Richmond times-dispatch. [volume] (Richmond, Va.) 1914-current, 1915-08-24
TREASURY BEHIND
SOUTH'S COTTON
M'Adoo Ready to Place $30,oO0,-
600 in Richmond, Dallas
and Atlanta Banks.
FUNDS WILL BE RE-LOANED
Action of Allies Not Permitted to
Force Growers to Sell at
Sacrifice.
Especial to The Times-Dispa ,ch. ]

tion Of the allies in putting cotton on
the contraband list caused Secretary of
the Treasury McAdoo to announce to-
day that 100000. 900 more will be
placed, when necessary, in reserve
banks of the South 10 finance the cot
ton crop. These funds are 10 be re-
loaned to cotton producers Mt low rates
Of interest.
The statement, given out by the
Treasury Department is as follows:
Secretary McAdoo announced from
North Haven. Nc. that. in view of the
action OF the allies in putting cotton on
the contraband list. he will, II II be-
comes necessary. deposit S3oo0n.OOo or
more in gold in the Federal reserve
banks at Atlanta Dallas and Richmond
for the purpose OF enabling these Fed
eral reserve banks TO rcdiscount loans
made on cotton secured by warehouse
receipts by national banks and those
State banks that are members OF the
Federal reserve system.
WILL CHARGE NO INTEREST
ON THESE DEPOSITS
The secretary said that in the ex-
ercise OF the discretion given to him by
law the government will, for the time
/ being. charge no interest on these de-
posits in Federal reserve banks: that
such acion is jusincd by the unusual
situation respecting cotton caused by
the European war: that he considers
1t his duty to use every available means
In his power to help the cotton pro-
ducer Of the South in the circum-
stances; that it is matter OF economic
importance to the entire nation that
those who have produced the cotton crop
shall have a fair opportunity to dis
pose of It gradually and in an orderly
manner, SO they may not be forced,
through inability TO market their cot
ton gradually, to sell It at sacrifice
prices.
Secretary McAdoo said that one Of
his chief objects was to create n basis
for such enlarged credit in the South
that the banks will have ample re-
sources to extend to producers such ac-
commodations that they will he able to
carry cotton in warehouses for a rea-
sonable length of time until il can be
marketed advantageously. In order to
accomplish this. he said that the ma
tional and State banks which are mem
bers of the Federal reserve system
should make loans on warehouse re-
ceipts for insured cotton at low rates
afford to carry cotton for producers at
per cent, especially If they are able
10 rediscount cotton paper at the Fed
eral reserve banks at a much lower
rate than per cent; that tho credit
resources of the banks of the country
are greater than ever before in our
history. and that there is no reason
why the banks should not. In co-opera-
tion with the merchants of the South,
help the cotton producers with loans
at low rates in the present peculiar
situation.
RIGHT TO DETERMINE
RATE OF INTEREST
THE secretary said that the Fed
eral Reserve Board had right to de-
termine the rate of interest which the
Federal reserve banks can charge MEM
ber banks on notes or loans secured by
insured and warehoused cotton redis-
counted with Federal reserve banks.
He has been unable TO consult his COL
leagues OF the Federal Reserve Board
on account of his absence from Wash
ington. but feels confident of their CO.
operation in every reasonable way.
Secretary McAdoo said that II 1t
should appear. however. that the OBJ
greater efficiency TO the cotton pro-
ducers. the merchants and the banks
of the South by depositing government
funds in the national banks direct, in
stead of in the Federal reserve banks
he would take that course and make
deposits in such national banks as
would give him the assurance that the
money so deposited or the credit ba sed
theron would be loaned on cotton in
sured or warehoused and at a rate of
interest not to exceed 6 per cent
The secretary said he believed that
there was no occasion for alarm about
the future of cotton, and that il the
bankers and merchants would co-ope-
rate with each other and with the cot
ton producers Of the South in a spirit
Of patriotism and mutual regard for
each others welfare. the situation could
be handled with happy results to all
concerned.
WILSON DISCUSSES
COTTON SITUATION
HE expressed the earnest hope that
this would be done"
President Wilson discussed the cot
ton question with w. p. G. Harding,
OF the Federal Reserve Board, to-day.
The result Of the conference was not
announced. but 1t is presumed it had
to do with the plan divulged in the
McAdoo statement.
This plan was forecast by Comp
troller Williams's recent statement re-
gardinG the prosperous condition of
the national banks and their ability to
finance the crop producers.
Sir Richard Crawford, of the British
embassy, also conferred with Mr..
Harding. 1t is believed Sir Richard
communicated the intention of the
British government to purchase a part
OF the cotton crop. This assurance
would fit in with the official announce
ment Of the British government that
IL planned certain measures which
might tend to relieve any dcpression