The Pensacola journal. (Pensacola, Fla.) 1898-1985, 1915-09-12
SAYS MR.. M'ADOo's IDEA OF
AIDING FARMER RIDICULOUS

Editor Pensacola Journal.
/ have watched with interest the
efforts of the secretary Of the treas
ury for the past year in his attempt
to fix currency elastic enough to
make the south's cotton crop bring a
fair price. To offset the bearish ten
dency caused by the allies placing
cotton on the contraband list, the ser
rotary will place $30,000,000 in the
reserve banks of the south, to aid the
farmer and advancing merchant to
hold the cotton.
Now let's see how far Mr.. Nc
Adoo's plan will go, and he is going
the limit, not to be charged with IA
voring a special class? A low esti-
mate of the present crop is ten mil
lion bales. Mr.. McAdoo proposes to
loan on a basis of six cents per
pound or $50 per bale. This $30,000,
600 will take care of one million
bales or one-tenth of the crop. This
is, provided every cent is loaned to
the neediest borrowers. We can
easily see that the $3o.000,000 isn't
a drop in the bucket.
Now S15,000,000 of this amount
has just been sent to the three re-
serve banks of the cotton section and
Mr.. McAdoo says that at is up to
the patriotism of the southern bank
ers whether the farmer and small
banker get fair price for the crop"
What is the attitude Of the bank
ers? We find that in the recent
meeting of the members of the re-
serve system, they decided not to
ak maximum rate of interest for
the use of this money, but to leave
it to the individual bankers"
So the best the secretary can do
is to let small number Of our bank
ers have one-tenth enough money to
care for the crop and it is left to this
few to fix the rate at which this
money is loaned, Notwithstanding the
money comes to these few bankers
practically without interest charge
from the government.
To illustrate the working of Mr..
McAdoo's plan, take an extra good
farmer, John Smith.
Smith owns 100 acres of good land,
but to improve and equip it with
mules and fertilizer, he borrows from
his advancing merchant $1,000, Civ
ing mortgage on his farm, mules
and crop. Smith uses fertilizer ju-
diciously and expects to make forty
bales Of cotton, expecting therefor
| $50 per bale or $1,000.
| He works his crop we'll. On Aug.
LIST carries his first bale of cotton to
town. His advancing merchant tells
him that owing to the unsettled con-
ditions he can't even bid on his cot
ton, but as Smith is compelled 20
have some cash for picking and GIN
ming takes the first bale at seven
cents, and advises Smith to get out
his cotton as fast as possible and
store it.
The merchant has discounted
Smiths mortgage at the local bank,
who has placed it as collateral in
New York.
Nobody is pressing for money al
this time and Smith picks every pos
sible bale by October 1st when his
| mortgage is due and stores this cot
ton in warehouse, owned jointly By
the merchant and local banker. On
October first Smith has ginned %
bales of cotton but has had to sell
five bales to get cash for ginning and
j picking. Cotton now is at cents
with an upward tendency. Smith is
i uneasy as to his mortgage on the
i farm, but the merchant allows him
until the 18th on his paper. On that
day cotton is off a few points and
Smith begs a few days more. AS the
merchants lien covers his crop
Smith has only one chance, SO he
i goes to the local banker who has
the government money. The banker
tells him that he can get him $50
per bale on unencumbered warehouse
receipts
! That is $3.50 on the 25 bales. Smitil
owes the merchant $1,000, but ask;
| the merchant to release the cotton
The merchant declines, so Smith
can't get the government money ana
4 as his mortgage is due he sells, the
merchant giving him the top of the
market on that day, lie, or 1895
for the lot which is applied to the
mortgage.
i The next day the merchant takes
these receipts to the local banker ex-
pecting to borrow on these receipts
enough to take up his note with
Smiths mortgage attached, and t.
: his horror is told by the banker thai
the government funds are exhausted
and that the bank could not accom-.
modate him. Further that the mote
and mortgage was rediscounted il