Richmond daily register. (Richmond, Madison County, Ky.) 1917-1978, 1921-06-14

nothing further. He indorses thai
wheat ticket Tor the warehouse re
ceipD to the association and delivers
| II 10 the association. Then the as
ISOLATION has a regular form of draft
and acceptance. 1t fills it out and ac
cepts a draft which he is going tc
sign for S12,500. The draft is either
tnree-months, or ninety days, OF
six-months' draft. Usually these are
three-monthS' drafts where there is
a choppy market, so we can reduce
credit as we go along. If the mar
ket looks thoroughly stabilized we is
sue more of the six-months' drafts
But remember the association is con
sentative. This association is not try
ing to get the largest amount OF
money by any means, but a fair
amount of money by right banking
arrangements. We issue the draft
and along with it we give to the
grower a list of the banks in his
district that favor the plan. He must
not go outside of his district unless
his banker tells him to do it. He can
go to any bank in his district that
favors the plan and present this draft
and they will discount it at the cur.
rent discount rate-6, 615 or per
cent. Most of the time last year in
| w 1llI4lldlt SOuIlIy lIlG ulScOuuL rates
were 612. He discounts it there and
he gets So 500, less the 61a per cent
for three months.
Ready Cash For the Grower.
At the end of the day that bank
lets our association know what drafts
it has discounted. Then we send over
to it the warehouse receipts or grain
tickets covering those drafts. Or we
may give the warehouse receipt or
the ticket to the grower and tell him
to take it to his own bank and SO
save us the trouble.
The grower gets immediate money
within twenty-four hours after the
delivery of his stuff. The local banks
have a paper signed by the grower.
known to the banker, and Endorsed
by the association and accepted by
the association. The association S
credit is worth something because it
| has not only that grower but a whole
lot of other growers tied up for four
more years. Then it has behind it
a nonperishable product of COM
mercial value. The banks have pa
per which, if it is d member of the
Federal Reserve, it can rediscount
with the Federal Reserve Bank. If
| it is not d member of the Federal Re
serve it sells it to a correspondent
! bank which very likely is a member
| of the system. We moved hundreds
of thousands of dollars worth of pa
per through the Federal Reserve
Banks the last year. 1t has handled
| literally millions of dollars d year on
the paper of growers through the CO.
operative system.
This paper is rediscountable in the
Federal Reserve system as agricul-
tural paper, with six-months' matur-
ity, if for agricultural uses, by writ
ten ruling of the Federal Reserve
! Board.
The preferred method is to use the
local banks and the draft and accept
ance system; but whenever they reach
the limit to use the commodity bond
system 1 have already explained to
you.
Extending Crop Value.
A MEMBER-How do you arrive
at the amount of money you advance,
for instance, on your beans?
MR.. SAPIRO-That is a very in
teresting question. We called in a
meeting of the banks at Sacramento
and Stockton and Santa Maria and
met together with the associate gov
ernor of the Federal Reserve Board,
Mr.. Day of San Francisco. At that
conference the growers association,
the Federal Reserve and the bankers
all canvassed the outlook for selling
beans. We had figures on what the
sales were being made for. They
studied the situation as to the beans
locally, whether they were going to
be good beans, or bad beans, many
cracks or splits, so we could get an
idea of the competition between New
York, Michigan and Oriental beans
We had all those points present. We
finally decided that somewhere be-
tween 4 and AZ cents would be abso-
lutely safe to lend on the small whites
for the season. Some man suggested
5 cents. one suggested as low as 3
cents. 1t will interest yop to know
that the 3 cents, which was the low
est suggestion, came from the man
ager of the association. The banks
as a group suggested between 4 and
AZ. Finally we agreed that 4 cents
was the safe amount. Then tepparieS
are used only by the Italian workmen
in this country or exported to Cuba
or Italy. All agreed that the loan
value of them should be one-half of
the loan value on the small
whites. Then we had to figure on
the colored beans. We were much
afraid of the Pinto bean of New Mex
leo as against our pink bean of Cali
fornia, although they usually sell at
the same price as our white or Cali
fornia. We finally reached an agree
ment for every class of bean.
A MEMBER-How much did you
get for those beans when you did sell
them?
MR.. sAPIRo-We averaged for
small whites between 6 and cents;
for pinks between 5 and Z; tepparies
81 to Az.
A MEMBER-Have you thought of
any way to apply that method to the
tobacco situation here? l mean this,
as to how to arrive at the amount OF
money?
MR.. SAPIRO-Yes: do it exactly
the same way. Mr.. Sands, president
of the American National Bank at
Richmond, sat in a conference there.
He said when we are ready to act he
will call together the leading local
bankers and have them get together
in one office in Richmond, all the So
called local and city banks, and reach
a decision as to the fair amount they
will loan on tobacco. That is the way
you will do tin conference with
your bankers.
A MEMBER-Do you have the ten
ant system? A great many people here
are interested in knowing what be-
comes of the tenant.
Tenants Become Owners.
MIR. SAPIRO-We started in with
the same thing out there. Here is an
interesting thing: Where you have
cooperative marketing association for
a term of years you can mathemat-
ically show a decrease in the tenant
system and an increase in the small
owner system. But we originally
started with a tenant system. Let us
first distinguish between the cropping
system and the tenant or lease system.