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-f -k /? ' ig.AiJ FEDERAL RESERVE BOARD WASHINGTON ADDRESS OFFICIAL CORRESPONDENCE TO T H E FEDERAL RESERVE BOARD X-6385 October 9, 1929, SUBJECT: Sand and Gravel as Readily Marketable Staples. Dear S i r : The Federal Reserve Board has "been requested to rule upon the question whether sand and gravel may he c l a s s i f i e d as readily marketable staples, so that the storage of these materials qay be made the basis of bankers' acceptances under the provisions of lection 13 of the Federal Reserve Act. Careful consideration has been given to t h i s question in, the l i g h t of memoranda prepared by the Federal Reserve Banks of Cleveland and New York, the opinions expressed by members of the General Acceptance Committee, and information received from the Department of Commerce in reply to a. request from the Federal Reserve Board. I t appears that in the d i s t r i c t of the Federal Reserve Bank of Cleveland sand and gravel are shipped during the. montnts of the open navigation season on the lakes to lower lake ports and there stored- for~ use during the winter months. This situation, according to the information received by the Board, does not exist generally throughout the country. A ruling of the Board on a question of t h i s kind, however, mast be general in i t s nature, applying to a l l Federal reserve d i s t r i c t s a l i k e . The Department of Commerce advises that deposits of sand and gravel occur throughout the United States, and that even the higher grades have r e l a t i v e l y low u n i t value. The materials themselves have l i t t l e i n t r i n s i c value. Production i s governed chiefly Tpy local demand and car supply. With c e r t a i n exceptions, these materials are usually mined by the consumer or marketed dirdctly from the producer to the consumer. The prices received vary considerably according to grade and type, extent of competition and distance to markets. The Board i s also informed that the disposition of sand and gravel a t a forced sale could be made only at a considerable reduction from the prices prevailing i n the trade. X-6385 The Federal Reserve Board has reached the conclusion that sand and gravel are not a r t i c l e s of such usage as to make them "the subject of constant dealings in ready markets with such frequent quotations of price as to make (a) the price easily and d e f i n i t e l y ascertainable and (h) the staple i t s e l f easy to r e a l i z e upon "by sale a t any time", as r e quired "by the definition contained in the Board's Regulation A, and that accordingly they may not properly "be c l a s s i f i e d as readily marketable staples. By order of the Federal Reserve Board. Very truly yours, E. M. McClelland, Assistant Secretary. TO GOVERNORS OF ALL F. R. BASKS
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