Evening star. [volume] (Washington, D.C.) 1854-1972, 1907-01-03
FRAUD CHARGES FILED
Methods of New York Cotton
Exchange Arraigned.
ALLEGED FALSE QUOTATIONS
Grades of Product Said to Be Unfit
for Spinning.
INJURY TO TRADE CLAIMED
The Postmaster General Petitioned to
Bar the Organization From
the Mails.

Postmaster General Corteyou against the
| officials and members of the New York
| cotton exchange by Representative Liv-
| ingston of Georgia and Harvie Jorden, pres
| ident of the Southern Cotton Association Of
| Atlanta On the charges they flied they
| base request that the Post Office Depart
| ment issue a fraud order against the Of
| ticials and members of the New YORK
cotton exchange in order to bar them from
| the use of the United States mails in con-
| Quoting what the charges term fraudulent
practices. The Postmaster General after
going over the papers submitted to him,
| referred his callers to Judge Goodwin, as
| sistant attorney general for the Post ONCE
| Department. 1t is likely that hearing on
| the charges will be held by Judge Goodwin
before a determination Of the question Is
reached.
Charges Presented.
Following are the charges presented to
Mr.. Cortelyou:
a. We charge that New York city has
| ceased to be a commercial spot cotton
| market and that the New York cotton ex-
change operating under it's present debased
and fraudulent contracts, has developed
| into a purely speculative or gambling ex-
| change and that the grades of cotton snip
| ped to New York and tenderabie on the
contracts under the rules of the New YORK
cotton exchange cannot be used for COM
| mercial spinning purposes and that such
grades of cotton are used solely to depress
| the price of spinnable grades in the south.
| to further the speculative features OF the
| New York cotton exchange to the heavy
| detriment of the entire legitimate cotton
| trade of the United States.
80 We further charge that the said
| New York cotton exchange. through its
officers and members, is daily using the
| United States mails for the purpose OF
transmitting and advertising its business
| to the legitimate cotton trade Of the United
| States and we charge that said business Is
| fraudulent and said officials and members
| of the New York cotton exchange should
be denied the use of the United states
mails. We refer you to copies of letters
| hereto attached.
| 20. We further charge that the quota
tons sent out daily on the debased con-
! tract of the New York cotton exchange
exercise a predominating influence over
the legitimate cotton trade to its great
| detriment and injury.
Not the Real Market.
~ We further charge that New York
city has ceased to be spot cotton market
for commercial, spnnable grades Of cotton,
due to the present debased contracts Of the
| New York cotton exchange, and as proof
| of the charge We cite to you the tact th<at
| from the 1st day of September, 1905 to
December 81 1906, there was only delivered
| from that market lO,046 bales of spot cot
| ton to shippers out of a total of practically
| 100000 bales of American cotton placed
| upon the market of this country at other
points.
| %. We further charge that under the
present debased and fraudulent rules or
| the New York cotton exchange a large
number of unspinnable low grades Of cotton
are rendered on the contracts of said ex-
| change which are not permitted under the
rules of any other cotton exchange IN the
| world. and We affirm that such rules are
| fraudulent.
Alleged Fraudulent Prices.
IS. We charge further that the official
ant NIIOh
| States mails by the officers end members
| of the New York cotton exchange to their
| customers and others, both as to futures
and spot prices are fraudulent. in that
| neither represents the true and actual value
| of spot cotton, but that the same are from
IS to $3.50 per bale less than the market
price at which Spinnable grades of cotton
| could be purchased in the south and
| shipped to New York for tender on said
fraudulent contracts. In an exhibit at
| tached hereto we specifically call your at
| tention to the wide difference existing be-
| tween quotations of futures market and
spot market on December -, as existing In
| the New York cotton exchanged diner
| ence of 10 points, or SS.15 per bale, said
| difference clearly showing fraud. Your
| attention is also specifica--y called to the
| official quotations in said exhibit of the
| futures markets and spot market of the
New Orleans cotton exchange. noting the
| close proximity bet.yeen futures and spots
1 of that market.
| ~. We further charge that out of the ad-
| vertised stock of cotton at present stored
in the warehouses of New York city
| amounting to $4,000 bales-fully 10000
| bales of said cotton Is of such inferior
grades as to render the staple unfit for
| spinning or manufacturing purposes, and
| that d considerable portion of said cotton
| has been held in said warehouses tor years
| and is totally unfit for any purpose what
| ever, except to be rendered on the fraudu-
! lent contracts of the New York cotton ex-
| change to the serious detriment and injury
| H.. ~ ha mi ta1
| States.
Inspection Desired.
| 1--WE, therefore, ask that you ost-
| master General of the United States send
| a representative of your department. to the
! warehouses of New York city and have all
the cotton stored there inspected and
| graded in order to officially determine the
| character of the unspinnable and unmar-
| ketable grades of cotton stored in that mar
| ket to tender under the fraudulent contracts
| of the New York cotton exchange, the
! present practice of that exchange.
| Your petitioners further state that tney
| have no desire to jeopardize any legitimate
| transac tons that are made through any of
| the cotton exchanges of this country. This
| is no fight against the New York cotton
| exchange, exchange to be used for the
| purpose of safeguarding, protecting and
| furthering the legitimate cotton business of
| the whole country, but the charges here
| preferred and efforts made are directed
| solely against any and all debased and
| fraudulent contracts and transactions which
| are at present practiced by those who are
| in authority in making elective the present
| rules and methods of that exchange to the
| detriment and injury of the legitimate cot
| ton trade of the United States"
| In addition to the formal charges, many
| letters and affldavits in support of them
| were submitted to Postmaster General Cor
| telyou. Representative Livingston urged
! prompt and decisive action in the matter.
| and Mr. CorteIyou said the charges would
be given attention by the department.