with a Federal Reserve bank.

Demand Notes Not Eligible

A demand note or bill is not eligible since it is not in terms payable within the prescribed ninety days, but may, at the option of the holder, not be presented for payment until after that time. However, if the bill were altered so as to read "on or before--------- days from date, pay to the order of ourselves," etc., it would come within the terms of the law and would thus be made eligible for rediscount.

Notes Payable Before A Certain Date

A note made payable "on demand, and if no demand is made, then on ---------," is eligible for rediscount with a Federal Reserve bank, provided that the date to be filled in is not more than ninety days from the date of discount, and provided further it conforms to the other provisions of law and the regulations of the Board.

Extension Of Time On Notes Or Drafts

A note or draft containing a provision for an extension of time should not be approved for general use by the Federal Reserve Board.

Direct Loans And Discounts Distinguished

A member bank may obtain indirectly, acting through another member bank, the discount of its paper secured by government bonds for a period as long as ninety days, although a member bank acting alone may not tender its collateral to the Federal Reserve bank, which runs for more than fifteen days. It may be proper in this connection to consider questions of fact-whether the two banks exchange courtesies merely for the purpose of having their notes discounted for ninety days instead of fifteen days; but in case a country bank which has its regular dealings with a large bank in a city sends its notes secured by government bonds to that bank, the Board would regard the note as eligible for rediscount by the city bank.

Regulations Of The Federal Reserve Board

Relating to Maturity of Promissory Notes Eligible for Rediscount

Maturity Of Notes, Drafts, Bills Of Exchange And Agricultural Paper

Any Federal Reserve bank may discount for any of its member banks any note, draft, or bill of exchange, provided it has a maturity at the time of discount of not more than ninety days, exclusive of days of grace; but if drawn or issued for agricultural purposes or based on live stock, it may have a maturity at the time of discount of not more than six months, exclusive of days of grace.

Amount Of Paper Of One Interest Rediscountable For One Member Bank

General Statutory Provisions

Limitation of amount; exception. - The aggregate of such notes, drafts and bills of exchange, bearing the signature or indorsement of any one borrower, whether a person, company, firm, or corporation, rediscount for any one bank, shall at not time exceed ten percentum 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.