The Montgomery advertiser., 1908-05-29
BUREAU OF CORPORATIONS CRI77CLSES
 SPECULATION N COTTON BY EXCHANGES

It's segregation Into even-running lots tor consumpton.
 There should certainly be system of uniform grades throughout ths greatly simplify the business and stop q number of abuses. The practlcatt dihiculties in the way of arriving at such system are considerable. ana probably the best that can be done at present Is to. make a persistent eIioIe H to approach gradually such an ideal es near as may be-
 Very numerous criticisms have also been directed at the large number or grades now deliverable on future con. tracts on both cotton exchanges. n must always be remembered that the buyer of future contract has no option as to grades. He must take whatever the selles chooses to deiiveg deliverable on New York and New Orleans contract, covering very wide range. In practice 1t frequentiy happens that deliveries on a single contract embrace ten different grades and half grades, so that lots thus deIiy- cred are often greatly mixed Ihis IS true both in New orleans and In New York: though not to so great an extent in she former place.
 So far. as spfnners are concerned. the practical certainty of receiving several different kinds of cotton on one contract makes 1t impossible Tor changes. The, rang of quality Of cotton which can ordinarily De useo owing to the mechanical restrictions of his mill and the requirements or his particular custom. So limited, indeed, is this spfnners' range that it is wholly out of the question to so restrict tre range of grades on ex- changes as to make this contract gen, eralfy acceptable to spinners, and still maintain practical future market. The spinner will probably always buy directly through spot transactions, although he should be able to use the exchange for hedging purposes
 | It is obvious that the more mixed delivery Is the less desirable 1t is. | It has happened. that sellers Of con- ! tracts have deliberately tendered lots | of very indiscriminate character TOT the purpose of forcing the buyer to sell out his contract rather than re- ceive the cotton, making it possible for the seller to buy in the contract at profit; The present wide range or l On the other hand, there must De a considerable range of grades, as, unlike certain other great staples.
 difference in the quality of a given | crop of cotton; there is. also a demand | for most if not all. oe these grades.
 This is often expressed in the phrase l that "the contract must be broad en-
 ough to take care of the crop.
 The contract must also be broad en- | ough to induce general trading there | on and thus furnish the broad market | necessary to fusfll the true functions I of an exchange. There Is no reason able obligation, however, to take care l of that crop which. is for most pur- 1 of very low grades of such unmer- chantablr or unspinnable cotton into
 the exchange stocks creates several 1 evils. The effect of such cotton is to | depress the price of future contracts, and this tends to affect unfavorably
 the value of the entire crop. the great i bulk of which Is of much better quality It is certainly wholly improper that a
 small fraction of very low-grade cot
 ton should be allowed on exchange
 contracts if 1t has such effect. The
 extent of this particular efect, how
 later part. Secondly. this iow-gradt
 cotton is the cause of by far the great