The Dillon herald. [volume] (Dillon, S.C.) 1894-????, 1919-09-25
KING PIN OF FINANCE
COTTON BASIS OF FOREIGN EX.
CHANGE REGULATION.


COTTON BASIS OF FOREIGN En-
CHANGE REGULATION.
i Europe Pays Big Price for Cotton; +;
But Most of the Profit is Raked Off
4 by Exchange MISUNDERSTANDING.
<ers Could Protect Themselves II
They Would Go at the Matter in
4 the Right Way.
The following letter from Hon.
John L. McLaurin OF Bennettsvllle,
addressed to Hon. Mack King of An
derson, under date Of September IL
contains late information in connec-
ton with the financing of cotton that
is worth while:
Yours quoting from a speech
made in Anderson in 1916 as follows:
Cotton went down first, it will be
the last to rise and remain up lon
ger than any other commodity" You
ask my opinion now. 1t is the same
as then expressed. In 1916 price
fixing" was unknown, as well as the
threats by war industries board. In
the long run government authority
cannot permanently overturn natural
economic law. Ultimately the price OF
cotton will be fixed by the volume of
money in circulation and the supply
and demand for cotton. AS to wheth-
er or not the farmer will get the ben
eft sure to come from the unrestrict-
ed operation of these laws depends
upon his intelligence and the means
at his disposal to carry his cotton dur
ing the period of readjustment
through which We are passing. i hope
that the cotton association under the
able leadership of Mr.. Wannamaker
will help us. 1t is complicated sit
Iation with which we are confronted.
King Cotton.
The south has natural monopoly
in the production of cotton. Some day
We will comprehend and utilize it,
when We do, our section Swill be a
dominating figure in world finance.
Up to 1914, our cotton crop was
the main factor in the nations bal
ance of foreign trade, but it never
did the south much good except in
directly. When war was declared the
! throne was usurped by war material
and food. The present situation is
a struggle by king cotton to regain
his lost throne. The price of cotton is
largely a matter of utilizing credits.
Up to the state warehouse develop
ment cotton was a good basis OF
credit in eyerybody's hands except
the man who grew it. Now 1t is a
better credit in the hands of the far
mer. than anyone else. This Is splen
did basis from which to work. 1t is
not generally knowa, but in section
13 of the Federal Reserve act. the
farmer can discount rent notes and
crop. mortgages as well as actual cot
ton. We lack the proper machinery
to use these securities to pay the ex-
pense of the coming crop. II we did
this, it would tighten the load on the
actual cotton in the spring.
Direct Sales.
am more firmly convinced than
ever in my life. that the development
of a statewarehouse system in every
cotton state is the only effective solu-
tion of the problem. 1t was great
step to go as far as we did in enab-
ling the farmer to hold his cotton,
borrow money. and pay his debts, but
fafter all cotton is made to sell and
anot to store. The middlemen are get
ting too much of the profits. In this
country they make as high as $50 per
bale profit on long staple. 1T doesn't
matter where the price goes under
the present system, the middlemen
get more clear profit from handling
the cotton than the farmer does from
growing 1t. I hoped to add the direct
sales to state warehouse but / could
not move one step without state in
surance on stored cotton and bank
in connection with the system; those
interested in making money, out OF
existing conditions had sufficient po-
litical power to prevent me from get
ting the legislation that l needed. I
refused to remain commissioner
merely to store cotton and finance it.
= What Might Have Been.
Let us suppose. ! could have Sc
cured this legislation, what could be
hdone today.
The world is clamoring for raw cot
ton. There are plenty of ships to car
ry it abroad, the only difficulty is
that Europe is unable to pay and
lacks the credit. There is no machin-
cry through which this credit can be
extended.
The rate of foreign exchange is
prohibited. Gold for exchange has
practically ceased to move from this
country for commercial purposes. We
are being throttled by the available
gold Of the world being dumped up
on us for war materials. The proud
sterling is normally 1856. 1t is now
around. s4.20. This means that II an
English mill purchases 100000
worth Of cotton the discount would
be about $4,000. II it was Ger
man merchant the discount would be
Is per cent. because the mark now
sells in New York for s cents This