The sun. [volume] (New York [N.Y.]) 1833-1916, 1915-09-21
MADOO Is HELD UP
ASA COTTON SAVIOR
W. I. G. Harding Defends Crop
Moving Fund and Reserve
Boards Action.
SAYS FARMERS NEED AID

RALEIGH. n. c., Sept. 2o.-william p.
G. Harding of the Federal Reserve
BOARD in a speech here tonight de-
fepded the action OF Secretary McAdoo
IN depositing SIS. 900, 900 in Southern
reserve banks for the financing Of the
cotton crop.
He also defended the regulation Of the
Federal Reserve Board establishing
preferential rates on commodity paper
no that Government deposits would be
loaned to the cotton planter at 6 per
cent or less,
Mr.. Harding quoted from a recent
compilation as to interest rates charged
in the South to show that some action
spart from that of the bankers them
selves was necessary to save the
farmers the necessity of selling their
cotton at a sacrifice. Mr.. Harding said
In part:
From the report Of June 20. 1915. 1t
appears that here are i've national
banks in Alabama whose maximum
rates OF interest average 26 per cent,
the rate in one case being 60 per cent.
and in another 81 per cent. The aver
sge rate OF interest which one OF these
banks was charging on all OF Its loans
amounted to ~ per cent. another 10
per cent.
TN Arkansas one national bank ad-
nitted making a loan at a rate as high
as 40 per cent, another at so per cent,
another at so and another at rs per
xN To- rgaruAa A.-A .--
banks whose average maximum rate OF
interest was about 80 per cent. The
maximum rate charged by one OF these
banks was 40 per cent. and the average
on all loans was Is per cent.
High Rates in Texas.
"No bank in South Carolina ad-
mitted charging more than Is per cent.
In Texas a number OF banks reported
rates in excess of 100 per cent. and
many OF them stated hat their average
rates on all loans were l per cent. a
month or more.
These higher rates. however. are not
confined exclusively to the South, for
the reports show occasional rates OF so
per cent. in the East and North as well
ss in the Far West and South. Twelve
per cent. SEEMS to be regarded still as
not extraordinary by the country
bankers of Minnesota. Wyoming, Ken
lucky and California.
The average interest rates in North
Carolina are lower than elsewhere In
the South. While one bank In North
Carolina admitted making a loan at as
high as so per cent. It's average rate on
oil loans was less than 6ia per cent. and
the average rate for loans by all ma
tional banks in your State was slightly
more than s per cent.
THE regulation OF the Federal Re-
ee-ve Board granting preferential
discount rates as commodity paper to
notes secured by warehouse or terminal
receipts for cotton. grain or other staple
commodities provided the maker has
been charged not more than 8 per cent.
Interest for discount has been severely
criticised by some OF the financial jour
mails.
The action OF the Secretary OF the
Treasury m ~depositing Government
funds with some OF the Federal reserve
banks has also been condemned. He has
On u~ndoubted legal right 10 make de-
posits with the Federal reserve banks.
He cannot be charged with dLscrim-
nation in favor OF any one section, for
his critics contend that no Government
deposits are needed anywhere. and he
has. AS a matter of fact. offered to de-
rosit Treasury funds with Federal re-
serve banks OF other sections, which de-
posits have been declined.
The Human Equation.
81 fully agree that from a purely
banking standpoint. and eliminating all
other considerations. the deposits were
not essential. The situation as a bank
Ing proposition could have been cared
Tor by the Southern reserve banks either
by an expansion of their note issues or
by rediscounting with other Federal re-
serve banks, but the human equation
has to be reckoned with, particularly
when it comes to dealings with Southern
farmers
Tn my opinion the Secretary or the
Treasury felt that by announcing his
Intention 10 deposit Government funds
with southern banks to assist in NOV
Ing The cotton crop simultaneously with
Great Rritain's declaration of contra
band against cotton he was availing
hlms' Of the psychological moment for
restoring confidence. and the members
OF the Federal Reserve Board felt that
In issuing the commodity regulations.
which are entirely independent of the
secretary's action in depositing Govern
nent funds. they would prove to the
Southern farmer the disposition of the
Federal reserve banks to render aid
while the Secretary by making these de-
posts convinced the farmer of the
ability of the banks to carry out their
good Intentions.
The contention that the board Is seek
Inc 10 assume the right to dictate to
member banks What their interest rates
snail be is OF course absurd, as there
10 nothing compulsory about the regu-
latlon,"