The watchman and southron. [volume] (Sumter, S.C.) 1881-1930, 1913-08-06
MILLIONS FOR BANKS OF SOUTH
GOVERNMENT WILL DEPOSIT
FUNDS TO SUPPLY FALL DE-
MAND.
McAdOO Will Place Between $25,OOO,-
900 and $50, 600, 900 ut Disposal of
FiDancial Institutions of South and
West tO Help Move Crops.

by Secretary McAdoo to facilitate the
movement of crops. Federal, State
and municipal bonds and prime COM
mercial paper will be accepted as Sc
curity for the money, upon which the
banks will pay per cent interest.
The motive of Secretary McAdoo in
! establishment this new policy Is to an
ticipate the money stringency in the
late summer and fall, which invariably
accompanies the marketing and move
ment OF crops. especially when the
crops are unusually large, as the har-
vest now beginning forecasts He in
tends to take time by the forelock and
prevent or minimize the usual tight
ness Of money.
In a statement today the secretary
made the significant answer that gov
ernment bonds would be accepted at
par as security for the new deposits
and that the additional money would
be placed only with banks which have
taken out at least 40 per cent. of their
authorized circulation.
United States 2 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 ga during the
past few days. The secretary's will
ingness to accept these bonds at par
as security for the $25, 900, 900 to $50
100000 of promised deposits and the
| inducement to the national banks to
increase their circulation up to the 40
per cent limit is expected to help In
restoring the parity of the depressed
2s by creating n new market for them.
For the first time In history the
government will accept prime COM
mercial paper as security for deposits.
This privilege will be granted, an
nounce0 the secretary. in order to
make these special deposits available
to the banks on securities already
within their reach.
The commercial paper submitted"
added Mr.. McAdoo, shall first be
| clearing house committees OF the
cities in which the banks Offering such
paper may be located. All commercial
paper and bonds must finally be
passed upon and accepted by the sec
retary."
Approved commercial paper will
be accepted as security for the de-
posits at G5 per cent OF it's face value,
| and high class State, municipal and
other bonds. exclusive of government
bonds. at rs per cent Of their market
value.
The additional deposits will be
placed with the national banks i'm the
two or three principal cities in each
of the States where harvestin-. now
Is In progress and where the demand
for money for moving the crops most
conveniently can be met. The secre-
tary said IT would not be practicable
to scatter the deposits among the
smaller cities. especially in view of
the character OF securities necessary.
The banks will be required to re-
turn the money to the public treasury
when the crops have been moved The
present suggestion is. Mr.. McAdoO
said, that Is per cent be repaid in
December, 80 per cent i'm January
30 per cent in February. and 25 per
cent in March next.
steps are now being taken to car
ry out the plan" added the secretary,
so that the funds may be promptly
available for the movement Of crops"
Names of banks to receive the de-
posits ana other details of the ar
rangement will be announced later.
This new policy is the antithcsis OF
that adopted by Former Secretary
MacVeagh, who two years ago de-
clined To make government deposits
To relieve the tight money market on
the ground that the moderate surplus
OF federal funds at that time should
be held as a reserve to be utilized al
some possibly critical stage.
With the net balance i'm the general
fund today amounting to nearly
$132 100000. Secretary McAdoo has
taken the stand that the government
should anticipate the situation by
placing deposits where ana at the
time they are needed.
IT the full $5O.OOO,O00 Is deposited
this step will temporarily almost
double the governments deposits with
the banks which now hold S5S, ,OOO,-
600 Of federal funds.
Just AZ Secretary McAdoo was an
nouncing his plan, Senatu.' Tillman of
South Carolina was issuing IL state