Cotton Exported. Neal Barrett, Clarence Harwood, Lawson Keene, Jim Ned English, Joe White, Hunt Watson, Chas. B. White, Geo. MatIn 1913 the United States produced thews, Ted Whitlock, Robin Pate, Louis 14,159,078 bales of cotton. We exported Gissel, Russell Crow, Richard Rector. 8,800,966 bales that year, and our doPorters: Henry Reeves, Henry Mat-mestic spinners used 5,786.330 bales. tison, Joe Gordon, John Merriwether, The total value of the cotton exported Milton Nobles, Alonzo Harrison, Robert for the year 1913 was $547,357,195, and Robinson, T. W. Williams, Chas. Jack the average price received for upland son, Zeke Williams, Fred White; Green cotton was about 12 cents per pound. Penn, porter for Dr. Cunningham. MESSAGE FROM THE GOVERNOR. Of cotton exported, Great Britain took 3,563,216 bales; Germany, 2,350,761, and France 1,014,834 bales-these three Mr. J. T. Bowman, private secretary countries taking almost four-fifths of to the Governor, appeared at the bar the total quantity exported. In addiof the House, and, being duly announced, tion, Russia took 70,625; Belgium, 214,presented a message from the Governor, and Austria-Hungary, 109,202 which was read to the House as follows: bales; in fact, all the cotton we exportGovernor's Office, ed went to the countries now at war, except 1,391,695 bales. Austin, Texas, August 24, 1914. Gentlemen of the Senate and House of Representatives: 245, Other Farm Exports. I regret the necessity for calling you In addition to cotton, those engaged from your homes and pleasant vacations in productive agriculture supplied the at this season of the year. Nothing but home markets in 1913, and furnished considerations of the highest obligations for export $28,800,500 worth of corn; induced me to convene the Legislature in extra session. I trust your labors will soon be completed, and that under the duty we owe the people, it will be a pleasure for us to discharge it. Extraordinary events beyond our control have produced a crisis in our business affairs, which our State and nation is but poorly prepared to meet. During the last twenty days the most powerful and progressive nations of Europe have engaged in war, thus practically stopping our intercourse and commerce with them. $13,206,247 worth of oats; $53,171,537 worth of flour; $89,060,428 worth of wheat; $17,338,117 worth of beef products; $114,853,303 worth of hog products, a total of $316,440,136, as against $547,353,195 worth of cotton exported. These figures show that cotton constitutes 63 per cent of the productive agricultural exports of the United States. Our cotton has been the means of the United States maintaining the balance of trade in her favor for many years. Yet the growers of this commodity have had but scant consideration, out of the great avalanche of legislation, for their protection against such a crisis as is now pending. Texas to Do Its Duty. Great Britain, France, Germany, Russia, Austria-Hungary and Belgium are .the biggest buyers of American cotton, as well as the principal owners of the ships which have carried it from our shores to theirs for manufacture. These nations are now at war, and their ships To aid in meeting this crisis is the for the most part have been impressed object of your coming together at this for national service, and those not in time. It is proper for Texas to take such use are refusing to take cargoes the lead in any effort to do this, as she on account of the war hazard. Our cot- has taken the lead in other great moveton crop for this year is practically ments in recent years, and point the made, and the harvest season is upon way to other States and to the nation. us; the world's cotton markets are The statesman who can not see that closed against us, and cotton is unsal- the State, and the nation, must make able except in small lots and at prices provision to care for such situations as that will be ruinous to farmers, and now confronts us, is blind to the progto bankers, and business generally. A ress of events, and their requirements condition exists which must be met by and remedies, and will have to give way practical and effective measures; theo-to those who can see and have the courries will not meet the needs of the age to meet and provide for such emerpeople under the present emergency. gencies. The Home Market. The National Banks. Our domestic spinners take but a lit- The capital and surplus of Texas natle more than one-third of our cotton tional banks amounts to $78,191,408; production. Of course, it is to be ex- capital, $52,046,580, and surplus of $26,pected that they will consume more of 626,780, and currency to the amount of the raw material under existing condi- 125 per cent of this total would give tions than otherwise, because the nations them the right to issue bank notes to the extent of $97,739,408. They have at peace will have to look to us to sup- already issued, on bonds of the United ply what they have heretofore been buy- States, $23,626,780, and if they had ing of the manufactured product from bonds to deposit as required, could issue the nations now at war. Even under emergency currency to the extent of $74,this condition it is estimated that we 112,480 increase. But as they have only will not have a home market for more $5,637,942 of bonds available and can than one-half of this year's crop. Un- only issue 30 per cent of their capital less we can provide a way to store and and surplus by the deposit of commerhold that portion of our cotton crop cial paper, the maximum amount of which domestic spinners will not