The Leader, enterprise and press. (Fitzgerald, Ga.) 1915-1921, 1920-10-13
Would Make County's Credit
Resources Available to Grow
ers and Tighten Burden on
Southern Banks.
UNIFORM WAREHOUSING
LAWS ARE NECESSARY
National Bank of Commerce in New
/'Tork Says Discount Market Re-
quires Standard Receipt Which
Will Protect Loans.

The use of bank acceptances for
financing cotton growers is advocated
by the National Bank of Commerce in
New York as a remedy for the hand
tQmouth crop-lien system now in gen.
, eral use. In its magazine, Commerce
Monthly, the bank points out that cot
ton marketing requirements hereto.
fore have not shared in the country's
credit resources because the obliga-
this field have not been suitable for
negotiation in the open market. The
burden Of financing has been concen-
trated on limited number of South
ern banks. Such a system has been
responsible in large degree for COM
polling the dumping Of cotton on the
market almost as rapidly as it could
be picked and ginned.
The bank points out that a means of
securing a broader distribution of the
buNlen has been provided by the Fed
eral reserve system, which enables
member banks both to rediscount
loans and to execute acceptances,
which are particularly suitable for
general negotiation. The success of
this remedy, however, depends largely
on the ability of borrowers to provide
certain simple requirements Of the
discount market. One Of the chief re-
quirements, the bank declares, is q
uniform standard Of quality Of ware
house receipts, which will enable
banks throughout the country safely
to undertake the execution Of accept
ancEs on cotton in storage.
Requisite Conditions.
SThere has been a diversity and
ofnHp a laxity in business practices,
IgNeh as an absence Of uniformity in
the obligations and responsibilities as
Sumed by warehousemen, under vary
ing state warehousing laws, which has
caused banking institutions not di.
rectly acquainted with the individual
warehousing concerns to hesitate to
extend credit on the strength Of their
receipts" the bank declares. "On re-
ceiving a request for loan against
cotton the bankers first concern is
that there actually is cotton behind
the warehouse receipt. One of the
most serious difficulties which banks,
particularly those which are not in close
local touch with the situation, have
found in the way of lOaning more free
ly against cotton receipts is that they
have never been able to ascertain ex-
actiy what title to the cotton they had.
In general it. is true that the holder of
a receipt is subject to prior liens, and
uncertainty as to their nature and ex-
tent Increases the bankers hesitancy
In accepting receipts as collateral,
even though in practice the actual
losses from defective title by reason
or such liens have been comparatively
small The cotton, furthermore,
should be in the hands of reliable
warehOuSeman, who should be indie
pendent of the borrower, SO that the
latter cannot, while the receipt is out
standing in the hands Of third party,
obtain control over the cotton covered
1by it.
Uniform Warehouse Laws Needed.
"A reasonable method of improving
this situation would seem to be the
application of fairly uniform laws con-
4 corning cotton warehOusing wherever
& cotton Is stored. Two laws have al
ready been formulated which, were
their provisions uniformly and Jointly
applicable to cotton warehouses,
would go far toward establishing
w&-,house receipts on the high level
Of the bill of lading. These are the
! Uniform Warehouse Receipts Law and
q the Federal Warehouse Act adopted
& In 1915. The latter provides for Fed
. eral supervision and examination OF
4 licensed warehouses which take adj
vantage Of its provisions. The Uni
form Warehouse Receipts Act, on the
other hand, is concerned with putting
the receipt itself into proper form,
making standard the terms which It
incorporates and the obligations as
sumed by the warehouseman, and
making standard also the conditions
extending it's transfer or negotiation.
LAS regards the Uniform Ware
house Receipts Act, there would seem
to be no valid reason why Its provi-
Ions should not be Incorporated in
their entirety in the statutes Of every
4tate. The Federal Warehouse Act is
bot compulsory, and warehouses have
been, and probably will continue to be,
Tow to avail themselves Of It's provi-
sl4epns because Of the public supervision
4 for which it provides. A remedy
s might be found either in the estab-
lishment Of a similar system of public
supervision by the respective states,
or IN a provision in state laws that
all NN,blc warehouses be required to
obtaSNt federal licenses, the latter
meth being decidedly preferable be-
Cats |of the greater uniformity 1t
would Insure