The Bamberg herald. [volume] (Bamberg, S.C.) 1891-1972, 1915-08-26
WILL FURNISH S3O,00O,0O0
GOLD TO BE PLACED IN SOUTH
ERN RESERVE BANKS.
This Would Enable Banks to Reds
count Loans on Cotton Secured
by Warehouse Receipts.


announcement by Secretary McAdoo
that, in view of the action of the al
lies in putting cotton on the contra
band list, he would, if it became
necessary, deposit S30,OOO,000 or
more in gold in the federal reserve
banks in Atlanta, Dallas and Rich
mond for the purpose of enabling the
reserve banks to rediscount loans on
cotton secured by warehouse receipts
made by national banks and State
banks belonging to the federal re-
serve system.
The gold would be deposited tenn
porarily, at least, without interest
charge. 1t was explained that if it
appeared that the object could be ac-
complished with greater efficiency
thereby, the deposits would be made
directly with national banks agree
ing to lend the money on cotton at
a rate not to exceed 6 per cent.
Secretary McAdoo authorized the
announcement from his summer
home at North Haven, Maine. 1t
came at the close of a day of specu-
lation in official circles as to the ma
ture of steps which the entente pow
ers have indicated they will take to
uphold the cotton market in the face
of their contraband order.
Secretary's Statement,
In the exercise of the discretion
given to him by law" read the treas
ury statement, Secretary McAdoo
said that the government will, for
the time being, charge no interest on
these deposits in federal reserve
banks; that such action is justified
by the unusual situation respecting
cotton caused by the European war;
that he considers it his duty to use
every available means to help the
cotton producer Of the South in the
circumstances; that it is matter OF
economic Importance to the entire
nation that those who have produced
the cotton crop shall have fair op-
portunity to dispose of it gradually
and in an orderly manner so they
may not be forced, through inability
to market their cotton gradually, to
sell it, at sacrifice prices.
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
accommodations 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 Do This.
I'm order to accomplish this. he
said, the national and State banks
which are members of the federal re-
serve system. should make loans on
warehouse receipts for insured cot
ton at low rates of interest; that the
banks can well afford to carry cotton
for producers at per cent, especial
ly if they are able to rediscount cot
ton paper at the federal reserve
banks at a much lower rate than 6
per cent; 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 cotton producers with loans
at low rates in the present peculiar
situation.
The federal reserve board, the
secretary said, had right to deter
mine the rate of interest which the
federal reserve banks can charge
member banks on notes or loans Sc
cured by insured and warehoused
| COTTON IGQlSCOuAlcu Will iSoSh oi =
serve banks.
Sure of Cooperation.
He has been unable to consult his
! colleagues of the federal reserve
board on account of his absence from
Washington, but feels confident of
their cooperation in every reasonable
way.
"Mr. McAdoo said, however, that
should it appear 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 depositing govern
ment funds in the national banks dl-
rect instead of in the federal reserve
/ banks, he would take that course
and make deposits in such national
banks as would give him the assur-
ance that the money so deposited or
| the credit based thereon would be
loaned on cotton insured or ware
housed and at a rate of interest not
| to exceed per cent.