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Circular No. 16 FEDERAL RESERVE BANK Series 1919 OF DALLAS DALLAS, TEXAS, July 19, 1919. FINANCING THE CATTLE INDUSTRY TO T H E M E M B E R BA NK A D D R E S S E D : Your attention is especially directed to the following telegram , dated July 14th, from the Federal Reserve Board: “Board is advised of difficulty in placing loans on breeding cattle. W hile there has been no reduction in cost to consumer, statem ents from some breeders indicate m aterial drop in price of cattle on hoof. If breeding cattle forced to slaughter heavy losses to stock raisers in your district will result, and greater scarcity of m eat next year and year after will be inevitable. Board re quests that you call attention of m em ber banks in your district to this situation, and urge that they do w hatever they can consistently to aid in carrying loans on cows, pointing out the eligibility of six m onths cattle paper for rediscount. Regions which suffered from drouth last year have been relieved by heavy rains, and all reports indicate excellent pasturage in those districts. W ar Finance Corporation is authorized to make loans to responsible parties on beef exported abroad. The slaughter of breeding cattle would be great blow to cattle industry and should be prevented if possible. Board does not, of course, suggest that mem ber banks take undue risks, and they should use their own judgm ent as to security, but it is im portant that attention be called to the situation and that any relief which can be safely afforded should be given at once.” It is probably unnecessary to call the attention of our m em ber banks to the necessity and wisdom of assisting, as far as they can consistently, in financing their custom ers engaged in the cattle busi ness ; at the same time, in view of the fact that m any stockm en are finding it extrem ely difficult to finance them selves, and thus rehabilitate their herds, and are forced to sacrifice their breeding stock, as evidenced by the very heavy runs of cattle to m arket, I deem it expedient to repeat the w arning of the Federal Reserve Board. You are fam iliar w ith our regulations, and doubtless know that cattle paper, well secured, and hav ing a m aturity w ithin six m onths, is eligible for rediscount w ith this bank. O ur facilities are open to m em ber banks for this class of paper, and such offerings will have special consideration. W e trust you will assist in every legitim ate way to finance your custom ers engaged in cattle and sheep raising. In view of the excellent prospects which obtain over the range country of the w est and southw est, in suring good pasturage for m any m onths to come, it is especially opportune at this tim e th at every pos sible effort be made to encourage the conservation and rehabilitation of herds. W ithin the next few years, at least, there will be an unprecedented demand for cattle, not only for dom estic consum ption, but for export to those European countries devastated by the war, and unless proper aid is given this very im portant industry, a serious condition will result. V ery truly yours, A ssistant Federal Reserve Agent. This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)
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