Evening star., 1914-10-25
Plan Tentatively Formed to
Provide Fund Of $135,0OO,-
600 for Surplus Crop.
SUBMITTED TO BANKERS
BY THE RESERVE BOARD
If Adopted, Loans on Product Will
Be Guaranteed at Interest Rate
of 6 Per Cent.

A tentative decision to raise a fund of
$135,000.0O0 to take care of the cotton
crop surplus and extend aid to the cot
ton producers was reached last night
by members of the federal reserve
board, who for weeks have been dis
cussing this problem with bankers.
This plan has been practically ap-
proved by the board. which will have
direct supervision of the fund, but is
expected to operate through a COM
mittee of bankers and business men.
According to the plan, which is some
what different from the one originally
proposed. loans are to be made on cot
ton at cents per pound, bearing in
terest of not more than per cent
These loans are to run for one year,
with the privilege of extension for six
months additional
New York bankers already have
agreed to subscribe $50,000.000 to the
fund, and southern banks are counted
upon for $35. .00O, 900 more much Of IL
being already pledged. The remaining g
$50, ,600,8 is to be raised in non cot
ton producing states.
Details of the plan were withheld
last night, as the board decided to
await assurances from the bankers
that it satisfies them.
Outline of the Plan.
Secretary McAdoo. however. outlined
the plan as follows:
1.-The federal reserve board continued
consideration of the plans for the re-
lief of the cotton situation, giving
by Albert H. Wiggin, !. s. Alexander
A. J. Hemphill and William Woodward
of New York and Festus ]. Wade OF
st. Louis for the raising of cotton
loan fund aggregating s135,0O0, ,000
This plan has been evo.ved from that
originally proposed by Festus j. Wade
THE full details cannot be given out
until it is submitted to the bankers in
the leading financial cen.ers in order to
ascertain whether or not they will sup
port it. 1t has been approved tenta-
lively by the federal reserve board and
bankers in the leading financial cities
will be asked Immediately to subscribe
the necessary amount.
The bankers of New York city have
already agreed to subscribe so0.O00,-
s5O,00O.000 shall be subscribed by cities
in non-cotton producing states. The
remaining $35.0U0,000 is to be provided
by the cotton states.
Rate of Interest Prescribed.
THE new plan contemplates the loan
ing of money on cotton at cents per
pound. and at a rate of interest not
exceeding 6 per cent, for a period OF
one year, with the privilege of a re-
newal for an additional period of six
months. 1t is provided that all services
rendered in the administration of the
fund by voluntary committees and
bankers shall be without charge, but
that the borrowers shall pay per cent
on the amount loaned to them into a
FUND which is to be called the guaran-
tee fund, and which Is to be used ex-
clustvely for paying the necessary eX-
penses Of administration, which it is
estimated will not exceed one-eighth of
l per cent, and the remainer to be used
to make good any losses which may be
incurred on loans that may be made on
cotton at the stipulated rate of cents
per pound. Upon the conclusion of the
whole transaction the amount of money
left in the guarantee fund will be re-
turned pro rata to the borrowers
Early Decision Expected.
1T is hoped that responses may be
received from the bankers of the lead
ing cities early next week. If they
are favorable the plan will be put into
immediate execution. In that case the
cotton loan fund will be administered
under the general supervision of a CEN
trail committee to be composed of the
individual members of the federal re-
serve board, which committee will, in
turn, appoint a committee to be known
as the cotton loan committee and
which will have the actual manage
ment of the fund.
The plan in its new form is more
practical than anything heretofore pre-
sented, and it is hoped the requisite
amount may be promptly subscribed in
order that the plan may be put into
immediate operation"