The Daily Ardmoreite. [volume] (Ardmore, Okla.) 1893-current, 1920-09-05

tances for financing cotton growers IS
by the National Bank OF
iCommerce in New York as "a remedy
y for the hand-to-mouth crop-lien sys
tenn now in general use In its maga-
zine, Commerce Monthly, the bank
points out that cotton marketing re-
quirements heretofore have not shar-
ed in the country's credit resources
because the obligations of the gener-
ality of borrowers in this field have
not been suitable for negotiation IN
the open market. The burden OF mn
ancing has been concentrated on a
limited number of Southern banks.
Such a system has been responsible
in a large degree for compelling the
dumping of cotton on the market al
most as rapidly as it could be picked
and ginned.
The bank points out that means
of securing broader distribution OF
the burden has been provided by the
Federal Reserve system, which en-
ables 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 pro
vide certain simple requirements OF
the discount market One of the chlel
requirements the bank declares, Is a
uniform standard of quality OF ware
house receipts which viii enable banks
throughout the country safely to un-
dertake the execution OF acceptances
on cotton in storage
Requisite Conditions.
"There has been diversity and oft
en- laxity in business practices, as
well as an absence of uniformity
in the obligations and responsibilities
assumed by warehousemen, under
varying state warehousing laws, which
has caused banking institutions not
directly acquainted with the individ
ual warehousing concerns to hesitate
10 extend credit on the strength OF
their receipts" the bank declares
"On receiving request for a loan
against cotton. the bankers first con
cern is that there actually is cotton
behind the warehouse receipt. One OF
the most serious difficulties which
banks particularly those which are moi
in close touch with the situation
have found in the way of loaning
more freely against cotton receipts il
that they have never been able TO as
certain exactly what title to th'
cotton they had. In general 1t is true
that the holder of receipt is sub
ject 10 prior liens; and uncertainty al
to their nature and extent increases
the bankers hestancy in accepting
receipts as collateral, even though IL
practice the actual losses from de
fectiye title by reason of such lien
have been comparatively small. Tht
cotton Furthermore should be in th'
hands of reliable warehousemal
who should be Independent of the Dor
rover so that the latter cannot, whi
the receipt Is outstanding il th
hands OF a third party, obtain contro
over ;he cotton covered by it.
"a lending bank also desires assur
ance with r, Dect to the characte
of the warehouse in which the cottol
is stored. Apparently in only one stat
does the law define "A public ware
house and it provides that u ware
house may be lot or parcel O
ground enclosed with a lawful fence
the gates or entrance to which sha
be kept securely locked at night
Bankers naturally desire reasonabl
assurance that the receipts on whic
they are affording credit cover co
ton adequately protected from weatl
cr and depreciation, rather than cottO
stored in such a warehouse.
Uniform Warehouse Laws Needed.
"A reasonable method Of impro'
ing this situation would seem to b
the application OF fairly uniform law
concerning cotton warehousing wher
ever cotton Is stored. Two laws hay
already been formulated which, wer
their provisions uniformly and joint
applicable to cotton warehouses. woul
go toward establishing warehouse r.
ceipts on the high level OF the bi
of lading. These are the Uniforl
Warehouse Receipts Law. and the Fee
era Warehouse act adopted in 1911
The latter provides for Federal supe
vision and examination Of license
warehouses which take advantage
It's provisions. The Uniform Warehou,
Receipts Act. on the other hand.
concerned with putting the reccil
itself into proper form. making stan
ard the terms which Il ncorporat,
and the obligations assumed by Il
warehouseman. and making standal
also the conditions attending its tran
fer or negotiation. The two laws
will bc seen. are complimentary AZ
together cover adequately both aspcc
OF the warchousing situation.
As regards the uniform warehou
Receipts Act. there would seem 10
no valid reason why It's provision
should not be- In rporated in the
entirety in the stat. .es Of every stat
The Federal Warehouse Act s. n
compulsory. and warehouses have De-,
and probably will continue TO
SOW to avail themselves OF iis pr
visions because of the public sup,