The Richmond Virginian. (Richmond, Va.) 1910-1920, 1915-08-24
FRS, Step Taken by Federal
Government to Relieve Cot
ton Planters Under Embargo
RICHMOND BANK Is TO
BE ONE DEPOSITORY
No Interest to Be Charged on
These Deposits Making 1t
Possible for Member Banks
to Charge Low Rates

washington. Aug. as.-rhe irst step
on the part Of the Federal govern
ment to relieve the Southern cotton
PLANTERS was taken today. Announce
snent was made at the Treasury De-
partment that Secretary McAdoo viii
deposit $50, 100000 in gold in the Fed
erai Reserve Banks of Atlanta, Dali
las and Richmond. II so large sum
IL needed. In order 10 facilitate the
Amazing of the cotton crop. This
step was decided upon a. result OF
the action Of the allies in putting
cotton on the contraband list.
The deposits according to the officinl
announcement, will be for the purpose
OF enabling those Federal Reserve
Banks TO rediscount loans made on cot
ton secured by warehouses receipts By
national banks, and those State banks
that are members OF the Federal Re-
serve System"
No interest will be charged on these
deposits. 1t 10 intended that the de-
posits shall make IL possible for the
member banks TO charge low rates on
loans on warehoused cotton, and in
dications are that the Federal Reserve
Board will fix extremely low rates on
rediscounted paper Of this character.
No disclosures have been made as to
WM8A 9Anef BtTR6 arc WAs0Gt CuHACtbRa6-
ton for the relief OF the cotton sit
uation. The idea of government off,
ciais 10 that loans At low rates Of
interest viii enable cotton planters
20 hold back from the market . part
of their crops. thus helping the price.
various steps Considered.
The President had an important con :.
ference today with w. r. q. Harding.
OF the Federal Reserve Board. who
has had supervision Of all problems
arising Tor the board out Of the cot
ton situstion. Naay phasss. OF the sis.
walton were gone into and steps which
ssem to be advisable were discussed.
No announcement was made. however.
~ to what plans the President ana
Mr.. Harding have under consideration.
Nr. Harding will deliver . speech on
the cotton situation at Birmingham
Thursday night.
Here 10 the Treasury Department
statement:
else Of the discretion given to him by
law the government will for the time
being charge no interest to those de-
posts In Federal reserve banks: that
such action IL Justified by the unusual
situation respecting cotton caused by
the European war: that NE considers
II his duty to use every available
means In his power to help the cotton
producer Of the South In the circum-
stances; that II Is q matter Of eco
nomfc Importance 70 the entire nation
that those who siavc produced the cot
ton crop shall have fair opportunity
20 dispose of II gradually and in an
orderly manner, 60 that they may not
be forced. through inability to market
their cotton. to sell II at sacrifice
prices.s
Loans on Warehouse Receipts.
Secretary McAdoo said that one of
his chief objects was to create a basis
for such enlarged credit In the South
that the banks viii have ample re-
sources to extend to producers such
Accommodation that they win be able
Ito carry cotton In warehouses for q
reasonable length of time until II can
be marketed advantageousiy. In or
der to accomplish this. he said that
|ehc national and State banks which
|are members of the Federal reserve
|system should make loans on ware
house receipts for insured cotton at
low rates OF interest: that the banks
lean well AFFORD to carry cotton for
producers AZ 8 per cent. especially X
they are able to rediscount cotton pa
|per at the Federal reserve banks At a
|much lower rate than six per cent;
that the credit resources OF the banks
|cf me country are greater than ever
|before In our history. and that there
IL no reason. why the banks should
mot. IN cooperation with the mer-
|chants Of the South. help the cotton
producers with loans at lsw rates In
line present peculiar situation.
THE secretary said that the Fed
|eral reserve board had right to de-
|terUaine the rate Of interest which the
ksederal reserve banks can charge
|x1ember banks on notes or loans Sc
|cuted by insured and warehoused cot
TON rediScounted with Federal reserve
banke He has been unable to consult
hts colleagues Of one Federal reserve
beard on account Of hin absence from
Washington. but feels confident of
their co-operation In every reasonable
way.
''secretary McAdoo said that II il
should appear. however. that the OBJ
let In view can bo accomplished with
krcater efficiency to the cotton pro-
aucers, the merchants and the banks
e the South. BY depOsiting government
|ISstead OF In the Federal reserve
,8nks, he would take that course and
Ike deposits In such national banks
. would give him the assurance that
n money so Deposited or the credit
xned thereon would be loaned on
s7ffon insured on ware11oused and al
xrNte OF interest not to exceed six
~ cent
sESsrhe secretary said he believed that
3ere vas no occasion for alarm about
Eo future lot cotton. and X the bank
III ana merchants would cooperate
vjfh each other, and with the cotton
M - H. TIA x&&l