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12 U.S.C. § 344 — Discount or purchase of bills to finance agricultural shipments

submitted 113 years ago by ch. 6 to r/title-12-BANKS-AND-BANKING · 205 words · no verdicts yet

in plain englishAI-generated · not legal advice

A Federal Reserve bank may buy or discount bills of exchange tied to shipping farm staples. A member bank must first endorse the bill, waiving its own demand and notice rights. The bill must be collected promptly and cannot be held more than ninety days.

Once a member bank endorses a bill of exchange, that endorsement counts as the bank giving up its own right to demand, notice, and formal protest on its endorsement. Subject to rules set by the Board of Governors of the Federal Reserve System, a Federal Reserve bank may then discount or buy bills of exchange that are payable at sight or on demand. These bills must arise from shipping or exporting nonperishable, easily sold farm staples and other staples, and must be backed by bills of lading or similar shipping documents that give or secure title to the staples. All such bills must be sent for collection promptly, and payment must be demanded reasonably soon after the staples arrive at their destination. No Federal Reserve bank may hold such a bill for more than ninety days. When discounting these bills, Federal Reserve banks may calculate interest based on each bill's estimated life, then adjust the discount once the bill is paid to match how long it actually took.
the actual law source: uscode.house.gov ↗public domain

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, and subject to regulations and limitations to be prescribed by the Board of Governors of the Federal Reserve System, any Federal reserve bank may discount or purchase bills of exchange payable at sight or on demand which grow out of the domestic shipment or the exportation of nonperishable, readily marketable agricultural and other staples and are secured by bills of lading or other shipping documents conveying or securing title to such staples: Provided, That all such bills of exchange shall be forwarded promptly for collection, and demand for payment shall be made with reasonable promptness after the arrival of such staples at their destination: Provided further, That no such bill shall in any event be held by or for the account of a Federal reserve bank for a period in excess of ninety days. In discounting such bills Federal reserve banks may compute the interest to be deducted on the basis of the estimated life of each bill and adjust the discount after payment of such bills to conform to the actual life thereof.

Source credit: (Dec. 23, 1913, ch. 6, § 13 (par.), as added Mar. 4, 1923, ch. 252, title IV, § 402, 42 Stat. 1479; amended May 29, 1928, ch. 884, 45 Stat. 975; Aug. 23, 1935, ch. 614, title II, § 203(a), 49 Stat. 704.)

history & why it existsrecord from the source credit
  • 1913Enacted · Act of Dec. 23, 1913, ch. 6 · 42 Stat. 1479
  • 1928Amended · Act of May 29, 1928, ch. 884 · 45 Stat. 975
  • 1935Amended · Act of Aug. 23, 1935, ch. 614 · 49 Stat. 704

A history note hasn’t been published yet. The record shows enactment by ch. 6 on 1913-12-23.

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