Atlanta tri-weekly journal. [volume] (Atlanta, Ga.) 1920-19??, 1922-12-21
Periods
RAISED To 6 MONTHS
BY RESERVE BOARD
New Ruling Puts Agricultural
Paper on Parity With Ac-
ceptanCes Against Ex-
ports and Imports

WASHINGTON. Dec. 20.-Bank-
ers' acceptances of six months ma
turity drawn by growers of staple
agricultural products or cooperative
m rketing association are eligible
for purchase or rediscount by the
federal reserve banks under a rul-
ing promulgated today by the fed
eral eserve board as a step in the
direction of 10 ger term credits for
aGrit Ilture.
Officials declared the decision.
which makes the agricultural paper
eligible for rediscount for six months
instead of three, should be of ma.
ter:al assistance to cooperative mar
ketinS associations in financing the
orderly marketin. of crops.
The ruling requires that the &C.
ceptances be secured by warehouse
receipts covering the products
against which the acceptances are
drawn. 1t is in line with a policy
announced some time ago by the
board which made eligible for re-
discount acceptances . drawn to
finance domestic storage of com.
modities pending marketing.
Agricultural paper of this charac-
ter is placed on a parity with ac-
ceptances drawn against exports
and imports which have been extend.
ed from three to six months.
Officials explained that the six
months limitation was as far as the
board could go under existing law.
various bills are p3nding in con-
Sress, however, to make acceptances
with mitch longer maturity eligible
for re-discount by the reserve banks.
Several kinds of borrowing are in
Volved, said a statement issued by
The board explaining it's decision. eff
the grower desires to do the borrow
ing himself he can draw a draft ON
the cooperative association at the
time he delivers his crop, the associ.
alton accepting it. He then dis.
counts the draft at his local bank,
which, under the ruling, may reds-
count it at federal reserve bank
as agricultural paper with a maturi.
ty up to six months.
"If the association itself wishes to
borrow directly from a bank in or
der to make payments to the grow
ers who are its members, its notes
are eligible for rediscount, but the
board has held that under existing
law such notes are commercial notes,
the maturity of which must not ex-
coed ninety days, because the pro-
ceeds of such notes are used for the
commercial purpose of buying the
commodities from the growers. =. :,
This ruling has rightly been re
GarGCd IS a liberal one and will
greatly facilitate the operations of
cooperative associations. 1t is based
upon the principle long recognized
by the board that the carrying Of
agricultural products for such peri
eds as are reasonably necessary in
order TO accomplish orderly market
ing is d legitimate and necessary
step incident to normal distribution.
Not for Speculation
'The board points cut, however,
that there is distinction between
carrying products for such pur-
poses as are reasonably necessary
and mere speculative Withholding
from the market in the hope of OBJ
tainins higher prices. Under the
federal reserve act, paper drawn to-
finance speculation is ineligible for
rediscCunt.
The reserve board also points out
that in determining whether or not
an association is engaged in order
ly marketing, rather than specula-
tive holdings, it is not improper to
take into consideration the fact that
each crop must ordinarily support
the market until the next crop is
l,r. i