New-York tribune., 1918-06-09
Indorse Use of
Acceptances in
Financing Cotton
Committee Urges Adoption
of New Method; South
ern Bankers Opposed

trade and bank acceptances in financing
cotton from the seller to the spinner
was recommended yesterday by spe-
clal committee appointed to study this
subject by the National Association of
Cotton Manufacture. The conclusions
OF this committee, on which all the in
terests effected were represented, were
embodied in a formal resolution after
three hours debate at the Hotel
Biltmore.
After several revisions to conciliate
divergent interests the recommends
tion as unanimously adopted reads:
Resolved, That this committee rec
ommends that, in connection with the
present methods, bank and trade ac-
ceptances be employed as far as prac-
tlcable by shippers and spinners in
financing this seasons cotton crop"
Former Senator Theodore E. Burton,
president of the Merchants National
Bank, who presided over the meeting,
and other advocates Of thoroughgoing
changes in financing cotton, character
lied this resolution as exceedingly
mild, and pointed out that, even as far
as it went, it was advisory and not
compulsory. The insertion of the
phrase "in connection with the pres
ent methods" was a concession to the
Southern bankers, who declared that
the banking institutions in the cot
ton-growing states ought not to be
burdened after the possession of the
product has passed from the seller to
the desire Of the Southern interests
to leave no doubt that the use Of the
sight draft, which is the essence of the
existing system of financing the op-
GRAFTON, would not be wholly aban-
doned
w. P. G. Harding, governor of the
Federal Reserve Board, who had pre-
viously expressed himself as heartily
in favor of the ninety-day acceptance
plan, in addressing the committee yes
terday, suggested that it refrain from
decreeing "this shall be done" and
"this shall not be done," and instead
point out the general method which it
deemed advisable.
War Makes Changes Necessary
Having heard representatives of the
shippers, Of the spinners and of the
bankers speak each from their own
viewpoint, Mr.. Harding urged the COM
mitteemen to envisagc their problem
in relation to the larger problem of
the nation as whole, and indicated
that basic readjustments may have to
be made to meet the strain of war. The
fullest cooperation between buyer and
seller, he said, was needed to insure
that the utmost efficiency would be
obtained from every dollar. Referring
to the reluctance of special groups to
change the methods to which they had
by long experience become accustomed,
the governor declared that change was
imperative.
Mr.. Harding's appeal for broad,
patriotic stand lined up the various
members of the committee, and they
were soon ready for a vote. When
former Senator Burton read the orig
inal draft of the resolution he said:
"We have got to realize what we are
up against at this time. And 1t is
we'll for US to remember that what
helps others helps ourselves"
In answering the objection Of sew
eral of the Southerners present that
the ninety-day acceptance method
| Aho {n<n
dertakc to finance an operation which
was essentially the business Of the
mills, several men pointed out that
the inability to solve the problems un-
der consideration in a friendly, help
full way might lead to a clogging Of
i cotton in the markets. thing which,
they said, would be disastrous to the
current welfare Of the South.
The opposition to such radical
departure as abandoning completely
the sight draft for the ninety day
acceptance was very clearly articulated
by E. l.. Rice, banker, of Memphis,
Tenn. "My cotton accounts" Mr.. Rice
said, "are opposed to selling cotton on
sixty or ninety days acceptance. They
say that they will not be able to
continue business on that basis. The
mills, in receiving the cotton, get good
collateral, and it is their business to
finance the cotton after they get it.
"The banks of the South have done
their part up to the time when they
make drafts on New England mills. TO
make loans to the various factors at
home it is necessary for the Southern
banks to come to New York and borrow
money. After the cotton is shipped to
the mills the Southern banker needs
money, not credit. He needs not moro
credit, mind you. but, l repeat, money.
He does not deem it prudent to be tied
up for ninety days with contingent liza
bilities."
In response to the statement that the
spinners were trying to toss their own
burdens on the shoulders of the grow
ers, representative of the mills denied
that they expected the Southern bank
ers to finance their cotton, and added
that they would continue to buy cotton
in little towns, as they have done up
to the present, on the same terms. even
if they could not handle acceptances
He summarized the object Of the new
method of finance as an attempt to
make money easier to obtain and on
easier terms
Closer Cooperation Expected
The interchange of views In an in
formal way, according to the members
of the committee, did much to show
the various groups. the attitude of the
others and foreshadowed tighter CO.