Cattle For Breeding, Grazing Or Fattening

Loans on cattle, which are used for breeding, grazing or fattening, may be made under the classification of six months' agricultural paper, and the paper may be rediscounted by a member bank at its Federal Reserve bank.

Farmers' Notes

Farmers' notes, the proceeds of which are used for tilling farms, or for draining land already in use as farm land, should be classified as agricultural paper, and are eligible for rediscount.

Notes For Farm Tractors

Notes given by farmers for the purchase price of tractors where the tractors are used to supplement the work of horses or mules, or are used altogether instead of these animals, should be admitted to discount as agricultural paper when they mature within six months.

Agricultural Paper, How Determined

Agricultural paper need not be directly secured by agricultural products, but should be genuinely based upon transactions entered upon for agricultural purposes. In such cases, a determination as to whether paper may be classified as agricultural or not is left to general banking prudence.

Discount By Maker Or Indorser

Notes given for the purchase price of a commodity can be classed as agriculture paper eligible for rediscount if they have a maturity exceeding ninety days and if the maker is to use the commodity for an agricultural purpose, regardless of whether the note is discounted by the maker or by the indorser.

Paper payable to seller of commodity - A note may be treated as agricultural paper, whether discounted with the member bank by the farmer as the maker, or by the seller as the indorser, where the farmer makes his note payable to the seller of a commodity, and actually uses the commodity for agricultural purposes.

Paper Payable To A Bank

Where the farmer makes his note payable to the member bank, and uses the proceeds for an agricultural purpose.

such a note may likewise be discounted by a Federal Reserve bank as agricultural paper. However, if the farmer does not use or intend to use the commodity purchased for an agricultural purpose, although it is capable of being so used, the note in question should be treated as commercial paper and not as agricultural paper.

Agricultural Paper, How Identified

A purchasing member bank would have to satisfy itself in some satisfactory way that the bill is substantially of an agricultural character. The nature of the bill, the name of the acceptor, and the name of the drawer would probably indicate that a farmer was the purchaser, and an implement dealer the seller of the goods. As sufficient evidence of its agricultural character, a simple memorandum attached to the bill stating that the bill was drawn in payment of agricultural implements, signed either by the acceptor or the drawer, would probably be sufficient.

Amount Of Paper Rediscountable By Federal Reserve Banks

General Statutory Provisions