The Birmingham age-herald., 1915-09-04
15,000,0O0 in Gold to Be Placed in Southern Re- serve Centers as Initial Deposit
RICHMOND, ATLANTA AND DALLAS ARE
 TO RECEIVE $5,OOO,OOO
Deposits to Be Doubled Later-Plan Provides for Loans at Low Rates on Warehouse Receipts

Wnshington. September 3.--Defintte steps were taken today by the fed crai reserve board nnd Secretary of the Treasury McAdoo to extend mid to cotton growers and to cIcnr the way Tor handling the fall crop without last senr's uncertainty and difficulty.
 The board discussed new regulation. authorizing federal reserve banks to give special redfscount rates on pror- 'ssory notes secured by warehouse re- ceipts for staple agriculturaI products with the restriction that member banks which avail themselves of this rate must not charge more than 6 per cent to the borrower.
 MT. McAdoo announced he soon would deposit S5,OO0,0OO In gold as m initial deposit in each of the federal reserve banks at Richmond. Atlanta and DnI- las. *i5.OW.OOO more to he deposited later. The secretary said that if con- ditions showed the need of deposits elsewhere to mid in handling any other crop he would extend similar aid.
 The new regulations are broad enough
 
 crops but it Is we'll known that the cot ton crop is the one that has given con cern of late.
 The board announced that the reservs banks in Atlanta and Dallas already had requested rediscount of per cent on the sort of paper approved In the regula- tons.
 The announcement tonight followed meetings that have occupied the time of the board and Mir McAdoo most of the past two days The secretary's pro- posal several months ago of deposits of government funds in southern reserve banks alone was not favored by several members of the board. but it was not op- posed during the recent discussions Some members indicated, however that as the total cotton crop probably would be worth about ssOoWo,ooo they did not think sl5.- "oooo would go far toward handling it.
 McAdoo's Statement
 T have concluded that the best plan for extending aid to the cotton producers of the south is to deposit the S30, ,0OO, 900 in gold, concerning which l made an an- short time ago in the three federal reserve banks located at Rich mond, Atlanta and Dallas instead of in the member banks of the federal reserve system,' said Secretary McAdoo
 Five million dollars will be deposited in each of these banks, mak- ing total initial deposit of Sl5. .0o0 The federal reserve banks have the or ganization, the knowledge of local condi- tions and the powers under the federal reserve act and the regulations of the federal reserve board through which tho aid may be most effectively rem dered
 To-day the board adopted regulations commodity paper. Under these regulations all national banks and state banks which are members of the federal reserve system which may lend money to farmers or others on notes se- cured by cotton, properly warehoused and insured at rate of interest. including commissions, not exceeding per cent per may rediscount such notes with the federal reserve bank of their dis Lrict.
 Plan of Relief
 "To illustrate how the proposed relief IS available to the cotton producer the is sivei. as an example, A bor- rowcr asks his local bank for loan on his note, secured by warehouse receipts Tor cotton. If the bank is satisfied that he cotton is In a responsible warehouse properly insured. and that the note 10 good, it may make the loan. If the local bank charges the borrower q rare or rn- crest, including commission. not exceed ng 6 per cent per annum, 1t may ndorse he note over to the federal reserve bank If it's district, and the federal reserve bank may advance to the locaI bank the ull amount of the loan. The rate of interest which the federal reserve bank Will charge the local bank will be suf- fciently low, say per cent, to enable he local bank to make loans at rate # interest not exceeding per cent per lnnum, and have a liberal margin of profit on such transactions
 The deposit of government funds in he south to aid in moving the cotton crop s simply carrying out the policy adopted y the treasury department in l913 when
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