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REGULATIONS OF THE FEDERAL RESERVE BOARD

SERIES OF 1923

INDEX TO REGULATIONS.

Page.

115

REGULATION A.-Discounts under sections 13 and 13a......
REGULATION B.-Open-market purchases of bills of exchange, trade accept-

ances, and bankers' acceptances under section 14........
REGULATION C.-Acceptance by member banks of drafts and bills of exchange.
REGULATION D.-Time deposits and savings accounts.
REGULATION E.-Purchase of warrants.....
REGULATION F.— Trust powers of national banks......
REGULATION G.-Loads on farm land and other real estate....
REGULATION H.- Membership of State banks and trust companies....
REGULATION I.-Increase or decrease of capital stock of Federal reserve banks

and cancellation of old and issue of new stock certificates..
REGULATION J.--Check clearing and collection....
REGULATION K.--Banking corporations authorized to do foreign banking busi-

ness under the terms of section 25(a) of the Federal reserve

act.....
REGULATION L.-Interlocking bank directorates under the Clayton Act......

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REGULATIONS OF THE FEDERAL RESERVE BOARD.

REGULATION A, SERIES OF 1923.

(Superseding Regulation A of 1922.)

DISCOUNTS UNDER SECTIONS 13 AND 13a.

ARTICLE A.

NOTES, DRAFTS, AND BILLS OF EXCHANGE.

SECTION I. GENERAL STATUTORY PROVISIONS.

Any Federal reserve bank may discount for any of its member banks any note, draft, or bill of exchange: Provided

(a) It has a definite maturity at the time of discount of not more than 90 days, exclusive of days of grace; except that (1) if drawn or issued for an agricultural purpose or based on livestock, it may have a maturity at the time of discount of not more than nine months, exclusive of days of grace, and (2) certain bills of exchange payable at sight or on demand are eligible even though they have no definite maturity (see Section VII, below);

(6) It has been issued or drawn for an agricultural, industrial, or commercial purpose, or the proceeds have been used or are to be used for such a purpose, or it is a note, draft, or bill of exchange of a factor issued as such making advances exclusively to producers of staple agricultural products in their raw state;

(c) It was not issued for carrying or trading in stocks, bonds, or other investment securities, except bonds and notes of the Government of the United States;

(d) The aggregate of notes, drafts, and bills bearing the signature or indorsement of any one borrower, whether a person, company, firm, or corporation, discounted for any one member bank, whether State or national, shall at no time exceed 10 per cent of the unimpaired capital and surplus of such bank; but this restriction shall not apply to the discount of bills of exchange drawn in good faith against actually existing values;

(e) It is indorsed by a member bank; and
(f) It conforms to all applicable provisions of this regulation.

No Federal reserve bank may discount for any member State bank or trust company any of the notes, drafts, or bills of exchange of any one borrower who is liable for borrowed money to such State bank 25004-24 -9

115

or trust company in an amount greater than that which could be borrowed lawfully from such State bank or trust company under the terms of section 5200 of the United States Revised Statutes, as amended, were it a national banking association.

Any Federal reserve bank may make advances to its member banks on their promissory notes for a period not exceeding 15 days, provided that they are secured by notes, drafts, bills of exchange, or bankers' acceptances which are eligible for discount 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.

SECTION II. GENERAL CHARACTER OF NOTES, DRAFTS, AND BILLS OF

EXCHANGE ELIGIBLE.

The Federal Reserve Board, exercising its statutory right to define the character of a note, draft, or bill of exchange eligible for discount at a Federal reserve bank has determined that

(a) It must be a negotiable 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, and the name of a party to such transaction must appear upon it as maker, drawer, acceptor, or indorser.

(6) It must not be a note, draft, or bill of exchange the proceeds of which have been or are to be advanced or loaned to some other borrower, except as to paper described below under Sections VI (6) and VIII.

(c) 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. .

(d) It must not be a note, draft, or bill of exchange the proceeds of which have been used or are to be used for investments of a purely speculative character.

(e) It may be secured by the pledge of goods or collateral of any nature, including paper which is ineligible for discount, provided it (the note, draft, or bill of exchange) is otherwise eligible.

SECTION III. APPLICATIONS FOR DISCOUNT.

Every application for the discount of notes, drafts, or bills of exchange must contain a certificate of the member bank, in form to be prescribed by the Federal reserve bank, that, to the best of its

1 When used in this regulation the word "goods” shall be construed to include goods. wares, merchandise or agricultural products, including livestock.

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