The watchman and southron. [volume] (Sumter, S.C.) 1881-1930, 1918-07-03
As TO COTTON LOANS.
Recent Action of Federal Reserve
Bank Reveals Grave Danger That
Should be Guarded Against.
Editor Daily Item:

While believe thoroughly i'm the
Federal Reserve Banking system and
look upon IL as the greatest single
financial stride the country ever took.
yet the recent correspondence i'm ref
erence TO cotton loans shows that 1t
Is fraught with some grave dangers
which should be promptly corrected.
First and foremost. i'm his letter to
the Peoples Bank of Sumter in ref.
erence to the cotton loan to DR..
Osteen. Mr.. Assistant Cashier Mar
shall seems entirely to overlook the
important fact that DR.. Osteen owns
as much of that bank as he does.
We next observe that the loan is
not rejected because the security is
insufficient. II that reason had been
given and were true there would be
no more to say about IL and Mr.. Mar
shall would have been absolutely right
TO refuse TO rediscount the paper. He
was put there to watch just that sort
OF thing and so keep the business OF
the country on a safe basis.
But when he undertakes to over
step that limit and decide the question
as to whether a producer has the
right to hold his product, he Is get
ting into problem that is too big for
his brain.
III Dr. Osteen were Withholding from
the people something for which they
were suffering. like wheat or eggs. or
any other necessity OF life. the govern
ment might refuse to countenance the
boarding thereof and the people In
these trying times would certainly
back up the government In this DO
sition. But we are continually being
told that there will be big carry
over" and that we are facing a big
crop. only small part OF which can
be exported for lack OF ships and
that our mills can't use II all. IL is
therefore not question of holding
something OF which there Is not
ably some must be held by some
body. Mr.. Marshall undertakes to
decide that the producer shall not be
the one to hold.
Another feature of this remarkable
decision Is that DIR. Osteen is made the
victim OF an ex post facto ruling,
which violates one OF the fundamental
principles OF free government. Be-
cause DIR. Osteen missed the "high"
OF the cotton year, which any Sumter
child has "hind-sight" enough now to
see was 20 cents. without waiting for
information on this point from q
richmond flnancier. he is condemned
az n speculator by n man who. 1 as
sumo. never saw him. / may say with
out fiattery that those who know DR.
osteen do not 80 regard him. The
point however is that the local banks
were not warned that the Federal
bank would not stand for cotton loans
after a certain price was reached, and
that holding to that point would be
regarded by the bank as legitimate
and past that point as speculation.
But when the German drive took
place and cotton took a tumble with
kick administered to II every few
steps by that benehcent institution
the New York Cotton Exchange,. the
astute Mr.. Marshall looks back and
sees that 35c was the high" and con-
demns DIR. Osteen for not knowing
beforehand what every one In this
part OF the country would have given
great deal to know. namely what
was going TO be high"
We can clearly see, then, the dan.
ger to which referred. We have
erected and breathed the breath OF
life into n giant who may un-
dertake TO tyrannize over US, unless
he is promptly taught his place.
The Federal Reserve Bank has a
long and powerful arm under the
present law-given IL however. 10
help and not to throttle. III 1t is to
have the power to- decide that W.
must tumble our cotton on the mar.
ket regardless OF our Views of con.
ditions. we had better pull down those
warehouses which saved the Sou:h
from bankruptcy i'm 1914.
There IN "a pretty widespread
belief that some millions OF
bales OF cotton will be on hand
when peace comes and that
The man who has some then Is go
Ing To make some money. AccordlnG
To this ruling the producer Is not t.