The Washington herald., 1919-06-18
BOSTON WANTS
COTTON MONEY
Purchase of D. c. Bank Ef.
fort to Get Southern Ex-
change, Says Holland.

one Of the trust institutions of that
city has bought the control OF
large. perhaps the largest. bank In
Washington Heretofore, banking
interests outside OF washington
have ventured to secure influential
relations with one or more Wash-
ington banks. and capital furnished
by a citizen Of New York established
q trust company in Washington. But
there is no record made heretofore
of any attempt by Boston banking
capital to secure control of a bank
ing institution at Washington.
without explanation. this action
would seem like a long jump ana
in fact an unusual. even exceptional
one, for a Boston institution to take
But the readdustments In business.
Industry ard commerce which are
now in progress seem to have favor
ably affe1ted Boston banking inter-
ests. ting managers there perceivins
opportunities which until these days
Of redd ADJUSTMENTS did not exist
One of the explanations given for
- the purchase of the controlling in
terest IN an influential Washington
bank by a Boston institution has
reference to the financing Of the
cotton yield of the South. The
presumption is that the Boston bank
which has taken this step believes
that a large amount of fore gE ex-
change drawn against shipments o.
cotton may conveniently. ami per-
haps ecopomically. be handled by a
washington bank Having secured
exchange in large amount. and
thereby established new financial
relations with the nearby cotton in
dustry Of the South. the exchange
can then be sent over to the Boston
institution
Out After Cotton Exchange.
This would look like an attempt to
gain some of the business in cotton
exchange which has heretofore been
so largely held by New York banks
When Max May was dealing in for
eign exchange for one OF the largest
trust institutions of the world-the
Guaranty of New York-he probably
bought and handled for his corporation
a larger amount of cotton bills than
were dealt in by any other banking in
stitution in the United States. In one
year. according to fairly credible re-
ports, May handled approximately two
thirds of all the bills drawn against
shipments of cotton from the South.
Whatever the exact amount of these
dealings was in one year they were
acknowledged by banking authorities
to have been the largest at that time
which were dealt in by any American
bank.
A Profitable Business.
The purchase and sale OF cotton
bills. If wisely carried on. is always
profitable to the bank which does IL,
and also fairly satisfactory to the
cotton men who draw the bills. Now
with that fact in mind. and with the
presumed probability that Washing
ton can gain a considerable share of
this business and then transfer it to
Boston. the inference is that this can
be secured at the expense of New
York. At all events. the undertaking
shows how eagerly and actively Bos-
ton is awakening to the possibility of
sharing in some of the momentous op-
portunities that are now arising.
There have been earnest attempts
to take away from New York some
part Of the business which the city
has in great measure obtained ana
held in foreign exchange and in COL
lateral items Some years ago Chi
cago bankers undertook to gain. at
the expense of New York. a consid-
cradle business in foreign exchange
The Chicago bank secured $500. .O0O. 900
in gold. 1t made advertisement OF
that accumulation of gold which was
TO be made available for exchange
transactions. The announcement
caused considerable excitement, and
it was reported that throngs gath
cred around the windows Of the bank
so that they might read with pleas
ure and with wonder the statement
that the bank had this large accumu-
lation of gold and was made ready
thereby to begin competition with
New York for certain kinds OF bank
fnG business. But the attempt was
not long-lived. No more gold went
To Chicago for that purpose. and rr
there were any competition the New
York bankers did not recognize ii, or.
if they did. made no reference to it
Undoubtedly. with the quickenins
Of the seaboard ports OF the South
much the larger part of the cotton
designed for foreign markets will bs
shipped from the Southern ports
This may have been one OF the
reasons which led the Boston insti-
tuition to secure control, as reported.
Of a Washington bank. for the prox-
unity of Washington to the Southern
ports would seem to give the Capital
some advantage
What Cotton Bills Can Do.
Bills drawn against the shipment OF
cotton constitute a very large part OF
the foreign exchange which originates
in the United States. probably not so
large a part as bills brought against
the shipment OF wheat. although more
regular, more steady than wheat bills
They have also served greatly to aid
the United States in times Of serious
financial embarrassment
The only time the late j. P. Morgan
was forced to stand with his back to
the wall was in the days when he
strove desperately to fulfil his pledge
to President Cleveland to prevent the
export of gold. and in that way TO pro-
tect the gold that was In the United
States Treasury. To do this Morgan
was compelled to buy all the exchange
which the market offered. He even
secured the markets. communicating
with New Orleans. Mobile. Galveston.
in order to secure all the cotton bills
which the exporters were drawing. In
this way he did at last obtain foreign
exchange in sufficient amounts to meet
the demands for American gold. and
kept his pledge to President Cleve-
land. although the cost to himself was
heavy.
Cotton stabilizes Money.
Again in 1907. when panic pre-
vailed and the danger was great of
something like national bankruptcy
of American industry. James Still
man. who was at that time presi-
dent of the National City Bank, in
structed his executive. who dealt
in foreign exchange. to buy all of