COTTON WAREHOUSES. 3 
and insured, but they are not always able to advance these necessary 
funds. Even in years when prices are satisfactory, and but little 
cotton is held, it takes enormous sums of money to finance the mar- 
keting of the crop, and when the market is unsatisfactory and many 
persons wish to hold their cotton for better prices, it is almost im- 
possible for the present banking institutions to supply the necessary 
funds. The farmer frequently has no operating capital and that of 
the bank is limited. Consequently, when a market for cotton prac- 
tically disappears, it is impossible for the banks of the cotton- 
producing section to meet their obligations. , Success in developing 
an adequate and efficient system of storage houses depends largely 
upon obtaining sufficient capital to finance the cotton crop. Many 
letters from bankers, warehousemen, and business men generally, 
indicate an entire willingness and even eagerness on their part to 
erect storage houses of sufficient capacity, if only money could be 
obtained in order to enable farmers and others to hold cotton. 
It would seem that the banks would increase their capital stock 
to such an extent that they would be in position to advance all the 
funds needed.y But it must be remembered here, as stated in con- 
nection with storing cotton, that it is only when the market is un- 
satisfactory that the farmer needs to hold his cotton and therefore 
needs an unusual amount of capital. The banks, of course, can not 
keep on hand unlimited funds to meet this occasional demand. It 
also must be remembered that the farmer is not always reasonable 
in his demand for funds at such a time. When cotton is bringing 
13 or 14 cents per pound he often sells his crop as fast as it is ginned 
without reference to the disastrous effect it may have on the market, 
spends the proceeds, and devotes all his energies to raising a large 
crop the following year. While the cotton is growing he spends for 
his supplies on the basis of a full crop for which he expects to receive 
the maximum price. When, because of overproduction or unusual 
pressure on the market, the price falls appreciably, he finds that the 
merchant’s equity in the cotton is greater than its cash value. He 
then expects the banks to advance him money on the basis of the 
prices that prevailed when conditions were favorable, or perhaps on 
the cost of production. While cotton is recognized as the best col- 
lateral it will not be accepted by business men on such conditions. 
Bankers and other southern business men believe that cotton when 
properly stored and insured is the very best collateral. The most 
substantial bankers state definitely that they prefer it to real estate, 
and will advance funds on it as readily as on Government bonds. 
When making the survey of Georgia and North Carolina special 
efforts were made to determine whether the bankers in general 
regarded cotton as desirable collateral. They were practically unani- 
mous in their opinion that it is the very best that can be offered. 
