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FEDERAL RESERVE BANK OF ST. LOUIS.
000
Omitted
8000

This Chart is compiled from reports
to the Comptroller of the Currency. The
heavy black line indicates amount of
rediscounts with the Federal Reserve
Bank of St. Louis; the dotted line indicates money obtained elsewhere.
On December 31st, 1915, paper rediscounted with the Federal Reserve
Bank of St. Louis for Stockholding
Member Banks amounted to $1,200,000,
while the total of obligations for money
obtained elsewhere was over $4,200,000.
The average rate paid the Federal Reserve
Bank of St. Louis on rediscounts was
4.08%. The average rate paid on money
obtained elsewhere was 4.91%.

Discount Rates of the Federal Reserve Bank of St. Louis, in effect
February 15th, 1916. Subject to change.
Maturities
of 10 days
and less

Maturities of over Agricultural and Trade acceptances
to
live stock paper over
10 to 90
days inclusive 90 days to 6 months 90 days inclusive

Commodity
paper

5%

3%

3%



4%

REDISCOUNTING
WITH THE

FEDERAL RESERVE BANK




OF ST. LOUIS

Copyrighted by the Federal Reserve Bank of St. Lou's




February, 1916

CONTENTS.
Necessity of general knowledge of Rediscount regulations.
Maturities.
Certification that paper is eligible.
Financial statements of borrowers*
Merchants' notes.
Manufacturers' notes.
Agricultural Paper,
Notes secured by chattel mortgages;
Notes secured by warehouse receipts;
Notes secured by other collateral.
Renewals.
Endorsing and forwarding notes for
rediscount.
Rediscounting, for a fixed periodPaying off rediscounted notes.
Bankers' Acceptances;
Trade Acceptances;
Bills-of-Lading Drafts;
Bills of Exchange.
Rediscounting not an emergency.
Warrants.
Index.




—3 —




THE NECESSITY FOB A GENERAL
KNOWLEDGE OF REDISCOUNT
OPERATIONS.
This Bank will prove successful to the
extent that it and its Members develop
into a harmonious working unit. The
rediscount feature of the Federal Reserve
Act is such an important one, that this
development of the Bank must depend
to a great measure upon the knowledge
by its Members of the principles governing rediscount operations.
Some twelve months ago, this Bank
issued a letter setting out the qualifications of paper eligible for rediscount.
This booklet is written to put into a more
convenient form the principles set out in
that letter and to add thereto the results
of the year's experience.
Paper rediscounted for Member Banks
is the basis for Federal Reserve Notes.
This being true, it is necessary to exercise




-5-

every care possible in the rediscount
operations of a Federal Reserve Bank.
Every note accepted here may possibly
become collateral for the Federal Reserve
Currency. This Bank is confident that
every Member Bank in its District
realizes that the Federal Reserve Bank
is charged with the duty of safeguarding
the collateral for currency. To do this,
it is necessary to have certain regulations
governing the rediscounting of notes so
that the paper accepted shall be fit to
serve as such collateral.
This booklet sets out these regulations
or standards and the reasons therefor.
It is sent to Member Banks to familiarize
them with the qualifications of eligible
paper and in the hope that it will be
retained for reference.




—6—

MATURITIES.
The paper acceptable for rediscount
is that made by borrowers engaged in
farming, merchandising, manufacturing
or mining. The paper must be both
eligible for rediscount and safe as an
investment for this Bank's funds.
Eligibility is based upon the use made
of the proceeds of the note by the borrower. It is fixed by the terms of the
Federal Reserve Act under the regulations of the Federal Reserve Board.
The safety of the paper as an investment for its funds is determined by the
Federal Reserve Bank.
It is important that officers of Member
Banks become familiar with these factors:
eligibility, and the methods used by
this bank to determine safety.
The general rule may be set out here
that if the proceeds of the paper were




—7 —

used in the current transactions of the
borrower's business, and the paper has
the required maturities, it is eligible for
rediscount. The requirements as to
maturities are:
All paper must be payable at a fixed
date.
Agricultural paper, or paper based on
live stock, may have a maturity up to
six (6) months from the date it is offered
for rediscount.
All other paper must mature within
ninety (90) days from the date it is
offered for rediscount.
The time limits are calculated from
the date the note is offered for rediscount.
A note written for six (6) months, but
having only ninety (90) days to run from
date rediscounted, comes within the
limit fixed for ninety (90) day paper.




—8 —

CERTIFYING TO ELIGIBILITY BY
THE MEMBER BANKS.
The Federal Reserve Act places upon
Member Banks the duty of knowing
whether or not the paper offered for
rediscount is eligible under the law.
To be eligible for rediscount, the proceeds of the note have been used or will
be used in producing, purchasing, carrying or marketing goods. It is quite true
that the officers of Member Banks may
not knowthat theproceeds ofaparticular
note have been used in the manner above
defined. In the absence of this positive
knowledge, this would cause hesitancy,
and rightly so, upon the part of an officer
in certifying to the use of the proceeds.
This certification is to insure the rediscounting of only that paper prescribed by
the Act. Since this is the purpose, it
serves every theoretical and practical end
if the Member Bank shows by a financial




—9 —

statement of the borrower that the borrowed money is employed in the current
transaction of business. It can be assumed
that the money is thus employed and
certification rightfully made as to eligibility, if the borrower's financial statement shows that the current assets exceed
the current debts. It is evident from
this that Kediscounting goes hand in
hand with Financial Statements of borrowers.
It is in fact impossible to establish
standards of rediscountable paper
without the assistance of financial
statements of borrowers.




