New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1914-09-20
AID PLAN
nPROTECT BANKS
..,,N Co. Moves to Make
cans on Warehouse
Receipts Safe.
O,pIE GUARANTEE
AGAINST LOSSES
.sseu Risk Staple Will Be
= az IN Storage Company
a Share Responsibility.

:. .,,hls the South better to hold
..,ton by making warehouse re-
y Cor the staple absolutely safe for
- ~. a lend money or. the National
80 Company has launched plan
=, guaranteeing Of such receipts
y, -,bsn effective will make a wide
-. for such collateral and make
IN, the plans of the Treasury De-
,n.rt TO aid Southern banks '0
,hs immense burden forced upon
IN By the war.
theoretically warehouse receipts toI
~. are good collateral anywhere IN
Sop,h As a matter Of fact, such
...int, are usually accepted only when
s,snle is raised and stored in the
s.AAorhood Of the bank, and then as
- on the reputation Of the maker
hoyrover as upon the receipts, be-
-. Of the general looseness that has
.,,,,t.rired the conduct Of cotton
,,,bouses and the wide possibilities
!, fraud. which have taught bankers
!, lending money on such receipts
-aAopt some other security than the
.-,nsnt itself is an excellent way OF
Mins money,
Under the plan which vice 'presi-
ha Of the company Is now working in
=, South, the company will guarantee
AZ the cotton described by the re-
-, Is actually in the warehouse and
IN be delivered on the presentation
Z ne receipt. thus assuring the bank
a ,Rainst loss through frauds or MIS-
sThs warehousing problem is the
E-4est thing in connection with the
,SSs. next to getting the money, that
4. Southern banks have got to deal
.;AT said Joel RathbOne, general
snszer of the National Surety Com
v,y. Yesterday. The guarantee plan
= propose will solve 1t by making
ans on warehouse receipts actually
uis at all times.
IA normal times the warehOuSing
Z eotton is not as we'll done as II
aeold be. Staple is dumped at ire
arthouse. in the back yard of the
arehouse, and even in the street on
rhish it abuts. against which the ware
,suseman issues his receipt. When the
e,stOn is vented il may be there and
NAV not. Ii may be Of the good
,u,Fity that was delivered. and it may
a This is the case in times when
sttOn is pouring out of the country,
sOn such receipts the banks lend 10
Asir customers, but the personal equa-
ten is the big factor. II the borrow
ais all right and the warehouse Is
moan 10 the bank to be all right, the
,an is made But no bank wants to
Ind 10 those whom il does not know
Ills has hindered the working OF he
zlernment plan 20 aid the banks by
iusihg emergency currency TO the ma
;a1al currency associations formed
II 10 be formed 10 the several South
IN states. this money 20 be advanced
iRiEst loans on cotton receipts, and
Il banks members of the aSsocla-
hsrs-held responsible up to the full
mount Of their participation Tor loans
Tat DO not prove good.
Therein lies the difficulty. The banks
ne wiling 10 risk their money on loans
asy may make themselves, but they
itlitate about putting their assets bach
loans Of which they know nothing
4 MS makes a change in the method Of
urshousing imperative,
What We propose TO do is to insure
" banks or other lenders against los:
trough fraud or otherwise thar
trough fire, by guaranteeing the re.
UYis Under this plan the banks vii
I EtTiet thcir loans 90 cotton so guar
Elssd. the small. cost of the insur
at being met BY the owner of tht
4 FiOn. To protect itself the company
NJ compel the warehouseman TO Sc
pigate and store in separate com
Ntnents all cotton represented by re
1plS which IL guarantees, such com
Rtments TO be accessible only to the
nTehousemsn when accompanied by
agent or other representative of the
uEpany.
The banks thus have a triple guar
rlee against loss the responsibility
the borrower, the staple itself anC
e resources Of the company back o.
= guarantee that the cotton will bt
Heoaeed upon proper demand.
The plan is original with the com
any, and IS meeting with a warm wei
sne on the part Of cotton growers
arehousemen and banks in the South
sisfe one Of our Independents is nov
work putting 1t into operation, ant
u possible that other companies MAJ
Dnow US in the work.
u Is something more than wa
ssasure, for when the present neces
~ passes there is no reason VIII!
shss. once having found the system u
eH well, will not insist upon its con
Aaahee, for It will not only make thu
ahsaetlon Of business easier and safe
" them, but It will help the farme
~ The warehouseman more by max
Sawlde market for paper so secured
normal times it will enable the plac
Of loans At better prices than ha
ssh the case when loans upon suci
Sltteral were accompanied by risk
lN outside bankers would not fee
eranted in assuming, though tn
tpei might be attractive from III