Readily Marketable Staples

Any member bank may accept drafts which are secured at the time of acceptance by a warehouse receipt or other such document conveying or securing title covering "readily marketable staples." Banks, as a matter of prudence and protection to themselves, should not consider as eligible any staple which is in its nature so perishable as not to be reasonably sure of maintaining its value as security at least for the life of the draft which is drawn against it. A more extended definition of a readily marketable staple would be "an article of commerce, agriculture or industry, of such uses as to make it the subject of constant dealings in ready markets with such frequent quotations of prices as to make (a) the price easily and definitely ascertainable, and (b) the staple itself easy to realize upon by sale at any time.

Acceptance Of Drafts Drawn Abroad And Secured By Foreign Warehouse Receipts

A draft drawn abroad, payable in the United States in dollars and secured by a warehouse receipt covering readily marketable staples stored in a warehouse located in a foreign country, is eligible for acceptance by a member bank and after acceptance is eligible for rediscount by a Federal Reserve bank, but is not eligible for purchase by a Federal Reserve bank in the open market.

Acceptance Of Drafts Secured By Warehouse Receipts

No draft which is secured by a warehouse receipt should properly be considered eligible for acceptance unless the goods covered by the warehouse receipt are being held in storage pending a reasonable immediate sale, shipment, or distribution into the process of manufacture. .Any draft therefore which is drawn to carry goods for speculative purposes or for an indefinite period of time without the purpose to Bell, ship or manufacture within a reasonable time, should not be considered eligible for acceptance.

Qualified Acceptance Of Sight Draft

A trade acceptance may be created by an acceptance of a sight draft in which the acceptor agrees to pay at a future date. Ordinarily this would constitute a qualified acceptance, and hence release the drawer and endorsers. If the drawer assents to the qualified acceptance, or does not dissent within a reasonable time, the instrument is considered to be a trade acceptance and therefore eligible for discount if otherwise in order.

Trade Acceptance To Finance Structural Work And Other Building Operations In General

A draft drawn by a manufacturer or materialman upon a builder to cover the cost of materials sold to the builder is eligible for rediscount as a trade acceptance when accepted by the builder. It is equally clear, however, that if the nature of the contract under which the building operations are being conducted is such that the contractor, for instance, does not get title either to the materials furnished or to the building as it is being erected, he cannot properly make a trade acceptance of a draft drawn upon him by the sub-contractor or builder, it being apparent that he has not been a purchaser of goods sold. If the drawer of the draft has sold goods to the drawee, the drawee may properly accept, and the draft thus accepted would constitute a trade acceptance if otherwise in conformity with the Board's regulations, but it should be noted that labor in itself is not considered goods within the meaning of these regulations. The Board has ruled, however, that a draft drawn to cover the purchase price of goods sold, plus the cost of installing those goods, may be eligible for acceptance as a trade acceptance.