The Breckenridge news. (Cloverport, Ky.) 1876-1955, 1921-05-11

only that man but a great many grow
ers signed UP for a period of four
more years and the bank knows that
is worth something The banker says
he doesn't care primarily either. What
he cares about is the wheat. He fav-
ored a studied market, value and at
a conservative basis, not at a high
basis in a choppy market-becaus
anybody with sense knew that 1920
markets on wheat were not conserva-
tive or stable markets, but choppy
markets. Here the association and
the banks agreed.
The bank has on hand a paper that
is rediscountable by the Federal Re-
serve Bank by direct written ruling
from the Federal Reserve Board. If
he is a member of the counts direct
with the Spokane branch and gets the
money. If not, he keeps the paper or
sells it to his city correspondent. The
city correspondent may sell it again,
or may discount that paper.
A MEMBER-Suppose any paper
matured and the product is not sold?
MR.. SAPIRO-We pay the draft as
it natures, because the cooperative
association handles loads of products
in its different pools all the time and
therefore averages the prices. We al
ways keep money for that purpose
and we always keep selling.
But we struck problem that was
worse than that Our banks can re-
discount twice their capital and sur
plus. Take county like Whitman
county, in Washington-they produce
nothing but wheat All their demands
come in at one time. These banks lent
the limit on this particular type of
paper. They lent the limit to outside
growers. They suddenly found out
that they had in the Federal Reserve
Bank paper twice their capital and
surplus. The Federal Reserve Bank
notified them and they notified u.s.
They said, mo more of your paper
goes to us. We want to help you but
we cannot do anything for you. We
cannot get any more money. Our city
say they cannot get
any more money. Our city correspon-
dents say they cannot get any more
for us and the Federal Reserve Bank
has closed on us"
We had to come from a group of
places all at one time. We said, The
growers have to have money"
The Grain Bonds.
So Mr.. Jewett found a plan-the
best yet. Here was, the solution
short-time bonds, the same kind of
commercial paper that Armour and
Swift and lot of Eastern manufac-
turing people put out every year to
tide them over the peak of production.
They are for three, six and nine
months. When we first tried it out we
issued half million 8 per cent bonds
dated December 1, 1920, all payable in
June, 1921, all six months commodity
bonds. We deposited all of the bonds
with the Lincoln Trust Company of
Spokane. We made written agree
men with that bank that we would
deposit warehouse receipts or grain
tickets with them. For every bushel
of wheat represented by the receipt
or ticket they delivered to us one
dollars worth of bonds If we deliver
receipts for a thousand
bushels of wheat they deliver up to us
one thousand dollars in bonds in units
of 500 or multiplies thereof Then
we sell the bonds. People would
know it was short-time commod-
ity bond, secured in each case for
each dollar for one bushel of wheat
represented by a receipt in the
Lincoln Trust Company, and that if
we sold any of that wheat we would
not only be putting aside $1.O4 for
each bushel, but in addition a surplus
of additional security for the rest of
these bonds if the trust company !
called on us for more money to act !
as collateral or more warehouse re-
ceipts. So as we sold the wheat we !
kept some of the so-called surplus /,
money above the payment amounts !
on hand. If necessary we could put
more in as collateral
A MEMBER: Were they offered
to the public? ,
MR.. SAPIRO: With great trepida-
ton we started to sell them to the
public We didn't know how they
would take them. Our eyes were open
ed when we sold in Spokane and vic
nifty hundred and fifty thousand dol