Americus times-recorder. [volume] (Americus, Ga.) 1891-current, 1920-08-27
RESERVE BANK
TOAD SOUTH IN
HOLDING COTTON
Governor Harding, of
Atlanta District, Is
sues Statement

cases Wnere Iney are not oVerloan-
ed in other directions, can make
much larger loans on cotton this fall
than ever before, and that federal
reserve banks will do all they can to
assist in marketing the cotton crop,
is the encouraging statement of Gov
ernor W. P. G. Harding, of the fed
eral reserve board, in the August
number of the Business Review of
the Federal Reserve Bank of At
lanta.
Governor Harding denies emphati-
cally that the federal reserve board
ever has issued instruction to MEM
Der banks not to make loans on cot
ton unless it had been sold already
for prompt shipment, and that the
federal reserve banks stand ready
to do "all that can reasonably be
expected of them" when it comes to
| discounting loans on cotton. Gov
ernor Harding's statement is expect
ed have the effect of bringing
about a satisfactory marketing of the
cotton crop this fall.
The statement of the bank in re-
gard to the member banks and cot
| ton loans follow in full:
"The United States Department of
Agriculture recently addressed a let
ter to the governor of the Federal
Reserve Board, in Washington, in
which certain reports which had
reached the department were called
to the attention of the board. These
reports indicated that, due to an ex-
| isting financial stringency, stocks of
cotton in the South were being fore
ed on the market at sacrifice price,
that grave fears were entertained by
some business men regarding the
prospect for satisfactory financial
conditions this fall for the gradual
movement of the cotton crop, and
that it, was thought by some cotton
i dealers that a ruling or other form
of instructions from the Federal Re-
serve Board, which limited loans on
cotton to that only which was IN pro-
cess of shipment, was the tunda-
mental prospect for the future.
'To this communication reply was
made by Governor Harding, of the
Federal Reserve Board, on July 10,
which is quoted in part, as follows
"I acknowledge receipt of your
letter of the 14th instant, in which
YOU refer to the pressure on south
Iern markets of large stocks OF low
) grade cotton. You say at was stat
ed to a representative of this depart,
/. ment that the Federal Reserve Board
has issued instructions to member
hanks not to make loans on cotton
unless shipping instructions therefor
hUere shown the bank-ln other
words that member banks were for
hidden to finance cotton unless IL
had been already sold for prompt
shipment"
No Such Instructions.
"'The Federal Reserve Board has
issued no such instructions. 1t has
no power to require members Danks
ito make or refuse any loans Whlch
they may wish to make. MehIoel
banks are required only to i've up
TO the requirements of Section IL OF
the Federal Reserve act relating 10
reserves, and the national banks can
engage in all transactions which are
permitted under the revised statues
I of the United States and OF Section
.l13 of the Federal Reserve act. State
hanks which are members retain, uh.
: dor the provisions of Section OF
+ha Federal Reserve act, all OF the
nowers derived from their state CHAR
tors and continue to be subject TO
nbe supervision of their respective
state banking departments.
"'The board has net been adV1s-
ed of any circulars issued by the
IFederal Reserve banks in the cotton
growing districts giving advice TO
yybat loans they should make or de-
cline to make, and the board would
request that you ask your represen-
1 tative who has given you the intorma-
tion conveyed in your letter to me TO
transmit any such circular, II any are
in existence. or else to state no"
he received his information as TO 0he
alleged advice to member oanks.
"7In order to facilitate the hnanc,
mo of this years crop, the ooard
re6uested congress early in the year
to amend section $500 of the revised
.tatues. This section originally re-
stricted loans by national bank to
onv one individual, firm, or corpora
tion to an amount not exceeding lU
nor cent of the banks capital ana
eTrnI11s. Congress, however, acted
upon the suggestion of the board, and
action $500 as amended now pro
vides that for period of six months
out or'o of any consecutive twelve months
q national bank may lend to an IN
dividUai, firm or corporation, up to
o. ner cent of it's capital and sur
MUS where loans in excess of the
regular 10 per cent limitation are
secured by warehouse receipts Tor
readily marketable staples.
Low Grades Accumulate.
"sThe accumulation of low grade
cotton is due in part to the difficulty
! in making financial arrangements
necessary to sell it to the mill in the
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