The Birmingham age-herald., 1916-02-27

stagnant and the country was suffering from the first effects of the great war. After the reserve banks were in opera tion one year cotton was bringing l2 cents. Banks were rediscounting in New York at 2 to per cent The Aldrich- Vreeland loans had all been liquidated and business in the whole country was more active than it had been for years. Of course this great change cannot all be attributed to the operations of the reserve banks, but the fact remains that the latter no doubt caused the interest rates to fall, made money easier, and paved the way to general prosperity.
 Last summer the federal reserve board authorized, and put into effect preferen- tial commodity rates This enables the reserve banks to lend money on cotton and other commodities at 3 per cent--pro- vided the borrower received the funds at not over 6 per cent. Large sums were advanced last fall to farmers and mer- chants of the south on cotton at a lower rate of interest than this class of bor- rowers ever enjoyed before. This action of the federal reserve board enabled the farmer to market his cotton gradually, thereby receiving a higher price than formerly when, on account of high in- terest rates, and inability to borrow, he was compelled to dump it on the market, which resulted in low prices. I believe this action alone of the reserve banks re- suited in the farmers of the south re- | ceiving at least cents per pound more for their cotton, which amounts to over $1O0, COG, 600.
 The whole country has been benefited by the reserve banks but no section has been benefited more than the south ern states. It has made the latter in- dependent of the New York money mar ket. While the direct benefits have been great, the indirect have been incalculable. The reserve banks are not intended to make money When the country is pros porous, and when money is easy there IS very little for the reserve banks to do. This is illustrated by the fact that l in the east and west, where money was 1 plentiful and cheap the reserve banks 1 last year barely made expenses, while the Richmond and Atlanta banks, To- 1 cated in sections where money was &C., ] tive and in demand made enough profit to pay dividends. The reserve banks are l only intended to take care of the lIn- usual needs of the country-not the usual ] They are reserve in name and reserves in fact.
 PRAISE FOR WILSON
 We have i'm the White House today great constructive statesman. In these critical times the country is in- deed fortunate to have him there We are proud that he comes from the | of state under more difficulties and no man ever guided them more wise " than President Wilson. History will give him the proper credit. The Presi- dent has originated and signed many important nets since he has been In office, but in my opinion the most 1 constructive. most important and the one that will benefit the masses of the 1 people more than any other is the fed- eral reserve act.
 | Of course, this law is not perfect and will require amendments and changes from time to time. but when the time comes for this act to be tested, and that time will come, the people of this coun- 1 try Will understand and appreciate this | great piece of constructive legislation ! As l said before, the reserve act does 1 not prevent bank failures. The govern 1 ment cannot insure against bad manage | ment. Nearly all bank failures are due to some outside causes The bank of- ficers may be engaged in some outside speculation, or business, that is foreign to banking Bad loans also cause fail ures but in the case of all failures, you will no doubt find that the bank or its officers, have been engaged in some outside venture. The banker who attends strictly to banking is generally a success. This rule applies to all other l lines of business. The shoemaker may be successful if he sticks to his last, but would probably be a failure if he tried to run a bank .The banker may l the bank. hut woud probably fail if he attempted to run shoe shop.
 Another thing that contributes to