The herald and news. [volume] (Newberry S.C.) 1903-1937, 1914-12-11

money on deposit or debts due.
For Immediate Relic.
The second channel open to us is
through the discount feature OF the
federal reserve act. 1t is t@ere tha>
We must look for immediate relieI.
1t is well to remember. however,
that the federal reser'e bank a;
Richmond is the bank Of bankers, and
that relief can only come tarough the
member banks Of tie federal reserve
system.
Under section 13 o. this act, any
federal reserve bank may discount
notes. drafts and bills of exchange
arising out of actual commercial
transactions; that is, notes, drafts and
bills of exchange issued or drawn or
agricultural or commercial purposes,
etc., ETC., for a period Of 80 days:
<'Provided, That notes, drafts and bills
drawn Or issued for commercial pur-
poses or based on live stock, and hav-
ing a maturity not exceeding SIX
mont S, may be discounted in an
amount 10 be limited to a percentage
OF the capital of the federal reserve
bank" etc. This amount is fixed at
70 per cent. of the unimpaired capl-
ta1 and surnlus of the bank.
Then the act, in the following
specific terms, exepmts from all re-
striction the discount Of bills OF en-
c-ange drawn in good faith against
actually existing values.
At the cotton conference called by
Secretary McAdoo, August y and p,
he ruled tat under the Aldrich-
Treeland emergency act. cotton ware
: ouse receipts were acceptable as Sc
curity for the issue O. currency.
Loan Value Basis.
Now, with the federal reserve act
We have further enlarge's 9nt OF
their sphere OF uSeIulnesS.
The committee appointed by NJ
McAdoo, after congratulating him
upon his ruling as to ware ouse re-
ceipts, said that "the Average market
value of middling cotton for the past
SIX years tas been in excess Of l.
cents per pound" that cotton does
rot deteriorate wien properly ware
housed" etc., etc. 1t can, therefore,
be carried over until the restoration
Of normal business conditions enables
the worlds consumption 20 absorb 1t.
The committee therefore is of the
opinion that eevry effort should be
made to assist tie producers to hold
cir cotton for price that will min
ilnize their loss" ETC., etc. T e com
mittee then suggested s cents pc"
pound as u basis for loans.
In the currency act just - INTO
operation there is conferred amp-e
power to protect the producers cot
ton against loss from lack of an ade-
quate currency. The Southern reserve
districts are suffering from our avail
able funds being tied up in the very
commodity which We are trying TO
hold. There are, owever, sources
open to the central beard, Of which
Mr.. MeAdoo is eXofc;o chairman, that
can meet tie situatlo-- The under
lying principle Of the federal reserve
act is tnat it is possible TO marshal all
O: the assets of tie entire system at
it's weakest point, instead of as her
tofore. each bank being left to stand
or fall alone.
Can Compel Rediscounts.
Under section 10, subaead B, five
members of the reserve board ID
Washington can, by an affirmative
vote. require other federal reserve
banks to rediscount paper whfsa has
been discounted by the Richmond
bank, and this with or without the IN
dorsement of tie member bank. So
far as I see, there are no limitations
to the amount of such discounts.
Under section 15 of tie act, federal
reserve notes are issued at the dlscre-
ton OF the federal reserve board in
I'5snington. fer tie purpose CT MAX
ing advances 70 federal reserve banks.
The only collateral security required
is collateral equal to the amount CT
the federal reserve notes issued an1
is defined as being the notes. and bills
accepted under the provisions Of sec
ton 13, which l haze quoted, as en-
titled to discount Wit out reference to
the capital stock and surplus OF the
bank, when for agricultural purposes
biased on actual existing values, 10
Wit, warehouse receipts for cotton, as
construed bv Mr.. McAdoo's statement