General Statutory Provisions

What Constitutes Eligibility

Notes, drafts and bills of exchange secured by staple agricultural products, or other goods, wares, or merchandise, are eligible commodity paper.

Regulations Of The Federal Reserve Board

Relating to Eligible Commodity Paper

Conditions Governing Eligibility

To be eligible for rediscount at the special rates authorized to be established for commodity paper, such a note, draft, bill of exchange, or trade acceptance, must also comply with the respective sections of this regulation applicable to it, must conform to the requirements of the Federal Reserve bank relating to shipping documents, receipts, insurance, etc., and must be a note, draft, bill of exchange, or trade acceptance on which the rate of interest or discount, including commission charged the maker, does not exceed six percentum per annum.

Opinions Of Counsel And Rulings

Relating to Eligible Commodity Paper

Direct Discounts Of Mercantile Firms Not Allowed

Federal Reserve banks are not allowed to discount commodity paper directly for mercantile firms.

Drafts Drawn In Connection With Sales To The United States Government Ineligible

Drafts drawn in connection with sales to the United States Government cannot be treated as bills of exchange, drawn against actually existing value, and are subject to the limitations imposed by Section 5200 of the Revised Statutes, when discounted by national banks. Such drafts do not conform to the requirements of commodity paper as defined by the Federal Reserve Board and should not be discounted at the rate prescribed for such paper.

Suspension Of Special Rate On Commodity Paper Regulations Of The Federal Reserve Board

Rate For Movement Of Crops

As the special rate for commodity paper is intended to assist actual producers during crop moving periods, and is not designed to benefit speculators, the Board reserves the right to suspend the special rates herein provided whenever it is apparent that the movement of crops which this rate is intended to facilitate has been practically completed.

Rediscount Of Bank Acceptances Regulations Of The Federal Reserve Board

Banker's Acceptance Defined

A banker's acceptance is defined as 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.

Opinions Of Counsel And Rulings

Relating to the Rediscount of Bank Acceptances

Eligible Acceptors, How Determined

The question of determining the eligibility of an acceptor is left to the discretion of the Federal Reserve banks themselves. The Federal Reserve Board does not wish to see concerns regarded as eligible acceptors which are not in the habit of carrying on some acceptance business regularly, and which are not generally of such character and standing as to qualify their acceptance as a "banker's acceptance."