—10—

FINANCIAL STATEMENTSThe advantages of having borrowers
furnish financial statements are conceded
by every one.
The larger banks now maintain credit
records which contain in one form or
another information regarding their
borrowing customers* No matter how
small the bank, or how well its borrowers
are personally known to the officers, the
bank is benefited if it has, as a matter of
record, information on which its investments and loans have been made. There
is no argument which can be advanced
to support the practice of a bank's officer
carrying in his head information which
belongs to the bank. Many things can
happen that might suddenly deprive the
bank of this knowledge. It is infinitely
better to have this information in the
form of signed statements furnished by
the borrowers themselves; but, when




-a-

such cannot be obtained, without detriment to the bank, there is no good reason
why the next best thing cannot be done
and have the officer record his knowledge
of every borrower's condition.
Financial statements sent this Bank
are received and held in the strictest
confidence. Member Banks are authorized to give this assurance to their customers. Copies are made for this Bank's
use, and the originals are returned to the
Member Bank. An annual statement, or
a statement made during the current year
is sufficient. When a statement has been
filed here, it is not necessary to send the
same statement if a note of the same
borrower is offered again during the year.
Recognizing the difficulty, in some
instances the impossibility, of obtaining signed financial statements of
borrowers, this Bank accepts in its
discretion statements of a borrower's




-12-

condition made by a Member Bank's
officers.
A supply of financial statements will
be furnished Member Banks, without
charge, on application, for the use of their
customers. Forms of these statements
appear on pages 35 to 40.




-13*-

QUICK ASSETS AND CURRENT
LIABILITIES.
The discussion of rediscounts cannot
proceed further without a full understanding of the terms "QUICK ASSETS"
and "CURRENT LIABILITIES", which
will appear so often in this booklet.
"QUICK ASSETS" are defined to be:
Articles intended for sale in the customary transaction of the owner's business,
and resulting assets created by their
sale, namely: Cash, Accounts Receivable, and Notes Receivable. It is well
to fix here the sharp distinction between
"Quick Assets" and "Fixed Assets."
"Fixed Assets" are Real Estate, Plants,
Machinery, Equipment and other assets
which the owner does not purchase to be
sold in the ordinary conduct of his
business.
"CURRENT LIABILITIES" are debts
represented by notes or accounts which




—14—

are payable within a period of say thirty
days to six months. These should be
separated from mortgage debts or bonded
debts, which mature over a period of
years.
In the consideration of a loan, it should
be noted whether the "QUICK ASSETS"
exceed the "CURRENT LIABILITIES."
When this is not true, the conclusion is
evident that part of the borrowed money
is being used for the purchase of fixed
assets, or for the payment of debts which
were contracted for fixed assets.
The amount of the excess of Quick
Assets above the "Current Liabilities"
is commonly termed "THE MARGIN
OF QUICK ASSETS." To what extent
this margin should exist, to make the
paper desirable for investment, is a
matter for the judgment of the Banker
making the loan. In considering the
paper here, this Bank exercises the




-15-

same right of judgment in determining
whether the paper shall be received,
MERCHANTS' NOTES.
Jobbers and Wholesale Merchants
stand between the original producer and
Retailers. Attention is called to the fact
that the ACCOUNTS RECEIVABLE of
a Jobber are largely due from retail
merchants, and, are collectable as a rule,
and that his merchandise is in unbroken
packages and is readily salable in the
event of liquidation.
Retail Merchants stand between the
Wholesale Dealers and the general public
in the distribution of merchandise. Since
the ACCOUNTS RECEIVABLE are
largely due from individuals, and the
merchandise consists of a widely distributed variety of articles, more difficulty
will be met in realizing upon these assets,
should it become necessary. The MARGIN OF QUICK ASSETS should neces-




-16-

sarily be large, in considering paper of
Retail Merchants as contrasted with that
of Wholesalers, for the reasons given
above. This is no reflection upon the
Retail Merchant's paper, but is simply
setting out well established principles of
credit. This Bank has taken notes of
Retail Merchants freely in the past, and
there is no reason for hesitancy on the
part of Member Banks in offering us
such notes.




