The Richmond Virginian. (Richmond, Va.) 1910-1920, 1915-09-04

lHOD1
KEEP RATES REASONABLE
Five Millions win BE Deposited In
Richmond Banks At Once-Sere-
uary McAdoo Explains Plan-Funds
Obtainabac On Commodity Notes"

Washington. Sept 3.-The Federal
Reserve Board disclosed today an ex-
traordinary plan for. controlling the
loans from the $4,000 900 of govern
ment deposits In gold which Secretary
McAdoo has announced he VIII deposit
in the Federal Reserve Banks Of the
Richmond. Atlanta and Dallas to as
sure adequate credits for the cotton
plantera
The boards piHr ID embodied IN new
regulations regarding commodity pa
per- and trade acceptances which ad-
NIT the two kinds of paper to redis-
coun. by the Federal Reserve Banks
at lower rates OF interest with the
waiver of certain SPECIFIC requirements
which are applicable 10 transactions In
any other sort Of paper.
The term commodity paper" plainly
liz so defined by the new regulations
as to apply especially to warehouse re-
ceipts for cotton.
The new regulations exclude from
the dennition paper on which the rate
Of interest or Discount. including com
mission charged the original maker.
exceeds six per cent.
Secretary Gives Out statenent.
Secretary McAadoo in a statement
this AftsrnoNn~ - reference to the new
manner In which the reserve banks are
AutHOFtASQ 10 AACitttAtS CottoH AoAuSs
described the working OF the new
scheme a. follows:
a borrower asks his local bank for
a loan on his note secured by ware
house receipts for cotton. II the bank
IL satisfied that the cotton IL in a
responsible warehouse. properly in
sured and that the note IL good. II
may make the loan. II the local bank
charges the borrower rate of inter-
est including commission not exceed
ing six per cent per annum Il may
endorse the note over to the Federal
Reserve Bank of its district and the
Federal Reserve Bank may advance
to the loe,l bank the full amount of
the loan"
The secretary in his statement dis
closes that the rate which the Reserve
Bank at the direction OF the Federal
Reserve Board will charge on such
loans will probably be, three per cent
and certainly sufficiently low to enable
the member banks to make six per
cent loans on liberal margin Of profit.
Secretary McAdoo announced that
after a consultation with the board he
had decided to deposit $4,000 900 in
tho Reserve Banks AT Richmond. Allan
ia ana Dallas Immediately. distributing
II equally among the three institutions.
The remaining 10000 600. he said,
would be deposited as soon as 1t Is
needed.
The Federal Reserve Board has
adopted regulations authorizing Fed
eral Reserve Banks to give special
rates for rediscount on commodity pa
per. that Is promissory notes having
not more than ninety days to run
which ara especially secured by ware
house receipts for staple and readily
marketable commoditions of non
perisha BILE character, properly insured
| II Is believed that preferential rates on
this class OF paper will be of especial
/ service Mt this time In aiding in the
gradual and orderly marketing Of the
cotton and other crops. In order that
producers may be directly benehted
| by the low rates authorised the board
! has made IL condition that paper
| offered by member banks for redis
count at the preferential rate. shall b.
paper on which the makers have paii
or have contracted to pay In the wa,
OF interest or discount. including com