The times dispatch. [volume] (Richmond, Va.) 1903-1914, 1908-05-04

price of future contracts yvap+ u,sl,riv
1 cent. the manufactures. unrid itnss .
cents a pound IN his spot cotton p,,r-
clIases. and gain oniv cent On hi.
futures. a net loss or 1 cent n mound.
1t Isl of course possible that tI,e par.
ity might so vary that the hedge would
give a net profit instead OF a loss f5tit
such profit Ia a speculative one and Ia
In conflict with the Fundamental theory
of hedging which is Intended TO elm
mate the speculative factor The man
who hedges does so to remove himself
from the speculative class. II he se-
cures protection against speculative
losses, he has no right to speculative
profits.
Fixed differences are an attenlpt t. sab
stantlally to render future transactions
a sure thing Tor i1mliedj class OF
speculative experts. The system
amounts to an attempt apsolutely 10
TX prices--an economic ansurai,y, Inc
relative value OF dl,terent sraaes are
as n,uch sup'ect 70 me ra s.,' laws 9.
supply ana ueHanu t's W. stii,.o tiol
lnlaa,lls eottoi. l.se,l, any, a., ~ - ss US US
Teasonhpie 10 attelhpl 70 IN ol'e ny llio
iia ~, Oh coill,'.tee as ~ IS .he otneI.
,.. s fssu -. os .nis a.,ehp.' a. anoSe
snom w, - 20 a.eu. ens nasls p,rse anas
20 n,,r,,. I -. az ~, .n.a.'.
! dirncti,, -, thosa Ell, ~ - ,s,t ar.ssas = :
,.arts ttsaIr ~. t,,a,..,, n' ~, ,.,,.
mice of ,ha contrart mi mi. ind,rect
action results IN great loss to asyast
| body OF persons who are not experts
and who do not understand this arti- !
| fetal machinery or its results BY
compelling operators in futures to cen.
slider probable conflicts between tho
two sets of differences, as well as pos
sible variations in the price OF nilddling
cotton itself an unnecessary increase
IN trading risks is introduced.
This is clearly an evil. The system
results in shifting the burden of,srisk
from limited class of experts to-
lnonspeculative class. or to those igno-
rant Oh the WORKING or the SYSTEM. ~
4 premium Is thus put on intelligence
applied to artificial conditions, which.
OF course, Is OF no"service' to the pub-
|lic. rather than on; intelligence applied
solely to forecasting the actual coirdi-
tions of supply and. demand In the
same way. the system tends to. shift
the burden of risk from sellers -Npon
buyers. Clearey. a great ADVANTAGE. ia
i given the seller. from the fact that,he
i can offer ON. contract anv Irrade ne
| chooses He shnu,d not have hofh All.
nriviIaro ana M. nri,,;,ah,a ~ .;,.,,i 4.
i trarilv fxal d,ffaren.as ,,,,,;,t, ~.
invorIob,,. ,,,ar,,ai,a o..,aI,, : -,
r,a ras,,,+ ~ ~ t,as.,a . . i,s
.,,, - -, -. ~ so,,a,H
~ ~ e ssl'e -. al, . On
eAAaii "o '"ntase 'set- tis' ou '!' 81. ~.
4 Caused Failure. 800
The foregoing criticisms were ;strik-
ingly illustrated, in November. 1906,
as the result of the failure OF the New
York revision committee to establish
correct differences. Owing to abnor-
NAL weather conditions, the CONNER
cial values Of the lower grades of cot
ton fell very sharply from tho nrice of
middlinr The ,ray;sion com,;,i;tsa
5 foiInd ~ ,ai,,.t i .,a.a,, s;Tensa...s..
taitha o.,,a, t,,,,s,i ~. .,Ii,.s,
1iSseranras for ,a,,s ~. IL ,,ia,, 49,.
haaviIy o~er,,a,,o, .5 sr"es "'''si
As . ros,,,t H .he 80, 80. .,oo
yu.,. 'u i,. .uluie So.a.inet plieo
a. a. NcM ioiN u.oppea aprupe,y from
r,enaons ,os. s asa ,...s, l',S,,an os'.ais
nrs ~ s,,t,,r nant,,r.tal1fo,. nntt5t,
II {ho nrhateft+ha 20 -, III, =, I'm
Il derstoodt i.n1 santicinatea M effaef. or
!, tba s,,s tan, 11nn1;e,1s nf ,,an lie, wiz,
had hedred cotton bv huvinr contracts
in New York were injured hys this
strii.,rc aisturhanca In sths naritv,.5 A
,rNs f sai,,ra =, tha Saul; s,ere
charged Ia iris ono cause alone. Ono
resuit has been. to reduce. hedging in
! New York. as the possibilities of its
: ARTIFICIAL system were thus disclosed.
nointed out above. such a disas-
!, trous disturbances in the parity is geX-a
= actly what Is brought about bys.t the
5 errors In the fixed differences in New
York. The reply of a certain interest
: LIN the New York Exchange is that "a
y contract is.sa contract: that men. who
deaf there come sof their own Il..and
are supposed to understand the game.
This position cannot commend itself as
7 sound business ethics. Practlcaiiy
also. it is not true that cotton Interests 81!
are wholly at liberty TO stay OUT o.. w. ~
, Iax hn pe
!. terests must have hedging pace
Furthermore. hnahcia, t,.,, :. NJ. NJ,
with New YORK a.s 50 n'oss ~ s,,,, ~,
5 YORK must DC ma pay ~, -rnri,
: OF tneH',- gu. ~ ,,.ant,eaY,y owes Tia
cotton ENcuanse a,,,.'a ~ h,,s,,ess
existence 70 w 1917, = ianatinr IF
made possin.e os me pnth p RIO dmty Of q
OUTSIDE ihteIesss' oo.n - IN h,s c,,stom-s
prlSale o ~ Is, ~ a concern which
!. Is to q ce,tuih ea.eiis : p'o-'s -.
l uel!.ahu tall .'.t., orrors IL, dif.