The herald and news. [volume] (Newberry S.C.) 1903-1937, 1915-04-02

New York such as tcas enabled Lon
oon to make herself the clearing Lousa
of the world. The National City bank
is showing great wisdom in establish
ing branch banks under the federal
law in South America and elsewhere,
so as to develop our export trade.
Under the old national banking sys-
TEN We had a rigid money market,
producing such bankers panics as in
1897, because just as credits ncedei
expansion to avert panic, t..ere was
contraction Of credits, increasing
Panic conditions. These acceptanc3s
will make for elasticity by extending
credit waen needed end automatically
retiring credits when net required by
actual business needs.
To Standardize Interest.
The new currency law, under its
power to fix the rcdiscount rates, will
eventually standardize interest charges
throughout the country, and, to some
extent, eliminate competition as to
interest rates. 1t is to meet this con-
dition that a system of acceptances
is being established. One or two large
financial concerns in New York seem
to be preparing to make specially of
tie purchase and sale Of acceptanceS,
This has never been done to any eX-
tent in this country, but in the money
centers Of Europe it is used very
largely in commercial transactions.
The accepting bank is paid a small
commission, which can be we'll al
forded, because of the low rates of in
terest at which a, draft is scld. 1t is
to be remembered, in t2is connection,
that tie State banks aggregate in cap
.ital and surplus 81 per cent. OF the
entire banking power Of tee country,
and that proportion is greater in New
York than in any otcer State.
Need Better Understanding.
''T am constantly struck with how
little knowledge the public in So@tG
Carolina have of tie enormous change
that has been brought about by legis-
lation within the past year. l confess
that | did not know anything about
the changes in the State banking laws
of New York, until l made this trip,
and l am saying as much. as l do now
about acceptances because | feel that
we all need a better understanding Of
the banking system. The prosperity
of this State depends largely upon an
intelligent use of credits arising from
cotton. We need to learn that the
correct idea of bank is not so mucn
as a mere place to borrow money, but
that it's highest function is to con-
serve the credits of the country anu
use item to the best advantage Of the
entire public. The time is at hand
when we must better understand what
is meant by reserves, discounts ana
aceptances.
A Basis of Credit.
"All that l have endeavored to 90
with the warehouse system is to trans
form our cotton into a basis Of credit.
| believe that l have made a begin
ming in the financial circles, in estab-
listing the character of State ware
mouse receipts. The State receipt is
the best security ttat can be offered
on cotton. 1 said in December that it
was up to- the banks. l now say so
again. There is no excuse for chars-
ing a man with cotton 8 per cent. ia
terest in South Carolina, when money
can be Tad in New York acceptances
at 4 per cent.
81 have the following letter from
responsible note broker in New YORK:
"My Dear Senator McLaurin: Re-
ferring to our conversation in re ar
rangement for acceptances against
cotton stored under tie warehouse sys-
tenn of the State of South Carolina,
beg to suggest the following plan Tor
overcoming the difficulties which are
presented in the fact tat the mouey
borrowed for account of number o.
these obligors, owners of the cotto-l
hypothecated.
81 suggest that in order to get over
this difficulty, you arrange with some
responsible bank or financial institI-
ton in South Carolina to loan against
the warehouse receipts issued by tie
State warehouse system and to take
in connection with said loans an agree
ment giving them the right Of hypoth-
ecation or subrogation.
"'If they are not familiar with tie
terms of this agreement, l shall he