-17-

MANUFACTURERS' NOTES.
Manufacturers of staple merchandise,
sold through the regular channels of
trade, stand close to the source of production. Their Accounts Receivable are
due from merchants rand other distributers. Their raw material and finished
product would generally command a
ready sale in the event of liquidation.
It is a well recognized principle that a
manufacturer should have capital sufficient to cover his investment in plant,
machinery and equipment less the
bonded or mortgage debt on same. His
borrowed money will be represented by
raw material, finished and unfinished
product, and current manufacturing expenses. The fixed investment of a manufacturer is often so large that there
exists a small margin, if any, between
"Quick Assets" and "Current Liabilities." The earning power of the




—18-

business is such an important feature
that proper consideration of a manufacturer's statement cannot be made
without the collateral information furnished by the profit and loss statement
reflecting the earning power and the
turn over shown by the sales of product
This Bank gives special attention to that
feature of a manufacturer's statement,
in those instances where a MARGIN OF
QUICK ASSETS does not exist.
During the past year, several Member
Banks have related examples of loans to
manufacturers made expressly for carrying accounts and purchasing raw material,
which would be repaid from the collection of said accounts and sale of the raw
material when manufactured, yet which

would be ineligible for rediscount
under any fixed rule requiring a
margin of quick assets in the borrower's financial statement.




-19-

In such

instances, when the proceeds of the notes
were used as indicated, and this fact
is within the knowledge of the Member
Bank, this Bank will entertain the offering
of the paper. Every consideration will
be given to the circumstances surrounding the loan in passing upon the paper.
The principles set out above will also
apply to notes given by Companies
engaged in the mining of coal, ore, or
quarrying stone, etc.




—20—

AGRICULTURAL PAPER.
Notes made for the raising of crops,
purchasing and preparing live stock for
market, and carrying on the ordinary
operations of agriculture, are eligible for
rediscount.
The principal distinction to be kept in
mind is whether or not the money will
be used by the farmer in such a way as
to enable him to repay the loan from the
products obtainable by its use. This
liberal construction does not embrace
loans made for the purpose of acquiring
land, or making permanent improvements.




—21—

NOTES SECURED BY CHATTEL
MORTGAGE ON LIVE STOCK;
or WAREHOUSE RECEIPTS FOR
STAPLE COMMODITIES.
Notes accompanied by chattel mortgage on live stock, which in itself is
sufficient to insure the payment of the
loan, are eligible without financial statement of the borrower. Any information
accompanying the note assists this Bank
in determining the desirability of the
paper. This information need not be in
the form of a financial statement.
Notes secured by warehouse receipts
for staple commodities, such as cotton,
grain, tobacco, etc., need not be accompanied by financial statement of the
borrower. If the warehouse receipts are
issued by a public warehouseman, chartered by the State, the collateral will
be sufficient. If issued by other classes
of warehousemen, some information




-22-

should accompany the note, reciting the
financial strength of the warehouseman.
NOTES SECURED BY OTHER
COLLATERAL.
Notes secured by other collateral are
not ineligible if the notes are given for
Commercial, Industrial or Agricultural
purposes, and not for the purpose of
carrying the collateral attached. Such
notes should be accompanied by a specific statement from the Member Bank
that the collateral was taken as additional
security and the proceeds of the note
are not invested in the said collateral.




—23—

RENEWALS.
The subject of renewal has given rise
to more erroneous opinions regarding
rediscount operations than any other
single subject. It is a well established
custom of merchants and others to borrow money from a bank and to employ
it in the current transactions of business.
When the note matures, a new note is
taken in its place, and this is commonly
termed A RENEWAL.
If the merchandise bought from the
proceeds of the first note has been
absorbed in the trade of the merchant,
and the new note is to make fresh purchases, the new note is not a renewal,
but is in reality a new loan. So long as
the Bank is not furnishing capital to the
borrower, there is no reason why it
should not continue making these new
loans, on the retirement of the old ones.
How, then, may a Bank determine when




—24-

this is good practice? Simply by the
condition reflected in the borrower's
financial statement, showing the MARGIN OF QUICK ASSETS, the sales and
purchases of merchandise.
Here, again, is emphasized the importance of a bank requiring financial statements from its borrowing customers.
The current purchases and sales of merchandise have a relation to the needs for
borrowed money, and will reveal if the
new note is given merely to carry old
merchandise, or, if it is, in reality, given
for new transactions. The Banker exercises his discretion as to the desirability
of discounting new notes at the maturity
of the old ones. This Bank exercises the
same discretion. This statement should
dispel any idea that because a note
is a so-called renewal, it will not be
accepted here. The quality of the
note is the real test.




—25-

ENDORSING AND FORWARDING
THE NOTES.
Notes sent for rediscount to the Federal
Reserve Bank should be endorsed by
the Member Bank. The following form
of endorsement is suggested, but an
endorsement in blank is permitted if the
Member Bank prefers it.
PAY TO THE ORDER OF
THE FEDERAL RESERVE BANK OF ST. LOUIS.
DEMAND, NOTICE AND PROTEST WAIVED.
(Name of Bank)
By
President or Cashier.

The notes should be listed on Form
D. G. 4. This form appears on page 34.
Member Banks will be furnished these
forms, on application without cost.




-26-

REDISCOUNTING FOR A FIXED
PERIOD.
It often happens that a Member Bank
needs money for, say, thirty or sixty
days, and does not desire to be under
discount for a longer period. At the same
time, it may not have sufficient eligible
paper with exactly that maturity. Under
these circumstances, it may offer its
paper, and if it desires to retire the
rediscount before maturity, this Bank
will, on request, charge such notes to its
account and return them. If this Bank
has had the paper for as long as fifteen
(15) days, the full unearned discount will
be refunded the Member Bank.




