Omaha daily bee., 1914-11-12

should, TO the utmost degree Of eff.
cheney. organize and make available It,
own resources In order that It may pro.
vide for It's own needs and replace the
facilities suddenly destroyed by the clos
Ing OF so many OF the accustomed chan
nels Of credit and trade
DussinG Paper.
In defining commercial paper the board
announced certain basic principles In
brief they are: That no bill shall be ad-
mItted 20 rediscount by n reserve bank
the proceeds OF which have been or are
to be applied TO n permanent invest
ment Maturities OF discounted bills the
board holds should be well distributed
SO that reserve bank should be In a
position TO lquidate ono.third Of all its
investments within thirty days. Bills
presented for rediscount should be "es-
sentially self-liquidating." which the
board explained means that they should
represent some distinct step In the pro-
duetion or distributlve process, and be
OF such character that II is reasonably
sure that they can be collected at ma
turity.
In addition TO these principles. the board
requires that such paper be endorsed by
the member bank offering II for redis-
count; that the indorser bank waive de-
mand notice and protest; that such paper
be issued or drawn for agricultural, in
dustrtal or commercial purposes Of the
proceeds OF which have been 20 used I;
that II IN the form OF acceptance they
might be based on transactions involving
the importation or expectation OF goods
and have a maturity of not longer than
three months.
Manner Of Endorsement.
Acceptance must be endorsed by rneni-
ber bank and the total amount offered
by any member bank shall not exceed one
half its paid UP capital and surpluA The
aggregate OF paper bearing the endorse
ment OF any one person. corporation or
firm rediscounted for any ono bank shall
not at any time exceed 10 per cent OF the
unimpaired capital and surplus, this not
to apply 10 bills OF exchange drawn
against actually existing values
Paper drawn for trade in stocks and So
eurlties will not be acceptable. nor will
such paper drawn for merely invest
ment and the board interprets this
of the law to exclude paper,
she proceeds OF which may be used In
Investments In land. plant machinery,
permanent improvements. or transactions
OF similar nature, Purchase for merely
speculative purposes would constitute a
"nere investment" in the eyes OF the
board and be excluded.
Has FIXED Limit.
The board also announced that for the
present II has fixed the limit which a
bank may rediscount paper for
AGRICULTURAL purposes or based on live
stock" having not more than six months
at Is per cent OF the capital
bank This limit may be Increased In
districts in time OF need.
In Its discussion OF two and one-name
papers. the board announced that II ISL
hoped to establish a central credit bureau
Tor the benefit OF all reserve banks in
which the financial record OF the big
corporations. firms and indi-
eiduals viii be kept.
until January i6 next a writtan state |
nent OF an officer OF q bank Applying
Tor the rediscount OF any bill that is 10
be used for the purposes designated /
Till be sufficient. After that date, how !
'ver. no paper win be rediseounted UNI
eas II bears on It's face evidence that
{ Is eligible under the boards regula-
lions. and that the seller has given a
statement to the member bank.
To Ne stgned Under oath.
This statement is TO be signed under
'ath and viii show the character OF
the business the balance sheet, the
'rofit and loss account: permanent and
liked Investments. slow and quick as
'eta; capital. long term and short term
cans IL will show also the maximum
lggregate up 10 which the borrowing
concern expects 10 sell short paper, and
he beard says that the giver OF the
statement should obligate itself to OBJ
ain the member banks consent be-
'ore exceeding the agreed limit. The
IiSnsture OF q member bank on such
'aper viii be considered binding. and a
guarantee that the borrowers statement
ias been examined and that the pAper
complies with the law.
This Information in the hands Of re.
erve banks viii be open 20 inspection 10
~ mi