The Birmingham age-herald., 1914-05-07

dress. He did speak with enthusiasm of the proposed cotton warehouse system. lie intimated that it should be SD operated as to make possible credit obligations based upon cotton which was stored in the warehouses Every one of those who were present apparently was able to for7 muate in his mind. although somewhat vaguely. method. of this kind-namely, the cotton planter. having harvested ms cotton, could take it to the warehouses and receive certificates therefor which might easily be utilized for the purpose of obtaining needed credit.
 But there are thousand and one de- tails to be worked out. Mir. Nanderip in- timated strongly that perhaps chief among the advantages to be established by the new national banking system is the crea- ton of very great discount market. That meant in plain English the creation of a certain form of commercial paper based upon cotton adequately secured by accept ances and Endorsements which could be discounted and rediscounted in any mar ket in the United States where money is plentiful.
 Commodities as Security
 It has always been the belief of bank CTS that there is no better security for loan negotiated at bank than com modities. That is the reason why com mercial paper representing actual trans actions between buyer and seller and be- hind which stands the commodity bought and sold is regarded as the best form of banking paper. So also cotton bills be- hind which is the cotton itself have al- ways been highly favored. Bills of this kind led to the formation by Alexander Brown of Baltimore, more than cen tury ago, of what ultimately became one of the worlds great private banking houses.
 This fact was clearly intimated by MT. Vanderlip in his speech, for he said that the proposition which involved the giv- ing of a wide currency to loans made against cotton warehouses Is a funda- mental movement, the first among great many that are now gradually de- veloping which would eventually lead to vast discount markets where the funds of the whole country and, in fact, for the nations across the sea can find excel lent investment in short-term commercial credit.
 Mir Vanderlip evidently suspects that the establishment of an adequate and great discount market where cotton bills could readily find funds may lead to con | siderable improvements in the methods l of cotton growing and cotton manufac- turing. It was not pleasant to hear him l say that when looked at from a world point of view, the cotton manufacturing business of the United States in recent years has only about held its own in | comparison with a worldwide develop ment. He seemed to feel that there should be greater efficiency both in the | agricultural and the manufacturing utili- zation of cotton. We produce about two l thirds of the worlds supply of raw cot | ton. We have a magnificent homogen- l eous market in the United States which | is fairly well protected by the tariff law 1 There Is no country where the rates Of I transportation are so low both by rail l and by water as is the case in the United l States. Yet in spite of these so great ad-
 vantages Mir Vanderlip was compelled
 to say, somewhat reluctantly. that the cotton manufacturing business of this country has not kept pace with many other lines of American industry
 Need of Labor Saving Apparatus Labor saving apparatus. some of whicf seems almost to. think, has been in
 vented and utilized in other great Amer ican industries. But MT. Vanderlip tolt
 the delegates to this convention that h'
 sometimes thought t5at American science
 and American invntive genius were no
 perfecting appar,.ms to be utilized fl
 cotton manufactt-,,,c as they had per
 fected apparatus ,,,hich has been spen
 didly utilized in s,,ar fields Of industry
 Ali of this was ar,, interesting to thos,
 who heard Mir v"enSserlips ve,s adiress. Bu
 there was expressI,d privateiy ,ome feel
 ing of regret that MT. M vano,dtlip, wh was known to have cordiahs tndorse'
 the so-called Duke plai.p for es"1shinl
 cotton bonded warehouses, oio ex
 plain more in detail the plan or som
 counsel by which it may be poNrpl
 speedily to put it into operation. Never theless, this gathering and the informa discussions which it made possible ar likely to lead to the formulation of al adequate plan for financing grea bonded cotton warehouse systen ] throughout the south. There was com mon understanding that in all probabilit,
 the National City bank of New Yorl
 would cooperate cordially in the working
 out of this plan. The germ of the plal Is this: That guaranteed receipt fo cotton stored in warehouse would un doubtedly constitute the most desirab
 commercial paper. would be eagerl'
 sought in the money markets and woul'
 provide the means by which manufactur
 CTS and planters in the south coul
 greatly increase their output. receiving
 therefor prices which would represen
 reasonable profits.