-27—

PAYING OFF REDISCOUNTED
NOTES.
At their maturity, rediscounted notes
are charged to the account of the Member Bank discounting same. Ten days
prior to the maturity of each note, it is
sent to the Member Bank, so that it may
be in the hands of the Bank in ample
time for presentation and collection. It
is not necessary for the Member Bank
to remit separately for each note, provided it has sufficient funds in this
Bank to its credit to cover the note at its
maturity. This applies to notes which
are not secured by collateral.
Notes secured by warehouse receipts,
chattel mortgages or like pledges, are
held here until maturity, but ten days
before maturity the Member Bank is
notified, so that it may provide funds to
cover; or, if desired, the note will be




-28-

mailed to the Member Bank before
maturity, by arrangement.
BANKERS' ACCEPTANCES.
This Bank is constantly in the market
for Bankers' Acceptances. In some
States, the banking laws permit State
Banks to accept drafts drawn on them
payable at a distant maturity for domestic
transactions. The St. Louis Federal
Reserve Bank is constantly in the market
for prime acceptances of this character,
with or without the endorsement of
Member Banks. Acceptances of National
Banks are by law limited to transactions
relating to the importation and exportation of goods.




BILL OP LADING DRAFTS.
A large volume of merchandise is sold
in this District for payment by drafts
with Bills of Lading attached. Drafts
drawn on demand, or at sight, or for a
period not exceeding fifteen (15) days,
will be accepted for credit, on receipt,
when endorsed by a Member Bank with
Waiver of Protest; provided, the drafts
are accompanied by Bills of Lading made
to shippers' order without other conditions, and covering staple marketable
commodities. On receipt of these drafts,
credit will be given to Member Banks,
and the drafts sent for collection to the
place of payment. When this Bank is in
receipt of proceeds, an interest charge
will be made for the actual time
elapsing between the date of the receipt
of the draft and the date of payment
to us. Interest will be calculated at the
same rate per annum as this Bank's




-30-

current rate of discount, on thirty
day notes. Exchange charges, if any,
will be added to the interest. Drafts
drawn on demand, but which are to be
held for payment until the arrival of cars
covered by attached Bills of Lading, can
be received for immediate credit under
arrangement with the Member Bank
which will provide that if any draft
remains unpaid for fifteen (15) days
after its receipt by us, it will be charged
back to the Member Bank's account,
and entered for collection. These drafts
are not to be listed in the regular cash
letter, but should be sent in a separate
letter.
Member Banks desiring to use this
service, with this Bank, may make
arrangements for us to handle such
drafts regularly.




—31—

TRADE ACCEPTANCES.
When a draft has been accepted by
the drawee, it can be defined as an
accepted Bill of Exchange, or a "Trade
Acceptance."
This Bank is permitted to buy Bills of
Exchange, provided the said Bills conform to the regulations issued by the
Federal Reserve Board. At any time
that a Member Bank deems it advisable
to sell such Bills, this Bank will entertain
the offering.




-32—

REDISCOUNTING NOT NECESSARILY LIMITED TO AN
EMERGENCY.
So much publicity has been given to
the Federal Reserve Act, and especially
the important provisions for rediscounting, that the item "REDISCOUNTS
WITH THE FEDERAL RESERVE
BANK," in the bank's published statement, does not reflect anything except
that the bank is turning over customers'
paper to give to other customers the
benefit of the funds thus released* It
signifies more than anything else that
the bank has in its assets paper which
will pass the scrutiny of the Federal
Reserve Banks.

Rediscounting with the Federal
Reserve Bank is a current, not necessarily an emergency operation*




-33-

FEDERAL RESERVE BANK.
St. LOUIS. MO.

Ity vwfW inm OM m raw •
ln, iiecpthif ifricullor.I p

DEAD SiftS:
bees to submit herewith (or rediscount the (allowing notes or Kcepttnce* eligible under section U of the
Federal Reserve Act. duly endorsed by it ind iwhrfag deiMnd notice tnd protest-

The itxrve described note* iff endowd htrewHh and «r» iubmhtcd for nj3»c«tnt tt the |oin« B u *

T * the bett «l ow koowMct tad htllef toe Iwm remsentrd by tb> ibeve ortn »er« nude lot
urturil. UdustHtl. «r camaicrd*r purposes and the prwrition* «l the Fedetil kntn*

Act •Od tin

lttloMfacwdby the Federal K n e w 8 M M h*v» been OMiplied with.
Ovr (»n» PiymUe M thUdite ire I ,




. ; wit iwtisawnted irtpw nettaKlvtingthi*

-34-

CREDIT STATEMENT—ACRI CULTURAL.

