New-York tribune., 1906-12-30
OLD SYSTEM UPHELD.
COTTON CONTRACT FAIR.
Exchange Members Defend Present
Method of Firing Prices.

Men prominent in the management of the New
| York Cotton Exchange yesterday defended Wig
| orously the present system of fixing prices for
| spot cotton. which has been in operation for
many years and which is now being attacked
by an influential section Of the exchanges mem
be-ship. 1t declared that the New York
cotton contract was not excelled for fairness by
, that in use in any other cotton market in the
world and that the substitution for the New
York system of one similar TO that of New Or
leans would make it possible for corners to be
worked in the local market Walter c. Hub
bard. president of the Cotton Exchange, said:
The entire spirit of the exchange is opposi-
ton TO corners. The early experience of the
exchange demonstrated that frequent reVfsons
OF the premiums and discounts made it possible
for the revision committee to put such prices
on or off, as 10 prevent the delivery Of cot
ton in this market, with the consequent loss to
those who had made contracts of delivery. The
present system makes such corners impossible.
and il also enables the exchange to facilitate
the delivery in New York Of all the cotton the
planters Will raise
EX-President Samuel T. Hubbard said:
The New York exchange adopted thirty years
ago policy of offering TO Southern growers
every facility for the delivery of all grades Of
cotton in this market. The purpose was two
fold 1t desired TO benefit the South and to
prevent corners in New York
More than fifteen years ago the New York ex-
change found It better to have the differences
in discounts and premiums settled twice a year.
or week to week. 1t was seen. furnished oppor-
tunities for very rapid changes in the value OF
cotton, delivered as the contracts changed In
composition from month to month. Therefore,
1t was considered preferable to have q world
esta blished value of the contract with reference
to differences as fixed in November Such reg
ulation It was felt would also be advantageous
in permitting the planter or shipper in the South
TO send cotton here With knowledge that there
would be difference in the rates for the va
rious grades between the time of shipment and
the receipt of the cotton here.
,Laa l0rye --Ici1,
tee OF five. which is the number in most of the
other markets at present. Now, committee OF
stitute quorum the committee is sometimes
controlled by two. I recall an instance when the
discount on q certain grade was lowered at the
urging Of q dealer who had accumulated all of
that grade there was in the country. The result
was heavy profit TO the dealer. Occurrences
OF this kind were frequent, and II was partly to
put stop to them that the present system was
established.
The system is similar to that on the Coffee
Exchange, which one thinks OF changing. 1t
is fairer to every man, grower, dealer, operator
spinner to have the trade, whole under
stand exactly under what scale of premiums or
discounts the cotton is to be delivered than to
have prices changed repeatedly at the discretion
OF any body of men whatever. 1t makes fixed
contract that is more acceptable TO bankers
than any other, and, in my opinion, is the fair
est and justest contract in the world.
At the corresponding period last year there
was unusual amount of high CRATE cotton in
the market, and there was objection because
the purchasers under the exchanges form OF
contract were oDllged TO pay q premium. NOW
there is criticism because discounts on the low
grades are not high e|ough. The differences
last year eventually adjusted themselves, and
have little doubt that there will be the same
result this year
It is not correct to consider the price arbi-
trary When, as this year, the greater part OF
the cotton is low grade, the weight of that cot
ton depresses the price of our contract.
That there has been a very large scarcity Of
high grade cotton is we'll known, the crop
having been seriously damaged by the Sc
storms in the Gulf territory The de-
mand has been much greater than the supply,
and dealers have been hard pressed to find a
sufficient quantity Of the staple of high class.
Two of the largest local houses, it was said yes
terday had been unable to get the high grade
cotton which they had contracted to deliver, and
It only by sending agents to the South,
and even to Egypt. that they could find the cot
ton required by them, for which they paid q
high price Other houses which had made con-
tracts TO deliver high grade cotton were unable
to make delivery and were obliged TO settle at
losses ranging from SO to $50 bale.
1t is understood that the Board of Managers
may decide to alter the existing system by al
lowing a revision Of the basing price in the
spring well IN the fall, the revision now
being made only In November.