The watchman and southron. [volume] (Sumter, S.C.) 1881-1930, 1915-09-08
MONEY FOR COTTON.
MADOO AND F'EDERAE BOARD
PUTTING PLANS INTO EF-
Feet.
Will Deposit Five Million Dollars for
Each District Now, With More to
Come, to be Available for Covering
Paper Secured by Staple.

reserve board and Secretary McAdoo
to extend aid to cotton growers and
to clear the way for handling the fall
crop without last years uncertainty
and difficulty.
The board issued new regulations
authorizing federal reserve banks to
give special rediscount rates on
prOmissOry notes issued on ware
house receipts for staple agricultural
products with the restriction that
member banks which avail them
selves Of this rate must not charge
more than 6 per cent. to the bor-
rover.
Mr.. McAdoo announced he soon
would deposit $5.O00,OOO in gold as
an initial deposit in each of the fed
eral reserve banks in Atlanta, Rich
mOnd and Dallas. Fifteen million
dollars more is to be deposited later.
The secretary said if conditions
showed the need of deposits elsewhere
to aid in handling any other crop ne
would extend similar aid.
The new regulations are broad
enough to apply to all staple readily
marketable crops, but it is we'll
known that the cotton crop is the
one that has given concern Of late.
The board announced that the re-
serve banks in Atlanta and Dallas al
ready had requested rediscount
rate Of per cent. on the sort Of pa
per approved in the regulations.
The announcement tonight follow
ed meetings that occupied most Of
the time Of the board and Mr.. Nc
Adoo for the last two days. The pro-
posal Of several months ago for
the deposit OF funds in government
| banks alone was not favored w some
members Of the board but it was not
| opposed during the recent sessions.
II have concluded that the best
plan for extending aid to the cotton
producers Of the South is to deposit
$50, 100000 in gold, concerning
which 1 made an announcement q
short time ago, in the three federal
reserve banks located at Richmond,
Atlanta and Dallas instead of in the
member banks Of the federal re-
serve SYSTEM" said Secretary Nc
Adoo.
Five million dollars will be de-
posted Immediately in each Of these
banks, making a total initial deposit
OF 100000. The federal re-
serve banks have the organization,
the knowledge Of local conditions and
the powers under the federal reserve
act and the regulations of the federal
reserve board through which the pro-
posed aid may be most effectively
rendered.
To-day the board adopted regula-
tions concerning commodity paper
Under these regulations all national
banks and State banks which are
members Of the federal reserve sys-
tenn. which may lend money to farm
ers or others on notes secured by
cotton, properly warehoused and In
sured, at rate Of interest includ-
ing commissions, not to exceed per
cent. per annum, may rediscount
such notes with the federal reserve
bank Of their district.
ITO illustrate how the proposed
relief Is available to the cotton pro-
ducer the following is given as an
example A borrower asks his local
bank for loan on his note, secured
by warehouse receipts for cotton. If
the bank is satisfied that the cotton is
In responsible warehouse. properlv
insured. and that the note IS good.
IT may make the loan. If the local
pank charges the borrower a rate of
interest, including commission. not
exceeding per cent. per annum. it
may lndorse the note over to the fed
eral reserve bank Of it's district and
the federal reserve bank may advance
tc the local bank the full amount of
the loan. The rate Of interest which
the FEDERAL reserve bank will charge
the local bank will be sufficiently low
say per cent. to enable the local
pank to make loans at a rate of H.
tcrest not exceeding per cent Der
annum, and have a liberal margin OF
rrofit on such transactions.
THE deposit Of government funds
In the South to aid in moving the
cotton crop is simply carrying out
the policy adopted by the treasury
department in 1913, when the first
crop moving deposits were made.
Ihls year the South is the onIy
section of the country where govern