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±001 EX OFFICIO MEMBERS CARTER GLASS S E C R E T A R Y j i U HE TREASURY pE CHATEMAI WA M N JOHN SKELTOH WILLIAMS COMPTROLLER OF THE CURRENCY FEDERAL RESERVE BOARD W. P. G. HARDING. GOVERNOR ALBERT STRAUSS. VICE GOVERNOR ADOLPH C. MILLER CHARLES S. HAMLIN HENRY A. MOEHLENPAH W . T . C H A P M A N . SECRETARY R . G . E M E R S O N . ASSISTANT SECRETARY ADDRESS REPLY TO FEDERAL RESERVE BOARD W . M. IMLAY. FISCAL AGENT WASHINGTON December 16,1^1$. Subject: X-1764 Usages of Trade i n Foreigp Countries. Dear S i r s « Section 13 of the Federal Reserve Act provides t h a t "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 i g h t t o run, e x c l u s i v e of days of grace, drawn, under r e g u l a t i o n s to be prescribed by the Federal Reserve Board, by banks or bankers i n f o r e i g n countries or dependencies or insular p o s s e s s i o n s of the United S t a t e s f o r the purpose of f u r n i s h i n g d o l l a r , exchange as required by the usages of trade i n the r e s p e c t i v e c o u n t r i e s , dependencies or i n s u l a r p o s s e s s i o n s , 8 Under t h i s a u t h o r i t y the Board has from time t o time determined that the usages of trade i n the c o u n t r i e s , dependencies or insular p o s s e s s i o n s l i s t e d below require the granting of acceptance f a c i l i t i e s f o r the purpose of c r e a t i n g d o l l a r exchange. The Board i s now engaged i n r e v i s i n g the l i s t . As an i n s t i t u t i o n ^ f a m i l i a r w i t h the usages of trade i n the r e s p e c t i v e c o u n t r i e s , dependencies and p o s s e s s i o n s , l i s t e d below, the Federal Reserve Board would be glad t o r e c e i v e from you such information as may be i n your p o s s e s s i o n as t o the usages of trade i n each such country, so f a r as such usages may a f f e c t the r u l i n g s of the Board i n r e s p e c t of d r a f t s drawn f o r the purpose of f u r n i s h i n g d o l l a r exchange. The Board i s under the impression that i n some of these c o u n t r i e s the usages of trade do n o t nov* require the f a c i l i t i e s authorized by Section 1) f o r the purpose of f u r n i s ing d o l l a r exchange, and t h a t the Regulations of the Board i n t h i s r e s p e c t require c a r e f u l r e v i s i o n i n order that b i l l s drawn under the s a i d p r o v i s i o n s of S e c t i o n 13 s h a l l not i n e f f e c t become mere finance b i l l s . -2» ' X-1764 As, b e a r i n g on the purpose of the quoted p r o v i s i o n s of S e c t i o n ^ | p 13 f your a t t e n t i o n i s d i r e c t e d t o pages 565 ana 666 of the F e d e r a l Reserve B u l l e t i n of December 1, 1916, from which the f o l l o w i n g q u o t a t i o n i s made: 1003 "The purpose of t h i s Act and the r e g u l a t i o n made p u r s u a n t t h e r e t o was t o enable the American banks t o p r o v i d e d o l l a r exchange i n c o u n t r i e s where the check i s n o t the c u r r e n t means of r e m i t t a n c e i n payment of f o r e i g n d e b t s , b u t where the t h r e e months 1 bankers * d r a f t i s g e n e r a l l y used f o r t h a t purpose# 1 * * * * * * The Board i s informed t h a t the bankers 1 1 custom of s e l l i n g t h r e e months 1 d r a f t s i n p r e f e r e n c e t o checks o r i g i n a t e d i n c o u n t r i e s where t h e m a i l c o n n e c t i o n s were i r r e g u l a r and the f o r e i g n exchange market was a l i m i t e d one, and where i t would have been d i f f i c u l t f o r the drawing banker t o be c e r t a i n t h a t he could f i n d a cover a g a i n s t the checks drawn by him i n time t o forward i t b y the same m a i l , where a s , i n drawing a t h r e e months ' d r a f t he would f e e l a s s u r e d of b e i n g able t o forward r e m i t t a n c e s b e f o r e h i s o b l i g a t i o n f e l l due,'! The f o l l o w i n g 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 d e s i g n a t e d by the Board as c o u n 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 t h e purpose of f u r n i s h i n g d o l l a r exchange; SOUTH AMERICA Argentina Bolivia Brazil Chile Peru Venezuela Uruguay Costa Rica Guatemala Honduras Colombia Ecuador Paraguay B r i t i s h Guiana Dutch Guiana French Guiana CENTRAL AMERICA San Salvador P o r t o Rico Santo Domingo B r i t i s h Honduras Nicaragua Panama Trinidad Cuba I am, Very t r u l y y o u r s , Governor* Latter sent t o l i s t of banks engaged i n f o r e i g n business*
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