The watchman and southron. [volume] (Sumter, S.C.) 1881-1930, 1914-09-16

AMENDMENT BY SENATE PER-
MlTS STATE BANKS TO
SHARE.
New Fian Suggested by McAdOo-
Action by Ho,,sc and Approval of
President Means Much Relief to the
South.

been coming to Washington that the
producing and commercial interests
have not been able to get hold of any
OF the emergency currency which was
supposed to be available for their re-
lief. The most conservative Southern
congressman and senators have be-
come convinced that there Is a basis
for this complainc, and steps arc be-
ing taken to correct the trouble.
Two days after the outbreak OF the
war In Europe congress amended the
Aldrich-vreeland Emergency currency
act 10 as to make n billion dollars of
this currency Immediately available
In the discretion Of Secretary McAdoo.
Under the law as II now stands, with
this amendment. emergency currency
In issuable only to associations COM
posed OF national banks Cor State
banks which have signified their in
tsntion to enter the federal reserve
systern.) and the rate Of interest
ment for It's use is per cent for the
first three months. increasing one half
y OF one per cent month thereafter
until the maximum rate Of per cent
10 attained.
This emergency currency may be
based upon state or city bonds or up
on approved commercial paper. but
not more than 80 per cent of the
amount OF any Issue may be based on
commercial securities. Secretary Nc
Adoo has suggested that this limit be
raised by congress to 73 per cent, ad-
ding that the federal reserve board
would construe properly ly-authenticiat-
ed cotton warehouse certificates to
be admissible as a basis for CONNER
cial paper. offered BY banks al Sc
curity for emergency currency and
backed by the joint credit of the $5,-
100000 banking associations to which
such currency is issuable. The sem
ate last Friday passed a bill amend
ing the emergency act as suggested by
Mr.. McAdoo.
State banks have been complaining
bitterly Uf thesr exclusion from the
emergency relief zone. They say that
they are helpless when they have to
pay per cen. 10 a national bank for |
money 20 Do used In State where the |
legal maximum Of interest Is s per
cent
National banks have to pay at least |
per cent to the government for
emergency issues: they charge at least
Q per cent for handling the money,
and IL the State bank manages to
handle the same funds at q cost of |
only I per cent there is no chance of
the State banks making a particle of
pront without violating the law and
charging the individual borrower
more than per cent. As a matter of
fact IL costs the State banks as much |
to handle the money as 1t costs the |
national bank.
There seems to bc no way Of rem
edying this trouble except rs suggest
ed the other day by Congressman n |
John III. Small. of North Carolina, in
q letter to a State bank In his district,
which has found II impossible to get
emergency funds under present con-
ditions. In this letter. which was sent
two days before the senate adopted
Senator Hoke Smiths amendment ad
mittins the state banks directly to
the emergency currency facilities,
Congressman Small said:
In my opinion the only additional
reluedy which can be offered by the
federal government is to 80 amend
the law AS to provide n method by
which emergency currency may be
available To ali banks for loans on
warehouse receipts for cotton. SD that
the intcllisent farmer may store his
cotton and borrow "a sufficient amount
rpon his warehouse receipts to enable
hiu to hold same until the condition
IL the worlds markets create Il rea-
sonable demand. - or course. care
must he exercised that such cmer-
gency currency shall be amply Sc
cured and prott cted. No citizens
are more interested than the farm
crs In preserving the stability of the
currency.
~ cannot now sec any other gov
ernmcntal remedy. Whatever else Is
done rests upon the cooperative ef-
fort OF the cotton growers. the mer-
chants and the bankers. Substantial
warehouses must bc provided so that
cotton may he stored and insured at a
reasonable rate. our people should
borrow as little morey as possible up
on their cotton so stored. and with