The Montgomery advertiser., 1908-05-29
Bureau of Corporations Criticises
 Speculation in Cotton by Exchanges

no provision for the rejection. or such mitteJ are not required to test the soundness or strength of cotton. but simply to grade is In accordance with spect to color and the amount, of dirt and othar foreign matter. While there Is no specific rule on this point, how eyer: 1t is clearly improper for the clas- certifcated stock cotton of distinctly perished. staple and consequently of an unmerchan antable character.
 Exchange likewise, contain no specific provision for rejecting extremely weak or so-called perished staple cotton. The stated. stfpulates that no cotton shall be deliverable which has less market value than good ordinary of fair. color. Extremely weak or perished staple cot this provision. Furthermore, since in New Orleans the receiver as well as the delfverer is represented at the time the samples are drawn, and since the protest any samples which he consid- CTS below the contract limit. the ab- sence of q specific provision from the rules Of the New Orleans Cotton Ex- change for the rejection of cotton. of extremely weak staple is much less i'm portant than in the case of New York. where the receiver of cotton has abso- lutely no voice in the original classi- fication. A certificate system under which the inspscti,1,n b1rsau .Ss oSsiaiy cotton involves responsibilities which do not obtain where the grading Is left to arbitration. These facts, and the New Orleans classification. instead of charging undue laxity. are generally to the effect that classification in that market has been unduly severe. make the absence of specific provisions fof the rejection of extremely weak staple cotton in New Orleans a matter of sec-
 Nevertheless. 1t is desirable that both exchanges specifically provide for the rejection of cotton of distinctly weak staple. Similarly. 1t Is desirable that in other respects the characteristics of contract. Al. the present time too much latitude Is left to classification com mittee and arbitrators.
 Use of Working Types.
 Another suggestion relative to clas- sifcation in both the New York and New Orleans markets Is that those who perform the actual work of classifca- tion should be compelled to keep con- stantly before them the standard types present time this Is not invariably done in either exchange. The standard. types fin both markets are kept in room bitration is performed. but actual ref erence to such standards is left to the discretion of the classers It is alIeg- ed that failure to refer regularly to these standard types has been repson- sible kor many errors in classification in both markets Some classers. 1t is true. have contended that constant or even frequent reference to the standard types was not necessary, be- cause of the expertness of, the ciassers. 1t was argued that reference to such stsndards was no more necessary than learned to read. In view. however, of constant reference to the standard the very frequent discrepancies in clas- sification, and the admitted differences of opinion even among experts, 1t would appear that more frequent or even types of the respective exchanges is see how rule compellig constant ref erenas 10 such types could possibly be . disadvanyage, while it could hardly fail to result in the main. in more se-
 It also seems desirable that the New York Cotton Exchange adopt working types for the half grades fin white cot at snq aSs 0 New ae s change maintains types for such half grades in. wa1tte cotton. On the other hand. the spot quotation committee in New Orleans does not quote prices for these half grades. but the delivery value of such half grades is fixed half way between the quoted differences for such half grades by the spot quotation committee of tbs New Orleans Cotton Exchange would be an improvement over the present method. Methods of Appeal and ReeIasaihcatIOA At New York.
 It has also been urged that instead of submitting apeSls from ciassiheS- entire classification committed. which includes the members who originally chased the cotton, such appeals and re- classfhcations also, should lie entirely with an independent committee. The present practice has been very gener- ally condemned. On the other hand. ken to an independent set of arbi- tratore. reclassifications often show such wide divergence from the original awards as to occasion doubt as to whe- This Is partly due, no doubt, to the fact that in New Orleans appeals are taken to a very small body of arbitrators, whereas the chief advantage in appeal in the case of cotton appears to lie in securing the judgment of a larger num- Der of persons, thereby eliminating as far as possible the personal equation of the Individual. On the whole, 1t is a question whether an appeal to an independent body would be an improve ment over the New York system. par ticularly since there Is reason to be- lieve that efforts to improve the work of the classification committed at New York, as a result of recent complaints. will go far to insure greater accuracy. IL 1S QOuOtLuI Wn0Iner any WOuAu be gained by excluding those members of the committee who originally passed on the cotton from participation in re- classitcation... It might. however. he desirable, while permitting those mem bers to be present. to prohibit them from voting.
 Proposed Resort to Arbitration for TIuged and Stained Cotton. The establishment of official stand ards for tinged and stained cottons Is a subject of much controversy Most 1 tempt to establish standards for such cottons orSto quote such irregular grades at specific prices. The estab- nshment of arbitrary standards for such cottons and the fixing of differ ences for them on contract deliveries | are regarded by some as among the most objectionable practices of the New York Cotton Exchange, and 1t Is urged that the grade of and the differences | ternained bY arbitration. There are some practical difnculties in combining a system of arbitration with the cer- | tificat te system, and if these can not be | overcome, the simplest solution appears l to be by the absolute exclusion of a l still larger number of such tinged and stained grades from the privilege of contract delivery.
 | Identification of Individual Bales at New York. . Another suggested charge of great l in the New York stock shall be identi-
 fled on the grade certificates so that the
 receiver of a given lot of cotton can | instantly know which particular o1Ies | are of each grade. The absence .oI such practice at Jew York; has, in tne ne