Yorkville enquirer. [volume] (Yorkville, S.C.) 1855-2006, 1915-09-24
SENATOR SMITH ON COTTON
Discusses the Situation from Stand
point of Finance.

Discusses the Situation from Stand
point of Finance.
Senator E. D. Smith on Tuesday,
gave out the following to the press
from Florence:
Some weeks ago 1 me with the
Federal reserve board, for the purpose
of discussing the practical operation
Of the new banking and currency law
as it relates to the farmer. l pro-
pounded certain questions to them, In
the form Of a letter, to which letter
the governor Of the board replied.
Among other questions ~propounded
was: What would be the rate Of re-
discount? In other words, what in
terest would u regional reserve bank,
Richmond, charge our state banks
that is the national and member banks
of this state, on cotton certificates.
| suggested to the board at that time
that in view Of the fact that cotton
always was an extremely liquid asset
the world over, and especially now,
when the consumption by virtue OF
this war and it's uses as the basis OF
high explosives, and in view OF the
other fact that 1t was practically i'm
perishable, when properly protected
from fire and weather, that I thought
it was entitled to a special rate. On
last Thursday, I again saw the gov
ernor Of the board and was informed
by him thai the board had determined
on a special commodity rate for cot
ton. / was informed that 1t had issued
a statement to the member banks
throughout the cotton belt that in case
any bank would agree not to charge
the party or parties obtaining a loan
on cotton exceeding 6 per cent that
the reserve bank, in u case Rich
mond, would not charge but 3 per
CEN discount. ! IA greatly graft
fled to see that at last the commercial
and banking value Of cotton was being
recognized by the Federal power.
Paper issued upon cotton properly
stored, insured and grade ascertained
and the ownership established. Is I'M
der the law the basis Of the issuance
of Federal reserve notes. Therefore,
the local member bank that takes such
paper practically no liability.
The cotton itself guarantees the loan;
now it does seem that every national
and member bank In the south would
gladly accept this proposition. They
receive the money from the reserve
bank at 3 per cent, and give 1t to the
maker Of the paper at 6 per cent,
which means a gross profit to them OF
100 per cent with practically no liza
bility on their part.
Under such terms as these with the
present price of cotton. every farmer
who so desires can hold a part or all
Of his crop from the market without
a serious per cent Of its value being
taken up in interest.
1.-The present crop is undoubtedly ore
Of the smallest that has been made in
years. The demand for cotton, both
in this country and abroad. has not
abated a particle. Therefore, with
holding the cotton from the market
and only selling at will may rapid
ly enhance the price and tend to re-
nuperate losses sustained last year.
Under our present banking and cur
rency law. as administered bv the
present officials, the financial status
Of the seller is made approximately
as strong as that Of the buyer. This
Is the condition which we have
fought for for all of these years. AS
long as 1t vas hard and costly for the
farmer to finance his cotton. and prac-
tically easy for the buyer to obtain
credit. the fight was unequal and the
prices disastrous.
"Mr. Harding Of the Federal reserve
board. who was made chairman Of a
committee charged with the investi-
CATION of conditions. made some
startling revelations at a banquet last
night in Raleigh in reference to the
rate Of interest charged by certain
banks In certain southern states. The
comptroller Of the currency has prom
Used in his official reports hereafter to
give the amount Of paper discounted
by member banks on farm products,
the kind Of paper, the rate Of interest
charged the maker Of the paper and the
%rediscount rate of interest charged the
bank by the reserve bank. / am of
he opinion that this will help.
II gather from the opinion Of certain
correspondents that their estimate of
the present crop is that it will not ex-
coed IL. 200, 900 bales, with the posi-
bility Of II, 900, 900 bales being nearer
the mark. With, the confusion occa-
stoned by the unexpected war last
stoned by theaoin aoinad. .,qjvsbresu
year, with the generalization Of both
the financial and marketing world and
with a sixteen million bale crop after
a temporary depression. the market
rebounded to nine and ten cents, with
order having been restored, with con
fidence returned, our new banking and
currency law put into operation, with
abundance Of crop money and a small
CIOp, IL 10 dilllOSl iulpOSSiulS " Sdy
what would be the price of cotton with
proper marketing.
while in Washington last Thurs
day. Secretary Of the Navy Daniels in
sisted that 1 should accompany him to
Raleigh as a guest Of the chamber Of
commerce at it's annual banquet last
night. MIR. Harding discussed the
cotton situation from the standpoint
of the Federal banker, and 1 from the
standpoint Of a customer Of that bank,
We were in hearty accord and the au-
dience seemed also to be unanimous.
1t seems as If North Carolina borrow
ers have been more fortunate than
even South Carolinians, in that it was
developed that the rate Of interest in
that state has been around 6 per cent,
while in South Carolina it had been
considerably higher, and in n in
stance at least as high as Is per cent.
In the country, and particularly at
Raleigh, there were evidences Of re-
turning prosperity. To me the outlook
is more hopeful than it has ever been
in the history Of the cotton belt"