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circular Ho*18-A jorioa of 1C20# iA & A A to iL>CAUV13 BAITfl. Of HallcS. Hay 13 ,,1920. ooiijosioa or s a a d s a a as p 2a i c ue, 20 2113 BASK ADDRESSED* Eho use o f trod© acceptances is being adopted by aa increasing number o f business concerns over the entire United s ta te s . I t is probable, therefore, that acceptances w ill oomo into your hands in increasing numbers, for c o lle c tio n , from batiks in every part o f the country and in same instances d ire ct froa too drawers* I t has cone to our attention that a great many baffles receiving trade accept ances for c o lle c tio n , have presumed such iteca to bo ordinary coamercial d rafts drawn against unpaid or past due accounts, and have n o t, therefore, accorded such items the treatment which their importance deserves* llany trade acceptances have boon r©~ turned unpaid with such notations as S*!3ays w ill rem it,” if,M s Company never pays drafts,*’ and ir£o response to n o tic e ,” e t c . , only to find that the acceptor who i s toe drawee, has not boon presented with the item or has boon called on the telephone end advised that a d raft was being hold for c o lle c tio n . we deem i t advisable, therefore, to s o l i c i t your co-op oration in the in te re st o f good banning service and sound c r e d it, in the handling o f those items* A trade acceptance is a d raft drawn by the s o il or of goods on the buyer fo r a specified time, end when sent fo r c o lle c tio n , has already been presented and accepted by the buyer, whereupon i t becomes h is ob ligation and a valid promise to pay on the specified date* I t i s therefore a negotiable instrument, as binding upon the acceptor as hi a promissory note, and a l l suoh items are in fa ct subject to protest unless otherwise stated. S ta tistic® show that a very largo percentage o f trade acceptance® are paid at maturity when properly presented and therefore rr esent ins ba*&3 can render a service to th eir customers as m i l as creating a source o f revenue for themselves, by giving items o f th is character d o so attention* frade acceptances are usually ne&e payable at the drawee *s own batik at toe time o f acceptance, cad the holder usually recognises the pref erence o f toe acceptor by sending h is acceptance to the batik where i t i s payable* I t has not been the custom in th is part of too country to charge to tho maker's or acceptor*s account the amount o f any negotiable instrument made payable a t M s bank:, except a Chech* IThen a trade acceptance is received for c o lle c tio n , therefore, care should bo taken to observe the following* ( 1 } She item should bo presented at toe bank or other £>laee where i t is made payable, but i f tho bank at which presented has no instructions to pay, the item should be presented a t tho acceptor *3 o f f i c e , or the acceptor should bo n o tifie d of non-pay ment by the bad?: at which ho made the acceptance payable* (2) when an acceptor is n o tifie d ho should be made to clea rly understand that i t i s an accepted d raft with a maturity and should not bo merely advised that you hold a d raft on him, etc* h i l l you please seo that th is le t t e r 5.3 brought to tho attention o f your Collec tion Department so that in too. in te re st o f the trade acceptance system, which premises so much for tho benefit o f the banker as w ell as h is customer, i t may to prepared to handle such items correctly whenever they r each your hands* Respectfully, K .l. Van 2 a n d t , (r o(FedHistory@dal.frb.org) vem or This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library
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