The Birmingham age-herald., 1908-02-20
PLEA FOR LEGITIMATE
 COTTON SPECULATION
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 l ---~~---~>----~-~~~-~~o~~~> l ing the crop is equivalent to a. fortune. i The problem, therefore, of how best to
 market this vast production so as to 1 realize the most value to the producer
 and to those whose interests are allied to
 his, is the most important problem before l the south today. It is momentous ques- l tion, but it is also a most difficult and l complex question. It is easy enough for 1 Us to specify the evils from which we suffer and the good to which we aspire, 1 but how to bridge the chasm between the l two is yet to be learned We know that
 thep ractice of selling in three or four | months the worlds supply for year IS
 contrary to all sound business rules. and | Is illogical. unwise and ruinous. We know l that the consumer and those interested in | buying cheap cotton have not only taken
 advantage of our necessities in this re- 1 gard, but have used their great power 10 l render these necessities more acute ana
 our need more stringent, to realize money 1 from the crop.
 Formers Power.
 "The farmers power lies in his ability l to hold He should, therefore, entrencn | his position strongly as possible oy 1 adopting such rules of living as would 1 dlbe HIS llutpcuucutS- AAC | first of all, and immediately, abandon | the ruinous practice of buying for cash l the provisions that he could make at
 home. The combined profits of the origi-
 nal producer of such provisions, the l profits of three or four middiemen and l the freight charges of several transporta-
 tion companies are all paid by the cotton
 farmer. By living at home the saving 1 is hardly to be calculated, and not only
 would he save in expense. but he would of necessity plant less cotton, Whlch | would, as a general proposition, pay him
 as much or more than larger crop. 1 made under the present faulty principles. l Thereby he would place himself in the | most favorable position for holding ms cotton. But he would still need some as- l sistance. To carry on the great volume ! of general business, much money is nec- | essary, and In the fall of the year the
 great bulk of the money comes from the 1 sale of the cotton crop. If the supply ] of money is cut short by tardy selling of the crop, other interests would suner, business would be crippled and these un- l favorable conditions would react upon the | price of cotton and upon the farmer him. self. Thus, even if the farmer could hold 1 his cotton without distress to himself, l he could not alone solve the problem l It is necessary that there should be suf- f1cient money available to cover the de-
 ficiency caused by withholding cotton l from sale.
 Cooperation of Capital.
 1 "The cooperation of capital is, there l fore, necessary to proper and advan- 1 tageous distribution of supply. In this l crusade all the bankers of the south 1 should earnestly join. Their own profits
 and prosperity are largely dependent upon i the outturn of the cotton crop. Not only
 should they accumulate reserves against 1 the time of the movement of the crop, aECtc l of foreign capital. It Is short-sighted I policy for our banking interests to en- l deavor to keep out competing capital. l The more money there is in country l of rich but undeveloped resources, the | more business there is and the more need | for money. Foreign capital regards cot | ton security as the best security and is | waiting for opportunity to come to us when it can do business without be- ing taxed to the point of loss. The Other Side. But even with the farmer reasonable l independent and with ample capital to | finance the crop there is yet another nee essary factor that must be employed In | order that the highest legitimate price i for cotton may be obtained. Hitherto have dealt with but one side of the proposition. I have shown how supply 1 should and could be regulated. but sup 1 ply is only one-half of the problem; de- mand is the other half. No matter how | perfect the system for distributing the supply might be, 1t would be futile if a | consuming demand was not there We would, therefore, do but half our duty and accomplish little of our purpose if we neglected giving as much attention l to the stimulation of demand as we do to the distribution of supply. Hence the necessity for legitimate exchange. Functions of the Exchange.
 "The function of legitimate cotton exchange is to improve the market for cotton; to devise ways for minimizing the cost of marke eting the crop, and to |
 provide means to both producer and | consumer for protection against demor- alizing interruptions to the natural l course of trade. Let it be understood first of all, and | distinctly that a cotton exchange does l not fix the price of cotton. The price of any commodity is fixed by the laws | of supply and demand. The figures | posted in an exchange only represent l the opinions of traders in the commod- | ity as to its present and prospective l value. The exchange fixes price. | The trades actually made fix the quota | tions posted from day to day. The law | of suplpy and demand fixes value From | | the fact that there are posted in the exchange quotations of cotton in future |
 
 change fives prices in advance and to l this mistake Is due to a great extent l the antagonism to the exchange and | the radical and vndictive legislation against them. In the light of the un- , derstanding of this truth the conscien- l
 tious reformer can see the way more | 1 clearly and be better able to discrim- | i mate the good from the evil, to the l
 end that he may preserve the one and | destroy the other and escape the fatal | and unnecessary mistake of sheling l the woods and destroying both. Bucket Shops. "The bucket shop is responsible for | the most pernicious and by far the most | far-reaching phase of the gambling dis 1 ease that has blessed the south. The | destruction of it would eliminate the | most conspicuous and serious charge | that has been made, but unjustly made | against future trading and legitimate | exchanges. But it is not to be denied that even | in the exchanges there are many con- l tracts bought and sold for a purely | speculative purpose. Before pasisng | sweeping condemnation upon this | class of trading, 1t would be well to |
 give a little bought to the principle of | <1 tf<x.