The watchman and southron. [volume] (Sumter, S.C.) 1881-1930, 1918-06-19
HOW TO FINANCE COTTON.
Unless Farmers Can Control Expan-
sion and Expansion of Credits Spec
ulatOrs Will Dictate Prices.


sion and Expansion of Credits Spec
ulatOrs VIII Dictate Prices.
Editor Sumter Item.
note in your paper Of the 11th
inst. that you had good meeting of
business men in Sumter on cotton
marketing. 1 am going to make q
few fundamental suggestions that may
be of some value.
The price of cotton is largely a
matter of utilizing credits. Manu-
facturers will not invest in cotton
and carry 1t unless they can buy it
cheap. The tremendous value of the
cotton crop makes 1t necessary for
those who produce it to have a means
to finance and carry it until called for
actual assumption. not speculative
purposes. Money is a mere measure
in the exchange of values. and Is only
available when the time Is ripe to
make that exchange. unless cotton Is
bought as an investment. The period
from the gin-house to the mill must
be cared for by the farmers. Cotton
up to 1915. was a good basis credit in
the hands of a speculator or manu-
facturer, but not In the hands Of the
farmer. SO long as cotton Is a basis
Of credit In everybodys hands except
the farmer 1t will be taken away from
him at sacrifice. lay this down as
a proposition in finance, which canno,
be successfully controverted. That
whatever controls the expansion or
contraction of cotton credits, can con-
troll to large extent cotton prices
1t was upon this theory that ] act
cd In promoting the State warehouse
law. You must make cotton a fluid
asset just as are stocks and bonds.
When l took up this matter of fin-
ancing cotton with the Federal Re.
serve Boald. you could not borrow q
dollar on cotton In South Carolina. AS
soon as we established cents as a
borrowing value, cotton began to ad-
vance. This established new bor-
rowing basis and advanced tho price.
Each advance did likewise until II
touched 35 cents. This would have
kept up. had not the Federal Reserve
Board began to decline to renew
notes of the farmers. They will dis
count cotton paper for the manufac-
turer. but not the farmer, as it Is not
the policy of the Board to carry this
crop over into the next. except where
IL Is in process of consumption.
Cotton is "up in the air" because OF
The unsettling of the borrowing ba-
sis. and the difficulty Of securing re-
newals. for the remnant of the crop
still In the hands of the producer.
In discussing this matter with Mr.
Harding and Senator Banks we agreed
that at some point this condition
would have to be met.
Our idea was the establishment in
South Carolina. somewhat as an ex
periment, a bank with the stock own.
ed by those interested in cotton.
strictly for the one purpose of handl-
ing agricultural paper. There Is full
authority in the federal act, to dis.
count paper with rent notes or crop
mortgages as collateral. as we'll as re-
ceipts for the actual cotton. Thi.
bank would not do a commercial bus
mess in competition with the banks
now i'm existence. 1t would be more
like "a clearing house for the banks,
giving them cash for agricultural pa
per. If IL worked i'm this State. IL
would be done all over the South and
change us into a cash from "a credit
country. Once we got this well under
stood and strong financial machinery,
then we would be I'm a position to es-
tablish prices. and sell cotton on
grades anywhere in the world. This
may be dream. but If had been
given the power. / would have already
demonstrated its practicability. We
must be on "a solid foundation and So
from the ground up.
Jno. L. McLAurin.