The Norfolk Virginian. [volume] (Norfolk, Va.) 186?-189?, 1897-09-23
WHY RATES ADVANCE
Demand for Money to Move Crops Drains
the Supply at the Centre.
COTTON CALLS FOR ENORMOUS AMOUNT
FiGpres Showing Amounts borrowed
by Banks sn Cotton states This
secsion Particularly Interested In
Dosising n scheme Of Flexible and
Safe Currency.
Washington, D. c., Sept. %, 1897


Deputy Controller or the Currency
Collin. In discussing recent advance .ul
money rates In New York, said this
morning:
Some Of the recent sharp advance
IN rates Of interest on demand loans
M New York is no doubt due to specu-
lative manipulation of the stock mar
ket. but 1 think the impulse to this
upward turn has been given by the
oeaFy withdrawal from New York of
funds for the legitimate purpose of
moving the cotton crop now coming to
market
'As resident .of South Carolina
1amliiar with the movement OF this
crop. have for years observed its ef
1eot upon national bank statements, as
wei! as on the money market in New
ork, during the month of September.
As rule tho rates Of interest advance
ABOUT this time and in some years have
approached the danger line, and while
the movement Of the wheat and other
great crops has contributed. to this ef-
1ect. still think the movement OF the
cotton crop has been the main factor for
this reason
The average value of the cotton yield
Is ABOUT $500 000, 900, and it is practically
marketed between October 1st and
March 1st, or within a period Of five
months, but 1t Is peculiar in this respect,
that only about one-ninth of the entire
crop, when this is 5000, 900 bales, remains
In the section where 1t is grown or
the remaining eight-ninths. about 2,OOO-
wv pales, are shipped North. where 1t Is
manufactured, while about two thirds OF
the entire crop are exported from the
United States.
The rapid removal Of so large a pro-
portion Of this great product within so
snort period Of time requires large
amount of actual currency for most of
the cotton Is paid for in interior towns
at the South with spot cash. AS the
COTTON growing region Is not densely
populated the accumulation of banking
capital there is not sufficient to pro-
vide the enormous amount of money
needed for few months to move the
crop. and for this reason the Southern
banks have to borrow largely from
banks In other sections during this
crop period. This is reflected in ma
ticnal bank reports for the past years
10y the following figures showing the
amount OF money borrowed by national
banks in the distinctively cotton States
or North Carolina, South Carolina,
Georgia, Alabama Mississippi, Louis
lana. Arkansas and Texas, at dates In
each year approNima ting October 1st
and March 1st: October 3. 1897, $685.
600; February II, 1883, 81, ,TS3, 900; October
a. 1883, Ss,93s, 900; February o6. 1850,
1.13l 900; September 30. 1885, 50, o57, 900;
February 2S, 1890. s2.1S1, 600; October 9
1880. $14, 1884 900; February 26. 1891, S5,54S.-
600: September %. 1891. S15, ,553, 900; March
l. 1892, 1851 900; September 90 1892, $Io,-
$4,000: March 6. 1893, s4,725, 900: October
s. 1893. s12,351 900; February IS 1894,
e1.9i1, 900; October 2. 1894. s11.1Il 900;
March S. 1894, s2,761 900: September rs,
1896 $40, 100000; February 2S. 1885, S., ,Ol6.-
600: October 6, 1896. Sli,o9S, 600; March 0,
1897. s1,3S5.000.
"When the borrowings of the State
=, ,lxq ir, f1,oc to+
OF the national banks. and IT Is under
stood that most OF this money is 'bor-
rowed from New York it can be seen
how potent a factor the cotton crop
movement must be in affecting interest
rates In New York.
These figures, I think too, show how
vital an interest bankers. merchants
and farmers In the cotton growing
States have In currency which would
be elastic. If any plan could be de-
Flsed under which the Southern banks
could issue additional currency equal
TO one-tourth OF their capital stock dur
Ing the cotton season It would he n God
send to that section. For It would cna-
BILE the banks there to furnish the money
needed without outside aid and free
from the cost Of interest now paid on
borrowed money, and national banks
In all other sections having the same
privilege, the result would be to make
money more abundant and cheaper. and
to relieve the New York market OF the
annual strain now put upon il,
"On October 6, 1896. the capital stock
OF the national banks IN the eight States
named was about s3S000. 900. Could
they have Issued currency to the cX-
tent OF one-fourth Of this amount they
could themselves have furnished about
So,600,000 OF the Sl1. 900, 900 they were
compelled under existing circumstances
to borrow outside. 1cl my opinion, there
fore. the cotton growing South has n
more vital interest In devlsinE n bank
currency which is elastic, as well as safe.
than any other section of the United
States
I0AlA1r.IA IIr1rIrII