Fortbtpurpou ol procuring ctmiii fnvn lime u line with you Ua • ) / nefottlbU pnpw at otherwlte, Ikmlihtl
oi my Eauiciil condition on
which naj htruflttt* CMtidcrol u ivprn«ituX »In* tUMWOt ef a
itolcu Aetic* of t^iirfir ii (irro you.

PROPERTY OWNED BY UNDERSIGNED
CASH illfainkn i l on k u d ,

..

r

x

DEBTS DUE BY DNDEKSIGN£D
ArmiTMTit P AVAttT.h h, « .

._

GOOD ACCOUNTS due BW

w r r a s PAVAfti.it h j h .

COOn NOTES Anfc.nJ

Mnair.»fiE MOTR* <»« t>7 — .

LIVE STOCK on h*nd, i h w kind and n l u *

ALL OTHER DEPT?.,

FARM PRODUCTS on Itnd: tr»lo (ottoa, tiiy, Ind at

PtTri HTNOt "- 'TTH *•* wnttN.
c r r y BEJIT. FSTAT* i'«"r

• j hay* endowed otaMrtmmfl. notgB
for other TJeople f o r |
TOTAL DEBTS

TOTAL PROPERTY

QUECTIONS TO B£ ANSWERED REGARDtNC FARM LAND.

M fotlowi: R w p , S«tJ«, Towa.bip. £ t c _

Any HMMibW 7 « t , ttui (awl witl piwtjc* per a m : .




—35-

~- loig h m you own«d tUit I»Bdf_
MJ pan i**t*4; t w muei, todfa*wlut «
auto fitmi_

iwhu price p*r mw, kan impwwd tow it your «irhtwkwd »W duting pMt y«trf

! fcml* wUmoty deeUn ud e«ti(y thi. A* ttwt* u t trut u w w u <J mj I w c U cowliliM




-36-

&S5SS
d of butiaett fully and state whether wholesale or retail.)
For th« pttrpose of procuring credit from time to time, the udertiztted hereby make* to yo« tit* following statement of th*
condition of the undersigned on the—
d a y _
•
»?—-I »
hereby miirttAini and guarantees that said statement U id aU respects true and correct; and yoa m*y consider •
the peewiiary respootibility of the undersigned u coBtiwting to be tnc and correct until written notice of • chai
by the undersigned.
LIABILITIES

ASSETS

BILLS PAYABLE U"« tm • ^ i - d u .
BILLS PAYABLE « t « i - ^ w • » Wto
BILLS PAYABLE « t « i « iU^mU «f
BILLS PAYABLE *>iln*>n*m*oUUm
ACCOUNTS PAYABLE
DEPOSITS OP MONEY WITH OS
MORTGAGE ON REAL ESTATE
CHATTEL MORTGAGE DEBT
OTHER LIABILITIES

CASH OB hand
CASH la
JanV
NOTESJRECEIVABLE of ctutomert
ACC^UNTSRECEIVABLE of cwtomers
NpTESjBd^A^r^NT^RECnVABLE

REAL ESTATE used to ladota
FIXTURES «sed hi bubes*
OTHER ASSETS!

TOTAL LIABILITIES
NET WORTH

•rAPITM STTX-r
t
ST7FPT.RS * PROFITS t

-. ,
TOTAL

TOTAL
PSOFIT AND LO*3 ACCOOMT. T15CAL TXAR KWDIKQ-,

CROSS PROFITS
From If tftfcurffae
From InrettiBeaU

Ba4 Debt, charged oft
Withdrawal* or DMdetttt Paid
Ktt Profit*

Soldi
Net Worth t h o n by t*M rt»t*
«• fcu4 o . thtt d»tt.
Total wlei of awftbtadtw faith* »
O« wl*t uwtt an •ortgafts %
It
What
What.,

it of w o n t s u d bllla nccittMe m put 4«* «ad «tefcW? 1

Vswl tenu on wVkh jo« •
T«*>1fi«l«*lor pMt tw«lr«




-37-

Arc any Bills payable fWea by jwu to Banks or others, ttcortd by pledge of eclUtwaL endorsement, parantet or bond?

If BO, ghre

unouni of sties Bills Payable and how secured-^

b aitj part of items. -Notes RteaT^J* of Customers" or "Accounts Receivable of Customers." doe trom allied companies or final b

Accounts ReceWablt.

Notts Receivable.
Timefcavcbees in bewne
IVhat Utharacter of r»w material?

(Pleue iniww t

h raw material prepared tpedally for your <uc or cao it be tued by other maaafacturers ia *ame Hoe? ( P I U M ktuwer f

Itavt all bad and doubtful assets been eliminated from foregoing statement? Bank Acconmj, where kept?

It a Corporation, GU out following schedule;
OFFICERS AND DIRECTORS.
NAME IN KULL

TXTLE

No.ofShares4Jeld

ADDRESS

If * rVtaenhip. fiH oot folk>*tiia schedule.
PARTNERS.
NAME IN FULL

Iiutnul Wi tUi

bptrnJui H
Lta-ted U

ADDRESS

.
1 hereby certify that to the best of my knowledge and belief, the figure* and Information given arc, ta every respect, true and
ia t c c o r d u u wfth the fact*.




