Yorkville enquirer. [volume] (Yorkville, S.C.) 1855-2006, 1914-12-15
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ACT. WIN. INGLE EXPLAINS SITUATION


ACT. WIN. INGLE EXPLAINS SITUATION
Moro Responsibility Rests With Local
Bank Which Must Act cireumspset.
Iy In the Spirit Of the New Law
Reserve Authorities Find Il Nsess.
sary to Go Slow.
!! One Of the questions awaiting settle
ment by the directors of the Federal
reserve banks, certainly those situated
in the south, has been the attitude the
governing boards Of such regional re-
serve banks would assume with refer
ence to farm notes and other collateral
in which the agricultural. banking and
commercial interests dependent upon
cotton are so largely interested. The
issue was recently submitted by Com
missioner E. ]. Watson, president Of
the South Carolina Cotton Congress,
acting for the cotton growers Of the
south as a whole, and was answered.
SO far as the question could be answer
ed at this time-by Mr.. William Ingle,
the Federal reserve agent at Richmond.
Va, for the fifth district bank Of which
Charlotte Is a component part. This
letter Of Mr.. Watson's was first sent to
Mr.. w. g. P. Harding Of the reserve
bank In Washington and referred by
him to Mr.. Ingle
NJ l.sl> n>-li..
Mr.. Ingle's letter Is Of interest
throughout this section by reason Of
the fact that 1t forecasts what will un-
questionably be the attitude Of the
heads Of the Federal reserve boards
throughout the cotton belt. It follows:
In the presence Of q new law, which
In many material ways radically diff
fers from an older measure which has
been tried and found wanting. It is
clear that those charged with its inter.
pretation and administration must
avoid moving too quickly, II they are
to be spared confusion, II not worse.
While therefore 1t Is easily appreciated
that those hoping to be the beneficial
ries Of the act may feel that we have
been altogether too deliberate, I assure
you that both in Washington and in
Richmond the chief purpose is to make
the law as promptly useful as condi-
tions permit. In writing your letter
you evidently had in mind two ideas,
both calculated to aid cotton growers,
and through them the southern mer-
chants and banks, namely the cotton
pool fund and the Federal reserve act
You. Of course, understand that the
two things are in no wise related, the
cotton pool fund being simply an emer-
gency measure, while the reserve act is
to be continuously with us. The So
called Wade plan invites the banks in
the northern or creditor section Of the
country to help their brethren In the
cotton growing states but in Offering
the same II Is assumed that the south
ern banks will take, shall ! call II the
first risk, with their own customers. In
other words, the class A subscribers are
perfectly willing to help In the situa-
ton II the banks subscribing to class
B certificates will assume the very
nominal risk. II any attaching to the
transaction.
II understand that the machinery Of
the Wade plan Is now set up and ready
for use, and that In consequences, q
southern bank, wishing to aid its local
clientage In carrying their cotton will
upon subscribing to $4,000 class B Ger.
tifcates receive an additional $4,000
from the class A contribution. The
planters are only required to follow the
plan outlined by those in charge, the
particular feature Of which Is that the
pledged cotton shall be deposited in
some proper warehouse. Obviously, q
planters own barn Is not such a prop
er place.
Reserve Banks Ready.
1T is also proper to state that reserve
banks are now in position to accept
from their member banks as a banking
transaction notes made by planters
against pledge Of cotton properly stor-
ed and insured, such notes to be han
died In the first instance by the plant
ers local bank, which In turn will dis
count 1t with the reserve bank. AS the
rate charged by the reserve bank Is al
ways public property, and as It Is fair
to assume that local bank, in connec-
ton with the current and usual busi-
ness Of customer, Is making fair
dCCOuul, lucTc 10 uO Ecz1-
son why an extravagant rate Of inter-
est should be charged q planter on his.
emergency transaction grant 1t, hQ1
ever, that the only thing control
the limit Of such q charge by cak
bank would be public opinion formed
In the light Of knowledge Of all ccndG
tions. ~
1T possibly is fair to say that ol
information Is that not q little; OF
mr. v1a kAA
luctance Of a very great number OF tAe.
southern planters to warehouse their
cotton, they feeling that their own
banks should take care Of an emergen-
cy credit In exactly the same manner
as they do with the ordinary operations
Of q palmy season. We learn that in
consequence an enormous amount Of
cotton Is lying around either in the
fields or under improvised sheds, prac-
tically unprotected, while its owners
are disposed to feel aggrieved over the
fact that no one seems willing to help
them, when they, on the other hand.
are declining to take the most reasona-
BILE steps suggested.
1T Is only fair for such farmers to
bear in mind that loans granted with
the idea Of helping them carry their
cotton are to find their way into the
hands Of reserve banks, where obvious
ly 1t cannot be known just how good,
as a matter Of credit, the maker Of the
particular note may be, and where, in
consequence, an advance may be made
on actual values. II your organization
could succeed in enlightening the aver
age tenant farmer on this particular
point It would be most helpful. as 9TH
erwise such farmers are apt to lose not
the little additional warehouse carry
ing charges, but a very large percent
age Of their entire crop.
Sound Collateral Defined.
Il think I have fairly we'll respond
ed to the other points raised in the let
ter. No bank unacquainted with the
net worth of the maker of a note can
afford to loan credit based upon q crop
lien or chattels with or without record,
when the property itself is under the
physical control Of the maker Of the
note. II you will apply this principle
to such things as stock supplies or any
staple commodity so situated, you can
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