The midland journal., 1906-10-12
MOVING A BUMPER CROP.
BANKERS FIND THEMSELVES
CONFRONTED WITH A DIFF
FICULT PROBLEM.


CONFRONTED WITH A DIFF
FIcULT PROBLEM.
What Happens When a Farmer Sells
a Carload of Wheat, Corn or Cot
ton-A Task of no Small Proper
tions-Bankers are Optimistic.
The attention of bankers in New
York and Chicago and throughout the
agricultural parts of the United
States is devoted just now to the Il
nancing of the crop movement.
Official reports thus far indicate
that the yield of grain and cotton VIII
be one of the largest in the history
of the country. Moreover, the re-
markable business activity now ex-
listing throughout the nation is ab-
sorbing the supply of money to Won
derful degree. The amount of funds
available for use in moving the crops
of the present season is therefore
somewhat restricted and bankers find
themselves confronted with diff
cult problem.
When the country grain dealer
ships a carload of wheat to Chicago,
for instance, he draws on his com
mission house here through his local
bank for rs or 80 per cent. Of the
value of the shipment. Hence the
country banker is continually build
ing up credits with his Chicago cor
respondent against which he must
- fn mQnt the
demands of the farmers in his v1cln-
ity.
At the same time the Chicago COM
mission merchant sends the grain
East for export or consumption ana
draws his draft for rs or 80 per cent.
of the vaue of the grain shipped. AS
a. result, the New York banks are
called upon to ship currency to the
local financial institutions against the
added credits that are built up IN
the East through the movement OF
grain to that point.
Credits for grain sent abroad take
the form of foreign exchange, against
which the New York banks cannot
quickly replenish the supply of cur
rency.
The br1nt of the crop moving de-
mand therefore falls upon New YORK
and Chicago, and bankers at these
two financial centers must be ready
for almost any call, no matter wnat
other interests want money, for the
crops must be transferred from held
to market at all hazards.
Last year the banks of this city
were compelled to ship to the inter-
ior no less than s93 100000 between
August 1 and December 81, during
which period they received in return
$4,000, 900, thus leaving them $780,
100000 short.
Chicago banks are well prepared
this season, although funds are at
a low ebb in New York, as is reveal
ed by the weekly statements of aver
ages submitted by the clearing mousse
banks.
To move the enormous products OF
the broad Fields of the west ana
South without disturbing the money
conditions of the ration this year Is
therefore a task 20 small proper
tions.
However, bankers are optlmlstic'
for during the summer they have peen
making unusual preparations. Bank
ers in the country have been buying
commercial paper maturing before the
beginning of the crop movement
while large borrowers in Wall street
and Chicago have taken the precau-
ton of securing loans on long Time
obligations to carry them over one
period when crops are in transit. Al
the same time banks throughout the
West have been guarding their re-
serves with more than usual dill
gence.
AS a result of these preparations
the movement thus far has been II.
nanced by the interior banks out oi
their resources, a phase of the sltua-
ton which is adding greatly 10 une
ontimism of financiers. The real test
however, will come when the transfer
of grain will be in full progress.
Then there will be a steady stream
of currency flowing from New York
and Chicago to the interior, country
balances will be drawn down to a
low point, and financiers will be put
to their wits ends to bring the coun-
try through the period without repe-
tition of the events Of last fall when
reached a climax in December, Wlcn
call money in Wall street once at
the abnormal and dangerous helght
of 125 per cent.-Chicago Inter-Ocean.