Yorkville enquirer. [volume] (Yorkville, S.C.) 1855-2006, 1915-04-02

| them to the best advantage Of the
entire public. The time Is at hand
when we must better understand what
is meant by reserves, discounts and
acceptances
| All that I have endeavored to do
with the warehouse system Is to trans
form our cotton into basis Of credit
I believe that have made beginning
In financial circles, In establishing the
character Of state warehouse receipts
The state receipt Is the best security
that can be offered on cotton. I said
in December that It was "up to" the
banks. say 30 again. There is no
excuse for charging q man with cot
! ton eight per cent interest in South
New York on acceptances at four per
| cent.
I have the following letter from a
responsible note broker in New York:
my dear Senator McLaurin:
Referring to our conversation In
re arrangements for acceptances
against cotton stored under the ware
house system Of the state Of South Car
olina, beg to suggest the following
plan for overcoming the difficulties
| which are presented In the fact that
the money that you propose to borrow
would be borrowed for account Of
the cotton hypothecated.
II suggest that in order to get over
| this difficulty, you arrange with some
responsible bank or financial tnstitu-
ton in South Carolina to loan against
the warehouse receipts issued by the
State Warehouse System and to take
In connection with said loans an
agreement giving them the right Of re-
hypothecation or subregation.
IF they are not familiar with the
terms Of this agreement ] shall be
glad to draw 1t up for them.
Whenever they desire to reimburse
themselves for the advances SO made,
they can send the warehouse receipts
to me in New York together with the
draft at say ninety days sight on
some institution here who Ia willing to
accept the same under the provisions
Of our state law as set forth In the
pamphlet which have just handed
you.
"The usage Of the market is against
making such contracts as these for q
longer period than ninety days but 1t
is frequently arranged that the accept
ors shall renew them upon maturity
continuously, making the loan In fact
a continuous one.
"For such acceptances, the insttu-
tions who are willing to make them,
generally charge commission at the
rate Of one per cent per annum, or at
the rate Of one-fourth per cent for each
ninety day acceptance. Drafts % ac-
cepted by any one Of the institutions
have in mind can now be sold In the
market here at about Q 1-2 per cent per
annum. which added to the acceptance
commission Of one per cent per annum
and my brokerage Of one-eighth per
cent for each ninety days. equal to one.
half Of one per cent per annum, would
make the total cost Of the money so
borrowed four pr cnt pr annum-
IF your local bank loaned the money
at six per cent per annum, they could
make q profit Of two per cent for their
services and the negligible risk as
sumed.
ut could doubtless be further ar
ranged that the New York institution
will allow them to hold the warehouse
receipts in trust 80 that when any bor-
rover desired to pay OF q small loan
against q particular lot Of cotton, 1t
would not be necessary to send to New
York for the release Of the warehouse
receipts.
"Of course you understand that on
loans of this sort, the acceptance In
stitutions Of New York require q mar
gin Of at least 20 per cent upon the as
certained value Of the cotton at the
place at which 1t Is stored az evidenc-
ed by your warehouse receipts, and 1t
is probable that some general agree
ment would have to be arrived at Tor
the adjustment Of any margin calls
that might be made In the event Of q
decline in the price Of cotton.
MY commission would include ar
ranging the acceptance and selling 1t
and attending to all necessary details"
The legislature granted me power to
negotiate loans and make sales Of cot
ton, but appropriated no money except
| for current expenses. It is manifest
impossibility for me, without provtd-
ing new machinery, to handle these in
dividual loans, and hope to make ar
rangements with several local banks to
transact this business on q margin OF
two per cent prof1t-that Is, II they can
lend 1t to the farmer at six per cent
can myself place straight loans at I'VE
per cent in New York, but 1t would
not be possible for me to handle them
in small amounts. In the matter OF
sales Of cotton, I am in touch with q
gentleman from Europe who is familiar
with the cotton business, and am sat
isfied that arrangements can be made
to sell cotton direct to the mills.
believe that the state warehouse
system Is a scientific solution Of the
cotton problem. It Is in its infancy,
but can be developed to handle the
cotton in each Of the southern states
on the same plan that we are pursu-
ing here, enabling US to market our
crop gradually.
All legitimate interests in cotton de-
sire to stabilize its value. Hedge SELL
ing by mills to protect purchases OF
cotton Is now q necessity, because OF
wide fluctuation in the price Of raw cot
ton. This expense Is now borne by the
cotton planter. A striking example
was had few days ago, when q report
was circulated In the exchanges that
| would be no reduction Of acreage
Prices broke sharply, which enabled
| short sellers to get out Of the market,
and who probably circulated the story
for that purpose. The next day, on q
denial by Mr.. Houston, the market re-
| bounded to higher point than ever.
1t is to be hoped that the secretary OF
agriculture will find out the author OF
this conspiracy in restraint Of trade"
and prosecute them to the limit Of the
law.
The farmers need organization 30 as
to make their power felt At present
there Is no adequate means to secure
unity of action among the several
states. The Farmers Union Is strong
in Texas and North Carolina We
should revive 1t in the other states 30
as to enable us to act together in Sc
curing proper legislation, not only In
handling and marketing the crop, but
in restricting production. The present
rise in the price Of cotton Is deceptive
and II 1t leads to generally increased
use Of fertilizer and enlarged acreage
the result will be disastrous Those in
terested in cheap cotton can act as q
unit. We are a disorganized mass,
each for himself, with no concert Of
action. The warehouse bill Is a fine
example Of what can be accomplished
by concentrated effort.
Fellow Farmers, let US organize and
act together. We create the credits
we have the numbers, why not use our
power? Respectfully,
John l. McLaurin,
State Warehouse Commissioner
The Submarine SehIey.-When the
submarine boat Of the future makes