clearly a commercial purpose. 1921 Bulletin, p. 1199. (See sec. 13, Agricultural paper" and "Commercial paper;" see also XIII-C, 400.)

XIII-C, 102. Warehouse receipts as collateral for bank loans.— General discussion of acceptability and importance of warehouse receipts as collateral security for bank loans, especially as regards receipts of warehousemen licensed under the United States warehouse act. 1921 Bulletin, p. 1314.

XIII-C, 103. Collateral security as affecting eligibility.-The eligibility for rediscount of paper other than bankers' acceptances does not depend upon the existence or character of collateral security. This is material only as bearing upon the acceptability of the paper and its desirability as an investment. 1922 Bulletin, p. 931(3). (See XIII-C, 200, 208.)

XIII-C, 104. Paper of cooperative marketing associations.-Sum mary of rulings and review of general principles relating to the eligibility for rediscount of paper arising out of the operations of agricultural cooperative marketing associations. (This summary of rulings is superseded by XIII-C, 106, which brings the subject up to date and in harmony with the law as amended March 4, 1923.) 1922 Bulletin, p. 1044.

XIII-C, 105. Nonnegotiable paper ineligible for rediscount.Although negotiability is not required in specific terms by the Federal reserve act or the board's regulations as a requisite to the eligibility of paper for rediscount by Federal reserve banks, the definitions of promissory notes, drafts, and bills of exchange contained in Regulation A incorporate substantially the requirements of negotiable paper as set forth in the negotiable instruments law, and negotiability is a necessary condition to eligibility. 1923 Bulletin, p. 559. (See XIII-C, 700-715.)

XIII-C, 106. Paper of cooperative marketing associations.-A summary of rulings and review of general principles affecting the discount and purchase by Federal reserve banks of cooperative marketing association paper. This ruling supersedes XIII-C, 104, and brings the subject matter up to date and in harmony with the provisions of law as amended by the agricultural credits act of 1923. This summary embodies rulings discussing the following questions:

(1) Definition of eligible commercial and agricultural paper substantially as set forth in Regulation A, series of 1923.

(2) Classes of cooperative marketing associations under consideration.

(3) Growers' drafts accepted by association covering deliveries of crops may be eligible for discount as agricultural paper when the proceeds are used by the growers for agricultural purposes.

(4) Growers' drafts accepted by associations may be considered bills of exchange drawn against actually existing values when drawn at about the time the grower delivers his crop to the association.

(5) Growers' drafts on associations are not trade acceptances, because the delivery of a crop to the association under the circumstances described is not the kind of a sale which should be made the basis of a trade acceptance. Such drafts may, however, be eligible for discount as agricultural or commercial paper.

(6) Carrying a crop pending its orderly marketing is an agricultural operation, and growers' paper used to finance the carrying of their products for a reasonable period incident to orderly marketing may be eligible for discount as agricultural paper.

(7) Notes and drafts of associations for funds to finance packing and marketing products of their members may be eligible for discount as agricultural paper.

(8) Notes and drafts of associations for funds to pay for products purchased from their members may be eligible for discount as agricultural paper.

(9) Notes and drafts of associations for funds to advance to their members for an agricultural purpose may be eligible for discount as agricultural paper.

(10) Bankers' acceptances drawn by associations for agricultural purposes are eligible for acceptance and discount with maturities up to six months when secured by warehouse receipts covering readily marketable staples.

(11) Warehouse receipts must be issued by corporations independent of the borrower in order to constitute proper security for bankers' acceptances.

(12) The discussion herein of certain kinds of paper of cooperative marketing associations as eligible for discount does not mean that they are the only classes of such paper which are eligible; they are merely the only classes of paper the eligibility of which the board has considered, and as questions arise concerning the eligibility of other kinds of paper further rulings will be issued.

(13) Paper of cooperative marketing associations the proceeds of which are used to pay organization expenses or represent fixed investments are not eligible for discount.

(14) Federal reserve banks are under no obligation to discount paper, even though it be eligible, but may accept it or refuse it in the exercise of discretionary power.

(15) Secured bankers' acceptances drawn by associations for agricultural purposes are eligible for purchase on the open market with maturities up to six months, and bills of exchange drawn by associations for an agricultural purpose may similarly be purchased with maturities up to nine months, provided they conform to the provisions

of Regulations A and B. 1923 Bulletin, p. 999. 1923 Bulletin, p. 999. (See XIII-C, 215, 216, 335, 336; XIII-E, 416, 417.)

Agricultural Paper.

XIII-C, 200. Agricultural paper is eligible, irrespective of security, provided that the direct primary purpose of the loan is to carry on the ordinary operations of agriculture. The words in section 13 "based on" do not mean "secured by." 1915 Bulletin, p. 72. (See XIII-C, 104.)

XIII-C, 201. Horses and mules constitute live stock within the meaning of the agricultural paper provision of section 13. 1915 Bulletin, p. 72.

XIII-C, 202. Notes for commercial fertilizer.-Six months notes given for commercial fertilizer to be used under growing crops are eligible as agricultural paper. (NOTE.-Under the present law such notes would be eligible with maturities up to nine months.) Bulletin. p. 75.

1915

XIII-C, 203. Cattle paper.-Notes made by mule and cattle dealers, like notes of dealers in agricultural implements, are commercial rather than agricultural paper, and so limited to 90-day maturity. But a note made by a farmer in payment or part payment of mules to be used on his farm is agricultural paper. 1915 Bulletin, p. 212.

