The Birmingham age-herald., 1907-10-10
DEFENSE MADE OF
 COTTON EXCHANGE

Washington, october 9.-(Special)-ln an address before the cotton manufae- turers' convention which was in session at the New Willard hotel In this city the past week. MT. Marsh of New York delivered an address outlining the Eco homie Position of the New York Cotton Exchange and It's Relation to the Cotton Trade"
 Tt Is the fasihon to say that New York is not a natural cotton market and that the business of the New York cot ton exchange is mainly speculative" de- clared Mr. Marsh in opening his address. "The voice of the southern agitator Is heard in the land. declaring that the New York cotton exchange is part of the malev- olent machinery of Wall street that it is dominated by interruptions gamblers, and that it were better for all those hay- ing legitimate interest in cotton, whether as producers or as consumers, if the blight of it's malgn influence could once and for all be removed"
 Conditions Outlined.
 MT. Marsh met this statement by show ing the real position of the New orS cotton exchange in the cotton market He said it Is true that three-fourths I of the annual cotton crop of the United States is handled by members of the New York exchange. But it is also true, 1 he added, that the yearly transactions in actual spot cotton are larger in New York than in any southern market eX- cept New Orleans and possibly Memphis
 He gave a brief historical review of the manner of handling the cotton busi- ness in the past Before the war the cotton business in New York was simply one form of commission business exactly like the business of handling molasses sugar hides, etc. Money was advanced for handling the crop, either directly or through trusted southern correspondents and when the cotton was picked the planter sent it to New York to be sold by the commission merchants for their account. thus repaying the advance they had received and obtaining the balance in cash. Commissions, interest and ad- vances were what wound now be regarded as eXtortionately high.
 Effect of Civil War.
 The civil war upset this method of doing business, and there were no regu- lar shipments of cotton to New York from the south. The only source of sup ply was from cotton which the govern ment from time to time got hold Of through the capture of blockade runners or through confiscation in the south The huge profit made by some of those who bought this cotton was the real besIn- ming of general speculation in cotton in this country. Spectators began to buy not only actual cotton, but cotton tX- pected to arrive at some future dase. This was the beginning of the trade in cotton futures, which has gradually revo- lutionized the whole cotton business. This suggested a new way in which to handle the cotton business.
 Several years after the war this new conception took shape in the mind of MT. John Kew of Liverpool. He saw that the laying of the Atlantic cable al- lowed merchants in Liverpool to learn of actual prices of cotton in New York with unheard-of promptness. He saw that if the price that was being bid in Liverpool for "cotton to arrive" WAS high enough he could with profit buy cot ton in the south and sell contracts for cotton ito arrive" in Liverpool two or three months later with profit. This method permitted the cotton merchants in Liverpool to handle cotton on a safe basis, instead of highly speculative one. Mir. Kew s great success In these methods of doing business caused the merchants in New York to adopt them, ana m lSi0 and 1871 the Liverpool Cotton association and the New York cotton exchange were formed The system established in the beginning was enlarged and perfected with the result. Mr, Marsh declared, Of handling cotton at prices very much smaller than those which it had to bear in the old days of the cotton commission merchant This decreased cost of hand ling the product had benefited both the producer and the consumer.
 Declared Misconcep eption.
 It is a mlsconcepton of the function of the cotton exchange. he said, to believe that its chief business is speculative. He was satisfied that not 25 per cent of the transactions on the exchange are specu- latlve. The cotton exchange permits the distribution of the enormous risks of handling cotton over a vast nnmoer or men. The cotton industry means the risking of $2,000. coo 900 outside the capital invested in the farms and mills. The lis- tribution of the risk is accomplished through the contract for future delivery of cotton The exchange also allows the legitimate user of cotton to hodge by buying cotton for future delivery when he may need 1t. and permits the owner of the cotton to hedge by selling cot ton for future delivery This he re- garded as d legitimate transaction, pro- noting stability in business relations, and, in fact preventing great speculation. All in all, the exchange, in his opinion, Pio- notes substantial business interests, and heinz based upon credit. New York, as the great center of financial credit, IS the place for the location of the greatest