The Columbia herald. [volume] (Columbia, Tenn.) 18??-1935, 1909-12-10
TRADE IN FUTURES
IS PURE GAMBLING,
SAYSCOMMISSIOHER
HERBERT KNOX SMITH so CHAR
AcTERIZEs SPECULATION
ON EXCHANGES.
PRODUCERS AGE The VICTIG
Cotton Exchanges Have Great Posi-
bilities For Good, But They Must
Be Regulated-Fietitious Quota
tons Bring Trouble To All.


WASHINGTON, Dec. Both the
producers of cotton and the dealers in
that community are the victims Of the
system OF trading in vogue on the
cotton exchanges of the country.
This is the burden Of parts 4 and 8
of the report of Commissioner of Cor
porations, Herbert Knox Smith, on the
conduct of such exchanges. The prac-
tice of dealing in futures, as 1t is car
ried on at present, is condemned, al
though 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 a great central
market like a cotton exchange, and
the need that this good be developed
and evils eliminated by regulations
in line with economic laws"
The report is especially condemna-
tory of teh dealings in futures, brands
this form of speculation as pure
gambling and highly injurious to le-
climate trade. In quotations for
future" deliveries OF cotton, the mar
ket is so uncertain and so many ele-
ments of chance enter into the trans
action that all bids are made at a
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, it 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 in the end, while the
farmer loses likewise.
The report, while recognizing 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 followed
natural lines, the report draws atten-
ton to the fact that it has been
proved trat the abnormal depressions
in the future price in New York
"were almost wholly due to the inn |
proper artificial condition now main |
tanned by the New York Cotton Elk
change. BY maintaining them the |
New York Exchange is responsible for |
a very real injury to the producer and
In closing the letter to President |
Taft which accompanied his report,
Smith again takes oc-
casion to reprove the New York Elk
change. He says:
After the publication of the earlier
parts of this report the New Orleans |
and New York exchanges established
special committees instructed to con.
slider the systems of their exchanges
and to cooperate therein with the
of Corporations. Con-
ferences have been held by the Com.
missioner with both committees. On
the part of New Orleans this corpora
lion was very complete, resulting in
certain important improvements In
The rules of that exchange. After
more than a years investigation the
committee of the New York Exchange
1ad not yet made any final report or
aiken any substantial action"
The Commissioner touches on the
activities of the various organizations
# cotton growers, all formed with a
,iew Of controlling both price and pro-
luction. He believes, however, that
10 numerous are the factors of supply
md demand in determining the price
# cotton that it is impossible to ar
i've at any satisfactory conclusion as
O the extent of influence exerted by