PRIA, Government Policy, Made Personal

Summary

Federal Reserve banks may buy (discount) notes, drafts, and bills made for farming or based on livestock if they mature within nine months. When a member bank endorses one, that bank gives up needing demand, notice, or protest about its endorsement. These papers can back Federal Reserve notes, but if they mature over six months they must be secured by warehouse receipts or similar negotiable papers for readily marketable staple farm products, or by a chattel mortgage on livestock being fattened for market. The Federal Reserve Board sets rules and limits.

Title 12, §348

Banks and Banking, Source: USLM XML via OLRC

Upon the indorsement of any of its member banks, which shall be deemed a waiver of demand, notice, and protest by such bank as to its own indorsement exclusively, any Federal reserve bank may, subject to regulations and limitations to be prescribed by the Board of Governors of the Federal Reserve System, discount notes, drafts, and bills of exchange issued or drawn for an agricultural purpose, or based upon livestock, and having a maturity, at the time of discount, exclusive of days of grace, not exceeding nine months, and such notes, drafts, and bills of exchange may be offered as collateral security for the issuance of Federal reserve notes under the provisions of section 16 of this Act: Provided, That notes, drafts, and bills of exchange with maturities in excess of six months shall not be eligible as a basis for the issuance of Federal reserve notes unless secured by warehouse receipts or other such negotiable documents conveying or securing title to readily marketable staple agricultural products or by chattel mortgage upon livestock which is being fattened for market.

Notes & Related Subsidiaries

Editorial Notes

References in Text

section 16 of this Act, referred to in text, means section 16 of act Dec. 23, 1913. For classification of section 16 to this title, see Codification note set out under section 411 of this title. Codification Section is comprised of first par. of section 13A, formerly section 13a, as added Mar. 4, 1923. Pars. 2 to 5 of section 13A are set out as sections 349 to 352 of this title, respectively.

Statutory Notes and Related Subsidiaries

Change of Name

section 203(a) of act Aug. 23, 1935, changed name of Federal Reserve Board to Board of Governors of the Federal Reserve System.

§348 Discount of Obligations Given for Agricultural Purposes or Based Upon Livestock; Collateral Security for Federal Reserve Notes