With passage of the Federal Reserve Act in 1913, the institutional structure necessary to support an American market for bankers' acceptances was created. This article examines the development of the secondary market for bankers' acceptances during its first 20 years. It provides evidence that discount market liquidity increased dramatically during the 1920s and helped the dollar acceptance challenge the sterling bill as an important source of trade finance around the world. The Federal Reserve Banks played a key role by reducing the risk borne by private dealers and propelling the market to a high-liquidity equilibrium.The author thanks Mike Haupert, William Roberds, and Ellis Tallman for their useful comments and suggestions, and Susan Isaac for her excellent editorial assistance. All errors are the responsibility of the author.