Pine Bluff daily graphic., 1915-08-08
|ESERVE BANKS |T0 HELP MARKET l S0UTH'S COTTON
( Bank Board Outlines Han for Keeping Up Price 1 of Staple.
nANS TO FARMERS, NOT SPECULATORS

psncial Experts Declare Supply Not
 likely to Exceed Demands, But Im-
 lairment Shipping Facilities Cre-
 ates Extraordinary Situation.
 Washington, Aug. 7.-The federal
 serye board sees in it's machinery
 resources an effective substitute
 the method of financing the move
 ent of crops employed in previous
 ars, when special deposits of gov
 hment funds at money centers of
 e agricultural sections have been
 ade. This year loans are to be
 ade by federal reserve and member
 Inks by means of rediscounts of pa
 er with securities covering farm
 oducts properly warehoused and in- bred.
 The abnormal situation arising from
 e European war does not present to
 e reserve board any serious prob
 m in the financing of any crop ex- ept cotton, as it is believed the
 ovement of the others will proceed
 an orderly manner and without
 tide price fluctuation.
 With cotton there is not the same
 eling of certainty. yet it is felt that Ne new system will work in that field |ith entire success if the bankers feet whatever condition may arise
 the proper spirit. The board, in |atement, asks that the reserve and ember banks give special attention
 and withhold no possible aid from be Southern people. .-ss...-
 SpeculatOrs Are Barred.
 In this connection it is pointed out bat the carrying of products in be- alf of speculators is not permitted nder the law, and that member anks cannot certify the notes of 'peculators as eligible since the act oes not allow the rediscounting of &otes, drafts. or bills of exchange 5overing merely investments" No staple commodity, the reserve board states, is subject to greater lariations in price than is cotton, Phich during the past 12 years has |hown an average annual fluctuation i aS3 cents per pound. Sudden and Fiolent fluctuations are clearly 1o |he advantage of neither the loaning banks, the producer. the manufactur- Pr nor the consumer. They offer on |he contrary an inviting field for the PpeculatOr, and the reserve board [eels that should it, in making possi- ple the more normal movement of |he crop, be a contributing factor in Feducing these limitations, it would have accomplished greatp ublic good.
 In it's letter to the reserve banks, me board calls special attention to me marketing of cotton because 1t is clearly to the common interest that credits based upon the crop be pro- tected as far as possible from the hanger of Generalization" The re- serve banks should, it is suggested, particularly point out to their mem- Oers that they are prepared to -redis- count the notes of that credits based qpon this crop be proper warehouse receipts for cotton and accompanied Dy evidence of insurance"
 Methods of Procedure.
 Member banks, the board says. which offer these notes to reserve banks for rediscount should be ready to state the grade and market value pr the cotton and the notes should be m the customary collateral form. pro- Vldlng the right to call for additional security in event of material decline m market value.
 me amount to be advanced would De :, left primarily to the judgment of me member bank.
 Ine board suggests that the reserve panks in the cotton-growing states caii attention of their member banks .o the desirability of reserving stor- age space for such cotton as is to be '. used as security for loans in lOcali- nes where warehouse facilities are lla!aequate. The letter states that wnlle there is not sufficient ware mousse space in the South to take care VI the entire cotton crop. there are pronably ample facilities for the proper storage of all cotton likely tc oe nledged for loans.
 While there seems to be no reason .o believe that the worlds present ana potential supply of cotton is out !" \. proportion to requirements dprins :.i. .ne next 12 months" says s@e board :. ~ IS nevertheless importa1 bdcausl '. O, our lack of adequate shhpiItg fa' s,nlltles. as we'll as restriction brough ~ .oou. by the war upon free exports ~ all countries, that ample means b' psovided p for the proper handling ant 'nsctive marketing of cotton" (, similar means may be taken to ait ~ s nnancing other agricultural pro Hacts, the board says, whereve sasre IS available a system of ware suases, elevators or other approved 1'eans of storing and certifying.