Bills Based On Sale And Delivery Of Gas

An acceptance drawn by a gas producing company or a gas distributing company and accepted by the latter in payment for gas sold and delivered is a trade acceptance eligible for rediscount by a Federal Reserve bank.

Bills Based On Installment Plan Sales

The Board has ruled that if the purchaser is willing to accept a draft in advance of the delivery of the goods, there will seem to be no reason why such an acceptance should not be treated on the same basis as a bill drawn and accepted after delivery of such goods. The above has been ruled in connection with the sale of coffee mills, etc., on the installment plan.

Drafts Based On Electrical Installation

Drafts drawn for the purchase price of electrical goods which include the cost of installation, may be treated as trade acceptances when such drafts are accepted by the purchaser.

Acceptances In Liquidation Of Open Account

A bill drawn by a retail dealer on his retail customer to finance the sale of goods to that customer is a trade acceptance even if it is drawn after the purchaser has failed to remit promptly on an open account. The Board has expressed its opinion several times that the attempt to use a trade acceptance in this manner as a means of liquidating an otherwise slow account would involve considerable danger to the primary purposes of the trade acceptance movement and would subordinate the trade acceptance to the open account method, by suggesting it as a last resort for bad accounts. Trade acceptances of this character should probably be considered eligible as a matter of law. Nevertheless, member banks and Federal Reserve banks may discriminate against them, and should be encouraged to do so as far as possible.

Acceptances Of Sales Corporations

A draft drawn by a lumber corporation upon a sales corporation, which it and a number of other concerns have organized, will, when accepted, become a trade acceptance, even though the selling corporation is a stockholder of the sales corporation, provided the latter is organized in good faith, and not merely to act as agent for the purpose of evading the law.

Acceptances Based On Advertising Space

A draft or bill of exchange drawn by the seller on the purchaser of advertising spare and accepted by such purchaser, is a trade acceptance. A draft or bill of exchange drawn by a publisher or other advertising agency on the purchaser of advertising space, and accepted by such purchaser, shall be considered a trade acceptance, provided the advertisement on which the draft or bill is based, is for the purpose of promoting or facilitating the pro-duction, manufacture, distribution, or sale of goods, whether merchandise or agricultural products, including live stock, and provided, further, that such advertisement is not illegal and is not for the purpose of promoting or facilitating any transaction which is prohibited by the laws of the State in which it is to be consummated. These are the conditions upon which drafts drawn against advertising space sold will be ruled trade acceptances.

Acceptances based on foreign transactions; imports. - Trade acceptances originating through importations from foreign countries, which are indorsed by banks or bankers may be considered as trade acceptances, and may be taken within the range of the discount rates for bankers' acceptances.

Acceptances based on foreign transactions; exports. - Bills drawn for the purpose of providing funds for the purchase and export of cross ties and lumber are eligible for rediscount if properly indorsed and otherwise conforming to the regulation of the Federal Reserve Board. The above has been ruled in connection with exports to Cuba.

Ineligible Drafts And Trade Acceptances

General Statutory Provisions