The herald and news. [volume] (Newberry S.C.) 1903-1937, 1915-08-24
FUNDS SUFFICIENT
TO FINANCE COTTON
BANKS WILL BE ABLE TO TAKE
CARE OF SITUATION.
Better to Loan on Staple Commodities
Than Use Funds to Initiate the
Stock Market.

today that the present unemployed
loaning capacity Of national banks and
reserve banks was sufficient to finance
at market value the entire cotton crop
and half, if not all, of the tobacco and
wheat crops and to justify an expan-
sion of credit of two or three billion
dollars.
A statement issued by the comptrol-
Ter referred to the prospect for un-
usual demands for funds, particularly
if cotton should be declared contra
band, and declared that never before
had the banks been so strong and 50
thoroughly prepared to handle any
problem.
Just before tae statement was issued
the British embassy authorized the an
nouncement that the allies had agreed
on the principle that cotton was con-
traband.
Special requirements which the
banks may have to meet in the near
future were summarized by Mr.. VIII
1iams as follows:
First, The yearly recurring demand
for funds with which to move the
crops, which this year, except as to
cotton, are unusually large and com
manding full prices.
Cotton Situation.
Second. The unusual demand for
funds which may arise to enable cot
ton growers, to meet any congestion
in the movement or marketing of the
crop, in the event that cotton should
be declared contraband.
Third. Demands which are likely
to be made on national banks, both di-
rectly and indirectly, in connection
with TIE extension of credit to for
eign purchasers of supplies of all
kinds, and to pay for the American
securities which may be returned to
US by the foreign creditors"
Continuing the statement said:
@The actual figures show that from
the present condition tie national
banks of this country have never be-
fore been so strong and so thoroughly
prepared to grapple with and handle
successfully any problem, however
large, which may be presented to them
as they are today. These figures show
that the national banks of this coun-
try and the twelve federal reserve
banks, exclusive of State banks and
trust companies, have at this time an
unemployed loaning capacity sufficient
to enable them, if need be, to carry for
our own people at market value the en-
tire cotton crop, and half if not the
whole of tie wheat crop and tobacco
crop, which it is not, of course, con-
ceivable that they will be asked to do,
and also finance, until the purchasers
can pay US in gold or its equivalent,
a thousand million dollars or so of ex-
ports of foodstuffs or manufactured
products to be shipped to the rest Of
the world
Loans on Staples.
( cit is far better for the banks to
employ their surplus funds in making
loans on staple commodities, where
they can relieve congestion or promote
legitimate commercial transactions,
rather than permit these funds to be
used for the imitation of the stock mar
kets, where speculation in securities
has already reached point which in
vites caution.
"The abstract of condition of na-
tional banks as of June %, 1915, just
completed, shows that notwithstand-
ing the great reduction in reserve re-
Quirements which went into effect with
the inauguration of TIE Federal re-
serve system in November last, the
actual reserves of the national banks
on June %, 1915, are far IN excess Of
the largest reserves ever held at any
one time in the past history of the
country, and amounted to s1,S40,00O,-
900. or $77S,OOoOOO more than the
amount which the national banks are
required to col6.
Greatest on Record.
"This surplus reserve, it is esitimat-
ed, is sufficient to justify, on a con-
servative basis, an expansion Of credit
or further loaning power of, say, two
or three billion dollars. The present
total loans of all the national banks
amount to about six and two-thirds
billion dollars. A year ago the surplus
reserve of the national banks was only
SAT O00 000. cn If at tho innraaSp over