The Manning times. [volume] (Manning, Clarendon County, S.C.) 1884-current, 1913-07-30
LAW HURTS THE SOUTH
BURDEN OF BANKING SYSTEM
on COTTON STATES.
This Section Is Annually Pinched and
Bled for Money Needed to Move Its
Huge Cotton Crop.

The burden of our defective bank
ing system falls upon no section of
the country more heavily than upon
the South because the South is pinch
ed and bled annually in the move
ment of the cotton crop.
In the thirteen cotton growing
States, including Kentucky and ex-
Guiding Missouri, there are 1851 nat
ional banks with a combined capital
stock of s159,927,43. The total val
ue of cotton raised annually in the
Southern States is about seven and a
half billion dollars.
When the capitalization of the
Southern banks is considered in con-
nection with the value Of the cotton
crop, it is at once obvious why they
must call on New York and on Eu-
rope for help when that crop is to be
moved from the producer to the man
ufacturer.
1t should be mentioned in the be-
ginning that the local cotton busi-
ness is done in cash. Hence buyer
or cotton factor will arrange with his
local bank to obtain funds if he
wishes to purchase cotton.
He gives as security his note, with
warehouse, or compress. receipts, or
the railroad bills of lading covering a
certain number of bales of cotton.
Conservative banks do not advance
on this form Of security more than
their capital stock and surplus, and
so the movement of cotton is costly
and difficult. When the cotton fac
tor but 1000 bales and gets a loan
for, say 100000, the local banks
know that within three or four days
it will be called upon for 100000 in
currency, which must come out of it's
reserve or be sent to it from reserve
city banks. Approximately $780,
100000 of currency is sent annually
into the South to help finance this
crop.
Who gets the profit? New York
bankers and brokers. They reap in
this way several million dollars a
year. The South pays the bill. And,
in addition, the mere cost of shipping
the currency costs the country banks
in the South, it is estimated, $4,000
a year, aside from the interest which
must be paid for it.
The first reason for this expense is
the lack of actual currency. Another
is the use of actual cash where credit
exchanges mught be more generally
used. Still another is the inelasti-
city of our currency system. A dis
count would make it possible to coin
the cotton crop at once into currency.
Thus the enormous wealth brought
out of the soil would make for in
slant prosperity instead of creating
financial stringency. 1t would en-
large credits, instead of crippling or
hampering it.
A uniform discount rate, effective
only in rediscounts for banks, would
tend to equalize interest rates
through out the country. At present
these vary from 2 3-4 and 8 per cent
in rural districts. Proper reforms in
our banking laws which would be un-
form between banks throughout the
country, so that the local banks in
Mississippi could get funds at much
smaller price than is possible now.
The rates throughout the country
would vary somewhat, but the varia-
ton would be nothing like what it is
now; and the small banks would
profit equally with the farmers and
merchants they serve.
Proper revision Of our banking
laws would work for the greater
prosperity of the South, and would
aid materially in the easy movement
of it's great staple cotton. 1t would
make it possible for the banks of the
South to take care of the South's
business. It would provide abundant
funds when they were needed, and
would convert into cash at once the
South's greatest source of wealth.