The Covington leader. (Covington, Tenn.) 18??-current, 1920-08-26
BUSINESS IN SOUTH
IS MUCH BETTER
WALL STREET BANKERS NO
LONGER BOSS 1T
Bank Reserve Act Cause Of South
Coming Into Its Own-Easy For
Southern Farmers to Negotiate
Loans NOw-Quite a Marked Diff
ference Now and Twenty Years Ago
Some Bank Resource Figures.


ference Now and Twenty Years Ago
Some Bank Resource Figures.
Under the above title Samnel Crow
Their presents an interesting study Of
the reconstruction of American BUSH
ness under the federal reserve bank
ing act in the current issue of Worlds
Work, laying special attention as it
happens on the improvement of bust
ness and agricultural conditions in the
South.
Previous to the advent of Demo-
cratic administration into Washington
in 1918, and the subsequent passage
Of the reserve act, it might have been
aid that we were owned by New York
bankers. There were innumerable
small business men and farmers in the
South and elsewhere who held the
titles and thought they were the own
ers; but the first financial crisis that
came along showed them that they
were at the mercy of monied men else
where and that their rights to prop
erty existed on sufferance if they con-
tinued to exist at all.
For lack of credit in the South bust
ness was cabinned, cribbed and con-
fined, The cotton farmer could not
60 into the banks and borrow on his
crop. The banks did not have much
credit to give under. the old law, and
there was little certainty about the
price the farmer could get for his
staple after the spectators on the
New York Cotton exchange got
through with it. So he had to carry
a continuous account with the local
s,orekeeper, who managed to keep
him thoroughly in his debt,
1t was. a hand-to-mouth existence
for business generally. And when the
credit system, always inadequate, was
strained little more than usual, the
New York bankers, in whom the
mony power was centralized, grew
timid and withdrew what credit they
already had out, with the result that
their state Of mind was echoed in the
ruinous nationwide ''panic."
The banks Of the South today would
hardly claim kin with the banks of 20
years ago, they are so much bigger,
brighter, better" AT that TIME the
total banking resources in the South
were $35O,00O.00O; but now these have
increased tenfold to a total greater
than $3,5OO,0O0,0O0.
New England and the solid South
have exactly changed places in their
comparative financial importance
under the new freedom which the
South enjoys. New England, which
used to control l6 per cent. Of the
total banking resources of the coun-
try, and new subsidies to less than
seven per cent; while the South,
which used to figure seven and one
half per cent, now controls Is per
cent.
Prosperity has come to all the sec
tons since the reserve act took them
out from under the thumb of the New
York manipulators, but none other is
like the golden prosperity that has
come to the South. We are Americas
ploudest exhibit when she would point
out her industrial achievements.
Mr.. Crowther gives space to the
personal history Of a Southern bust
ness man before and after the South
tried the tonic properties Of the fed
elal reserve act. We quore nart Of
this gentleman's remarks:
"The old type of Southern banker
was a banker in name only. Really,
he was note shaver and pawnbroker,
and the borrower usually got what
stuck tosthe rungs Of the ladder as the
loan was poured through II. If you
had asked him for loan on pfomis-
DRY note. he would have thought you
were crazy. He had more belief in
fairies than he had in character. His
middle name was collateral Today
there is new type of banker who is
not lending on cotton or on chattel
mortgages. but on character. The cot
ton crop is no longer held in pawn
broking shops at wicked interest rates;
it is held by the planters, and al
though the New York Cotton ex-
change may break the price Of cotton,
they get precious little cotton At the
broken price. for the Southern banks
are using their own money, and they
are not lending on cotton but on char
acter. Hence they care comparatively
little about the market price. The
plan er, not being concerned. will not
sell far below what he thinks is the
true worth. In the last year there
have been at least three attempts to
smash the price Of cotton, but cotton
is not down. Memphis Scimitar.