re-emergency currency the national banks quire, these home buyers will not only of Texas could issue under existing curbe able to buy all they need at the re- rency laws would be $29,095,364. It will duced price, but they will be willing to cost an average of $10 per bale to have pay for the "distress" cotton the cotton picked, and if picking three forced upon the market, but it will leave million bales is paid for, at this price it will take thirty million dollars-or the part of the crop not otherwise submore than the emergency currency the ject to export, as surplus and a drug national banks can issue under existupon the market. ing law, to pay for the picking of threefourths of the Texas crop. This serves to show how little relief we can expect Emergency Currency. that is Of course the issuance of currency is a function of the Federal and not of the State government. But we should use all the influence we can possibly exert to induce the Federal government to co-operate with the State, by proper amendments to currency legislation, to help meet the crisis now upon us. This we can do by the prompt passage of laws providing for a system of public warehouses and bonded warehouses, bills for which have been carefully prepared, and submitted herewith, and which will be referred to further. from the present currency law to meet The State Banks. Some ten days or more ago the Secretary of the Treasury advised the Dallas Currency Association that State banks would not be allowed to issue emergency currency under the AldrichI deem it not out of place to refer Vreeland act, and amendments, though to present currency laws, and what is the Act of August 4 provides that eliknown as the amendment of August 4gible State banks-those having a capto the "Aldrich-Vreeland law." This ital of $25,000 or over-might avail amendment provides that national banks themselves of the act if they joined a may organize "currency associations" and for emergency purposes such banks may issue bank notes to the extent of 125 per cent of their unimpaired capital stock and surplus, on certain bonds being deposited with the treasury. It permits the issuance of only 30 per cent increase, or emergency currency, on the unimpaired capital stock and surplus of banks, upon the deposit of commercial paper. Texas banks, national and State, have very few bonds and therefore would have to rely upon the other provision of the law to increase their issue of emergency currency. currency association within fifteen days after the passage of the act. On the 18th instant we telegraphed to the Secretary of the Treasury asking this privilege for Texas State banks. On the 20th he replied saying these banks could have taken advantage of the act within fifteen days after the amended act was approved, and that he was not to blame if they had not done so. We called his attention to his telegram to the Dallas urrency Association, and on Saturday last I received a further telegram from the Secretary of the Treasury saying that "there is nothing to preclude eli gible State banks from applying for membership in Federal reserve system and no time limit for doing so." State banks are eligible to membership in the Federal reserve system, which provides for regional banks, but our State banks are cut off from the benefits of the Act of August 4, but they ought not to be. Capital Should Be Available. There are 410 State banks and trust companies in Texas with capital of $25,000 and over. They have a combined capital of $28,148,000, and a surplus of $5,600,975, or a total of $33, the 740,975. There are 248 other State banks which by transferring their sur plus to capital would give them the $25,000 required to make them eligible. These have a combined capital and surplus of $21,587,936. Adding the two together would give $55,328,911 of banking capital in Texas which is denied participation in the benefits of the Act of August 4th, which could be utilized to increase the circulating medium for the present emergency to almost as great an extent as the national banks. An amendment to the Act of August 4th amending the Aldrich-Vreeland act is now pending before the Committee on Banking in United States Senate, and it proposes to allow banks to issue emergency currency based on commercial paper to the extent of 75 per cent of the unimpaired capital and surplus of banks. If this were passed and the State banks that are eligible were admitted to the benefits of such an amendment, the emergency currency the national banks could issue under it would be $47, 677,665, and $41,526,681 by the State banks, or a total of $89,204,346, whereas under existing law the most that can be issued is less than thirty million-not enough to pay for picking the cotton crop. Needed Federal Legislation. bill has passed Congress appropriating twenty-five million dollars to charter ships to carry commerce, and another appropriating five million dollars to pay insurance on same, and I can see no reason in principle, or good policy, why the same care should not be taken to aid the producer of our wealth in a crisis like this. A bill with this object in view, too, is pending in Congress, and if it should be passed would solve the whole difficulty we in the agricultural States are now laboring under. The act amending the Federal Reserve Act, approved August 4th, imposes a tax of 3 per cent on the emergency currency issued by any bank under the provisions of said amendment. Warehouse receipts for cotton and wheat, endorsed by the State government, or secured by bond and insurance, is certainly