The Lancaster news. [volume] (Lancaster, S.C.) 1905-current, 1915-08-24
If Necessary 100000, 900 Will be
Deposited in Reserve Banks
to Aid Cotton.
NO INTEREST CHARGE.
Create ~ Basis for Enlarged Credit
i'm the SOuth-Prcsident Confers
on the Situation.

mCauOO dHHOuHCeu tOnlSnt tnat III
view of the action OF the allies in
putting cotton on the contraband list
he would If ii became necessary de-
posit $30,000,0OO or more in gold in
the federal reserve banks at At
lanta, Dallas and Richmond for the
purpose of enabling the reserve
banks to re-discount loans on cotton
secured by warehouse receipts made
by national banks and state banks
belonging to the federal reserve
system.
The gold would be deposited tenn
porarily, at least, without interest
charge. 1t was explained that it ap-
peared that the object could be ac-
complished with greater efficiency
thereby, the deposits would be made
directly with nationsl banks agree
ing to lend the money on cotton at
a rate not to exceed per cent.
The announcement came at the
close of day of speculation in Off
cial circles AS to the nature of steps
which the Entente powers have in
dicated they would take to uphold
the cotton markets in the face of
their contraband order.
"In the exercise of the discretion
given to him by law" read a 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 1t his duty to use
every available means in his power
to help the cotton producer of the
South in the circumstances; that it
Is a matter of economic Importance
to the entires nation that those who
have produced the cotton shall have
fair opportunity to dispose OF it
gradually and in an, orderly manner
so they may not be forced. through
inability to market their cotton grad
ually, to sell it at sacrifice prices.
THE secretary said that one of his
chief objects to create basis for
such enlarged credits 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 warehouse 5
1t can be marketed advantageously
In order to accomplish this. he said
that 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 6 per cent especially
IL they are able to re-discount cotton
paper at the federal reserve banks
at much lower rate than per
cent: that the 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 cooperation with the
merchants of the South. help the cot
ton producers with loans at low rates
in the present peculiar situation.
"The federal reserve board. the
secretary said. had a 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 warehuused
cotton rediscounted with federal re
serve banks. He has been unable
to consult his colleagues OF the fed
eral reserve board on account of his
absence from Washington, but feels
confident Of their cooperation in ey-
cry reasonable way.
"Mr. McAdoo sail. however, that
should IL 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
direct instead OF tho federal reserve
banks, he would take that course and
make deposits in such national
banks as would give him the assur.
snce that the money so deposited or