The Spectator., 1914-12-11
COTTON FUND DETAIL EXPLAINED
Money Will Not Be Loaned on Less Than One Hundred Bales---Plan Not Satisfactory
 to the Small Farmers.

New York drafts for 25 per cent of each loan; in return, the banker re- ceives a certificate of participation of the denomination issued to the cot ton states subscribers, designated as Glass B." The S100,000,000 subscrib- ed by the city banks, being three fourths of the entire fund, Is desig- hated in Glass A" certificates in pro- portion to the subscriptions of the city banks. When the loans are paid. the Class A banks receive two per cent in dividends to each one per cent paid Class B banks until the balance due Class A and Class B banks is equal, then the dividends are equally divided. For instance, if bank was only in terested in one loan of $3,000 it's in- terest in the pool would be a s750 certificate Class B; the Class A pro- portion would De s2,25O When Class A had received so per cent of its sub scriptions in dividends, and Class B one-half, or 40 per cent of it's subscrip- tion, the division between the "A" and "B" class in that loan would be $450 each; future dividends would retire this equally.
 The Class A certificates are prefer red only to the extent that any losses to the cotton fund in the end would be payable out of the guarantee fund first to Class A and second to Class B. As the losses should be slight un- der the careful administration that is being perfected. this preference should be of little moment if fair amount of the fund is used.
 The bank is not required to endorse the loans of it's customers, but must guarantee the prompt and punctual payment by the borrower of interest on loans, and all warehouse charges and insurance premiums. AS the forms to be furnished will be com plete, the transaction should be short and simple.
 The Farmers Object.
 President H. s. Mobley of the Farmers Union of Arkansas said the farmers were very much disappointed in the details of the cotton loan plan. He said:
 ''The farmers asked Congress to have the treasury deposit United States treasury funds in the banks to be loaned to the producers of cot ton at S30 per bale, at per cent in- terest. We made strong fight for this, but the Wade plan was intruded into the fight, proposing that the bankers would subscribe $135,000.000 to pool to be loaned on cotton on the terms we had asked government loans. This defeated out efforts. Since Congress adjourned we have waited patiently for the bankers plan to be put in operation. It is now an- nounced that the governing committee is ready for business. They propose to lend on not less than one hundred bale lots.
 we had expected to be able to bor- row on single bales or more, when properly insured and stored But thelr proposal to lend on not less than one hundred bale lots disappoints us in this regard. As the matter stands, the average producer is prohibited from borrowing, and will receive no benefit whatever. The cotton buyer and large grower can be taken care Of, but the multitude of small grow CTS are entirely eliminated. Can any one wonder at the discomfort and prejudice of the small farmer when matters which are proposed as being for his benefit turn out as this does, to be actually for the benefit of oth- CTS?
 Tt is such proceedings as this that cultivates and keeps alive the labor ing mans antipathy to business men. especially bankers"