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F E D E R A L R E S E R V E B O A R D WASHINGTON X-300C December 23', 1920. SUBJECT: Shipping Documents to be Furnished to Bank .Accepting Drafts Growing Out of Export or Import Transactions. Dear Sir: Sub-division (b) ( l ) of Section B of Regulation A of the Board*s Regulations, Series of 1920, relating to the e l i g i b i l i t y of bankers 1 acceptances, growing out of export or import transactions, provides in part as f o l l o w s : "While i t i s not necessary that shipping documents covering goods in the process of shipment be attached to drafts drawn f o r the purpose of financing the exportation or importation of goods, and while i t i s not e s s e n t i a l , therefore, that each such draft cover specific goods actually in existence at the time of acceptance, nevertheless, i t i s e s s e n t i a l as a prerequisite to e l i g i b i l i t y either (a) that shipping documents or a documentary export draft be attached at the time the draft i s presented f o r acceptance, or (b) if the goods covered by the credit have net been actually shipped, that there be in existence a s p e c i f i c and bona f i d e contract providing f o r . the exportation or importation of such goods at or within a specified and reasonable time and that the customer agree that the accepting bank w i l l be furnished in due course with shipping documents covering such goods or with exchange arising out of the transaction being financed by the credit*1 β’ The question has been raised as to the precise meaning of the term "shipping documents" as used in t h i s provision of the Board's regulation, and the Board has ruled that the term includes an order b i l l of lading or a straight b i l l of lading, whichever i s issued by the carrier in the particular case, but do6$ not include f r e i g h t reβ 1303 β2β X-30C0 c e i p t s which the Board understands merely evidence the receipt of the goods but are nob required to he returned to the carrier upon the del i v e r y of the goods. The purpose of the requirement that the accept* ing bank s h a l l be furnished with shipping documents i s not merely e v i dentiary, but i s also to put the accepting bank in possession of the documents which the carrier w i l l require as a condition precedent to the delivery of the goods, i n order that the bank may be in a position to protect i t s e l f by requiring that i t be put in funds or furnished with other security when i t releases the documents. The customer must, therefore, furnish the original b i l l s of lading and the requirement of the regulation w i l l not be s a t i s f i e d by the furnishing of f r e i g h t receipts or non-negotiable copies of the b i l l s of lading. This, however, does not necessarily mean that the b i l l s of lading must be sent to the accepting bank. The Board has ruled in connection with domestic acceptances that documents are l e g a l l y in the possession of the accepting bank when they are held by i t s correspondent, or by some other independent party, as i t s agent, and the principle of this ruling can be applied in dealing with the shipping documents to "be furnished to banks accepting drafts'drawn in foreign transactions. Yours very truly, G o v e r n o r . To Governors and Chairmen of FbetePSl Be serve Banks,