Albuquerque morning journal., 1914-11-12

ceeds Of which have been or are 10
be applied 20 a permanent Investment.
Maturities OF discounted bills. the
board holds, should be well dlstrlbu-
ted 80 that a reserve bank should be
IN a position 20 llquldatc onc-fhird Of
all It's investments within thirty days.
Bills presented for re-dlscount should
be essentially seIf-llquldatIng which
the board explained. means that they
should represent some distinct step
In the productive or distrlbuiivc pro-
cess and be OF such character that i
Is reasonably aure that they can be
collected at maturity.
In addition these principles the
board requires that such paper be
endorsed by the member bank offer
ing il for re-dlscount. that the en-
dorser bank waive demand notice and
protest; that such paper be issued or
drawn for agricultural. industrial or
commercial purposes or the proceeds
Of which have been 10 used, that II in
the form of acceptances they must
be based on transactions involving the
importation or expectation of goods.
and have a maturity OF not longer
than three months. Accepfances must
be endorsed by a member bank and
the total amount offered by any mem
bor bank shall not exceed one-half its
paid-up capital and surplus. The ag-
gregate Of paper bearing the endorse
ment OF any one person corporation
or firm re-discounted for any one
bank shall not at any time exceed 10
per cent Of the nnimpaired capital
and surplus. this not to apply to bills
of exchange drawn against actually
existing values
Paper to BE Excluded.
Paper drawn for trade IN stocks and
securities Will not be acceptable. nor
viii such paper drawn for merely in
gcstmcnts,' and the board intcrprets
this phrascology of the law To exclude
paper, the proceeds OF which may be
used In investments in land, plant
machinery. permanent improvements,
or transactions OF similar nature. The
purchase of commodities for merely
speculative purposes would constitute
a mere investment I'm the eyes OF
the board and be excluded
The board also announced that for
the present It has fixed the limit
which reserve bank may re-discount
paper "for agricultural purposes. or
based on livestock" having not more
than six months maturity, at rs per
cent of the capital Of the bank. This
limit may be increased in agricultural
districts In time OF need.
In its discussion of two and one
nsme paper, the board announced
that II is hoped TO establish central
credit bureau for the benefit OF all
reserve banks In which the financial
record OF the big borrowing corpora
tons firms and individuals will be
kept
Rigid Investigation.
Until January 10. next, "A written
statement. of an officer OF bank APP
plying for the re-discount Of any bill
that is to be used for the purposes
designated will be sufficient. After
that date. however, no paper will be
re-discounted unless II bears on Its
face evidence that II is eligible under
the boards regulations and that the
seller has given a statement TO the
member bank. This statement is to
be signed under oath, and will show
the character of business, the balance
sheet, the profit and loss account
permanent and fixed investments,
slow and quick assets; capital, long
term and short term loans. II will
also show the maximum aggregate up
to which the borrowing concern ex-
poets TO sell short paper, and the
board says that the giver Of the state
ment should obligate itself TO ask the
member banks consen before ex-
coedlng the agreed limit The sigma
ture of a member bank on such paper
win be considered binding. and a
guarantee that the borrowers state
ment has been examined and that the
paper complies with the law,
This information in the hands OF
reserve banks will be open TO inspec-
tion to examiners, and copies shall be
furnished on request to the reserve
board