The Birmingham age-herald. [volume] (Birmingham, Ala.) 1902-1950, 1915-08-26
HARDING ADDRESSES MERCHANTS OF
ALABAMA ON THE COTTON SITUATION

81 L OA i lOIN
satisfactory than would be the case were
the crop forced upon the market within
a short period. The south has now ample
warehouse facilities for properly caring
] for that portion of the crop on which
loans are apt to be negotiated and the
banks can provide ample funds. either
out of their own resources or by use of
their credit in rediscounting paper Sc
cured by cotton to enable them to aid
materially in conserving the values of
| this great crop. 1t has often happened
] heretofore that the farmer has been
forced to sell his cotton to meet the de-
mands of his creditors, or in cases where
| he had no pressing demands and found
the price unsatisfactory, that he found
| himself unable to negotiate loans upon
| his warehouse receipts, unless perhaps
at a very high rate of interest The
| bankers and merchants of the south have
at this time a great opportunity, as well
| as a, great responsibility. They are in
close and intimate contact with the pro-
] ducers throughout the cotton belt and
are In the best position to advise and
assist them in taking the steps neces-
| sary to protect their interests which are
| also the interests of the whole south.
For the second time within recent
far less money in the aggregate than a
moderate crop brought the preceding
year. You have an opportunity of con-
serving the values of the souths great
est single asset-its cotton crop-and upon
| you. bankers and merchants of the south.
rests the responsibility of the veal or
| woes of a great agricultural section dur
Ing the next II months and perhaps for
years. Leading financiers of the coun-
try, in commenting upon present condi-
tons. which are due in part to the Euro
pean war. freely express the fear that
the sudden prosperity that has developed
In some sections and along certain lines of
industry, will be followed by a period of
wild speculation and Initiation. The bank
ing reserves of this country are now large
being considerably more than $1,000, co.,
900 in excess of legal requirements. The
GOLD holdings of the United States over
81 100000, are larger than those of any
other two countries combined. Our trade
balances are piling up at an unprecedent-
ed rate. and will probably amount to ST.
900. 600 900 during the last six months of
1915 Rates for the best commercial
paper are very low, per cent or less,
and the southern banks. should they be
able to collect within the next 60 days
the amounts which they have out directly
or indirectly on cotton, will be at an alb
solute loss to find safe and profitable
investment Tor their IundS.
Value of Security
What better security, therefore, could
a southern bank ask than the obligation
of merchant or farmer which he has
been carrying on a crop not yet existent?
What better or more liquid investment. I
say. could a southern banker find than to
carry this same obligation along for a
few months If necessary, secured by the
actual cotton at-ob nd
insured, and certain of a market? Such
general action on the part of southern
banks would greatly facilitate the orderly
and natural marketing of the crop and
would, in great degree, relieve what Is
called distress cotton by which term
forced sales of cotton, regardless of mar
ket conditions, have come to be known.
while the rule Is not invariable. 1t very
ofteh happens. nevertheless, that after the
producers and the country merchants
who have had most to do with growing
the crop, have sold their cotton, that the
price advances so that by planting time
the stern resolve made by the farmer q
few weeks previous to reduce his cotton
acreage so per cent is modified under the
influence of the higher prices that he
hears about, with the result that the
reduction Is very small. During the
acute depression in cotton last fall, per-
haps all the farmers were determined to
plant but little cotton this year, and In
ono state the legislature placed drastic
restrictions upon the amount of land that
could be planted in cotton, which re-
strictions, however. were afterward re-
moved at a later session. With the i'm
proVement that came in January, Feb
ruary and March, the feelings of the farm
ers underwent change. Sales of cotton
were made at 8 cents and even higher,
and. forgetting their recent plight the
a rfp- y-o H4t H.
ter experience and regardless of all the
advice and warnings of the department
of agriculture, the banks and the mer-
chants reduced their cotton acreage only
about Is per cent. Our experience last
winter should convince every one that
the economic law of supply and demand is
memorable and unalterabe
The situation at that time was indeed
a most serious one. and many desperate
remedies were proposed which seemed to
be Justified by conditions then existing.
Valorlzat1on schemes were proposed and
much pressure was exerted upon Con-
gress to authorize the purchase by the |
government of a large amount of cotton |
at 10 cents per pound. When this propo- |
sition, however. was referred back to |
some of the states for separate adoption |
on their part. it developed that there was |
but little public sentiment behind it. |
Inc situation last year, as was to be ex- |
pected, finally worked itself out along |
natural and economic lines. Only AZ per |
cent of the crop came in sight by De- |
cember 81. against 70 per cent in ordinary |
years, and of the amount in sight per-
haps 80 per cent was held unsold for |
account of the producers or the country |
merchants. A demand gradually de- |
veioped for cotton and the price advanced |
The situation this fall is totally different |
from that which confronted us year ago. |
The present crop can be handled sue |
cessfully only along economic lines, and If |
we are really suffering from an over |
production of cotton. the true remedy to |
be applied is curtailment of production |
Experience has shown that the farmer is
not impressed In the spring of the year
by figures showing a large amount of |
cotton In sight unless he himself owns
some of this cotton. II the banks and |
merchants will carry cotton for farmers
this fall the advances that they will make |
should prevent repetition of the chaotic |
credit conditions and general trade depres-
sion which resulted last year, and If
satisfactory arrangements for marketing
the crop can be made before spring that
Will be good evidence that there has been
no overproduction If, on the contrary.
considerable portion of the crop has to
be carried until planting time for the
farmers and the country merchants. a |
corresponding reduction in acreage will
almost certainly result.
Reduction In Acreage
THE farmers will not be disposed to |
plant heavily IL they have consider |
able amount of cotton on hand when the
planting time comes and a sharp reduce |
tion IN acreage next spring would most
probably result In a demand for cotton |