The Lancaster news. [volume] (Lancaster, S.C.) 1905-current, 1915-09-24
GRANT LOW RATES
ON COTTON LOANS
Authorities of the Federal Re.
serve Board Give Special
RediscOunt.
E. ID. SMITH DESCRIBES 1T
senator Thinks New Facilities
With Short Crop, Will Mean
Good Prices


Sept. 21.-Senator e. ID. Smith was
in the city short while this morn
ing, returning to his farm from Raj
eigh. N. c., where he, with w. p. G..
Harding of the federal reserve board .
took different viewpoints in the mat
ter of loans from banks before the
Chamber of Commerce of that city.
They had both been invited to ac-
company Secretary Daniels to his
home to meet with this body. The
representative Of the reserve board
viewed the transaction from the
staindpoint Of the bank, the senator
from the standpoint of the borrower.
The meeting was described as most
interesting one, in which all seemed
10 be in thorough accord.
Senator Smith says that the people
in North Carolina seem to be getting
their money cheaper than those in
South Carolina. In the North State
the rate of interest Is said to be 6 per
cent. while in this state report seems
to show at least one case where It
Was Is per cent. He thinks that
there are many evidences of increas-
ing prosperity. The outlook in the
cotton belt he thinks is the best in
its history. He felt that the promise
of the federal reserve bank in Rich
mond to let the banks that would
lend the farmer at 6 per cent on his
cotton have the money to lend at 8
per cent, would be most gratifying
and encouraging. He gave out while
here an authorized interview in
which he repeated the conversation
between himself and the board on
this matter, in which was the state
ment concerning the interest that
would be charged in this matter. The
governor of the board gave him the
assurance of the per cent charge.
His statement is as follows:
Some weeks ago I met 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. / pro-
pounded certain questions to them,
in the form of letter, to which
letter the governor of the board re-
piled. Among other questions pro-
pounded was: What would be the
rate of rediscount?' In other words.
what interest would our regional re-
serve bank at Richmond charge our
state banks-that IS, the national
and member banks of this state-on
cotton certificates. I 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 its uses as the basis of high ex-
plosives, and in view of the other
fact that it was practically imperish-
able, when properly protected from
fire and weather. that / thought il
was entitled to a special rate. On
last Thursday again saw the COVER
nor of the board and was informed
by him that the board had determin-
ed on a special commodity rate for
cotton. l was informed that it had
issued statement to member banks
throughout the cotton belt that in
case any bank would agree not to
charge the party or par,,es obtaining
loan on cotton exceeding E per
cent, that the reserve bank, in our
case, Richmond, would charge but 3
per cent discount. | was greatly
gratifed to see that at last the COM
mercial and banking value of cottor
was being recognized by the federal
power.
Paper issued upon cotton proper
ly stored, insured and grade ascer-
tanned and the ownership established
is under the law the basis Of the is
suance of federal reserve notes
Therefore the local member bank
that takes such paper assumes prac-
tically no liability. The cotton itself
guarantees the loan; now it does
seem that every national and mem
ber bank in the South would gladly
accept this proposition. They re-
ceive the money from the reserve
bank at per cent and give it to the
maker Of the paper at 6 per cent.
which means gross profit to them
of 100 per cent with practically no
liability on their part.
under such terms as these, with
the present prices of cotton. every
farmer who so desires can hold a