Evening star. [volume] (Washington, D.C.) 1854-1972, 1914-10-16
POOL FOR COTTON MEN
IS GIVEN APPROVAL
Probable That Loan Will Be Super
vised by Federal Reserve
Board.
Member Says South Must Look for
Relief to States Rather Than to
Federal Government.

Although no decision has been
reached by the federal reserve board
on the proposal for a northumberland
nfty-millfon dollar loan by bankers to
aid cotton producers. enough has been
accomplished to make it certain the
board will assume general supervision
of the fund If the plan is carried out.
The matter was discussed at length at
the board meeting yesterday Although
1t already has the approval of the board
In principle. difficulties as to details of
administration of the fund were en-
countered which delayed final action
President Wilson and Secretary Nc
Adoo are known to be greatly interest
ed in the success of the plan 1t is
predicted that the board will work out
a system of administration for the
fund satisfactory to the government
and the participating bankers
Festus J. Wade and George w. Sim
mons. st. Louis bankers, who have
taken leading part in pushing the
scheme, had a long conference with
Secretary McAdoo. and later with the
board. Mr. Wade left last night for
st. Louis. Mr.. Simmons and w. p. G.
Harding, the members of the board
most familiar with conditions in the
out other details.
Alleged Obstacle in New York.
Conditions imposed by the New York
banks on their contributions are be-
Geved to form one obstacle to an
immediate acceptance of the plan. They
propose turning their quota over to the
reserve board to be loaned to national
currency associations or to federal re-
serve banks. To be useful the fund
must be in hand within thirty days, it
@ fnfn cd N,,f how y, 70
. practically eliminated from considera-
ton.
The question was raised in the board
meeting yesterday whether currency
associations, created under the Aldrich-
Vreeland act are clothed with legal
power to handle the fund. Further eff
forts will be made to straighten out
these difficulties and the New York
bankers probably will he consulted.
The south must look to the resources
of its state governments rather than to
federal aid for any real relief from the
financial stringency that threatens to
follow decentralization of the cotton
market. in the opinion of w. P. G.
Harding, prominent Alabama banker
board. In statement issued here Mr..
Harding urged that immediate relief
measures must be taken by the several
states to tide over situation he said
was now "becoming ACUTE
He made 1t clear, however, that his
suggestions were not in the nature of
an official expression emanating from
the reserve board. but set forth merely
his personal conclusions. Mr.. Hard
1ngs statement was addressed particu-
larly to the people of Alabama in sup
port of the plan recently suggested by
Senator Bankhead for extensive pur-
chase of cotton by the state govern
ment. to be paid for BY an issue of
state bonds.
"Real Need' Discussed.
What is really needed is a market"
said Mr.. Harding, land as there is no
adequate natural market for the time
being. the question reverts as to
whether an artificial market can be
created Attempts have been made to
create such market through the ma
uonal government, but 1t is clearly i'm
possible, both from a legal standpoint
ana Tor practical reasons, for the gov
eminent of the United States to aid
either as purchaser of cotton or as a
lender upon it as security.
Much valuable time has been lost in
pursuing this phantom hope. and the
sooner our people abandon the chase
he better If anything Is to be done
o%ard creating an artificial market,
such action must be taken by the
southern states for themselves
Senator sBankhead's plan does not
provide for any new or additional in
iebtedness. but seeks to change the
'orm of liabilities already Incurred by
converting individual debts into obliga-
ions of the state.
When he proposes that the state of
Alabama purchase one-half of all the
-otton actually grown within her
borders at price representing what
s probably the average cost Of pro-
sluction, 10 cents per pound. and that
payment be made by an issue Of per
cent bonds payable on or before three
years after date, he points out the way
TO establish an artificial market, by
means of which the cotton surplus in
Alabama can be carried over beyond
the danger point. and he has, in my
opinion, suggested the most practicable
way of securing immediate and ef-
fective relief
II have taken occasion to ask job
bers and bankers in various sections
of the country for their views, and
do not believe that any creditor of an
Alabama farmer or merchant would
hesitate to take these Alabama cotton
bonds in liquidation of obligations, for
in most cases the only security they
now have is the equity in the cotton in
the hands of thousands of Individual
holders. for which there is practically
no cash market. This apparent pur-
chase of cotton by the state would be
really mobilization of debts a con-
ceutrafi0n of