Since the amendment to the Federal Reserve Act permitting national banks to hold stock in such corporations, a very rapid development in the formation of acceptance corporations has been the result. A number of these corporations have been organized and are to-day conducting business in the various large financial centers of the country. Their principal functions are the development and extension of foreign trade and the establishment of branches in foreign countries.

The policy of the Federal Reserve Board in this connection, has therefore been a very wise one, as it places at the disposal of the American importer and exporter, through these acceptance corporations, a means of securing dollar credits with numerous advantages which they afford over other credits controlled by other exchange markets. The acceptances of these corportions sell in the open market at varying rates of from one-sixteenth to three-sixteenths per cent. higher than the acceptance of prime member banks.

The discount corporations that have been organized and the various banks that have been instrumental in the development of the bank acceptance and dollar credits in this country have realized the necessity of creating a discount market similar to those of the European nations. Under present conditions, the ultimate market for most of the bankers' acceptances is the Federal Reserve Banks. During the war, with the problems of Government financing on short term obligations at attractive rates, and the system of call money lending to which banks and the investing classes still adhere, there has not been afforded a maximum of assistance to the development of an open discount market. Conditions of this nature, however, cannot be expected to continue, for the time will surely come when Government obligations will be cancelled to a large degree. These will have to be filled by some other form of high grade investment-not only from the standpoint of the individual but of the business man, and particularly, the bank.