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EX OFFICIO MEMBERS CARTER GLASS SECRETARYjiUpE CHATEMAI HE TREASURY WMAN JOHN SKELTOH WILLIAMS COMPTROLLER OF THE CURRENCY A D D R E S S R E P L Y TO FEDERAL RESERVE BOARD FEDERAL RESERVE BOARD WASHINGTON ±001 W. P. G. HARDING. GOVERNOR ALBERT STRAUSS. VICE GOVERNOR ADOLPH C. MILLER CHARLES S. HAMLIN HENRY A. MOEHLENPAH W. T. CHAPMAN. SECRETARY R. G. EMERSON. ASSISTANT SECRETARY W. M. IMLAY. FISCAL AGENT December 16,1^1$. X-1764 Subject: Usages of Trade in Foreigp Countries. Dear Sirs Section 13 of the Federal Reserve Act provides that "any membarr bank may accept drafts or tills of exchange drawn « upon it having not more than three months sight to run, exclu- sive of days of grace, drawn, under regulations to be prescribed by the Federal Reserve Board, by banks or bankers in foreign countries or dependencies or insular possessions of the United States for the purpose of furnishing dollar, exchange as required by the usages of trade in the respective countries, dependencies or insular possessions, 8 Under this authority the Board has from time to time determined that the usages of trade in the countries, dependencies or insular possessions listed below require the granting of accept- ance facilities for the purpose of creating dollar exchange. The Board i s now engaged in revising the list. As an institution^familiar with the usages of trade in the respective countries, dependencies and possessions, listed below, the Federal Reserve Board would be glad to receive from you such information as may be in your possession as to the usages of trade in each such country, so far as such usages may affect the rulings of the Board in respect of d r a f t s drawn for the purpose of furnishing dollar exchange. The Board is under the impression that in some of these countries the usages of trade do not nov* require the facilities authorized by Section 1) for the purpose of furnis ing dollar exchange, and that the Regulations of the Board in this respect require careful revision in order that b i l l s drawn under the said provisions of Section 13 shall not in e f f e c t become mere finance bills. Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
Transcript of frsbog_mim_v11_1001.pdf
E X O F F I C I O M E M B E R S
CARTER GLASS S E C R E T A R Y j i U p E
CHATEMAI HE TREASURY WMAN
JOHN SKELTOH WILLIAMS COMPTROLLER OF THE CURRENCY
A D D R E S S R E P L Y T O
FEDERAL RESERVE BOARD
FEDERAL RESERVE BOARD
WASHINGTON
±001 W. P. G. HARDING. GOVERNOR ALBERT STRAUSS. VICE GOVERNOR ADOLPH C. MILLER CHARLES S. HAMLIN HENRY A. MOEHLENPAH
W . T. CHAPMAN. SECRETARY R. G . E M E R S O N . ASSISTANT SECRETARY
W . M. IMLAY. FISCAL AGENT
December 16,1^1$. X - 1 7 6 4
Subject: Usages of Trade i n Foreigp Countries.
Dear S irs
Section 13 of the Federal Reserve Act provides that "any membarr bank may accept d r a f t s or t i l l s of exchange drawn
« upon i t having not more than three months s ight to run, exc lu-s ive of days of grace, drawn, under regulat ions to be prescribed by the Federal Reserve Board, by banks or bankers in f o r e i g n countries or dependencies or insular possess ions of the United States for the purpose of furnishing dol lar , exchange as required by the usages of trade i n the respect ive countr ies , dependencies or insular posses s ions , 8
Under t h i s authority the Board has from time to time determined that the usages of trade in the countr ies , dependencies or insular possess ions l i s t e d below require the granting of accept-ance f a c i l i t i e s for the purpose of creat ing dol lar exchange.
The Board i s now engaged i n r e v i s i n g the l i s t .
As an ins t i tu t ion^fami l iar with the usages of trade i n the respect ive countr ies , dependencies and possess ions , l i s t e d below, the Federal Reserve Board would be glad t o rece ive from you such information as may be i n your possess ion as to the usages of trade i n each such country, so far as such usages may a f f e c t the rul ings of the Board in respect of d r a f t s drawn f o r the purpose of furnishing do l lar exchange. The Board i s under the impression that i n some of these countries the usages of trade do not nov* require the f a c i l i t i e s authorized by Section 1) for the purpose of furn i s ing do l lar exchange, and that the Regulations of the Board i n t h i s respect require care fu l r e v i s i o n i n order that b i l l s drawn under the sa id provis ions of Sect ion 13 s h a l l not i n e f f e c t become mere f inance b i l l s .
Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
-2» ' X-1764
As, b e a r i n g on the purpose of the quoted p rov i s i ons of Sect ion ^ | p 13f your a t t e n t i o n i s d i r e c t e d to pages 565 ana 666 of the Federa l
Reserve B u l l e t i n of December 1, 1916, from which the fo l l owing quo ta t ion i s made:
"The purpose of t h i s Act and the r e g u l a t i o n made pursuant t h e r e t o was to enable the American banks t o provide d o l l a r exchange i n c o u n t r i e s where the check i s no t the cu r ren t means of remi t tance i n payment of f o r e i g n d e b t s , bu t where the three months 1 bankers * d r a f t i s gene ra l l y used f o r tha t purpose# 11 * * * * * * The Board i s informed t h a t the bankers 1
custom of s e l l i n g three months 1 d r a f t s i n p re fe rence to checks o r ig ina t ed i n c o u n t r i e s where t he ma i l connect ions were i r r e g u l a r and the f o r e i g n exchange market was a l imi ted one, and where i t would have been d i f f i c u l t f o r the drawing banker to be c e r t a i n t h a t he could f i n d a cover aga ins t the checks drawn by him in time t o forward i t by the same mai l , where a s , i n drawing a three months ' d r a f t he would f e e l assured of be ing able to forward remi t tances be fore h i s o b l i g a t i o n f e l l due,'!
The fo l lowing i s a complete l i s t of a l l the c o u n t r i e s which have been des igna ted by the Board as coun t r i e s i n which banks or bankers may draw d r a f t s or b i l l s of exchange on member banks approved by the Board f o r the purpose of f u r n i s h i n g d o l l a r exchange;
SOUTH AMERICA Argent ina Bo l iv i a B r a z i l Chile Peru Venezuela
Uruguay
Colombia Ecuador Paraguay B r i t i s h Guiana Dutch Guiana French Guiana
Costa Rica Guatemala Honduras
CENTRAL AMERICA
San Salvador
B r i t i s h Honduras Nicaragua Panama
Por to Rico Santo Domingo
I am,
Tr in idad Cuba
Very t r u l y yours ,
Governor*
1003
Latter sent to l i s t of banks engaged i n fore ign business* Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis
