Norwich bulletin., 1915-08-24
To RedisCount
Loans on Cotton
$so,oooooo IN GOLD TO BE DEPos-
TIED IN RESERVE BANKS
NO INTEREST CHARGE
Action Taken by Secretary MeAdoo
20 Uphold Cotton Market in the Face
Of Commodity Being Listed as Con-
trahand by Allies.

washington. Aug. sS.-TreaSury Of
fictalS tonight made public an an
no0ncement by Secretary NcAdoo that.
in view OF the action OF the allies in
putting cotton on the contrab9nd list.
he would. II * became necessary. de-
poStt $50, ,000.000 or more in gold in the
federal reserve banks at Atlanta. Dali
las and Rtcemond for the purpose of
enabling the reserve banks to rSdiS-
count loans ON cotton secured by ware
house receipts made by national banks
and state banks belonging to the fed
sral reserve system,
Temporarily Without Interest.
The gold woud be deposited tempor-
arily. at least, without interest charge.
II was explained that IL IL appeared
that the object could be accomplished
with greater efficiency, thereby, the
deposits would be made directly with
national banks agreeing to lend the
money on cotton at a rate not to ex-
coed six percent
To Uphold Cotton Market.
Secretary McAdoo authorized the an
nouncement from his summer home at
North Haven, Maine. 1t came at the
close OF day of speculation in Official
circles as to the nature of steps which
the entente powers have indicated they
in the face OF their contraband order.
Justified by Unusual Situation.
IN the exercise of the discretion
given to him by law, read the treasury
statement. Secretary McAdoo said
that the government will for the time
being charge no interest on these de-
poSitS in federal reserve banks; that
such is justified by the unusual sit
uation respecting cotton caused by the
his duty to use every available means
in his power to help the cotton pro-
ducer of the south in the circumstances
that 1t is a matter of economic i'm
portance to the entire nation that
those who have produced the cotton
crop shall have a fair oportunity to
dispose of it gradually and in an or
derry manner so they may not be
forced. through inability TO market
tneir-cotton gradually. 10 sell 1t at
sacrifice prices
Carry Cotton Until Marketed.
The secretary said that one Of his
chief objects was to create a basis
for such enlarged credit in the south
that the banks will have ample re-
sources to extend to producers such
accommodation that they will be able
to carry cotton in warehouses for a
reasonable length of time until it can
be marketed advantageously. In order
to accomplish this, he said, the state
and national banks which are members
of the federal reserve system should
make loans on warehouse receipts for
insured cotton at low rates of interest; /;
that the banks can well afford to carry
cotton for producers at six percent es-
pecially If they are able to re-dis-
| count cotton paper at the federal re-
serve banks at much lower rate than
| six percent; that the credit resources
| of the banks of the country are great
| er than ever before in our history and
that there is no reason why the banks
should not, in cooperation with the
merchants of the south. help the cot
| ton producers with loans at low rates
| in the present peculiar situation.
May Deposit in Other Bank.
"Mr. McAdoo said, however, that
| should it apear that the object in
view could be accomplished with
greater efficiency to the cotton pro-
| ducers, the merchants and the banks
| OF the south by 1depositing government
funds in the national banks direct in
stead of in the federal reserve banks,
he would take that course and make
| deposits in such national banks as
would give him the assurance that the
| money SO deposited or the credit based
| thereon would be loaned on cotton in
| sured or warehoused and at a rate of
interest not to exceed six percent.
The secretary declared he believed
that there was no occasion for alarm
about the future of cotton"