The Birmingham age-herald., 1908-05-29


 parts of his report, "The Operation If Cotton Exchanges of the United States" dealing with the classification of cotton,' and the range of grades deliverable on contract.
 The commissioner treats of conditions on the New York and New Orleans eX- changes, the only two markets in this country doing a future business. He has found that the methods of the two are radically different and that criticism oe both has been made He finds that in New York there is over-grading and over classifying in cotton, while in New Or leans there appears to be under-grading. The commissioner urges the adoption of system of uniform grades, if possibls, thus simplifying business and putting an end to serious abuses.
 The report considers at length the crit icisms directed at the large number of grades now deliverable on future con- tracts and Commissioner Smith says that the importance of the exchanges of New York and New Orleans and their effect on the cotton industry render it desirable that consideration be given to practical lines or improvement III IHellOuS.
 Complaints on Classification.
 The report in part is as follows
 The classification of cotton has been the source of a great deal of contro- versy. Dissatisfaction has been particu- larly pronounced in the case of deliv- cries on future contracts of the New York and New Orleans cotton exchanges, f..t.n future business is conducted. It is al legged that cotton intended for delivery on contract in New York has been sys- tematically overgraded. and also that considerable amount of cotton has been deliverable on contract there of such an inferior and nondescript character as really to have no commercial rating what ever. Complaints against the New Or leans cotton exchange are of the opposite character. namely, that the classification there has been too severe, and that cot ton which was clearly adapted to ordi- nary spinning purposes has been rejected by arbitrators when rendered on future contracts
 Diffifficulties in Classification. In considering these complaints it should be constantly borne in mind that the classification of cotton is not and cannot be- an exact science. The grade of a bale is usually established from a sample of only a few ounces. Since bale of 800 pounds represents the product of something like two and one-haf acres of land, a classification based on so small a sample may easily give rise to serious controversy. Furthermore, considerations apparently trifng may seriously affect l the judgment of a classer, as for tn- 1 stance, the shadow cast by a passing cloud. The grading depends almost ea- | tirely upon the personal judgment of the individual classers, among whom there are certain to be great differences in skill and experience.
 In the case of complaints from spin ners, the further consideration should pc kept in mind that cotton as classed for contract delivery is mainly graded on It's superficial appearance-that is, It's color and the amount of trash and dirt mixed with the fiber-rather than by me length, strength and general character of the staple. The latter considerations are exceedingly important in determin- ing the spinning value of the cotton as distinct from grade They are, however, so complex that they are to large ex- tent necessarily dsregarded in chasing cotton for delivery on exchange con tracts.
 Methods of Classification. In New Orleans the classification or contract cotton is left to arbitrators, who also adjust the price differences for the various grades.
 In New Orleans the samples sub ! mitted for arbitration are drawn in the presence of both the deliverer and receiver or their representatives, the receiver having the right to object to or protest" any bales which he | considers below contract grade. Either l party has the right to appeal to an | other set of arbitrators, also chosen by lot The New Orleans cotton ex- change assumes no responsibility for classification beyond the maintenance of types and the selection of arbi- trators.
 The classification of contract cotton in New York, on the other hand. Is entirely under the official control of the New York cotton exchange. The exchange has an inspection bureau which samples cotton intended for con- tract delivery, establishes it's grade, and issues a certificate of grade. Such certificate holds good for year, or until the cotton Is shipped from the port of New York, subject to a demand for reclassifcation by any holder not satisfied with the classification as originally established. The actual work of grading is performed by a classification committee consisting of five salaried employees of the exchange.
 Purchasers of cotton on contract in New York must take the cotton at the grade thus established by the classification committee and pay the | seller on that basis. As just stated | however, the purchaser has the right | to demand a new classification. If this | shows the cotton to be of a grade in- 1 ferior to that originally given 1t or be- l low the contract limit, the holder of the certificate has claim for reim- bursement from, the inspection fund | of the exchange. Such recla ssfcation, while in the nature of an appeal is conducted by the classification com mittee in the same manner as the orig