The herald., 1893-06-14
GOOD AS GOLD.
BUTTER, CHEESE AND EGGS ARE
SECURITY AT THE BANKS.

row Money on These Naturally Perisha-
BILE Articles-This Facs Is Said TO Facifi-
tate Trade to Evezybody's Benefit.
Money can be borrowed on butter,
eggs, cheese, chickens and farm products
Of all the kinds that will keep as easily
rs on diamonds and watches. Not only
Is this so, but there is a great deal more
money loaned on ordinary farm prod
ucts than in all the pawnshops in New
York. This is business which is grow
ing every year, and which has now as
sumed such an enormous proportion that
it makes up large part of the discount
line of several banks.
Cold storage and Developments Of the
storage warehouse business in New York
have made this possible. Most of these
warehouses, especially the storage ware
houses, are to the banks what the pawn
brokers' safe is to him, only the banks
act through some one else, while the
pawnbroker owns the warehouse and
the capital both. Until recently it was
not possible to keep long in good condi-
ton dairy products, eggs and many
small fruits; they would spol if not
used within few days after they were
placed on the market. The COWS and
the chickens do not adjust themselves to
the demand of the public, which requires
in the winter an extra amount of butter
and as many eggs as In the summer. AS
cold weather comes on the efforts of the
COWS and chickens are largely directed
to keeping themselves warm, with the
result that their contributions to the
public food supply are diminished.
In the summers before cold storage
warehouses existed the farmers had to
send their milk, butter and eggs to the
market at once, so that they would be
sold before they spoiled, with the result
that the prices fell to such low point
that at times the shipments to the COM
mission merchant did not realize enough
TO pay the freight There is minimum
price below which it would not pay the
railroads to transport and commission
dealers and retailers to handle Farm
products, and that price the consuming
public must pay for their benefit, no
matter how plentiful the supply is. So
in the summer the farmers made little
money, and the New York public got
only small part of the benefit. In the
winter the supply was so much hess that
while the public had to pay high prices
the farmers had not enough milk and
eggs to sell TO reap much benefit.
Then came the Introduction Of cold
storage and the cold storage warehouse,
which is SO recent that the big men in
the business are still young or middle
aged, wlri1e the acceptance of butter and
eggs as good collateral Is SO recent that
young note dealers easily recall the first
baper which came in with butter and
eggs security.
The first effect of this innovation was
to make q great deal Of money for the
men who had CAPITAL and rcliri ON thuir
own Judgment aud the possibilities Of
cold storage They are rich men today,
for they anticipated the future by two or
three seasons. Some of the first men to
take advantage of the cold storage bust
ness IN this manner were produce com
mission dealers.
In the summer, when butter and eggs
were low, they bought up all they could
carry and pay for and put them into cold
storage warehouses. In January and
February they unloaded and made over
200 per cent profit. They made their
purchases direct from the farmers who
shipped to them and put the butter and
eggs in the warehouses at once, so they
came out almost as fresh as when they
went in. The only reason they did not
make more money was that they had in
sufficient capital, and the business of
borrowing money ON butter and eggs
was in its beginning. Butter and eggs
were not then regarded as good collat-
eral
The next year the men who had made
the big profits the year before went to
their banks and used their personal cred
it to secure the money 10 carry their
purchases. More butter and eggs were
carried over to the winter season that
year than the season before. Though
the total amount Of profit was larger
than that of the first year, the per cent
of it was not 50 high. Their purchases
stiffened the prices in the summer, and
their unloading made a weaker butter
and egg market IN the winter.
1t occurred to some Of the storage
warehouse men that there should be
some way by which they could make
profit out Of the business over their stor-
age charges. They found it when they
got the banks to accept storage ware
house receipts for butter and eggs as
good collateral for loans. When this was
accomplished, almost every produce man
took to speculating on butter and eggs
The possibilities Of the storage ware
house business developed to include
chickens, game and meat Of all kinds
When chickens were low, wholesale
man could afford to buy them in thou
sand lots and store them until the mar
ket quotations on them were higher.
The big creameries and butter factories
we're among the first to take advantage
Of this new state of things, demanding
higher prices for their butter in the sum-
mer or storing their surplus product un-
til winter. The farmers then profted by
the facility with which the summer sur
plus could be disposed of, while the pub
lie for the first time bad good butter at a
low price in the winter and cheap eggs
the year round, irrespective of the wealth
er or the feelings of the cows and the
hens.
Now tho banks win receive storage
certificates for collateral as readily as
they would United States bonds when