The Dillon herald. [volume] (Dillon, S.C.) 1894-????, 1920-10-14
RESERVE BOARD
READY TO HELP
A. w. Mclean Says Government VII
Lend on Stored Cotton

A. w. Mclean Says Government VIII
Lend on Stored Cotton
The following article by A. w. Nc,
Lean, a member Of the FeoeIal
finance Board, is taken from tne
Robesonian of Lumberton:
1.-THE present conditions are que " ~
the long loked for re-adjustment VI
nrices which every intelligent per
con knew would be bound to follow
the high prices incident to the grea.
war The recession in prices dld not
come as quickly or as gradually as
most people expected but no one
doubted that sooner or later tnis ie
adjustment would take place.
The decline in prices first affectea
stocks and bonds of the large lndus-
trial corporations situated principal
Iiv in the North and Middle west.
These have declined in many instances
from f,fty to seventy-five per cent Oh
their war time value.
"Six months ago the prices OF "oUi,
sheen and cattle produced by the
states of the far west began TO ae-
cline. and now there Is practically ho
demand for them even at hfty per
cent of war levels. / have known
of instances lately where sheep anu
cattle have been sold for taxes. sugar
and many other commodlties naNe
been greatly reduced. Cotton FACTORY
products have in numerous instancee
fallen in prices from tnlrty-thlee
and a third to sixty per cent IN tue
last three months and consequently
a large per cent Of the mills are smut
down entirely, while others have re-
dnced their operations to half time
only in order to give their laooreis
enough work to enable them 10 pa!
living expenses.
The low prices received for tobacco
and cotton are due largely to tne
same causes. o., tho
present low price of cotton. over
half of the cotton raised in the soutn
IN peace times and sold ABROAD thete
is great need Of raw cotton At tne
present time by many OF the coun
tries of Europe, particularly Ger
MANY. Austria, Czecho-Slovakia, 70
land. Italy and Belgium. But these
countries cannot buy for cash pay.
able in American dollars because Oh
the depreciated value Of their money
as compared with ours. They can
not get the money to pay us IN casn m
and our people seem AFRAID 10 sen
them on long term credit. Ihls con.
dit,on practically puts an embargo
against the export Of cotton, thus pro
ducing practically the same condllon
which existed to a greater extent at
the outbreak of the war In 1914. An
other element has contributed to the
recent drop in prices. In the past
week it seems that Texas, which mas
a large crop and plenty OF Mexican
labor to pick it, has sold great guam
titles of cotton on the markets for
future delivery at low prices. The
stock demand was unable to ABSORB
these sales at high prices, therefore
low prices Immediately prevailed.
The talk in some quarters that the
low prices are principally due to lack
of discount facilities at the Federal
Reserve banks is wholly incorrect.
There has not been and will not be,
in my opinion, any restriction OF
credit for moving the crops. Money
is plentiful for lending on cotton by
member banks of the Federal Reserve
System, provided the cotton is stored
in bonded warehouses, and insured.
The Federal Reserve banks have
saved this country during the war
and will continue to save 1t from dis
astrous currency panics such as have
occurred in the past. They have oeen
extremely liberal to the member
banks in the cotton section OF the
south. North Carolina member banks
are re-discounting now nearly twice
as much with the Federal Reserve
banks, as they would be entitled to
under an equitable distribution of the
discount facilities throughout the
country, while South Carolina banks
are discounting nearly three times
their fair quota.
This whole situation can be handled
| if the farmers will gather their cot
ton promptly, have it ginned and
store it. If they desire to do so, they
can by storing it in bonded ware
houses borrow part Of its value from
banks who are willing to lend.
Good cotton will probably be worth
more later. The main danger as
see it is that cotton may be damaged
in the fields, so that the grade is re-
duced below middling, in which case
it will bring very little, because the
markets of the world are already
glutted with low grade cotton.'