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FEDERAL RESERVE BANK OF CHICAGO
79 WEST

MONROE STREET

Chicago, March 30 , 1918 .
Bull eti n No . 104 .
TO BANKS AND BANKERS
I N FEDERAL RESERVE DI STRICT NUMBER SEVEN:
Dear Si r :
We beg to call your attention to the following l etter
a ddressed by W. P. G. Harding , Governor of the Federal Res erve
Board , which is s elf-explanator y:
"The Board has receive d many inquir i es of l a t e as to
the eli gibility of not e s given by f armers in payment of
tractor8 used by them in agr i cult ural operations . The
Board has already rul ed that notes given for the purchase
pric e of farm implements whi ch a r e t o be r esold may be
di scounted as commerc i al paper, and if the implements ar e
to be used for an agricultural purpose, notes given in
payment may be discounted a s ag ricultural paper . The
Board ha s considered the question whether a tractor can
be regarded as a farming implement or whether it must be
treated as a permanent fixed investment. While it is
expected that the use of a tractor will be extend ed over
s everal seasons , this ci r cumstance does not make necessary
the classificat io n of a tra ctor a s a fixed investment . Horses
a nd Mules bought for farm work are purchased with seve ral
years ' use in view , ye t the r e can be no que stion that a
note give n by a farmer i n pa yment of a pair of mules to be
us ed in farm wor k, matur ing wi th i n six months , i s elig ible
as agricultural pape r. Wh ere tractor s are used to supplement
the work of horses or mul es or are used altogether i nste ad
of these animals , it seems to the Board that notes given by ยท
f armers for the purchase pri ce of tractors, and maturing within
six months , should be admitted to discount as agricultura l
paper , and yo u are req uested to advise your membe r banks
ac cordin gly . "


https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis

Very truly yours,
JAMES B. McDOUGAL,
Governor .