New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1915-02-13
new ACCEPTANCE
RULES FOR BANKS
Federal Reserve Board
Provides for Discount
or Purchase.
MAKES THE DOLLAR
EXCHANGE MEDIUM
Step Toward Gaining for Amer
leans a Share of London's
Big Business.

Washington, Feb. 12.-Another step
designed 70 bring American finance
more in accord with that OF other ma
lions was taken by the Federal Reserve
Board to-day when II issued regula-
tions governing the discount or pur-
chase Of bankers acceptances.
The Federal Reserve act authorized
national banks 70 purchase acceptanees
based on the importation or eXporta-
ton Of goods, and the boards reguia,
lions indicate how banks may avail
themselves OF the aid Of the Federal
Reserve banks in securing rediseount
OF such paper, and lay down the lines
by which the reserve banks VIII pc
guided in purchases of acceptances IN
the open market. Before the Federal
Reserve act vas passed domestic desi-
ings in acceptances were conhned 70
state banks, trust companies ana pr
vate banks. How far American banks
may proceed in taking away from Lon
don a share Of this business, a con-
siderable part Of which is done with
South America, officials here DO not
pretend 10 know.
Although under to-day's regulations
the reserve banks are not barred from
outright purchases OF aceeptances, the
board indicates 6 present preference
for discount Of such paper presented
by member or other banks. Accept
ances must be payable in dollars IN
the United States" step toward max
ing the dollar at least one Of the me-
diums of international exchange.
1.-THE acceptance is still IN its in
fancy In the field Of American bank
ing" the board says in circular
"How rapid its development will be
cannot be foret Id, but the development
itself is certain. Opportunity is given
BY the Federal Reserve act TO assist
the movement in this new direction.
"The acceptance is the standard form
Of paper In the world discount mar ket.
BY reason of its being readily market
able Il is widely regarded as a most
desirable paper in the secondary re-
serve Of banks and will help to provide
an effective substitute for the call
loan Its growth, however, will de-
pend upon the ability of the American
market 10 adjust its rates effectively 10
those prevailing in other markets FOR
paper Of this class
Federal Reserve banks may from
time TO time submit for the approval
Of the board maximum and minimum
rates within which they desire to be
authorized 20 deal in acceptances'
within such limits, ana SUBJECT 10 sNSH
notifications as may be imposed by
the board, Federal Reserve banks Will
be allowed 70 establish the rates AT
which they will deal in aceptances.
The board says preferential treat
ment should be allowed on acceptanees
bearing the Endorsement of member
banks, and will sanction such prefer
entail, but points out that Federal Re
serve banks which desire 20 purchase
such paper not 30 Endorsed may do so
though they should restrict operations
20 acceptances bearing some other sig
nature than that of the drawer anC
Accepter, preferably that Of bank Of
banker.
An acceptance, the regulations say
must bear OF be accompanied by. evi
dence satisfactory 70 reserve ban'
that IL originated in an actual bont
fide sale or consignment involving i'm
portation or expectation Of goods.
an framing their policy with respect
70 acceptances, says the board. FED
eral Reserve banks will have TO con
slider not only local demands TO be ex
pected from their own members, bu'
= also requirements 10 be met in Other
\ districts. The plan TO be followed
must in each case adapt itself to the
constantly varying needs of the coun'
try"