The Bamberg herald. [volume] (Bamberg, S.C.) 1891-1972, 1915-10-07
SMITH PREDICTS RISE.
Believes Price Will Go Beyond IS
Cents.

Cents. ~
Columbia, Sept. 2S.-"Cotton will
go beyond Is cents. Just how much
1 won't say, nor will 1 repeat what
l said to a Columbia banker this
morning. But cotton is going above
Is cents a pound"
The above was United States Sena-
tor E. D. Smiths optimistic summary
of the cotton situation when in Co
lumbia Saturday. His conclusion, he
explained, was based on two fac
tors:
One that the 1915 crop will not
be more than 10,500,00O bales; the
other the exorbitant demand for cot
ton for the manufacture of war mu-
nitions, which is becoming more urg-
ent each day to meet heavy orders
from Europe, plus the impending
crisis in Mexico and the appeal for
increased armament in the United
States, incident to threatened COM
plications with European countries.
Senator Smith also made a strik-
ing analogy between the present
crop and that of 1914. "Last year
we produced more than 100000
bales. Despite the decentralization of
the European spinners, and the fact
that the cotton exchanges were clos
! ed a large portion of the season, we
have consumed practically all of last
years crop. This year we'll mar
ket only about 10,500, 900 bales. You
can draw your own conclusion"
Not Optional With Banks.
Recent disquieting rumors that
bankers were not properly respond
ing to the federal reserve board rul-
ing that money should be loaned on
cotton at per cent. also came in for
heated arguments by the junior sena-
tor. He explained that he had re-
Gently been in Washington in session
with the reserve board, and that
while there, at his suggestion, the
board had agreed that the stream Of
money available for discounting cot
ton receipts would be shut off from
that bank which discounted cotton
paper at a higher rate of interest
than per cent Such ruling, he
added, precluded the idea of the
banks acquiesence in the provision
of the law as being optional. The
banks were compelled to comply, he
asserted, to remain an active part
of the federal reserve system.
1T seems that you just cant drive
it into the bankers heads that they
can discount any volume of cotton
receipts, irrespective of the size Of
capital stock or assets of the bank,
he continued. IF the cotton is prop
erly insured, and graded and placed
where there will be no exposure to
weather conditions, by the provisions
of the law the cotton is a banking
asset, and the bank is compelled to
discount the paper at per cent.
This discounted paper is then sent
on to the reserve bank and redis-
counted at 3 per cent. And any
bank can discount $5,000,000 worth
of commercial paper if it should be
called on to do so. There's no limit,
just so the farmer complies with the
provisions of the law in housing, in
suring and grading his cotton. The
central reserve bank issues steady
stream of notes to discount this pa
per, and the capital of member
bank has absolutely nothing to do
with the volume of paper it discounts
on cotton. The notes are issued on
three-fourths of the market value of
the cotton
Senator Smith claims the author
ship Of that section of the federal re-
serve act which places cotton in the
class with other commodities, upon
which the government will issue
notes.
The flag of the United Kingdom,
commonly known as the British flag,