as good security as ordinary commercial paper, and better, and it would be within good sound business discretion to provide that banks might issue emergency currency, on such warehouse receipts, at rates of interest not to exceed 4 per cent. I have recited the foregoing facts, and tried to elucidate them briefly, that you might better understand the urgent need of the legislation you have been convened to consider and hereinafter recommended. Its prompt enactment would have a wholesome influence upon the Congress of the United States in considering these changes in the emergency currency act now pending before their committees. Public Warehouses. To meet the emergency for warehouse protection and guarantee, I recommend that a system of public warehouses be provided for and established without delay. This will, as already suggested, in my view of the situation, greatly relieve the situation by furnishing a safe warehouse system under State protection. It will inspire confidence by banks in the security and besides will aid largely in securing a change in the currency laws so as to make such warehouse receipts the basis for issuing emergency currency. I recommend that the Legislature memorialize Congress to pass such an amendment to the Aldrich-Vreeland Act as amended by the amendment approved It may be urged by some that the by the President August 4, 1914. State ought not to go into the wareIn fact, personally, I think the Fed-house business. Why should it not do eral currency legislation should be so so now to meet this emergency? Can amended as to provide that the govern- not the State itself do what it creates ment would allow banks to issue emer- corporations to do? A corporation is gency currency on warehouse receipts but an artificial person, created by law, for cotton, and elevator receipts for to do that which the government itself wheat, where guaranteed by the State, has the power to do. The policy of it, or secured by bonds and insurance. A under different circumstances, might furnish grounds for argument, but there is no question of the State's power and right to do so. The policy of it ought not to be questioned at this time, for is there not urgent need? Has not the State failed in the past to provide any adequate warehouse system? Any system intended for immediate benefits, now, without the State behind it to push it, would fall short of the public emergency which must be considered. The dependent farmer must be considered; the banker lending money upon cotton and grain must be considered; security of the receipts issued against them must be taken into account-the general welfare calls for action, not quibblings over pride of individual opinion. A law which will force the establishment of safe places to store cotton is what is needed now. We cannot afford to depend upon one which will wait for the voluntary association of individuals with their capital, in establishing them. Carefully Considered. Foreseeing this need, the Legislature was called in extra session to consider it. For several years I have given the question careful consideration. Eight years' service on the Railroad Commission, in dealing with the rate problem, the compressing and handling of cotton, brought me into full realization of the poverty of our laws relating to the care of and handling of the greatest money crop in the country. Legislation on the subject of its protection, safe handling and warehousing, has been shamefully neglected, and if we do not profit now by the practical lesson before us, we shall lose opportunity to be of the great est service to our glorious State and her people. If we come to the rescue now, with adequate guarantees by the State, and then the Federal government closes its credit to the security we offer it, and to banks chartered by Federal and State authority, and calamity follows, by the sacrifice of values in our staple product, the State government will at least have done its duty, and the blame for disaster will rest elsewhere. Emergency Bill. of the Attorney General reviewing the main provisions of the proposed law, and this was done, not that I expect the members of the Legislature to accept the details of a bill embodying my views, however carefully prepared, but that they might have a measure at least worthy of thoughtful attention by them, upon which they could at once proceed to deliberate, with the hope of speedier action and conclusion of their labor. The measure is by no means intended as "dictation," but "recommendation." The bill provides that the law shall be administered by the Commissioner of Banking and Insurance. The proposed statute follows in large measure the lines of the State banking law, and clothes the Commissioner of Banking and Insurance with ample power and means to carry the law into immediate and practical effect. I shall not attempt to recite all its provisions. But it is deemed more practical to employ the organized machinery of a department already organized in enforcing the law, than to create new officers to administer it. The emergencies calling for the bill are stated in the first section of it. Some Objections Offered. This Of course it was not expected that there would be no objections offered to the bill. The ginners may object to the tax of 10 cents per bale imposed upon them as an occupation tax. plan was hit upon as the most feasible way to raise money to carry the law completely and successfully into effect. Some such plan will have to be used to get the money; it can't be obtained now from the tax levy, for all the