INDEX I. CREDIT FUNCTIONS AND INSTRUMENTS... Acceptance an Important Credit Instrument II. THE ENGLISH CREDIT SYSTEM. "Dollar Exchange" and Sterling INDEX-Continued VI. DEVELOPING the Market for ACCEPTANCES... Report of New York Federal Reserve Bank Acceptances Benefit Both Buyer and Seller General Use of Acceptances Urged VII. Amendments to the Federal Reserve Act...... Banks May Now Accept in Domestic Transactions Authorized Collateral for Reserve Bank Advances Possibilities for Extension of "Dollar Exchange" Establishment of Banking Connections Additional Amendments to the Act Reserve Banks' Discount Powers Broadened VIII. REGULATIONS OF THE FEDERAL RESERVE BOARD... Powers of New York State Banks Desirability of Bills of Exchange Regulations on Bankers' Acceptances Final Definition of Trade Acceptance Open-Market Purchase of Bankers' Acceptances Preferential Rate on Acceptances Checking Tendency Toward Over-Expansion Cable Transfers and Bills of Exchange Character of Bills and Acceptances Eligible Bills of Exchange and Trade Acceptances Kinds of Bills and Acceptances Specified Maturity of Bankers' Acceptances Extended Statutory Provisions Governing Rediscounts INDEX-Continued IX. THE UNITED STAtes WarehOUSE ACT... Receipts for Agricultural Products Stored Contents of a Warehouse Receipt Issue of Other than Original Receipts Conditions Governing Delivery of Products State Laws Not Impaired by Act Regulations for Wool Warehouses Negotiable and Non-Negotiable Receipts X. THE EDGE EXPORT FINANCE ACT.......... Authority for Formation of Corporations How Corporations May be Organized Form of Organization Certificate Authority to Commence Business Rules Governing Transfers of Stock Investments in Other Corporations Issue of Debentures and Other Obligations Regulations Governing Acceptances General Limitations and Restrictions ACCEPTANCE FORMS Chapter I CREDIT FUNCTIONS AND INSTRUMENTS N the primitive ages of commerce, article was exchanged for article without the use of money or credit. This was simple barter. As civilization progressed, a symbol of property-a common measure of value-was introduced to facilitate the exchanges of property. This may be iron or any other article fixed by law or by consent, but it has generally been gold or silver. This certainly is a great advance beyond simple barter, but no greater than has been gained in modern times by proceeding from the use of money to the use of credit. "Commercial credit is the creation of modern times, and belongs, in its highest perfection, only to the most enlightened and best-governed nations. "Credit is the vital air of the system of modern commerce. It has done more—a thousand times more—to enrich nations than all the mines of all the world. It has excited labor, stimulated manufactures, pushed commerce over every sea, and brought every nation, every kingdom and every small tribe among the races of men to be known to all the rest. It has raised armies, equipped navies, and, triumphing over the gross power of mere numbers, it has established national superiority on the foundation of intelligence, wealth and well-directed industry. "Credit is to money what money is to articles of merchandise. As hard money represents property, so credit represents hard money, and it is capable of supplying the place of money so completely that there are writers of distinction who insist that no hard money is necessary for the interests of commerce. I am not of that opinion. I do not think any government can maintain an exclusive paper system without running to excess, and thereby causing depreciation. "I hold the immediate convertibility of banknotes into specie to be an indispensable security for their retaining their value. But consistently with this security, and indeed founded upon it, credit becomes the great agent of exchange. It increases consumption by anticipating products, and supplies present wants out of future means. As it circulates commodities without the actual use of gold and silver, it not only saves much by doing away with the constant transportation of the precious metals from place to place, but also accomplishes exchanges with a degree of dispatch and punctuality not otherwise to be attained. "All bills of exchange, all notes running upon time, as well as the paper circulation of the banks, belong to the system of commercial credit. They are parts of one great whole. We should protect this system with increasing watchfulness, taking care, on the one hand, to give it full and fair play, and, on the other, to guard it against dangerous excess." This masterly summing up of the functions of credit and its instruments might have been uttered but yesterday, instead of more than four-score years ago. It is from a speech by Daniel Webster in the United States Senate, March 18, 1834. Acceptance an Important Credit Instrument Credit is the lifeblood of business. One of the principal channels through which it flows is the acceptance, or time bill of exchange. The system of credit based on acceptances has been very widely developed through long usage in England, France and Germany. It is so comparatively new in the United States that it is not yet generally understood. Its fields of employment here, however, are broadening rapidly, and it seems likely to become, before very long, one of our chief credit instruments. Such an opinion was expressed by the Federal Reserve Board in its circular of February 8, 1915, as follows: "The Acceptance is still in its infancy in the field of American banking. How rapid its development will be cannot be foretold, but the development itself is certain." |