River Falls journal. [volume] (River Falls, Pierce County, Wis.) 1872-2019, 1913-08-07
j. s. TO LOAN MONEY
FOR CROP HARVEST
70 DEPOSIT FROM 20 TO so MIL
LIONS IN BANKS OF SOUTH
AND WEST.
TRY NEW SECURITY SCHEME
Government Bonds at Par Will Be
Accepted-Prime Commercial
Paper Also Sanctioned
For First Time.

Washington, Aug. 2.-TWenty to
fifty million dollars of government
funds will be deposited in the ma
tional banks of the South and West
at once by Secretary McAdoo to
Federal, state and municipal bonds
and prime commercial paper will be
accepted as security for the money,
upon which the banks will pay two
per cent interest.
The motive of Secretary McAdoo
in establishing this policy is to an
ticipate the money stringency in the
late summer and fall, which inva-
riably accompanies the marketing and
movement of crops, especially when
they are unusually large, as the har-
vest now beginning forecasts. He
intends to take time by the forelock
and prevent or minimize the usual
tightness of money.
The New Conditions.
In a statement, the secretary made
the significant announcement that
government bonds would be accepted
at par as security for the new de-
posts and that the additional money
would be placed only with banks
which have taken out at least 40 per
cent of their authorized circulation.
The United States two per cent
bonds, serving as security for most
of the national bank circulation, have
been depressed recently to new low
market records, dropping to 95%
during the past few days. The sec
retary's willingness to accept these
bonds at par as security for the %
to so millions of promised deposits
and the inducement to the national
banks to increase their circulation
up to the 40 per cent limit is ex-
pected to help in restoring the par
ity of the depressed twos by Great
ing new market for them.
First Time in History.
For the first time in history, the
government will accept prime com
mercial paper as security for de-
posits. This privilege will be grant
ed, announced the secretary, in or
der to make these special deposits
available to banks on securities read
lily within their reach.
1.-The commercial paper submitted,
added Mr.. McAdoo, shall first be
passed on and approved by the clear
ing house committees of the cities in
which the banks offering such paper
may be located. All commercial pa
per. and bonds must finally be passed
upon and accepted by the secretary"
Approved commercial paper will be
accepted as security for the deposits
at IS per cent of its face value and
high class state, municipal and other
bonds, exclusive of government bonds,
at rs per cent of their market value.
In Principal Cities Only.
The additional deposits will be
placed with the national banks in
the two or three principal cities in
each of the states where harvesting
is now in progress and where the
demand for money for moving the
crops most conveniently can be met
The secretary said it would not be
practicable to scatter the deposits
among the smaller cites, especially
in view of the character of securities
necessary.
The banks will be required to re-
turn the money to the public treas
ury when the crops have been
moved The present suggestion is,
Mr. McAdoo said, that Is per cent
be repaid in December, 80 per cent
in January, 80 per cent in February
and % per cent in March next.
Steps are now being taken to
carry out the plan," added the sec
rotary, 80 that the funds may be
promptly available for the movement
of the crops"
Just as Secretary McAdoo was an
nouncing his plan, Senator Tillman
of South Carolina was issuing a
statement declaring that unless con
gress acted quickly to provide an
emergency currency, the cotton
planters of the South would lose a
hundred million dollars through in
ability to get money to move their
crops.