(»•* Ornnttai w Firm MM* Dm)

- 3 S -

LocationB«*neu_
For die pttrpose of procuring crtdit from time to time, the undersigned hereby nukes to yon the following statement of tot con*
dition ol the undersigned on tb<
day
19
:; and the andersijueil
bereby maintains and guarantees that iaid statement b in all respects true and correct; and you njay.eoitsidcr said statement as to Ilir
pecuniary responsibility of the undersigned.as contiuulng't&be true and correct nnttl written notice of a change it given to yoa t>j i!ie
tm erngne
^ ^ blank*, witting •no* ot "none" where necessary to complete Information.
LIABILITIES

ASSETS
Cast on hand
«"««•» in ,..,
,.,
, . ..
Bills Reeeirahle, from Customers, good

n

—
"lV
>—

—

—

Bills Payable, to Bank or Banks—________
Sills Payibfe. otbcr*i_e disposed of.
Bill* Payable, to Partners, Directors or Stock-

Accounts Receivable, from Customers, good

(Not mattered or ptcdtcd)
SiHs and Accounts Receivable, dor Inm Pinner*
Ofetn q* SuKkheldct* (not tru-fernd or »i«)«*d>—

Merchandise, fm.shed

—

_

Accounts Payable, to Partners, Directors or
Stircknfrfdrr*
Mortgage on Real F«*»>-

___

Chanel Mortgage Deb,

li

Real Eatate (market value/tue'd in tins business^
ttD;i4iA£« n^d ; n tfatt hit'ntit.,, .,,., Machinery aod Fixtures nsed in this business^—
Other Asset* tte.

TOTAI i TABi_rnFs____
•CAPTTAt STru-K

—

«

(*Fm eat •»•*€ s EH* if « > » « < » ;
TOTAL
Dr.

—

—

TOTAL

PROFIT AND LOSS ACCOUNT, FISCAL YEAR ENDING
DISBURSEMENTS

For ail expenses, inchxiing material bocicnt,
•factoring aod general expense.
For deprecUtion, IAJ debts, etc
Withdrawals or Dividends pai
Met Profib added to MU

From Sales of Prod.
Fran tdTeitnxats_
From all other s
Total—
Date ol hst annual statenunt preceding abort

Total of Inrentories of Raw Material. Finidted
and Us&ilahcd Mertbudue, shown In that stata*
Amount of tales doc* thai data to 4at* of a b m
On what auets a n mortgage* a tien?
t *a, fiT* datt of im

Is Statemeat based oa actnal in,
How is vantation vrtftd at? Oa Raw Mat
How It Tana&w armed at? Oa TJ&fiusbe
Hew it vahutkm arrived atr Oa Ftoished Mcr
Total Sties for past tw«he awaths $




-39-

Art U 7 Bin* pcysbt* ^ m by fv* to Biak* « ottun, want

by pltdc* ol ceJUttnl, wofei

d bow Mcured

.

——•

It »ny put of Itcsu. "Nottt ReetlTible of Cuitoaert" or "AceoonU R««tv*bU ol Cutomcrt," ivt from *Uie<l comp*n»tt a
t« **ifch ywi-mrt ihteretttd?
If w, tin •mornitj, |

.
Note* Reetlnblc. t

—

•

—

.—> AceounU Re«bf»btfc

Time IUTC been in t>
Ami wtwBi tueceeaed

Sutc U.t 4at« of Utrfnt trial b t l u u <jf y o u book*
Bcgtlu time of btlucSar roar bootn
Bank Aeeounu, when ktpt?

Vrhen U UcnJusdlM totmud? ^ _ _ _ _ _ ^ _ _
tt * CorponHon,fiUout following tdtedtd*:
OFFICBSS AND DUtSCTOftS.
NAME Itt PtJU,

TtTLB

No. of Share* Held

ADDRESS

tf • PutncnUp, M oat fonowinc KheJak;
PAKTNBSa
NAME IW FOU.

K

ADDKSSS

I hereby emlfr iku. M tb* V
c with the £**•.




B we* hi **ttf tttv***. ti

(Slr> Cotpontio. w rmi N I M Here)
By

-40—

MUNICIPAL WARRANTS.
(The word "Municipal" as used herein
means any Town, City, County or State.
The word "Warrant" means any bill, note,
revenue bond or warrant, — payable within
six (6) months from date of purchase, issued
in anticipation of the collection of taxes
already assessed, or the receipt of assured
revenues.)

