ACCEPTANCE BY MEMBER BANKS OF
DRAFTS AND BILLS OF EXCHANGE
l [NDER the Federal Reserve Act any member bank may accept
drafts or bills of exchange drawn upon it having not more than
six months to run, exclusive of days of grace, which grow out of a
transaction, or transactions, involving any one of the following:
(a) The importation or exportation of goods.
(b) Domestic shipment of goods, providing shipping documents conveying or
securing title are attached at the time of acceptance.
(¢) The storage of readily marketable staples,! providing that the bill is secured
at the time of acceptance by a warehouse receipt, or other such document
conveying or securing title.
The Act limits the aggregate which any bank shall accept without
security for any one person, company, firm, or corporation to an
amount not exceeding at any time 109, of the bank’s paid-up and
unimpaired capital stock and surplus. This limit, however, does not
apply in any case where the accepting bank remains secured either
by attached documents or by some other actual security growing out
of the same transaction as the acceptance.
Such bills may be accepted by a member bank up to an amount
not exceeding at any time more than one-half of the bank’s paid-up
and unimpaired capital stock and surplus; or, with the approval of
the Federal Reserve Board, up to an amount not exceeding at any
time more than one hundred per cent. of the bank’s paid-up and un-
impaired capital stock and surplus.
In no event shall the aggregate amount of the acceptances growing
out of domestic transactions exceed fifty per cent. of the bank’s capital
stock and surplus.
The Federal Reserve Board has determined that any member
bank, having an unimpaired surplus equal to at least twenty per
cent. of its paid-up capital, which desires to accept drafts or bills of
1A readily marketable staple within the meaning of these regulations may be defined as 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 otations of Jrice as to make (1) the price easily and definitely
ascertainable and (2) the staple itself easy to realize upon by sale at any time.
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