The Birmingham age-herald., 1908-05-29
Conln1issiOner's RepOrt
 Or Cotton Exchanges
Second and Third Parts of Report of Herbert Knox Smith, Commissioner of Corporations On Operations of New York and New Orleans Cotton Exchanges Tell of Conditions
 Prevailing and Suggesting Remedy Therefor.


 accumulation of rubbish is disproved i by the fact that the entire stock at l New York has on several occasions in recent years been reduced to a very small quantity. Thus, in October, 1900, the total certifcated stock was only a trhe over 5000 bales, and as recently as September. 1904, it was only $500 bales. At the latter date a consider able part of the stock was apparently of fairly high grade. Consequently it is certain that the amount of very low grade cotton carried over in New York for any considerable period of years cannot be extremely large. On the other hand, there is some cotton
 which has thus been carired over from
 year to year. The president of the
 New York cotton exchange, in No-
 vember 1907, stated to the revision
 committee that some cotton had been in the New York stock for four years, , and that the reason it had not been purchased for consumption was that 1t was of such poor quality as to be undesirable at the grade differences then existing. Moreover, a consider. able amount of the cotton certificated in the season of 1906-7 was of very poor quality. The 1906-7 crop. 1t may t, be noted, was seriously damaged by unfavorable weather.
 Since the tendency of the New York , market Is to attract surplus grades l of cotton, 1t follows that in years when the crop is of high grade the receipts at New York should be mainly of high grade cotton, and not invari- ably of low grades. This has been the case. Simple average figures compiled from the records of the exchange accepting for the moment the classi- l fication of the inspection bureau as
 correct-indicate that for the crop | years from 1S90-91 to 1906-7, inclusive
 4o.9 per cent of the cotton certifcated
 was above middling in value, s.2 pef cent middling or the equivalent of middling in value, and 51.5 per cent below middling in value. These figures are not conclusive because the classi- f1cation of the New York cotton ex- change, as sh own below, cannot thus 1 be accepted at its face value. More ! over, the figures include recassiffca- lions as well as original classifcations and as a result tend to exaggerate the prevailing character of the stock in any given year At the same time they are prima facie evidence that the New York stock has not been composed ex- clusively of extremely low grades. Changes in Stock.
 These figures, it should be noted. repre- sent the grade at the time of classifica- ton. As the season advances the more
 desirable grades for the time being are removed for consumption, thus leaving
 the stock composed mainly of the less i desirable or surplus grades. Until re- 1 gently the New York Cotton exchange ] kept no records showing the character of
 the certif1cated stock on hand at any
 given date In January, 1907, however. the exchange commenced the publication
 of statistics giving the certfcated stock l by grades. The first statement indicated | that. out of total stock of over 115 000 1 bales, not over 10 per cent would fall l under the designation of extremely low I grade cotton, say below strict good ordi-
 nary. assuming the classification to have ! been correct. A similar statement for
 March 3l, 19os however showed that, out of total certifieated stock of 7S 0s9 bales,
 only POO bales were of the value of mid
 ding and above. At this time there were II, ,512 bales of good ordinary and about 1o.500 bales of low middling tinged and :, middling stained cotton. These low
 grades, therefore, constituted about 30 per l cent of the total stock At the end of 1 April, 1908, the total certficated stock l had been reduced to about 72, GOO bales of
 which the grades of good ordinary, low
 middling tinged and middling stained l comprised about 20 700 bales. There were
 g, ,S66 bales of strict good ordinary, this 1 grade representing over 40 per cent of the l total. There were practically $500 bales
 of low middling. Only 3900 bales of the 1 72.000 were in grades above low middling. l The character of the stock at this time | was, therefore, distinctly low. The season l was of course, well advanced, and the
 stock of better grades had been heavily
 drawn upon in nearly all markets. It
 should be repeated. as stated in Part I,
 that since January 1, 1908, the New York l Cotton exchange has eliminated several
 of the lowest grades of cotton formerly l recognized by its contract, and that. l therefore, the stock at present, although l low, is nevertheless better than 1t would l have been if the former contract limits | had remained in effect.
 Complaints Against New Orleans. Complaints against the New Orleans | classification are in substance that cotton
 which was merchantable and properly
 tenderable has been rejected or has been | undergraded. Such complaints were
 
 York Cotton exchange, but by merchants
 In the south, some of whom had shipped | cotton to the New Orleans market. While | such complaints were numerous. most of 1 them were vague and indefinite: few l were supported by tangible evidence One
 of the most frequently cited of such in
 stances occurred In the summer of 1906,
 when a firm of cotton merchants, mem-
 bers of the New York Cotton exchange. l shipped approximately 1000 bales of cotton l to New Orleans for delivery on contract. l At this time there was a rather severe 1 corner in the New Orleans market. Out l of the 1000 bales shipped only little over | 800 were accepted; several hundred were l withdrawn by the deliverers after having l been tentatively rendered The action of 1 the New Orleans arbitrators in this case l was sharply denounced by members of 1 the New York Cotton exchange as show | ing bias in favor of the New Orleans re- ceivers.
 l Careful investigation of this particular l case showed that the New York shippers l had sent unbroken certificated lots, many | of which included cotton which the ship pers themselves knew was of such low I grade that It's acceptance in New Orleans 1 was doubtful. Furthermore, the shippers i admitted that approximately 150 bales of | this cotton which failed to pass the New 1 Orleans arbtrators could not be sold over | factors tables in New Orleans: In other I words, that 1t could not be sold in one l of the largest spot markets in the l world
 l Since there was a sharp corner in New 1 Orleans at that time, 1t would obviously