Yorkville enquirer. [volume] (Yorkville, S.C.) 1855-2006, 1910-09-23
Bill of ladinq Muddle.

Among the troubles ahead of the
cotton market is the bill of lading
muddle that has been brought about
as the result of wholesale forgeries in
Alabama last summer, and how this
trouble is to be settled cannot be sat-
isfactorily outlined at this time.
The trouble applies only to the NOV
ing of cotton abroad. There has been
no change in the conditions under
which the domestic trade has been
conducted all along.
The moving of cotton ordinarily is
very simple matter, and is usually
done on credit, though not always.
The commonest way is for the local
dealer to buy cotton from the producer
with money borrowed from the local
bank. The cotton is regarded as Sc
curity for the money loaned. When
the dealer sells to a consumer, he is
supposed to load the cotton or cars
and to turn the bill of lading and a
draft on the buyer over to the bank.
The bank discounts the draft and COL
lects the money from the buyer at the
other end of the line. The transac-
ton Is convenient, safe and satisfac-
tory.
This custom ran along very nicely
until that Alabama house managed to
swindle English bankers and mill men
out of several million dollars by means
of forged bills of lading. In this case
the railroads were not as strict as they
should have been. They allowed the
dealer to have bills of lading on the
assurance that the cotton would be
loaded Immediately. The cotton was
not loaded; cash was obtained from
the home banks on drafts attached to
the bills, the English banks paid the
drafts, as did also the English spinners,
and as the cotton never went forward
the spinners were out their money.
This was where the present trouble
originated.
Having been so severely scorched,
the English banks set up a demand
that hereafter the banks that forward
drafts with bills of lading attached
must guarantee that the cotton repre-
sented by the bills of lading will be
forthcoming. The American banks,
thoroughly satisfied with the old ar
rangement and contending that the
proposed new plan would be absurd,
especially in view Of the fact that the
banks make virtually nothing out Of
the transaction anyway, are unwilling
to accede to the proposed new ar
rangement, and there matters stand.
The English banks have fixed the
Goth of October as the date by which
their ultimatum must go into effect,
and things will continue as they are up
to that time.
1t has been suggested that unless
some kind of an arrangement is agreed
upon by way Of compromise, the price
of cotton will be affected, temporarily
at least: but just how this will he we
do not see very clearly.
According to our understanding of
the whole matter, the home banks
would be very foolish to accede to the
demand OF the Britishers in the mat
ter; but still the Britishers certainly
have a right to some protection
against forged bills of ladng, and it
seems to us that such guarantees as
the situation requires should be fur
nished by the railroads. They should
certainly not give bills of lading until
the cotton these bills represent is in
their custody, and after they get the
cotton in their custody, we cannot see
why they should object to guarantee
ing the bills.