RURAL CREDITS 



761 



could be expected to give rise to drafts upon the southern banks, and 

 it was some time, therefore, before any considerable number of appli- 

 cations for loans at the commodity rate was made. During the month 

 of November the southern reserve banks converted many of their 

 loans into the commodity form. Such loans aggregated $10,300,000 

 to the end of the year, $7,500,000 being the volume outstanding on 

 December 30, 1915. 



The effect of the commodity paper regulation was mainly antici- 

 patory and protective. The certain assurance that whatever funds 

 might be necessary for the gradual and orderly marketing of the cotton 

 crop would be available at moderate rates had an immediate and 

 stimulating effect on sentiment. Other factors which contributed to 

 the same result were the evidences of an early and active buying 

 movement and the realization that the cotton yield would be much 

 less than that of 1914. Within 60 days, prices advanced from 8 cents 

 to 12 cents per pound. There was a steady movement of the staple 

 to primary markets, the price of cotton seed advanced to a figure that 

 added from $20 to $25 a bale to the farmer's income, and compara- 

 tively little cotton had to be carried by banks for producers. 



The fact that there has been no demand for inter-bank rediscounts, 

 and that the autumn season has passed without the usual stringency 

 due to the necessities of crop moving, point conclusively to the bene- 

 fits derived from the Federal Reserve System. It is quite true, as 

 has often been observed, that the great release of reserves under the 

 Federal Reserve Act produced an unusual ease of money the country 

 over. This general ease, however, would not of itself have solved the 

 difficulty of crop moving, or have met the regularly recurring currency 

 requirements of the various agricultural sections of the country. 



AMOUNTS OF COMMODITY PAPER DISCOUNTED BY EACH OF THE FEDERAL 

 RESERVE BANKS FROM SEPTEMBER 8, DATE OF FIRST DISCOUNT, TO 

 DECEMBER 31, 1915 

 [In thousands of dollars] 



* All discounted at regular rates. 



