RURAL CREDITS 763 



But to get the benefit of the abnormal rate of 3 per cent, it had to 

 certify that it had made this loan at a rate not exceeding 6 per cent. 

 It gave the bankers an opportunity to co-operate in this movement 

 by offering special inducements to the farmer to carry his cotton at 

 6 per cent. This was the force of the commodity regulation. 



NOTE. The text of the commodity regulation is as follows. EDITOR. 



Circular No. 17 

 Series of 1915 



FEDERAL RESERVE BOARD 



WASHINGTON, September 3, 1915 



COMMODITY PAPER 



In Regulation B, series of 1915, the Board has established the policy 

 of encouraging transactions of Federal Reserve Banks in trade acceptances 

 and in commodity paper by admitting these kinds of paper to be redis- 

 counted by Federal Reserve Banks with the waiver of the particular require- 

 ments with reference to statements. 



In pursuance of this policy, the Board has issued a regulation (P, series 

 of 1915) laying down the conditions under which trade acceptances may be 

 discounted by Federal Reserve Banks at a special rate to be published for 

 this kind of paper. In further pursuance of the same policy, the Board in 

 the appended regulation (Q, series of 1915) has authorized special rates on 

 commodity paper. 



It is expected that this new class of paper with its special rates will 

 prove of particular efficacy in meeting the seasonal demands for credit 

 facilities in the crop-producing districts, and the Board in authorizing these 

 special rates will rely on the Federal Reserve Banks to adopt a policy which 

 will result in securing for the ultimate borrowers the extension of credit on 

 moderate terms by member banks. As in the case of trade acceptances, 

 the rates to be established for commodity paper may be expected to be 

 lower than the rates established for ordinary commercial paper. It will 

 be left to the discretion of the Federal Reserve Banks to determine whether 

 different rates should be established for trade acceptances and commodity 

 paper. Uniformity of rate may appear to be desirable in districts where 

 there are transactions in both kinds of paper. 



CHARLES S. HAMLIN, Governor 



H. PARKER WILLIS, Secretary 