revenues provided for by this year's tax levy and for next have already been appropriated by the Legislature at a previous session. The Ginners' Tax. It was believed that this occupation tax of 10 cents per bale, together with the appropriation of $100,000, which the bill carries, would almost pay the cost of necessary warehouse expenses throughout the State under this emergency act. If it is not collected from the ginners, it must be collected from the farmers or whoever stores the cot warehouses. If it is collected After a most careful consideration of ton in the State controlled and superthe question, at my request, the Attor-vised ney General's Department has prepared from the latter source, then it must an emergency warehouse measure, be collected in advance to get ready which I submit herewith as part of cash to meet these expenses. In draftthis message. I also attach an opinion ing the bill we adopted the most rea sonable and certain means of securing the money necessary to pay warehouse expenses and cost of insurance of the cotton. I believe, after careful consideration, the ginners themselves will concede the wisdom of this course. It should be remembered that this is an emergency measure, and the man who is unwilling to concede something himself to aid in carrying out a plan intending so much good to the whole public may find himself, in times of need, confronted with an uncharitable public sentiment demanding more drastic measures to contend with. Some may contend that the money which it is proposed to collect by this occupation tax on ginners should be appropriated out of the treasury and taxed against the people. You should not, in considering this course, overlook the fact that the taxes levied for this year are due in October, and are needed to meet the current expenses of the State. Besides, these taxes will have to be paid by the same cotton producers that we have met here to aid. If he is not able to sell his cotton, how is he going to pay his taxes? If you increase those taxes, you will only add to his difficulties. The banks have given notice that, under present conditions, they can and will advance money to pay for gathering and ginning the cotton. The ginner, therefore, will be protected by cash payments for his services as a ginner, even under the distressed conditions. Why should he complain if the State exacts a small sum from him, to help meet the crisis we are now dealing with? Buying Warehouses. Objection may also be urged against the bill by owners of private warehouses, but this objection, like that of the ginners, is a selfish one. If we are to be controlled in this emergency by the general public good, selfish reasons, or personal aggrandizement, will not be permitted to defeat legislation so much desired for the public welfare. re desired. If he does not secure that co-operation from the people in towns wanting a warehouse, the Commissioner may exercise his discretion and not establish one where it is not wanted. The cities and towns are authorized to cooperate with the Commissioner of Banking and Insurance in the establishment of warehouses, and may use money in their general funds to buy warehouses with, or to build them. Section 4 of the bill also provides that, before establishing a warehouse in any city or town, the Commissioner may require the citizens, represented by some sponsible committee, to agree to pay all or any part of the cost of establishing and operating a warehouse. I believe that there are hundreds of towns in Texas who will be glad to thus co-operate with the Commissioner of Banking and Insurance, either leasing or buying warehouses, to enable the State to carry out the purposes of the proposed law. If the citizens of any city or town raise the money for that purpose, or if the city government of any city or town appropriates the money from their general fund for that purpose, and offer it to the Commissioner to buy or build a suitable public warehouse, why should the Commissioner not be authorized to do so? But I shall not lengthen this message by a further discussion of the provisions of the emergency bill. I predict if you will pass it that the people of this State will never consent to its repeal. The emergency is upon us: we ought to meet that emergency with the very best law we can frame-one that will respond to the needs of the hour and give security and protection. Bonded Warehouse Law. recomA com At the First Called Session of the Thirty-third Legislature, mended warehouse legislation. prehensive bill was prepared at that time and introduced, providing for bonded warehouses. Since that time this same bill, which provides for a The provision in the bill authorizing system of bonded warehouses with prothe Banking and Insurance Commis- visions for marketing of farm and ranch sioner to "buy or lease" buildings for products, has been slightly revised and warehouses was for the purpose of giv- endorsed by the Farmers' Union. This, ing him ample power to provide ware- too, is one of the subjects you are house room at once at places where it called to consider. A copy of the bill is desired. It is presumed that the referred to, with some revision and imCommissioner will not have to buy any provements, is attached to this message house for such purpose. We rather an- and made a part hereof. The proviticipate that he will have the co-operation of the people in every town where a State' controlled warehouse is sions of this measure ought to be fairly well understood by the members of the Legislature, and I will not take up your |