Excerpt from Financing Agriculture: Address of Eugene Meyer, Jr. Before the State Bank Division of the American Bankers Association, New York, October 2, 1922

The collapse in agriculture and in the banking situation in the agricultural districts was characterized by an attempt to collect loans on farm commodities in too short a period. It was marked also by a fundamental change in the attitude and practice of the foreign buyer, brought about by theeconomic situation in Europe. This is strikingly illustrated by the figures for the movement of export cotton. Before the war it was the custom of the European cotton merchant to purchase, during or shortly after the harvest, his require ments for the year; and approximately 80 per cent of our annual cotton exports went forward in the six months from September to February. But changed economic conditions, and especially the violent fluctations in international ex! Changes, made it impossible for him to contract ahead for large supplies and he was compelled to buy on a hand-to mouth basis, laying in sufficient stocks only to meet current needs. As a consequence, since the war only about 50 per cent of our cotton exports have been going forward in these same months. In other words, from to bales, which ordinarily would have been exported during the period from September to February, had to be carried over into the second six months' period.

Failure to understand this radical change in conditions and to provide means for storing and financing the cotton in this country had a disastrous effect. Neither the Ameri can producers nor the country banks were prepared to assume the extra burden. Indeed, there was no adequate machinery for meeting such a contingency. As a result, a disorderly collapse occurred in the cotton market and several thousand banks in the cotton growing sections became dangerously in volved. Their correspondent banks in the larger centers were likewise embarrassed through inability to collect loans. And, in a more or less similar way, from various interrelated causes, the markets for wheat and hogs and cattle and sheep became demoralized, with identical effect on the banking institutions and producers of the West.

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