Yorkville enquirer. [volume] (Yorkville, S.C.) 1855-2006, 1907-06-21
FRIDAY, JUNE Fl, 1907.
TO ORGANIZE COTTON BANKS.
Southern Cotton Association Plans
Interesting New Scheme.

1t has been announced that the state
officials OF the Southern Cotton asso-
ciaticn will. during the month Of July,
make a campaign Of the state from
one end to the other to advance the
work OF the association. The average
reader who has not kept up closely
with the plans of the association is
apt to infer that President E. d. Smith
and his associates are again preparing
to urge the farmers to hold cotton for
higher prices or to decrease the acre
age. But Mr.. Smith and his associates
are not men of one idea and they have
no intention Of singing the same song
this year that has already resounded
from the mountains to the seashore.
The campaign Of 1907 has for its pur-
pose a plan, which, IL carried into ef-
feet, will benefit the farmers in sub
sequent years, as well as this year,
and which will not hurt any Of them
even II all do not get into 1t.
The proposition to be placed before
the farmers and business men or the
whole south Is the organization Of what
may be called Cotton Banks" In
ether words, 1t Is proposed to do a
banking business with cotton as cap
ital. In the language Of E. d. Smith,
is no reason why 1t should not be
utilized as basis for banking as we'll
as silver and gold.
| In any community where the farm
ers and local business men can secure
$4,000 or 100000 as capital 1t is plan
ned that they shall organize a. company
and erect warehouse, which must be
built according to regulation plans.
Then they will be ready for business
L haf 70
any number of farmers deposit with
them their cotton, just as they might
deposit their money with bank.
Supposing that 400 bales Of cotton are
deposited in this way and placed In
the warehouse, with insurance guar
anteed by the company and no storage
charged the company would proceed
to utilize this cotton just as the bank
utilizes the money deposited by Its
customers. Taking the warehouse re-
ceipts for 400 bales Of cotton, the COM
concern or persons having money to
lend and borrow money upon these
receipts at the current rate and the
current price. Of cotton. With this
money so borrowed the company would
go into the local market and purchase
other cotton, say 300 bales, which,
would be placed In the warehouse.
Then upon these 300 bales the compa-
ny would again go to the, bank and
borrow money and with this money
again go into the local market and
purchase other cotton, say 200 bales.
These 200 bales would then be placed
in the warehouse and upon them the
company would borrow money with
which again to enter the market and
purchase other cotton, say 100 bales.
This operation could be kept up until
the borrowing capacity Of the cotton
was exhausted, but this would hardly
be necessary at any time, and 1t would
be possible to return the original 400
bales whenever the owner made de-
mand.
It is easy to see that in the small
market, such as we have in this state,
the operations Of such company
would have considerable effect upon
the amount of cotton offered for sale
lat any time, and IL the company should
have the support Of the farmers and
they should deposit their cotton the
company would be in control Of the
situation. But even IL only about 25
per cent of the local production were
available as deposits. this together
with the cotton purchased, would be
sufficient to keep out of the market
what is known as the weak cotton:
that Is to say, the cotton which, be-
cause of liens and mortgages, Is forced
upon the market at the opening OF the
season. The plan would be to have
these companies at each important
cotton market In every state and, while
the scheme does not contemplate an
organization embracing all these COM
lranies, it is understood that through
the Southern Cotton association they
would work in harmony and, IL suf-
/ har ntZa6
easily control the marketing Of the crop
Throughout the south. 1t is estimated
that the deposits and purchases OF
cotton by these concerns would reach
at least 33 1-3 per cent Of the entire
lcrop and perhaps 80 per cent. 1t
would not be necessary to control the
entire crop in order to affect the price
and the demand.
But II there were no general organ
ization or understanding among these
companies It Is argued that the forma-
J ton Of them would have a beneficial
effect even IL that effect was merely
local one. The opportunity to deposit
or store cotton in a fireproof ware
house without any storage charges or
insurance charges on the owner would
be very attractive. Much Of the cot
ton, especially IL 1t is neld for any
time, Is now left out in the weather,
trees, because the farmer does not wish
to pay the charges for storage and in
surance even II a warehouse Is near
The company would store and insure
!, this cotton without any charge upon
the owner If deposited In the ware
house. 1t is conceivable that there may
be times when 1t is not desired to hold
cotton for any length of time, but this
situation would not injuriously affect
, such q concern.
Another benefit which may possibly
arise from this system would be the
ILLUMINATION Of the middle man. There
are frequently occasions when the mills
land exporting houses desire to pur-
lchase large amounts Of cotton on
short notice and these warehouses
with just a small degree Of co-opera-
ton would be able to supply such
want.
The organization Of these companies
lis considered to be entirely practical,
ESPECIALLY IL the business men and
banks of the towns lend any assist
lance. The fact is well known that
many farmers throughout South Car
lolina as we'll as other states are now
large depositors In the banks In the
lfall season and the money to supply
the capital Is certainly available.
There is no reason therefore why the
companies cannot be organized WIN
ample capital and II the farmers now
can deposit money in the banks there
lis no reason why they cannot deposit
lcotton instead Of first transforming 1t
into money. The effort will be made
by this months campaign to arouse
the most prosperous farmers and bus
mess men of the towns to enter into
this plan primarily in order to keep on
lof the market the weak cotton which
Is raised by the negroes and other
small farmers, and 1t remains to be
seen what success viii! be attained In
this movement.
There is some misunderstanding
labroad as to the present plan OF the
lSouthern Cotton association as to the
Organization of these companies. 1t
was originally proposed to form gi-
gantic holding corporation with cap
lital of several million dollars, but the
executive committee considered this
Impractical and the scheme OF local
companies on comparatively small
capital has instead been adopted. 1t
Is reported to Mr.. Smith, and his own
investigations confirmed the report,
that the states of the southwest are
fully alive to the advantages Of this