The Richmond Virginian. (Richmond, Va.) 1910-1920, 1915-08-11
RESERVE BANK
CONTINUED From First Page,

In case of necessity while the amount
per bale advanced TO the pledgor will
be at the discretion of the member
bank. the Reserve Bank in accepting
such papers would discriminate in
favor of transactions fairly margined.
It would be unwise to await the ac-
tual presence of a matured crop be-
fore undertaking to make arrange
ments for its financing and the storage
OF such part of IT "a II may be de-
sirable TO liquidate gradually. and II
therefore is recommended that menu
Der banks at once proceed to advise
with their interested customers with
the view OF having them promptly
rake advance arrangements, both with
their bank and with their responsible
warehousemen.
Limitations as TO Discounts.
All notes must bear the endorsement
of a member bank While the law will
not permit the Reserve Banks to ac-
cept under discount notes secured by
a pledge Of cotton when the notes are
made by those purchasing the staple
for speculation or investment purposes,
the Reserve Banks will serve one OF
their chief and proper aims when they
accept from member banks notes
made by planters growing and owning
the cotton, by spinners who have
bought II for manufacturing purposes.
or by merchants accepting cotton in
settlement or accounts or as security
from growers. Notes made by planters
may be accepted by a Reserve Bank
when having maturity up to six
months from the date on which the
Reserve Bank receives the paper. In
tf1is connection. however, II is well
to advise that the aggregate amount
= ftsr4 10 hnv nd
ninety days which Reserve Bank may
hold at any time is limited to 90 per
cent of the paid in capital of any
particular Reserve Bank. which. In
the case of this bank, would be about
So 900 900 II therefore would be wise
for single makers, in drawing their
notes against cotton, 70 make them
of different maturities when the trans
action is large, say in excess OF $4,000,
not only with the view of permitting
the Reserve Bank wide latitude of ac-
ton but In order to facilitate the
gradual and orderly liquidation of the
cotton in the presence OF fair market
conditions
An 10 Lien Laws.
The lien laws of the several States
fnterpose serious obstacles to the free
and safe acceptance OF warehouse re-
ceipts as collateral II therefore is
important that member banks In. ac-
cepting cotton as collateral. satisfy
themselves and be in position if asked
to certify to the Reserve Bank. that
no liens are outstanding against the
cotton so accepted
Cotton mills desiring to purchase
their raw material in excess of a value
for which open credit can readily be
obtained. may store the cotton In a
warehouse~not under their own control.
when the note of swch mill with ware
house receipt attached. will be al
together acceptable at the Reserve
Bank for any maturity up to 80 DAYS
from the date of rediscount by the
bank when the note bears the endorse
men of a member bank.
with assurances to our member in =
situations that this bank greatly de-
sires TO aid them in the situations
discussed in this communication. with
the least possible trouble TO them and
their customers. and inviting their full
cooperation. we remain,
Very truly yours,
FEDERAL RESERVE BANK
OF RICHMOND,
George J. Seay.
Governor.