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FEDERAL RESERVE BOARD WASHINGTON X-3U16 May 24, 1922. SUBJECT: Minimum Bate for Open Market Purchases of Trade Acceptances. Dear Sir: A t t h e i r r e c e n t c o n f e r e n c e the G o v e r n o r s of the F e d e r a l R e s e r v e B a n k s r e c o m m e n d e d t h a t n o p r e f e r e n t i a l r e d i s c o u n t r a t e "be established for trade acceptances, but that in f i x i n g rates for o p e n market p u r c h a s e s of trade a c c e p t a n c e s c o n s i d e r a t i o n b e g i v e n to the especial q u a l i t y of that k i n d of p a p e r . This recommendation h a s b e e n approved b y the Federal R e s e r v e B o a r d , and the B o a r d h e r e b y a n n o u n c e s t h a t it i s p r e p a r e d , u p o n t h e a p p l i c a t i o n o f a n y F e d e r a l R e s e r v e B a n k , to a p p r o v e a m i n i m u m rate at w h i c h e l i g i b l e trade a c c e p t a n c e s m a y b e p u r c h a s e d in t h e o p e n m a r k e t b y t h e a p p l y i n g Federal Reserve Bank, such minimum buying rate to be not less than o n e - h a l f of one p a r cent above the m i n i m u m b u y i n g rate f o r b a n k e r s ' a c c e p t a n c e s e f f e c t i v e at s u c h F e d e r a l R e s e r v e B a n k * In connection w i t h the r e c o m m e n d a t i o n referred to, the G o v e r n o r s r e q u e s t e d the F e d e r a l R e s e r v e B o a r d to c o n s i d e r t h e a d v i s a b i l i t y of a m e n d i n g its r e g u l a t i o n n o w in e f f e c t g o v e r n i n g o p e n m a r k e t p u r c h a s e s o f t r a d e a c c e p t a n c e s . T h i s r e g u l a t i o n is R e g u l a t i o n B , S e r i e s o f 1 9 2 1 , w h i c h , a s its t i t l e a n d t e x t b o t h i n d i c a t e , a u t h o r i z e s F e d e r a l R e s e r v e B a n k s , u p o n the c o n d i t i o n s t h e r e i n p r e scribed, to p u r c h a s e in the o p e n m a r k e t b i l l s of exchange, trade acceptances and bankers1 acceptances. T h e B o a r d is o f t h e o p i n i o n that there is n o o c c a s i o n at the p r e s e n t time f o r a m e n d ing this regulation. Very truly yours, G o v e r n o r . LETTER TO CHAIRMEN Copy to Governors.
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