XIII-C, 204. Agricultural-implement paper.-Notes given by farmers in payment for agricultural implements to be used on the farm are eligible for rediscount as agricultural paper. A bill drawn by a dealer on a farmer in payment for agricultural implements purchased by the farmer is a bill that has been "drawn or issued for agricultural purposes or the proceeds of which have been used or are to be used for agricultural purposes," and agricultural implements which wear out rapidly and in most cases have to be replaced within a comparatively short time are not considered as permanent or fixed investments. Notes of a farmer and bills drawn by implement dealers on a farmer against the sale to him of agricultural implements are therefore eligible for rediscount as agricultural paper. 1916 Bulletin, p. 67. (See XIII-C, 100, 210, 500, 501.)

XIII-C, 205. Cattle paper-Cows.--A note issued by a farmer and discounted by him at a bank, the proceeds of which are used for the purchase of cows which will be retained for a considerable length of time to produce milk, butter, cheese, etc., is eligible for rediscount as a note drawn for agricultural purposes or based on live stock, since live stock includes cows. 1916 Bulletin, p. 112.

XIII-C, 206. Purchase and sale of agricultural products or implements. The purchase or sale of an agricultural product or of implements, or other commodities used in agriculture, constitutes a com

mercial transaction. Where the proceeds of a note made by a merchant are used to purchase millet seed, to be later retailed or sold, such a note can not be treated as one given for an agricultural purpose and can not be discounted by a Federal reserve bank if it has a maturity at the time of discount of more than 90 days. 1916 Bulletin, p. 526. (See XIII-C, 100; see also sec. 13, "Commercial paper.")

XIII-C, 207. Cattle paper.-Loans on cattle for breeding, raising, or fattening may be made under the classification of agricultural paper which may be rediscounted as such with the Federal reserve bank. 1916 Bulletin, p. 679. (See XIII-E, 102-107.)

XIII-C, 208. Cattle paper.-A loan made by a member bank in good faith to a farmer for the purpose of assisting him to produce a crop or to fatten his cattle will be eligible for rediscount as agricultural paper by a Federal reserve bank, whether secured by a mortgage or not. 1917 Bulletin, p. 378. (See XIII-C, 104.)

XIII-C, 209. Paper based on live stock.-Live stock is slaughtered by a packing company on the day of purchase or within two or three days thereafter. The bill or note of a packing company, the proceeds of which are used for the purchase of live stock which is slaughtered upon purchase, is not "based on live stock" within the meaning of section 13 and is therefore not eligible for rediscount if it has a maturity in excess of 90 days; the business of the packing company is commercial rather than agricultural. 1917 Bulletin, p. 616.

XIII-C, 210. Cattle paper.-A note secured by collateral notes which are in turn secured by chattel mortgage on cattle is not necessarily eligible for rediscount. 1917 Bulletin, p. 690.

XIII-C, 211. Tractors used in agricultural operations.-Notes given for the purchase price of tractors which are to be resold may be discounted as commercial paper and notes given for the purchase price of tractors which are not to be resold, but are to be used for an agricultural purpose, may be discounted as agricultural paper, since a tractor, although its use is extended over several seasons, is not classed as a fixed investment, but, like horses and mules, is considered as being used for current agricultural purposes. 1918 Bulletin, p. 309. (See XIII-C, 204, 500, 501.)

XIII-C, 212. Notes of farmers for commodities used in farming. Where a farmer makes his note payable to the seller of a commodity and actually uses the commodity for agricultural purposes, such a note may be treated as agricultural paper, whether discounted with a member bank by the farmer as the maker, or by the seller as the indorser; and where the farmer makes his note payable to the member bank and uses the proceeds for an agricultural purpose, such

note is likewise eligible as agricultural paper. If, however, the farmer does not use or intend to use the commodity for an agricultural purpose, although it is capable of being so used, the note in question must be treated as commercial paper and may be rediscounted only if it has a maturity of 90 days or less. 1918 Bulletin, p. 310. (See XIII-C, 333.)

XIII-C, 213. Notes for purchase price of commodities used for agricultural purposes.-A note given for the purchase price of a commodity can be classed as agricultural paper eligible for rediscount when having a maturity in excess of 90 days, if the maker is to use the commodity for an agricultural purpose, regardless of whether the note is discounted by the maker or by the indorser. 1918 Bulletin, p. 312.

(See XIII-C, 212.)

XIII-C, 214. Notes for draining and tilling farm land.—Where land to be drained is already in use as farm land, the draining may be treated as incidental to the cultivation of the land, and notes the proceeds of which are used for draining purposes are eligible as agricultural paper. Notes the proceeds of which are used for tilling farm lands are clearly agricultural paper. 1918 Bulletin, p. 743.

XIII-C, 215. Paper covering sales of agricultural implements by a manufacturer to a dealer who will resell to a farmer must be treated as commercial paper and not as agricultural paper and, in order to be eligible for discount, must have a maturity not in excess of 90 days. 1918 Bulletin, p. 1118. (See XIII-C, 100.)

XIII-C, 216. Drafts of growers accepted by cooperative marketing associations.-Tobacco growers deliver tobacco to their cooperative marketing association, to be sold in due course, each grower receiving a distributive share of the proceeds of the sales. To finance themselves the growers obtain advances from the association by drawing drafts on it and discounting them after acceptance by the association. If the proceeds of such drafts are used by the growers for agricultural purposes, the drafts are eligible as agricultural paper. If the delivery of the tobacco to the association amounted to a sale thereof, and the drafts were drawn to pay for the tobacco, the original negotiation of the drafts would have been for a commercial purpose and would have precluded them from being eligible as agricultural paper; (NOTE.-Under the law as amended March 4, 1923, drafts drawn and accepted for such a purpose are expressly made eligible as agricultural paper) but under the facts stated the association does not purchase the tobacco, but merely loans its credit in making the acceptances, and the original negotiation of the drafts is their discount by the growers. 1921 Bulletin, p. 1199. (See XIII-C, 101,

106, 217.)