The Birmingham age-herald., 1915-09-01

aration for the warenousing of cotton regularly:
 l The holding of a surplus of the crop off of the market sufficiently long to relieve the spinner of the necessity of accunulating a large supply to be carried at his own expense and there by giving to the producer the added profit of logical marketing process.
 ?. The reduction of the loss from country damage and better methods of classifying and sampling, which may be done at warehouses instead of in open cotton yards or on the streets.
 ,. The induction of a more scientific plan of financing the crop. converting the accustomed mortgages on the growing crop at rates in keeping with the risk, into loans at lower rates se- cured by warehouse receipts represent ing an ascertainable value.
 Capitalization of Sentiment
 There has been a marked crystalli- zation of sentiment in. favor of the application of all of these functions. beginning with the exceptional needs of the present season. The conferences of representatives from southern bank ing institutions during the past month, one at Galveston and the other at Bir- mingham. were the result of the rec ognition that the application of these things will make for the prosperity of the cotton producing sections.
 The bankers and merchants of the south are in an excellent frame of mind for cooperating with the cotton pro- queer at every point not inconsistent with good business policies and the usual volume of distress cotton will be minimized under the existing con ditions of easy credit facilities. Be- cause of the lessened cost of produc- har wi ho nyln1bar Of producers whose debts contracted are equal to or in excess of the value of their crops, thus preventing the secur- Ing of loans upon fair marginal basis as was found to be the case last year in undertaking to apply the require i1ents of the cotton loan fund.
 As to Interest Rates
 There has been some argument made in favor of the fixing of maximum interest rate upon which commodity loans should be handled, but 1t has usually come from sources unfamiliar with the every day transactions of the average banking community in tine south, and therefore incapable of ap preciating the extent of the demora'iza- ton of rates which would naturally fol- low such an innovation. It is as un- sound to undertake the valorization of rates as to attempt the valorization of
 
 periority of the warehouse security, 1t is entirely proper for the banker to give consideration to the making of a lower rate on such loans. adding there by some encouragement to the pro- ducer to adopt the gradual selling plan the fixing of an arbitrary rate to be ap- piled to all communities, under all con- ditions, cannot well be defended
 The determination upon the part of the banking and business interests of the south to apply the principles of a long period for selling this years crop, is being supported by number of ele- ments in the national administration. The chief executive has approved of the idea of cooperation suggested herein. The Secretary of the Treasury has pledged the support of his office by en- larging the extent of the discount op- erations of the federal reserve banks. or by making deposits directly with members banks handling commodity loans, by either method rendering avail able a relief from the congested mar ket. and making possible more fa vorable rate. The federal reserve banks, in the exercise of the function of the fixing of discount rates upon varying classified tions of paper, in conjunction with the rights of the fed eral reserve board to review and de- termine such rates, may be expected to give preference to loans secured by commodities properly warehoused ard insured. A member of the federal re- serve board, in a public address in this city. while giving expression to per sonal views which, it is believed, fair ly represented the sentiment of the whole board, gave an analysis of eX- isting fundamental conditions ss they pertain to the probable~'value of cot ton, both intrinsic and salable, at the same time indorsing the efforts of those who are seeking to provide means of