Tensas gazette. [volume] (St. Joseph, La.) 1886-current, 1908-04-03
BUCKET SHOPS AND COTTON EXCHANGES
Their Wide Divergence. "A Clear Dis
tintion Made Between the Bucket
Shop and the Properly Con.
Quoted Cotton Exchange.
Strong Letter by Col.
l.. Majors.
NEW ORLEANS, March 10, 1908.

public welfare Is at stake and all friends OF
Louisiana and of the South's cotton Industry
are anxious to see none but wise, helpful and
wholesome laws enacted. During many years
past have worked continuously In behalf OF
cotton, and have devoted my entire time
and fortune to uphold cotton values. The
experience has given me a perfectly clear
insight into the influences for and against
the interests Of the staple. Possibly you are
not familiar with the modern method of Gre
ating the largest practical requirement for
raw cotton In advance Of production. without
fixing in advance the price the farmer is to
receive for his spots; the part future trading
plays; the total absence of connection be-
tween bucket shop and a properly conduct
ed cotton exchange, and the millions of dol
lars annually saved to the farmer by reason
of reduced commissions, reduced interest
charges, fewer mortgages, and the compar-
alive ease with which n cash market may
always be found.
A number of bills affecting the cotton mark
ct are going to be introduced in the Louisia-
ma Legislature. shall not ask you to favor
or oppose any of them, but would like to
place before you certain facts which should
prove OF value to you in forming your own
conclusions.
In the first place there is no relationship
whatever between a bucket shop and cot
ton exchange except in the minds Of unin-
formed people. The bucket shop should be
driven out completely and by well consid-
cred bill which deals with bucket shop pro-
hibition only. This bill should include no
other idea and no other subject. 1t should
be brief and to the point and there should
be no confusion about 1t. On this scope every
man in the State should agree save only the
bucket shop proprietors who, OF course, will
attempt to muddy the waters in the hope OF
defeating all hostile laws.
There are many bucket shops In louisiana
Such places are purely gambling institutions.
Their customers do not buy and sell cotton
for future delivery, but merely bet the pro-
prietor that quotations on the legitimate ex-
change for cotton will advance or decline.
as the case may be. 1t is a very easy matter
to frame a law which will drive them out.
Consideration Of the cotton exchange is
quite another matter and should be accom-
panied by the most careful inquiry into and
investigation of the facts concerning its func-
ton and the part 1t plays as an aid to profit
able commerce before anything is decided
upon. As a nation we all suffer to greater
extent from Ill advised laws than do the peo-
pie of any other country on the face of the
globe. We have more dead letter laws on
our statute books than has any other nation,
and more laws which are aot and never will
be enforced because they are not susceptible
OF practical application.
The producer and all other people In the
cotton growing states will thrive and pros
per most when all the civilized people Of the
world wear all the clothes made from Ameri-
can cotton they can afford. The purchase of
six shirts a year instead Of five by 500 900 200
men means an additional consumption of
several million bales of raw cotton. In order
to bring about this increased use OF shirts
and other goods retail merchants all over
the world must be encouraged by wholesale
merchants to buy literally. The wholesalers
in turn must be spurred on by the weavers
and their agents. The weaver must be en-
couraged by the spinners. and the spinners
by the raw cotton supply merchants who
contract months ahead of production to de-
liver the grades and quantities of cotton the
spinner will then need. Contracting ahead
is the greatest aid modern commerce knows.
But the supply merchant could not contract
aheadto,dellver spot cotton, which he must
go to the farmer and buy when delivery time
comes unless he could charge . profit big
enough to protect him against loss should
cotton advance or unless he could find some
financially reliable man willing to sell him
cotton in advance Of delivery.
Under the modern market system this Is
what happens:
/ The supply merchant signs up a contract
/ to deliver to the spinner, say 1000 bales OF
middling cotton In December at the market
price Of say 10 cents. Then In the open mark.
et he buys 1000 bales of December futures as
a hedge. Suppose when December comes
| the price Of middling spots has gone to Il
cents, the price Of December futures will also
have advanced a corresponding two cents a
pound. Thus the supply merchant may call
for the cotton due him on his futures and de-
liver 1t to the spinner, or he may sell his fu-
lures to some one else for two cents pound
profit and go into the spot market and buy
selected middling spots at . loss Of two cents
a pound "a profit the farmer receives) and
deliver 1t to the spinner, making a satisfac.
| tory profit because he has risked nothing)
Of only his commission, or say so cents'a bale.
The man from whom.he bought his future
hedge may have been farmer who had cot.
ton he wanted to deliver, a merchant who
had bought spot cotton and wantedto avoid
the danger of loss by reason Of price fuctu.
ations and who sold hedge against 1t, OF
a speculator who believed the crop was large
and trade small and that when delivery day
came he could buy spot cotton from the
farmer at less than 10 cents for middling
which cotton he could tender on his contract
When the supply merchant sells out hi;
hedge, the man who buysit takes his place
and assumes all his responsibilities, and al
the end of the delivery monthnamed all out
standing futures, of which the above may
be one, must be settled by the delivery OF
actual cotton which somebody must buy from
the farmer. There Is norway to avoid this
responsibility. II man has sold short
and tires of his bargain he must find some
other man willing to take his, place. because
the cotton exchange never permits any man
to avoid the responsibility imposed by the
terms Of his contract.
This system is of huge benefit to farmer.
merchant, banker and spinner II encourages
spinners to consume more cotton, bankers
TO advance more loans, steamship companies
to build larger ships, merchants to do more
business. and yet 1t does not In any way re-
strict the farmer from organizing, or ware
housing, or Withholding his cotton from the
market, or doing all within the power Of the
producer to advance values and keep them
up. A man may sell futures short" at s