must not express that the drawee will perform his promise An acceptance is an engagement to pay a bill of exchange as requested by the drawer. An acceptance is usually according to the tenor of the bill, in which case it is called a general or absolute acceptance. Qualified Acceptance. A qualified acceptance is sometimes given. § 141.-An acceptance is qualified which is: I. Conditional; that is to say, which makes payment by the acceptor dependent on the fulfillment of a condition therein stated; 2. Partial; that is to say, an acceptance to pay part only of the amount for which the bill is drawn; 3. Local; that is to say, an acceptance to pay only at a particular place; 4. Qualified as to time; 5. The acceptance of some one or more of the drawees, but not of all. The holder may require that the acceptance be written on the bill. It should not be written on another piece of paper. The drawee has twenty-four hours to decide whether he will accept or not. If he destroys the bill or fails to return it, he will be held to have accepted it. Mode of Acceptance. Upon presentation of the bill of exchange, the drawee, if he wishes to pay the order according to its terms, may do so by writing across its face the word "Accepted," followed by signature and date. When this is done by the drawee he becomes the acceptor, and thereby agrees to pay the bill at maturity, according to its tenor, without qualifying conditions. Effect of Acceptance. The effect of the acceptance of a bill of exchange is to constitute the acceptor the principal debtor. The bill of exchange becomes, by the acceptance, 1 similar to a promissory note-the acceptor being the promissor, and the drawer standing in the relation of an indorser or surety. § 206. Dollar Acceptance By the term "dollar acceptance," as used in international trade, is meant an accepted bill of exchange drawn in American dollars. The term has become familiar in this country. since the enactment of and amendments to the federal reserve banking law, which created a system of modern bills of exchange for American business. Prior to the establishment of this system, it was the usual custom to draw bills of exchange in pounds sterling. Most of the international trade was financed through London; that is to say, financial institutions of London granted to traders acceptance credits which authorized the drawing of bills of exchange on such institutions. By this agreement, the trader was assured that the London bank would accept his bill. Thus, such institutions lent their credit, for which they charged a commission, and a merchant in London or even in South America would deal with both his creditors and his debtors in this country in terms of pounds sterling. Under the amendment of September 7, 1916, to the Federal Reserve Act, in addition to the power to accept bills involved in the exportation and the importation of goods, federal reserve banks have the power to accept bills drawn upon them by foreign banks or bankers in the same way that London banks accommodate foreign traders. The reserve banks may accept drafts or bills of exchange drawn upon them, having not more than three months to run, exclusive of days of grace, drawn under regulations to be prescribed by the Federal Reserve Board, by banks or bankers in foreign countries or dependencies or insular possessions of the United States, for the purpose of furnishing dollar exchange as re quired by the usages of trade in the respective countries, dependencies, or insular possessions. It is likely that in years to come New York will be as important financially and commercially as London; and, as the use of a decimal currency has much to recommend it, there is good reason to believe that the future will see dollar exchange more generally used than sterling exchange has been in the past. It is certain that every business man should understand clearly what is meant by "dollar acceptances," and its synonyms "dollar exchange," and "dollar credits," as the terms are used by bankers. § 207. Bank Acceptances Under the federal reserve law, member banks of the federal reserve system are empowered to grant bankers' acceptance credits; that is to say, "Any member bank may accept drafts or bills of exchange drawn upon it and growing out of transactions involving the importation or exportation of goods having not more than six months' sight to run." 2 A bankers' acceptance, as defined by the Federal Reserve Board, "is a bill of exchange of which the acceptor is a bank or trust company, or a firm, person, company, or corporation engaged in the business of granting bankers' acceptance credits." When the bank, trust company, firm, person or corporation, accepts the bill of exchange, it has loaned its credit, not its funds. The direct responsibility for the payment of the bill of exchange that has become an acceptance, rests on the bank or concern granting the acceptance credit. Such accepted bills of exchange are payable in our country and hence are known as "dollar acceptances." § 208. Domestic Bank Acceptances The rules of the Federal Reserve Board are somewhat more rigid with regard to bank acceptance credits covering 13 of the Federal Reserve Act. domestic shipments. Such acceptances are used mainly to finance domestic transactions involving major staples. And the federal reserve law provides that "Any member bank (of the federal reserve system) may accept drafts or bills of exchange drawn upon it, having not more than six months' sight to run, exclusive of days of grace .... which grow out of transactions involving the domestic shipment of goods, provided shipping documents3 conveying or securing title are attached at the time of acceptance; or which are secured at the time of acceptance by a warehouse receipt or other such document conveying or securing title covering readily marketable staples." Such acceptances are known as dollar acceptances against domestic shipment of goods, or domestic bank acceptances. § 209. Trade Acceptances In this country most of the credit business has been done on the open-account system whereby goods are sold at thirty, sixty, or ninety days, or in many cases without any definite time of payment. This system has many disadvantages. It compels the seller to carry the financial burden of the buyer and so ties up his capital for an indefinite period. Also, the expense involved in collecting slow accounts and granting extensions constitutes in the aggregate a heavy tax on business. All these disadvantages are eliminated by the use of the trade acceptance. A trade acceptance is a bill of exchange drawn by the seller directly on the purchaser of goods, and accepted by the purchaser. The direct responsibility for the payment of the bill rests on the person, firm or corporation accepting the bill of exchange. The Federal Reserve Board has defined the "Shipping documents" are all the documents required to prove title to the shipments the bill of lading, insurance policy, consular invoice, and so on. Principles of Foreign Trade. Savay, page 306. trade acceptance as a "bill of exchange, drawn by the seller on the purchaser, of goods sold and accepted by such purchaser." Functions of the Trade Acceptance. Trade acceptances are instruments of credit, and when properly created are eligible for purchase by federal reserve banks. They thus add to the circulating medium, just as do eligible bank acceptances. The extensive use of the trade acceptance in American business is urged as a remedy to cure the defects of the openaccount system, as it provides the seller with an instrument which he may sell to his bank, broker, or other persons engaged in discounting such commercial paper, thus enabling him to keep liquid and mobile the capital that would otherwise be tied up in open book accounts. § 210. The Discount of Acceptances Under Section 14 of the federal reserve banking law, and under rules and regulations prescribed by the Federal Reserve Board, federal reserve banks may purchase and sell in the open market bankers' acceptances and bills of exchange from banks, firms, corporations, or individuals. It should be borne in mind that federal reserve banks proper do not "accept" bills of exchange, but may purchase acceptances in the open market (discount them), or may rediscount eligible acceptances for member banks. § 211. Rules for Discount of Bank Acceptances § 182.-A bankers' acceptance may be discounted with any I. The acceptance must have maturity at purchase of 2. The bill must have been drawn under credit opened |