New-York tribune., 1918-08-01
Cotton Buying by
Reserve Board to
StabilizeExchange?
This Course, Bankers Urge,
Would Offer Export
Outlet for Surplus

New York bankers interested in help
ing forge new instruments for the
financing Of the forthcoming cotton
crops have proposed, it was learned
yesterday, that the Federal Reserve
Board be empowered to purchase the
Southern staple for export in order to
stabilize the value of the dollar in neu-
trail exchanges, as we'll as to assist the
cotton grower by furnishing an outlet
for part Of the large surplus that Is
expected this year.
This suggestion was offered as q
substitute to the programme Of the
growers that governmental cot
ton corporation be formed for the pur-
pose of buying up all the surplus raw
cotton at fixed price to prevent a
great drop in the market value. The
proposal Of the Southerners, which
was insisted upon by delegates from
that section Of the country at recent
conference at Washington Of the va
rious interests connected with the cot
ton business, proved to be a stone wall
against which no progress could be
made toward plan that would satisfy
all elements in the cotton industry.
Another important part in the plan
which New York bankers think will
lead to a basis of conciliation is the
establishment Of the American Accept
ance Corporation, with a capitalization
of s5,o0O,OOo to help finance the cotton
industry. Men who are interested in
this phase of the matter said yester-
day that it seemed certain that the
corporation would be organized in the
near future, as the support necessary
for it had already come from business
and banking interests.
New Corporations Purpose.
Although the primary purpose of the
new corporation will be to introduce
the use of the acceptance in the cotton
industry, it will also function in other
lines Of business as we'll. On the other
hand, it was said that the proposed
American Acceptance Corporation will
not take care of all the acceptance
business that arises in connection with
cotton, as several of the leading banks
hero have already informed cotton
growers and spinners that they are
prepared to handle cotton trade ac
ceptances. The development of a pos
slole market for cotton acceptances is
result of the resolution passed sew
eTal weeks ago at meeting under the
auspices of the National Association of
cotton Manufacturers by representa-
tlves of all branches of the cotton in
dustry to the effect that they would
use the acceptance hereafter as far as
practicable.
\, me third main element in the
Northern plan for financing cotton and
caring for the expected large holdoyer
IS the establishment of a series of
large cotton warehouses, partly at the
expense of the government, in New
ork, boston, Fall River, Providence
and New Bedford. When this proposal
was made recently at the Washington
conference of cotton interests the
ooutherners made their support of this
enterprise contingent on the adoption
OF their recommendation that a govern
ment corporation be established for the
purpose of stabilizing the price Of cot
ton.
Another Conference Expected
AS soon as the Southern interests
reallze that their plan, which is op-
posed also in some parts of the South.
Will tall of support from Northern
spinners and bankers, local cotton men
believe that they will be ready to at
tend another conference and attempt
to work out a compromise plan.
The essential difference between the
proposed establishment of q govern
ment corporation to buy cotton and of
granting that right to the Federal Re-
serve Board, it was pointed out, is that
the Reserve Board would onlv he
obliged to buy as much cotton as it
deemed necessary for bettering condi-
tlons of foreign exchange, whereas the
former would be charged with purchas-
Ing at fixed price all the cotton for
which there would be no demand in the
regular market.
In the cotton conferences between
Northern and Southern interests that
have been held to discuss this general
problem up to the present time, it was
pointed out, there has been a cleavage
between the delegates from the two
sections. Bankers interested in the
subject said that the cotton men ought
to realize that in this emergency The
interests of both sides are common. at
least to the extent that some radical
steps must be taken to assist the spin
ner to finance his operations, which
are much more expensive than nor
mally on account Of the rise in costs.
and to aid the farmer to withstand the
depreciation in value which large
holdover in cotton is likelv to cause.