Yorkville enquirer. [volume] (Yorkville, S.C.) 1855-2006, 1914-12-04
Financing Cotton.

AS the result Of a trip Of a week, In
company with Hon. John L. McLaurin,
state warehouse commissioner, who
went to Washington and New York In
the interest Of the claims Of the stat,
warehouse certificate to superior ad-
vantages as a banking collateral, the
editor Of The Enquirer has picked up a
few points that may be Of more or less
interest to our readers.
While the general public down this
way has the idea that the ordinary in
dependent warehouse receipt should
furnish as good collateral almost as
gold bars, such is by no means the
fact. In the first place under the con-
ditions that have existed for so many
years, there Is more or less Of cloud
on the title Of every bale Of cotton tina!
Is offered as security, and the value OF
such security can be increased only ir
proportion to the extent to which this
cloud can be removed.
For instance, although the Local
banker may have satisfied himself alb
solutely as to the absolute merits Of q
warehouse certificate, when that re-
ceipt goes abroad as security, its actu-
al value counts for very little, and II
derives more strength from the note to
which it is attached than 1t carries
within itself.
1t is generally recognized by the
banking world that the greater the ex-
tent to which a warehouse receipt car
ries unquestionable evidence Of its alb
solute worth within itself, the greater
its value as a collateral security, and
during many years past the more in
given their best thought to the end OF
being able to offer a receipt that is
subject to the fewest possible objec-
tions, and increasing the quality Oh
raw cotton as liquid asset.
In theory at least, the state ware
house system has gone further in this
direction than any other plan that has
yet been devised; but the great task
now since the new system Is getting
into operation Is to have the banking
world to realize and accept the propo-
sition. This is the end to which the
state warehouse commissioner is now
devoting his efforts.
The treasury officials in Washing
ton, especially Mr.. Harding, Of the re-
gional reserve board, appeared very
much pleased with the guarantees Of
fered by the state warehouse receipt
Mr.. Harding, who has for years beer
a prominent banker Of Birmingham
Alabama, knows all about the compli-
cations involving the financing Of cot
ton under existing systems, and was In
position to instantly appreciate the full
significance Of the new idea. When
Mr.. McLaurin called, Mr.. Harding was
at work trying to perfect details in the
Wade loan plan, and being right then
up against the problem Of clouded IT,
ties in connection with cotton as col
lateral, he gave expression to sugges-
tions that made 1t clear that in his
opinion the general adoption Of the
state warehouse system would simpli-
fy matters wonderfully. The result o1
lllc lllSfNlcW was QuilC onlAoAoSeoty VI
both sides.
The governing officials Of the Park
National bank and the City National
bank gave the new receipt careful con-
sideration, and had their legal experts
to pass upon it without finding any
thing wrong. The advantage Of the
guarantee of title, weights and grades
was readily admitted.
Another thing Of importance was the
view that would probably be taken by
the insurance experts. AS matters now
stand, there are quite number OF
things that go to increase the hazard
Of cotton insurance in warehouses, and
not the least of these is inability, IN
case Of loss, to establish the grade OF
cotton burned, the insurance companies
not infrequently paying for strict good
middling when the burned cotton was
really nothing but linters. The matter
was submitted to some of the best
known insurance experts in New York
and without hesitation they conceded
that cotton in state warehouses would
be entitled to a substantial reduction
in rates.
Altogether Mr.. McLaurin seemed tC
be very we'll pleased with the net re-
suits Of his trip, and will no doubt
soon be able to give out something
officially on the subject.