It is the purpose of this part of the
pamphlet to call the attention of Member
Banks to the new market for Municipal
Warrants, in order that the Member
Bank may be of assistance to the Municipality in which it is located, as well as to
the Agricultural and Commercial borrower, and at the same time, afford the
Member Bank an additional field for
operation.
The Federal Reserve Act authorizes
Federal Reserve Banks to invest a portion of their funds in warrants, issued by
Towns, Cities, Counties and States, either
with or without the endorsement of a
Member Bank; provided,




- 4 1 -

(1) That under the laws of the State,
the warrant is a legal obligation
against the Town, City, County
or State issuing it*
(2) That the warrant must have a
fixed maturity from the date of
purchase of not exceeding six (6)
months and must be issued in
anticipation of the collection of
taxes, already assessed, or the
receipt of assured revenues.
(3) That the net funded indebted*
ness of the Town, City, County
or State must be within the
amount authorized tyy the laws
of the State and in no instance
can it be more than 10% of the
assessed valuation of its taxable
property.
The taxes necessary to pay the current
expenses of a large per cent of the Towns,
Cities, Counties, and some States, in the




—42-

Eighth Federal Reserve District, are
assessed at the beginning of the year,
but are not collectable and available for
use until the middle or last of the year.
In the meantime, the Town, City, County
or State has to borrow money in sufficient
amounts to pay its current expenses.
This is usually done by selling its warrants issued in anticipation of the collection of the assessed taxes or receipt of
assured revenues.
In the past, these warrants have not
found a ready market with Commercial
Banks. The Federal Reserve Act makes
such warrants eligible for purchase by
Federal Reserve Banks, thereby providing a ready market for them when a
Member Bank finds it necessary to
obtain additional money.
In addition to the right of a Federal
Reserve Bank to purchase such paper
from Member Banks, it is authorized to




-43—

purchase it on the open market, that is,
without the endorsement of a Member
Bank.
The demand on a Member Bank for
money for regular commercial purposes
may be such that it does not care to
invest its funds in this class of paper,
even though, being acquainted with local
conditions, it considers the investment a
good one. If this is the case, when it is
ascertained that a loan is to be negotiated, if the Member Bank will take the
matter up by correspondence with this
Bank, and act as its agent in the purchase
of such paper, it will thereby afford the
Federal Reserve Bank an outlet in which
to invest the surplus portion of its funds
not required in its regular discount
operations, and at the same time, be of
assistance to the Town, City, County or
State in which the Member Bank is
located.




-44—

The following are copies of
(a) The form of warrant which could
be used.
(b) The form of Certificate of authority to issue warrant.
(c)

The form of Certificate required
to be furnished by the fiscal
officer of the Town, City, County
or State.

(d) The form of Certificate to be
furnished by the City Attorney or
some recognized authority on
Municipal issues.
(e) A list of questions to be answered
by the fiscal officer of the Town,
City, County or State, in order
that Counsel for the Federal
Reserve Bank may determine
whether the warrants have been
issued in accordance with the
Regulations of the Federal Reserve Board, and the laws of the
State.




(a)
CERTIFICATE OF INDEBTEDNESS OR WARRANT.
$

191.
This is to Certify That the City of
is indebted to

L
T in the sum of

Dollars, which, for

value received, it promises to pay to her order at the office of
on the

day

of

1 9 1 . . . , with interest at the rate

of

per cent per annum.
Issued under and pursuant to an ordinance adopted by the




City Council or [Board of Commissioners] of the City of
on the

day of

1 9 1 . . . , and duly approved by the Mayor.
Mayor.
City Treasurer.

City Secretary,
No
Countersigned.




(SEAL)

(b)
CERTIFICATE OF AUTHORITY.
This is to Certify That the Certificate of Indebtedness of the
City of
, for
Dollars,
dated
, 1 9 1 . . . , and numbered No
was made in behalf of said City under and in pursuance of an ordinance of its City Council [or Board of Commissioners,] passed
4
, 191... t and duly approved by the
1
Mayor, being Ordinance No
, and that such certificate
with other certificates issued under the said Ordinance does not in
the aggregate exceed the sum of
Dollars
named in said ordinance.




City Secretary.
Mayor.




(c)
CERTIFICATE OF FACTS,
I Hereby Certify That the Certificate of Indebtedness of the
City of
, signed by its Mayor and
Treasurer and countersigned by its Secretary, for the sum
of
Dollars, bearing date of
191...,payable
191..,
numbered No
, was issued in payment of a current
liability of the City of
, for the current
year, and that the revenues of said City which are derived from
taxes and other purposes which can be applied to the payment of
this and similar claims will be sufficient to pay off and discharge all
Certificates of Indebtedness authorized by the City Council or Board
of Commissioners of the City of
, by Ordinance
No
, passed the
day of
191..,
and approved by the Mayor.




I Further Certify That the
has
existed for a period of more than ten years, and for such a period
immediately preceding the date of this Certificate it has not defaulted
for a period exceeding fifteen days in the payment of any principal
or interest of its funded debt, and that the funded indebtedness
is
, and does not exceed
per centum of the valuation of its taxable property,
which amounts to $
, as ascertained by the last
J* preceding valuation; that the aggregate amount of all similar revenue
1
warrants for the current and prior years, including these warrants,
issued and outstanding is $
; that the population
of the municipality as determined by the last Federal or State census
is
, and that a penalty for the non-payment of
taxes in anticipation of which the Certificates of Indebtedness or
warrants above authorized are issued will attach on the
day of
191....




City Treasurer, (or other proper officer.)

