Finance Paper

To be eligible for purchase by Federal Reserve banks, a bill of exchange or acceptance must not have been issued for carrying on trading in stocks, bonds, or other investment securities, except bonds and notes of the government of the United States; and must not be a bill the proceeds of which have been used or are to be used for permanent or fixed investments of any kind, such as land, buildings, or machinery, or for investments of a merely speculative character.

Opinions Of Counsel And Rulings Relating to Ineligible Bills and Trade Acceptances

Drafts Drawn On Corporation By Agent Ineligible

Instruments in the form of bills of exchange, drawn by an agent of a corporation upon the corporation itself, are not bills of exchange, such as are eligible for purchase in the open market by Federal Reserve banks.

Paper stamped "trade acceptance" of no value as such. - The fact that a land company has stamped a bill a "trade acceptance" and has accepted such bill does not in itself make it a trade acceptance.

Evidence Of Eligibility And Requirement Of Statements

Regulations of Federal Reserve Board

Evidence of eligibility; requirement of statements. - A Federal Reserve bank shall take such steps as it deems necessary to satisfy itself as to the eligibility of the bill offered for purchase unless it presents prima facie evidence thereof or bears a stamp or certificate affixed by the acceptor or drawer showing that it is a trade acceptance. A bill is not eligible for purchase unless indorsed by a member bank, and in case there is no indorsement by such member bank, a satisfactory statement of the financial condition of one or more of the parties thereto must be furnished.

Maturity

General Statutory Provisions and Regulations of the Federal

Reserve Board

Any Federal Reserve bank may purchase and sell bills of exchange of the kinds and maturities by the Federal Reserve Act made eligible for rediscount, and in any case, such maturities must not exceed ninety days, exclusive of days of grace, at the time of purchase.