The sun. [volume] (New York [N.Y.]) 1833-1916, 1906-12-30
DEFEND
PRESENT SYSTEM ALE RIGHT,
SAYS PRESIDENT HUBBARD.

Ex-prcs:ccnt Agrees T ut the Pre- yaiinx
Method OF Revising Quotations Is All
Right. but tho Agitation Continues
some Heavy Losses Recently.
Tit controversy in the Cotton Exchange
over the revision OF quotations for spot cot
ton and the criticisms made by advocates
Of a reform in methods elected yesterday
vigorous defencss Of the management and
arguments justifying the present system.
Various officers OF the exchange insisted
that the New York contract was the fair
est in the world and that the system could
not be changed to that OF New Orleans, for
instance, without leaving the market sus-
oeptible TO corners that would throw the
whole trade into confusion or disaster.
The entire spirit OF the exchange said
Walter c. Hubbard, the president, is oppo-
sition to corners. Early experience demon
strated that frequent visions Of the pre-
miums and discounts made il possible for
the revision committee to put such prices
on or of as to prevent the delivery of
cotton in this market with tho consequent
loss 10 those who had made contracts OF
delivery. The present system makes such
corners impossible, and II also enables the
exchange to facilitate the delivery in New
York Of all the cotton the planters will
raise"
THE New York exchange said Samuel
T. Hubbard, a former president of the
exchange. adopted thirty years ago a
policy OF Offering to Southern growers
every facility for the delivery OF all grades
of cotton in this market, The purpose was
twofold. 1t was desired to benefit the
South and to prevent corners in New York.
More han fifteen years ago the New
York exchange found it better to have the
differences in discounts and premiums
settled twice a year. The change in diff
ferences from month to month or week
to week, It was seen, furnished o%pportuni-
ties for very rapid changes in the value
of cotton delivered. Therefore it was oon-
sidered preferable to have a world estab-
lished value OF the contract with reference
10 differences as fixed in November. Such
regulation, il was felt, would also be ad-
~vantageous in permitting the planter or
shipper in the South to send cotton here
with knowledge that there would be no diff
ference in the rates for the various grades
between the time of shipment and the re-
ceipt OF the cotton here.
I'm the early lays there was a revision
committee OF five, which is the lumber in
most OF the other markets at present. Now,
a committee OF five Ia controlled by three
and since three constitute a quorum the
committee Is sometimes controlled by two,
I recall in my experience an instance when
the discount on a various grade was low
cred at the urging OF n dealer who had ac-
cumulated all Of that grade there was in the
country The result was a heavy proft
20 the dealer. Occurrences OF this kind
were frequent and 1t was partly to put a
stop TO them that the present system was
established.
at the corresponding period last year
there was an unusual amount OF high
grade cotton in the market and there was
objection because the purchasers under the
exchanges form OF contract were Obliged
% pay a premium. Nov there Is criticism
because discounts on the low grades are
not high enough. The differences last
year eventually adjusted themselves and l
have little doubt that there will be the same
result this year.
aIt. is not correct to consider the price
arbitrary. When, as this year, the greater
part of the cotton is low grade the weight
Of that cotton depresses the price OF our
contract, which OF course Is based on mid
ding"
The only chance, II was learned, that is
now under consideration by the manage
ment is tha OF maidnS three revisions a
year. Two revisions, September and No
vember, are permitted now, but as a matter
Of practice there is but ono revision, that
third revision is in March. Mr.. Hubbard
said there would doubtless be a long argu-
ment before the change is made.
The agitation on the part OF southern
growers rs ~dtITDubcu ny 5Otuc ~ VI
the exchange to Haryie Jordan and Rich
ard Cheatham. the president and secretary
OF the Southern Cotton Growers Associa-
ton. A letter sent two weeks 9 from
Memphis was shown yesterday in which
the prediction was made that Messrs.
Cheatham and Jordan were about to go
cunning for the Cotton Exchange. II. was
said in the letter that Washington was TO
be the scene Of their operations.
Remarkably heavy losses, It became
known yesterday, nave been sustained by
cotton men who contracted to deliver the
highest grades. While the supply OF these
grades is the smallest in years the de-
mand ia the heaviest. Some big houses
after the Gulf storms had injured the crop
bought at any price they could whatever
high grade cotton was obtainable IN the
south and in Egypt. Others, who did not
tske this course, were forced 70 settle
In come cases at a loss az high as $50 a bale.
Los YES of SO to $40 a bale were common:
Another difficulty cotton men in TINS city
have labored under is the high insurance
rate since the San Francisco ire. The
rate, though easing some now, has been as
high as g per cent. OF the valne OF the cotton
stored. The high rate has led to the re-
construction of warehouses, q matter IN
volving great expense. Insurance under
writer's have agreed to reduce the rate to
a. cents per 81 900 when the improvements