COTTON WAREHOUSES. 5 



many of them failed to meet their obligations, thus making it 

 especially hard on the merchant. When the price is unusually low, 

 as in the present emergency, the merchant can not afford to "close 

 out " the tenant. The cotton, if thrown on the market, would not 

 bring enough to settle the account. If the merchant insisted on 

 selling the cotton he necessarily would lose much of the money due 

 him. 



It is equally true that the local banker is helpless in such a situa- 

 tion. His bank advances some money to local merchants and some 

 to the farmers. He has borrowed most of this money from some 

 larger institution which is usually located outside of the cotton- 

 producing section. He is supposed to pay this money back at the 

 time that cotton is picked. When the farmer fails to meet his obli- 

 gation the merchant naturally finds it difficult to pay his banker. 

 Then the local banker is dependent upon the mercy of the larger 

 institution. 



A well-organized system of cotton warehouses would be of the 

 greatest assistance to the farmer, the supply merchant, and the local 

 banker in financing the cotton crop, especially in tiding over an 

 emergency. There is a serious need for warehouses whose receipts 

 would be accepted as an absolute guarantee that a certain amount 

 of cotton of a definite grade and in marketable condition had been 

 stored with the warehouse company. Under such conditions it 

 would be very easy for the farmer to store his cotton and offer the 

 receipts to his supply merchant as collateral for extending the time 

 in which his account must be paid. The merchant in turn could 

 surrender these receipts to the local banker and extend the time of 

 his loan. The local banker would then use these receipts in a similar 

 way to extend the time of his loan with the larger institution. In 

 practically every instance the large banker would be glad to extend 

 the time of payment when these receipts were offered as collateral. 

 In many instances the rate of interest would be greatly reduced. 

 This is one of the very important functions of an efficient system of 

 warehouses, and the need of such a system is extremely urgent. 



GENERAL DISCUSSION OF STORAGE FACILITIES. 



It will be shown (Table VII, p. 17) that the warehouses now in 

 use are entirely ample in total storage capacity when we consider the 

 South as a whole. The investigations indicate that if all storage 

 houses, including those belonging to cotton mills in the cotton-growing 

 States, were used, every bale of an average crop could be stored. 

 There is never a year when there is a demand for this amount of 

 storage space. Some cotton is always shipped direct from the gins 

 through the compresses to New England and to Europe. Some is 



