The farmer and mechanic., 1915-09-28
Der Of individuals engaged in the pro-

ber Of individuals engaged in the pro-
duCuon of agricultural staples
throughout a vast expanse of territory,
it is evident that the most effective
means Of reaching the producers is
through local banks throughout the
farming sections. Bankers as a class
are not lacking in patriotism and are
as liberal and public spirited as those
who are engaged in any other business
or profession, but they are, to some
extent, creatures Of habit. Having
been accustomed to charge high rates
Of interest in the days when they
themselves were compelled to pay
high rates of discount for accommo-
| dation it was feared that there would
not be any unanimity of action on the
part of the country bankers in giving
| producers the benefit Of lower rates.
| 1t was believed that the farmers as
| q rule would be discouraged and would
| be disposed to sacrifice their products
! unless they were given the stimulus
of low rates for loans on such COM
| modltleS as they might desire to hold.
1t was the opinion of the Boards
| committee that, in order to establish
| fair market conditions, the financial
| ability of the seller to hold must
be approximately equal to the power
| Of the producer to buy, and that if this
| equilibrium could be esta blished the
| nomic lines. based upon actual de-
! mand and supply.
Decide To Ask Commodity Paper.
! The committee therefore decided to
| recommend to the Board that regu-
| lation be issued authorizing prefer
entail rates on what is termed "com-
modify paper" that is, loans secured
by warehouse receipts for staple COM
modities of a non perishable char
acter, properly insured. The commit
tee felt that the Federal Reserve
banks in the agricultural districts,
while fairly we'll loaned up in some
cases, could easily take care of the
situation, either by the issue Of Fed
eral Reserve notes or by rediscounts,
as permitted under the law with Fed
eral Reserve banks in other districts
The committee had begun work on
the commodity regulation when it was
advised by the Secretary of the Treas
ury that he had decided to deposit
thirty million dollars if necessary in
, the three districts where the heavi-
est demand was anticipated, either
with Federal Reserve banks or with
national banks, to be used in assist
. ing crop holders. After considerins 2
the matter the Secretary decided not
to make deposits with individual
banks but with Federal Reserve banks
only, and he has made initial de-
, posits Of five million dollars each
with the Federal Reserve Banks OF
: Richmond, Atlanta and Dallas He
, , has also communicated with the Of
, icials Of the Federal Reserve Banks
of Kansas City and Minnea polis which
! | serve the great corn and wheat pro.
, , ducing districts, and offered to make
. deposits with those institutions also
if they were desired. but he was in.
| formed that deposits were not need
| ed, as those banks have ample fund:
t | available. The Secretary has also
announced that he is prepared t.
make deposits at any time with any
: other Federal Reserve bank where
: such deposits would prove beneficial
Adopt Commodity Regulation.
Y Meanwhile the board has adopted
y the commodity regulation, practicaII,
: as proposed by the committee, and il
8 order to make sure that producer
d get the benefit Of the preferential
n rates provided, the regulation inpose
d as a condition of the rediscount O
8 commodity paper, as such, and at tn
e preferential rates, that the loan mus
: have been made by the rediscount
d ing bank to the maker of the not
8 at rate Of interest or discount in
1t Guiding commissions, not exceedin,
e per eentum per annum The Fed
} eral Reserve banks Of Richmond. At
Is anta, Dallas and st. Louis. whic]
S cover practically all Of the cotton pro
Is ducang section, have fixed a rate a
per cent Tor this commodity pane,
90 that any country member ban
D tdeS3f1ng to make q loan 10 y farue