(d)
CERTIFICATE OF CITY ATTORNEY.
I Hereby Certify That the Certificate of Indebtedness of the
City of

, signed by its Mayor and

i Treasurer and Countersigned by its Secretary, for the sum of
Dollars, bearing date of
payable

. . . .191..,

, 191.., and numbered No

was issued pursuant to the ordinance of the City Council or Board of
Commissioners of the said City dated

191..,

and duly approved by the Mayor, authorizing a temporary loan of




Dollars, for the payment of current

liabilities of said City, in anticipation of the City taxes for the year
1 9 1 . . . , the same being included in and made a part of the tax
budget for 1 9 1 . . . , and that the said loan is authorized by law and
that the City Officers who have executed the same on behalf of the
City had the authority and the power so to do, and that said certificate is in proper form and properly executed and when issued will
become and be a valid and legal general obligation on the part of
the City,




City Attorney.

(e)

1.
2.
3.
4.

DATA TO BE FURNISHED RELATING TO MUNICIPAL WARRANTS OR OBUGATIONS
OFFERED TO FEDERAL RESERVE BANKS.
Name of municipality or (political division)
Population (last Federal census)
Total valuation of taxable property (as of 1915)
$
Total gross indebtedness
$
....
(Note: Tills Item should include all debts evidenced by bonds, notes*
warrants, and certificates of Indebtedness of every description as of
the date of this statement.)

Less deductions allowed:
(a) Obligations payable from current revenues
(b) Outstanding bonds issued for public utilities

$
$

(Note: This deduction can only be made provided the Income from
the utilities is sufficient to pay for maintenance, Interest and sinking
fund.)

(c) Outstanding improvement bonds to be paid by special assessment
against abutters
$
(d) Sinking funds for issues not included in (b)
$
Total deductions
„
$.....
5. Net funded indebtedness (Item 4, less total of (a, b, c, d)
$.....




6. Percentage of net funded indebtedness to total valuation..
7. Description of present issue of revenue warrants (or notes)

8.
9.
10.
11.
12.
13.
14.
15.

(a) Purpose
(b) Date.
(c) Maturity.
(d) Amount $.
Total amount of warrants or notes issued and outstanding, including this issue, payable from tl
same tax levy or revenues
$.
.,
Description of the taxes or assured revenues in anticipation of which the warrants are issue
(a) Nature of tax
„
(b) Date of levy.
(c) Rate
levy $.
per thousand (d) Amount of levy $
What is the last day on which such taxes can be paid without penalty? ..„
„
Are the warrants the general obligations of the entire municipality?
Has the municipality been in existence for 10 years ?
„
. .. ............... ...
Has the municipality during the 10 years immediately preceding the date of the issue of the
warrants defaulted for a period exceeding 15 days in the payment of any principal or interest
its funded debt?
.
Are the warrants registered by a registrar?
.
If so, where?
Has legal opinion of their validity been given?.
If so, by whom?....

I hereby certify that the statements made above are true, as of this..
dayoL
„ .._ ...191
(SEAL)




INDEX
Acceptances
Agricultural Paper
Definition
: Maturities
Assets
Fixed
Quick
Margin of
Bankers' Acceptances,
Bill of Lading Drafts
Bonded Debt
Cattle Paper
Certifying Eligibility
Chattel Mortgages
Coal Companies
Collateral Notes
Collection of Notes Rediscounted
Commodities as Collateral
Cotton as Collateral
Cotton Exchange, (See Drafts,)
Credit Records
Crops, growing of
Current Assets
(See Quick Assets.)
Current Liabilities
Demand Drafts
Discount, Unearned
Drafts, Bill of Lading




-se-

,

29-32
21
21
8
14
14
14
15
29
30
18
21
9
22
20
22-23
28
22
.22
30
11
21
14
14
30
27
30

Eligible Paper, Qualifications
Eligibility, Certifying
Endorsing Notes
Farmers' Notes.
Financial Statements
*
(See Statements in Index)
Forwarding Notes
Grain as collateral
Interest, Refund of
Live Stock Paper
.
Lumber Companies
(See Manufacturers.)
Manufacturers.
Margin of Quick Assets
Maturities
Merchants
Miners of Coal, Ore, etc
Mortgages, Chattel
Mortgage Debt in Statement
Notes, Collateral
Farmers
Manufacturers
Merchants
Miners
Warehouse receipts attached
Ore, Mining Companies
Other Collateral
Paying Rediscounts Notes.
Payment of Notes before Maturity
Quarriers
Quick Assets




-57-

7
9
26
21
II
26
22
27
22
18
18
15
7
16
20
22
18
22-23
21
18
16
20
22
20
23
28
.27
20
14

Rediscounting, not an Emergency
Bediscounting for a stated time
,
Refunding unearned discount
Renewals
Returning discounted paper
Sight Drafts
Statements of Borrowers
Furnished Member Banks free
Held in Confidence
How often required
Use in showing eligibility
When made by Bank
Stone, Quarriers of
Tobacco as Collateral
^
Unearned Discount
Use of Statement to certify eligibility
Warehouse Receipts
Warrants




—58-

.33
27
27
24
2S
30
11
13
.12
12
9
12
20
22
27
9
22
41