Memphis daily appeal. [volume] (Memphis, Tenn.) 1847-1886, 1882-03-10
COTTON GAMBLING.
How Good LiVings Are Made BY the
Transfer of Goods Which Have
No Actual Value.
Nine-Tenths of the Business of the New
York Cotton Exchange Speculation.
Otherwise Gambling.
New York Post

A cotton-broker was reported last week in
the EueHln9 Post attributing the recent
high price in cotton to wild speculation, in
which men, women and children took part.
A reporter of the EpeniH9 PoSt asked the same
gentleman this morning fer some account of
the methods employed in specializing in cot
ton on the New York Cotton Excha nge it
being generally acknowledged that nine
tenths of the business done there every day
is pure peculation-otherwise gambling.
at is fact" said this broker, (which is
more and more apparent to me the more /
see of this business-and / have been deal
ing in cotton Tor forty years-that there is no
such thing good Judgment in cotton spec
ulation. l have known men who have de-
voted themselves for years to compiling and
studying the statistics OF cotton fluctuations,
only to lose all their money by acting upon
their deductions. The ups and downs in cot
ton are due to no apprecis bic cause. Some
times when the shrewdest judges agree that
it must go up it will go down, and rice reysa.
You can also say that looking back over a
career OF forty years | cannot remember half
dozen spectators in cotton who have m ade
money aud kept 1t, and on the other hand l
have known scores of men who have made
fortunes and lost them because they were
unable to keep from specializing. Once
Spectator, always a speculation 1t is pure
gambling, and every one knsws that the vet
eran gambler cannot stop. | know three
men who have each made several fortunes
out OF cotton and lost them all again. Ex-
perience, shrewdness, knowledge of the mar
ket, all go for nothing in this business.
The Cotton Exchange came into existence
in 1871, when the old Merchants Exchange,
where the customhouse is now,lwas found too
small for the daily meetings of merchants.
Until the organization of the exchange, very
little speculative business was done Some
years ago the mania for buying and selling
cotton that did not exist, and in many cases
had not yet been grown, came into existence,
and has dwarfed all legitimate transactions.
The last report to the members of the ex-
change gives some notion of the proportion
which specializing in cotton has attained in
proportion to legitimate transactions During
the year ending Nav %, 1881, actual cotton
was sold as follows: For export, l43,262
bales; for spinning, Isl, 961 bales; for specu-
lation holding in store for a rise), II, 133
bales; in transit, 3l60 bales; total, 31O,516
bales, which represents the entire strictly
Legitimate business of the exchange During
the same period 26, 72l 500 bales were sold
and bought for future delivery-that is on
paper, no actual delivery of cotton taking
place. So that the actual cotton trans
actions bear to those on paper a proportion
of about one to seventy-6ve.
Gas l told you last week, cotton is quoted
at SO much pound in cents and hundreds
and quote cotton at 1884 a pound. We
recognize fifteen grades of cotton, as follows:
Strict ordinary, the poorest quoted; good Or
binary, strict good ordinary, low middling
strict low middling, middling, strict mid
ding, good middliDg, strict good middling,
middling fair, strict middling fair, strict fair,
fair, good fair, and fine. The last is used by
jewelers. and for such purposes. All cotton
contracts in which the quality is not men
toned are made on the basis of midding.
Cotton is divided broadly into two divisions
'nplands' and CULTS the former coming
from North and South Carolina-and Georgia,
and the rest from the gulf States and Ar
kansas. To the majority of brokers the
quality of cotton never enters into the cal
culation, for they have no more intention of
buying actual cotton than actual figs. An
expert is able to distinguish any one of the
grades mentioned from another, but the
average speculator or 'scalper'-they all call
themselves brokers, by the way-does not
know the best grade from the worst.
eve have four calls day, the cali being
an auction at which the auctioneer puts up
and asks for bids upon lots which members
desire to sell. The price obtained goes forth
the official quotation. All transactions
are made on the basis of 100 bales of mid
dlings weighing $1,000 pounds Brokers
charge 81 for selling or buying 100 bales for
a member OF the exchange, in case they give
up the real name of the buyer or seller. But
as many men do not wish to be known, and
refuse to allow the broker to disclose the
name of his principal, the broker has to
assume the contract, and charges 81 80 for it.
To outsiders broker charges Sl2 so for buy
ing aud So so for selling each 100 bales, or
S25 for the turn as it is called. The man who
buys 100 bales on speculation has to sell them
again, of course. The margin required by
brokers Is 1928 for 100 bales. A change of
one point, or hundredth of cent, in the
market ia equivalent TO 81 80 on the 100
bales-one- hundredth OF a cent a pound on
40 900 pounds. If cotton falls fifty points
from 1850 to 210 for instance fiuctua-
ton that is not unknown, the entire margin
of the unfortunate speculator is wiped out,
and unless he is able to put up more money,
or, in the slang of the exchange, put up
more margin, his 100 bales are sold out. A
lively day on the exchange is characterized
by fluctuations of at least thirty points; we
had one day last week when there was a
change in value of thirty-fve points. On
the quietest day of the year the variation
may not exceed three points.
at will naturally be asked, How do the
thousands of cotton spectators make a liv-
ing? Where do their profits come from?
From the whole country; from all the lambs
who want to speculate without being on the
ground. The scalper watches the market on
the spot as a cat watches a mouse. When
it goes up or down enough poiats to enable
him to make $40 or $50 upon the fictitious
100 bales of cotton that he passes his life in
selling and buying back again, he closes out
the transaction and pockets the money. Some |
days he wins, some days he loses, but being |
on the spot, ready TO take immediate advan- |
tage of any chance change in value, he |
makes living out OF the outside lambs in |
the long run"