The semi-weekly messenger. [volume] (Wilmington, N.C.) 1897-1908, 1897-09-24
AN ELASTIC CURRENCY
Greatly Needed in the Cotton Growing
Section of the Country-The Advance in
Interest Rates in New York Caused by De
mands for Money to Move the Cotton


Interest Rates In New 1Ork caused by lie
mands for Money to Move the Cotton
Crop
Washington, September 22-Deputy
Comptroller of the Currency Coffin, in
discussing the recent advance in money
rates in New York said this morning:
''SOme Of the recent sharp advance in
rates of interest on demand loans in
New York is no doubt due to specula-
tive manipulation of the stock market,
but I think the impulse to this upward
turn has been given by the heavy with
drawal from New York of funds for
the legitimate purpose of moving the
cotton crop now coming to market AS
a resident of South Carolina, familiar
with the movement of this crop, I have
for year observed it's effect upon nation
al bank statements, as well as on the
money market in New York, during the
month of September. AS rule, the
rates of interest advance about this
time and in some years have approach
ed the danger line, and while the move
ment of the wheat and other great
crops has contributed to this effect,
SClll tnlnk tNe movement OI the COtlOH
crop has been the main factor for this
reason.
1.-The average value of the cotton yield
is about $500, ,OOO, 600 and it is practically
marketed between October 1st and
March 1st., or within a period Of five
months, but it is peculiar in this re-
spect, that only about one ninth of the
entire crop which this year is 5000, 900
bales, remains in the section where it
nc sas~ osrrl,A
ninths about 1000, 900 bales are shipped
north where it is manufactured, while
about two-thirds of the entire crop are
exported from the United States. The
rapid removal of so large proportion
of this great product within so short a
period Of time, requires large amount
of actual currency, for most of the cot
ton is paid for at interior towns at the
south with spot cash. AS the cotton
growing region is not densely populat-
ed, the accumulation of banking capital
there is not sufficient to provide 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 Sec
tions during this crop period. This is
reflected in national bank reports of the
past few years by the figures, showing
the amount of money borrowed by ma
llOIdl Bd1lhS III luc uISlluCllScly COllOu
states at dates in each year apprOxi-
mating October 1st., and March 1st.
When the borrowings of the state
banks in these states are added to
those Of the national banks. and 1t is
understood that the most of this money
is borrowed from New York. it can be
seen how potent factor the cotton crop
movement must be in affecting interest
rates in New York.
r MI % chn ~
vital an interest bankers, merchants
and farmers in the cotton growing states
have in a currency which will be elias
tic If any plan could be devised un-
der which the southern banks could is
sue additional currency equal to one
fourth of their capital stock during the
cotton season it would be God send to
that section. For it would enable 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 priv
ilege 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 it.
"On October 9Th. 1896. the capital
stock of the national banks in the eight
cotton states was about S3S, ,OOO, 600.
Could they have issued currency to the
extent of one-fourth of this amount,
they could themselves have furnished
about 50, 500, 900, of the s11 O00,0 900 they
We're compelled under existing circum-
stances to borrow outside. In my
opinion, therefore, the cotton growing
south has more vital interest in de-
vising a bank currency which is elastic,
as we'll as safe, than any other section
of the United States