The sun., 1914-08-28
COTTON AND TOBACCO
AS CURRENCY BASIS
Secretary Of Treasury Will Ac-
cept Warehouse Receipts
From National Banks.
SPECTATORS ARE BARRED
Problem Of Marketing Crops
Caused by War Believed to
Have Been Solved.

WASHINGTON. Aug. c7-secrctary Of
tne treasury McAdoo announced to-day
that he would accept as basis for emer-
gency currency warehouse receip,s for
cotton and tobacco offered by national
banks. He served notice. however ,ha,
ne would reject such security where he
had reason to believe that II was being
used merely for speculative purposes
The decision Of the Secretary TO recor.
niz' such warehouse receipts grew out of
the recent cotton and tobacco conference
held here. II Is hailed by those immed,
ately interested in these products as fur
nishing partial solution Of the problem
OF marketing the two crops caused by the
European war. The Secretary's state
ment follows,
Among the eligible securities TO he
used as a basis for the issue OF cur
rency have decided TO accept from
national banks, through their respective
national currency associations. notes Sc.
cured by warehouse receipts for cotton
or tobacco and having not more than four
months to run at 40 per cent. of their
face value. The banks and the assets OF
"Aa 'dlNN pflpllElIE 10 Inv currency HSSo-
citation will bc Jointly and sevcrally liable
to the Unted states for the redemption Of
such additional circulation and n lien will
extend to and cover the assets OF all banks
belonging to the association and to the
securities deposited by the banks with the
association, pursuant to the provisions of
law, but each bank composing such
association will he liable only in the pro-
portion that it's capital and surplus bear
20 the aggregate capital and surplus Of all
such banks.
1T is not my purpose 90 prescribe the
character % the warehouses In which
cotton and tobacco may be stored. The
banks will be relied upon to see that
warehouse receipts issued bv responslhl
warehousemen or warehouse companies
alone are accepted and that the cotton
and tobacco stored I'm such warehouses
are covered hy adequate fire insurance ana
are protected against injury by the ele-
meuts.
In order TO obtain such currency the
following things should he observed by
banks applying therefor
81. Not less than ten national banks
In any given territory. each having an
uu!myaired capital and surplus of not
less than 20 per cent. desiring such cur
rency. shall form a national currency
association. with an aggregate capita
and surplus OF not less than $1,000 600
as required by the act. Full particular.
and blank forms FOR this purpose may
be had upon application TO the Comp.
troller of the Currency, Washington
II g
80 ANY national currency association
formed in accordance with the law vii
receive the approval of the Secretary ui
# .. H. D.
associations hav. been organized In tn,
various States
80 Under tho law the Secretary Of III,
Treasury may accept az securities foi
currency ,A) bonds o' any State or o
any city. town, county or other legally
constituted municipality or district in tn,
United states which has been In exlstenc,
/ FOR period NJ ten years and which fol
! a period of ten years previous 10 suci
deposit as security. has not defaulted il
/ the payment OF any part of either prin
! cipal or interest of any funded deb
authorized to be contracted ny H. anC
whose net funded Indebtedness does no
exceed 10 per cent. Of the valuation Of ~
taxable property. to be ascertained b!
! the last preceding valuation of propert!
/ for the assessment Of taxes.
"(Bb-Nny securities, including com
| mercial paper, approved by the Sccretar!
Of the Treasury. held by a national banl
and made available through a natona
currency association under the direction
and control Of the Secretary OF the Treas
ury ~ not exceeding IS per cent Of tn
cash value Of such securities or CONNER
cial paper.
"(Cb-No national bank shall be per
mitted TO issue circulating notes base
4 on commercial paper alone IN excess o
80 per cent of it's unlmpairod capital ant
surplus.
"i-The total amount of currency IL
sued 20 any bank, including its circulat
ing notes issued against United state
bonds, shall not hc more than 1875 pc
cent Of it's unimpaircd capital and sur
plus
"5-Each bank or currency association
rcCciving currency must maintain In tn
Treasury at Washington redemption
fund IN gold of at least per cent Tn
| Secretary of the Treasury may at an,
time require such additional deposits il
gold as in his judgment may be suf'iclen