Richmond times-dispatch. [volume] (Richmond, Va.) 1914-current, 1915-02-13
STEP IN DEVELOPMENT
OF AMERICAN FINANCE
Reserve Board Issues Regulations
Governing Discount or Purchase
Of Bankers Acccptanccs.
WEEKS SPENT IN PREPARATION
Designed to Bring This Country's
System More I'm Accord With That
OF Other NationS-May Take Share
of Business From London.

WASHINGTON. February IAN
lean finance designed to bring il more
In accord with that Of other nations.
was taken 10y the Federal Reserve
Board to-day. when II issued rcgula
lions governing the discount or pur-
chase OF bankers acCcptanccs.
The Federal reserve act authorized
national banks to purchase 3cceptances
based on the importation or cNporta
tion of goods. and tho boards reEula-
tions indicate how banks may avail
themselves OF the aid of the Federal
reserve banks in securing the rcdis
count OF such paper. and lay down the
lines by which the reserve banks them
selves will bc guided in purchases of
aCccptanCes in the open market.
Before the Federal reserve act was
passed. domestic dealings in accept
anccS We're confined to state banks.
trust companies and private banks.
How far American banks now may pro
coed in taking away from London a
share OF this business, n considerable
par, of which Is done with South
America, officials here do not now pre-
tend to know.
Although under to-day's regulations
the reserve banks are rot barred from
outright purchases % acceptances. the
board indicates present preference
for discount OF such paper offered by
member or other banks.
DOLLAR ONE OF MEDIUMS
OF INTERNATIONAL EXCHANGE
The board announce that accept
ances must be payable in dollars. In
the United States" step toward max
Ing the dollar n least one of tho me-
dtums of International EXCHANGE
Weeks have been spent by the board
in preparing the resolution, and many
conferences have been held with the
advisory council. some OF the governors
of Federal reserve banko and the Fed
erai reserve agents.
The acceptance Is still in its infancy
In the field of American banking" the
board says In n circular How rapid
its development will be cannot he fore
told. but tho development itself is Ger
tain. Opportunity is given by the Fed
cral reserve act to assist the movement
in this new direction" The circular
adds that present regulations are to he
regarded as a first step. TO he extended
as circumstances warrant.
The acceptance is the standard form
of paper In tn world discount mar
ket,' II continues. by reason Of its
being readily mnrke tnble it is widely
regarded rs n most desirable paper in
the secondary reserve OF banks. and
Will help to provide an effective sub
St,tute for the call loan It's growth
however. Will depend upon tho ability
of the American market TO adjust its
rates effectively to those prevailing in
other markets for paper OF this class.
DEALINGS SUBJECT
TO NOTIFICATIONS
Federal reserve banks may from
time 10 time submit for tho approval
Of the board maximum ana minimum
rates within which they desire to he
antholtzed to deal in a,ceptanccs;
within such limits, and subject to such
modincations as may be imposed by the
BOARD. Federal reserve banks will be
allowed to establish the rates at which
they VIII deal in acceptanccs"
The board says preferential treat
h'eht should be allowed on acceptances
bearing the Endorsement OF member
banks. and will sanction such a prefer
entail. hut points out that Federal rc.
such paper not so indorsed may do 50
though they SHOULD restrict openings TO
srec'es hearift, sonss' other signature
than that OF the drawer and nccep,or.
preferably that OF a bank or banker.
An acceptance. the regulations say
must bear or be accompanied by evil
dence satisfactory TO a reserve hank
mat II originated in an actual bona
nue. shie or consignment involving i'm
nortaton or expectation of goods.
in framing their policy with respect
20 hcceptanccs," says the board. Fed
eral reserve banks will have 10 con
slider not only local demands 10 be OK.
Pccted from their own members. hut
also requirements to be met I'm othcr
districts. The plan to be followed must
IN each case adapt itself TO the con.
SANITY varying needs of the country"
Markets Closed for HOLIDAY.
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