The evening times. [volume] (Grand Forks, N.D.) 1906-1914, 1909-12-06
Dealings in Futures Is mimi.
cal to the Real Commodity
Producer ,.:.
s 81 snlS Prices TEND
- MSlEAD THE PUBLIC
Danger Of Loss Causes the Futures to
be Quoted Much Lower Than the
Price Of the Commodity in Exist.
ence Declares Commissioner.

washington, Dec. 6.-Both the pro-
ducers Of cotton and the dealers in
that commodity are the victims of the
system OF trading in vogue on the cot
ton exchanges of the country.
This is the burden of parts four
and five of the report of Commission
er Of Corporations Herbert Knox
Smith on the conduct of such ex-
changes. The practice of dealing in
futures, as 1t is carried on at present,
Is condemned, although the report
does not condemn the existence of the
exchange.
The brief discussion of general
speculation in this report" says Mr..
Smith, recognizes the possibilities for
good inherent in great central mar
ket like cotton exchange. and the
need that this good be developed and
evils eliminated by regulations in line
with economic law"
The report is especially condemna-
tory OF the dealings in futures brand
ing this form of speculation as pure
gambling and highly Injurious to legi-
innate trade. In quotations for "fu-
ture" deliveries of cotton, the market
is so uncertain and so many elements
OF chance enter into the transaction
that all bids are made at much
lower figure than those offered for
cotton actually in existence.
The effect of these fictitious quota
tions, the report points out, tends to
mislead the cotton planter as to the
true value of his crop, honestly grown.
In addition, 1t leads brokers to "play"
both sides of the market to protect
themselves against loss in such trades
with the result that the producer is
forced to- pay IL the aend, while the
farmer loseS liksWtse.s = "a ;is=i''s:'-. So
The repoSts whneMfncognfzing that
the exchanges in New Orleans and
New York are necessary, does not
mince words in criticising the New
York exchange. After declaring that
the New Orleans methods of conduct
ing the transactions In cotton fol-
lowed natural lines, the report draws
attention to the fact that 1t has been
proved that the abnormal depressions
tn the future price in New York were
almost wholly due to improper arti-
tictal conditions now maintained by
the New York cotton exchange. BY
maintaining them the New York ex-
change is responsible for very real
injury to the producer and merchant"
In closing the letter to President
Taft which accompanied his report,
Commissioner Smith again takes oc-
casion to reprove the New York ex-
change. He says:
AFTER the publication of the earlier
parts of this report the New Orleans
and New York cotton exchanges estab-
ltshed special committees instructed
to consider the systems of their ex-
changes and to cooperate therein
with the commissioner of corpora
tions. Conferences have been held by
the commissioner with both commit
tees. On the part of New Orleans
this cooperation was very complete,
resulting in certain important I'M
provements In the rules of that ex-
change. After more than years in
vestigation, the committee of the New
York exchange has not yet made any
final report or taken any substantial
action"
The commissioner touches on the
activities of the various organizations
Of cotton growers. all formed with
view of controlling both price and
production. He believes, however,
that so numerous are the factors of
supply and demand in determining the
price of cotton that it is impossible
to arrive at any satisfactory con-
clusion as to the extent of influence
exerted by such organization.