Paper REDISCOUNTED AND BougHT BY FEDERAL RESERVE BANKS 
bankers’ acceptances which are eligible for rediscount or for purchase 
by Federal Reserve Banks, or by the deposit or pledge of bonds or 
notes of the United States, or bonds of the War Finance Corporation. 
The Federal Reserve Board, exercising its statutory right to define 
the character of a note, draft, or bill of exchange eligible for redis- 
count at a Federal Reserve Bank, has determined that 
(a) It must be a note, draft, or bill of exchange which has been issued or drawn, 
or the proceeds of which have been used or are to be used in the first instance 
in producing, purchasing, carrying, or marketing goods in one or more of 
the steps of the process of production, manufacture, or distribution, or for 
the purpose of carrying or trading in bonds or notes of the United States. 
It must not be a note, draft, or bill of exchange 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 any other capital purpose. 
It must not be a note, draft, or bill of exchange the proceeds of which have 
been used or are to be used for investment of a purely speculative character 
or for the purpose of lending to some other borrower. An exception to the 
last named prohibition was incorporated in the Agricultural Credits Act of 
March 4, 1928, which provides that notes, drafts, and bills of exchange of 
factors issued as such making advances exclusively to producers of staple 
agricultural products in their raw state shall be eligible for discount. 
d) 
It may be secured by the pledge of goods or callateral of any nature, includ- 
ing paper, which is ineligible for rediscount, provided it (the note, draft, or 
bill of exchange) is otherwise eligible. 
Special conditions of eligibility for discount at the Federal Reserve 
Bank are applied in the case of each class of paper. 
Bankers’ acceptances eligible for rediscount 
by the Federal Reserve Banks 
IT 
Definition: A banker's acceptance within the meanings of the Federal Reserve 
Board Regulations, is defined as a draft or bill of exchange, whether payable in the 
United States or abroad, and whether payable in dollars or some other money, of which 
the acceptor is a bank or trust company, or a firm, person, company, or corporation 
®ngaged generally in the business of granting bankers’ acceptance credits. 
A Federal Reserve Bank may rediscount any such bill having a 
Maturity at the time of discount of not more than 90 days (in case of 
AN acceptance drawn for an agricultural purpose, six months), exclu- 
Sive of days of grace, which has been drawn under a credit opened 
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