Drafts Discounted Before Acceptance

A bill of exchange discounted before acceptance may be said to be drawn against actually existing values, when and only when it is accompanied by shipping documents, warehouse receipts or other papers securing title to the goods sold.

Trade Acceptances

An accepted bill of exchange, unaccompanied by shipping documents or other such paper may be considered as drawn against actually existing values if drawn against the drawee at the time of, or within a reasonable time after, the shipment or delivery of the goods sold. In this latter case, there must be reasonable grounds to believe that the goods are in existence in the hands of the drawee either in their original form or in the shape of the proceeds of their sale.

Trade Acceptances For Long Standing Open Accounts

A bill drawn for a balance due on open accounts of long standing, which is accepted by the debtor, might constitute a trade acceptance, but in order for it to be excepted from the limitations imposed by the Federal Reserve Act as a bill of exchange drawn against actually existing values, it must have been drawn contemporaneously with or within such a reasonable time after the shipment of the goods, as to justify the assumption that the goods are in the hands of the drawee in their original form or in the form of the proceeds of sale.

Qualified Acceptances

A bill of exchange drawn payable "at sight" and accepted payable in three months is a qualified or conditional acceptance, and the maker and prior indorsers are released. The instrument in effect becomes the promissory note of the acceptor and would not come within the exception to Section 5200 of the Revised Statutes, as a "bill of exchange" drawn in good faith against actually existing value.

Evidence Of Actually Existing Value

As evidence of this fact, the Federal Reserve bank might reasonably require such trade acceptances as are offered "as bills of exchange drawn against actually existing values" to show the date of invoice so that it may be determined whether or not the account is one of long standing. (For further reference to the subject of rediscount of drafts and trade acceptances, see opinions and rulings relative to promissory notes; also rediscount of promissory notes affecting the aggregate amount rediscountable for one bank; indorsement of member banks; and rediscounts for non-member banks).

Rediscounts By Federal Reserve Banks Of Six Months' Agricultural Paper

Regulations of the Federal Reserve Board

Six months' agricultural paper defined; includes live stock. - Six months' agricultural paper is defined as a note, draft, bill of exchange, or trade acceptance, drawn or issued for agricultural purposes, or based on live stock; that is, a note, draft, bill of exchange, or trade acceptance, the proceeds of which have been used, or are to be used, for agricultural purposes, including the breeding, raising, fattening, or marketing of live stock, and which has a maturity at the time of discount of not more than six months, exclusive of days of grace.

Opinions Of Counsel And Rulings Relating to the Rediscount of Six Months' Agricultural Paper