The Leader, enterprise and press. (Fitzgerald, Ga.) 1915-1921, 1920-09-22
hCO..rihNCES
URGED TO AID
COTTON LOANS
Would Make Country's Credit
Resources Available to Grow
ers ard Tighten Burden on
Southern Banks.
UNIFORM WAREHOUSlNG
LAWS ARE NECESSARY
National Bank of Commerce In New
York Says Discount Market Re-
quires Standard Receipt Which
Will Protect Loans.

| New York as a remedy for the hand
eral use. In it's 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-
tons Of the generality of borrowers in
this field have not been suitable for
negotiation in the open market. The
burden of financing has been concen-
trated on a limited number of South
ern banks. Such system has been
responsible in large degree for COM
polling the dumping of cotton on the
market almost as rapidly as 1t could
be picked and ginned.
The bank points out that means of
securing broader distribution Of the
burden 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.
e"There has been a diversity and
often a laxity in business practices,
as well 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 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
~ against cotton receipts is that they
have never been able to ascertain ex-
actly 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
of such liens have been comparatively
small. The cotton, furthermore,
should be in the hands Of a reliable
warehouseman, who should be indie
pendent of the borrower, so that the
latter cannot, while the receipt Ia out
standing in the hands Of third party.
obtain control over the cotton covered
by 1t.
Uniform Warehouse Laws Needed.
"A reasonable method of improving
this situation would seem to be the
application of fairly uniform laws con-
corning cotton warehousing wherever
cotton is stored. Two laws have al
ready been formulated watch. were
their provisions uniformly aad Jointly
applicable to cotton warehouses.
would 60 far toward establishing
warehouse receipts on the high level
Of the bill Of lading. These are the
Uniform Warehouse Receipts Law and
the Federal Warehouse Act adopted
in 1915 The latter provides for Fed
eral supervision and examination of
licensed warehouses which take ad-
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 1t
incorporates and the obligations as
sumed by the warehouseman, and
making standard also the conditions
attending it's transfer or negotiation.
"As regards the Uniform Ware
house Receipts Act, there would seem
to be no valid reason why its provi-
sions should not be Incorporated in
their entirety IN the statutes Of every
state. The Federal Warehouse Act IL
not compulsory, and warehouses have
been, and probably will continue to be,
slow to avail themselves Of Its provi.
sions because Of the public supervision
for which 1t provides. A remedy
might be found either In the estab.
lishment Of similar system Of public
supervision by the respective states
or In q provision In state laws that
| all public warehouses be required to
obtain federal licenses, the latter
method being decidedly preferable be.
cadse Of the greater uniformity II
would insure"