The Guthrie daily leader. [volume] (Guthrie, Okla.) 1893-1996, 1909-12-09
COMMISSIONER PUTS
BLAME ON NEW YORK
mzHEg ---
Exchange, Report Alleges, Re-
fuses to Reform Fixed
Reference System
L-lE --

- - G. a.a
Washington, d. c., Dec 9.-Both
the producers of cotton and the deal
ers in that commodity 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 ;
OF the report OF Commissioner of
Corporations Herbert Knox Smith on
the conduct Of such exchanges. The
practice Of dealing In futures. IS III
is carried on at present, Is condemn
ed, although the report does not CON
deinn the existence OF the exchange
The report is especially condemns
tory OF the dealings in futures, brand
ing this form OF speculation as pure
gambling and highly injurious 70
legitimate trade. In quotations luF
future" deliveries OF cotton the
market Is so uncertain and so many
elements OF chance enter into the
transaction that all bids are made II
much lowe lgure than those Of.
ienad for cotton actually In existence.
Misleads the Planter.
The effect OF these fictitious quo
tations, the report points out, tends
10 mislead the cotton planter al 10
the true value Of his crop. honestly
grown In addition. Il leads brokers
to play both sides OF the market 10
protect themselves against loss Ia
such trades. with The result that the
producer Is forced 10 pay in tho end
while the larmet loses likewise
In closing the letter 10 President
Taft which accompanied his report.
Commissioner Smith again takes lc-
casiOn to reprnye The New York as
change He says
After the publication Of tho earlier
parts OF this report he New Orleans
and New York cotton exchanges er-
tablished special committees instruct.
ed TO consider ihe systems Of their
exchanges and 10 cooperate ihclein
with the commissioner OF corpora,
tlons. Conferences have been held by
the commissioner with both commit
tees. On the part 81 New Orleans
this cooperation WAS very complete.
resulting in certain important n-
provements in the rules of that ex.
change. After more than q yeaa's
investigation the committees OF the
New York exchange has not yet made
any final report or taken any suhsian-
tial action"
New York Is Blamed.
The report while recognizing thai
the exchanges in New Orleans and
New York are necessary. docs not
mince words In crliieising the New
York exchange. After declaring thal
the New Orleans methods of conduct
ing the transactions in cotton follow
ed natural lines, the report draws az
tentlon to the fact that il has been
proved that the abnormal depressions
Ia the futare price in New York
were almost wholly due TO lmprope'
artificial conditions nov maintained
by the New York Cotton Exchange
By maintaining them the New Yorl
exchange Is responsible for a very
real injury is the producer and mer
chant
''The brief discussion OF genera
speculation IN this report saws Mr
Smith. recognizes the possibilities
for good inherent IN a great ccn!ra
market like cotton exchange, ani
the need that lhis good be developer
and evils eliminated hv regulation:
In line with economic law
Explains Basis Contract.
The report going mto the details
Of cotton speculation says IN part
The cotton contract Is basis
contract. permitting the delivery %
large number OF grades Aiiddinl
Is the basis grade the other gradel
are deliverable al price differences
ON or of tho stipulated price of aid
ding A vitality important matter :.
that after The contract Is made ih'
seller has The entire option Of select
ing the grades within the prcsegih
ed rangcl, which he win deliver
Since the seller has The complete
option of selection. he naturally dc
liFers those grades which. hpcansl
Of these erroneous differences, arr
most oyerraiued as compared witl
middling This means that ihc pui
chaser viii suffer an unjust loss
since when he disposes pf tho cntipl
IN tho apot maskci hc can obtain onl
the commercial differences Couss
unently buyers of contracts seek i
escape fllIs loss either hy lowellnl
their htds for contracts Il The time o
purcha@ ar. f iiry fasr alreaR
purchases vich contracts bs scliin
them X IA lhe latter ease tlie
mnsf - 10 l..sss.s.s. .ssls.s sslIl -~iaatla'
~ ell1tANn tn NratpCi themaplff-
Either effort therefore. results in al
abnormal depfession of discount q
a
The aclnal ur $40 price Of niadlns
Effect on the pFoducer
coneefrlne the mental effect Dl TN
on the nfuduce l1e fepott SAYS
Most producers nnH 81 dail