The Anderson daily intelligencer. [volume] (Anderson, S.C.) 1914-1915, 1915-04-02

touch with the federal reserve board,
and am greatly indebted to the kind
ness nd intelligent aid rendered per.
sonally by Mr.. w. p. C. Harding. who
coming from the South, thoroughly
| understands finance as 1t relates to
cotton. He gave me a personal letter
in which he said that "the State ware.
house law is, in my opinion, In adj
vance OF anything that has been at
tempted m other Southern States, and
appears to be a model of its kind"
New York financiers naturally de-
sire to maintain that city as a finan-
cial center, and to do so must offer
money at rate under the discount
established at the various reserve
banks. This gives the federal board
! considerable power over interest rates
| by either lowering or riasing the fed
eral discount rate. The intention of
the State bank law is to develop an
acceptance and discount market in
New York such as has enabled LON
don to make herself the clearing
house Of the world. The National City
Dank Is showing great wisdom in es-
tablishing branch banks under the
federal law in South America and
elsewhere, so as to develop our ex-
port trade.
Under the old national banking
system we had u rigid money market,
producing such bankers panics as in
1907, because just as credits needed
expansion tc avert panic, there was
contraction OF credits. increasing
panic conditions. These aeceptances
VIII make for elasticity by extending
credit when needed and automatically
reriring credits when not required by
actual business needs.
| Fhe new currency law, under its
| power 10 AX the re-tliscount rates.
| Will eventually standardize interest
charges throughout the country. and.
TO some extent, eliminate competition
as 10 interest rates. It is to meet this
condition that system of accep-
tRnces Is being established One or
two large financial concerns in new
York seem to be preparing to make
specially or the purchase and sale of
acceptances. This has never been
| done to any extent IA this country,
but in the mcSey centers of Europe it
is used very largely in commercial
{! transactions. The accepting bank is
paid small commission, which can
be well afforded because OF the low
rate of interest at which draft is
sold. TITS to be remembered, in this
connection, that the State banks ag-
gregate in capital and surplus sixty
two percent. OF the entire banking
power of the country. and that the
proportion Is greater in New York
than in any other State.
! am constantly struck with how
little knowledge the public. in South
'Carolina have to the enormous change
that has been brought about by Leg
] islation within the past year. CON
fess that did not know anything
eLout the, changes in the State bank
ing laws Of New York nntil I made
this trip, and am saying as much
as do now about acceptances be-
cause ] feel that we all need bet
ter understanding of the banking sys-
tenn. The prosperity of this State de-
| pends largely upon, an Intelligent
use of credits arising from cotton, We
need to learn tiat the correct idea
OF q bank is not 80 much as a mere
place To borrow money, but that its
highest function is to conserve the
teradits OF the country and use them
to the best advantage of the entire
public, The time is at hand when we
mist better understand what is meant
! by reserves, discounts and accep-1
| tances.
L AL ltAitSli y aAltANG Cu1GdtOIGQl suO
with the warehouse system is to
traaeforIn our cotton into basis of
credit I believe that I, have made a
beginning in financial circles, In .es-
tRbliahing the character & OF State
warehouse receipts. The State re-
ceipt is the best security that can be
offered on cotton. I said In December
ithat It was cup to" the banks. / now
say so again. There Is no excuse for
Charging q man with cotton eight; par
cent. interest In South Carolina when
money cah be had In New York ON ac
ceptapcea az four per cent.
I have the following letter from a
/ lrespanstble note broker In New York:
FL MY Dear Senator McIsaufin: Re-.
ferring to our copversatio ion IN re a7-
rang gerients for aeecr, Ances against
cotton stored under The warehouse
system OF the State OF South Caro-
lslina, beg 10 suggest the following
nlsn for overcoming the dillicuitisas
which are presented In the fact that
the money that you propose to- bcr.
row won1d be borrowed for account
lpf q number al theaE obllgors, own
lsers OK the cotton hyD0thecated.
/ Ssugga5t that In order to get over
EthiS difficulty, you arrange with eonae
/ Irresponsible hank or flncncial institu-
Ition In South Carolina 10 loan against
! the wAtetotise receipts issued by Che
I State yIArelianse SyEtepn and to take;
In cshnG6tion With said foans an
agreement giyihg them the right of
iFa5fypo otheeation or srbroeatioB. 4 81
If they are not familiar with the
terms Of this agreement, I shall be-
/ Igiad to draw it ep for them.
yheneyer they desire to rettnburseS
lthemseiyes for the 1ilpANces 50 made J.
/ lhNy can send the warehouse receipts
! 10 sa1e ia New York together with the
draft at say ninety days sight on
aptna institution here who Is willing