New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1909-12-06
COTTON FUTURES



producer. have argued that the future mar
ket has no more effect upon the price or
cotton than the thermometer has upon the
temperature. The faliacy OF this contention
has been clearly exposed. IL Is worth point
Ing out, however, that even III the generai
contention We're true, thermometer Which
faithfully would be worthless. Indeed. a
future contract which persistsntiy falIs 70
reflect the changes in middling cotton Is
rot only worthless, but much worse thsn
worthless. II IT were not used. il would be
merely worthless. But this thermometer
IS IN constant use through the system OF
buying limits. and the sales of thousands or
producers are affected by the error: A
fsirer comparison would be with the steam
gauge OF a boiler, the failure of which to
faithfully record the pressure clearly might
result in serious disaster.
When the future contract ceases faith
fully TO represent cotton, an exchange be-
comes little better than n bucket shop. In
some respects IL becomes worse than q
bucket shop. No one claims that bucket
shop influences the price of cotton. Spin
ners and cotton merchants do not consult
bucket shop quotations They do. however
constantly consult the quotations OF the
New York Cotton Exchange, with a view
II basing their forward commitments in
cotton or cotton goods upon them. One of
tne most serious complaints against the
New York Cotton Exchange comes from
spinners and merchants doing business I'm
foreign countries. on the ground that the
New York Cotton, Exchange have led 10
endless friction In the conduct of the SPOT
cotton trade. as well as to serious loss
some members of the New York Cotton
Fxchange. IL Is true, have gone so far
70 insist that there is no necessary rela-
tonshlp between EriceS of cotton and
prices OF future contracts. They argue
mat cotton and contracts are divorced"
ana that there is no sound reason why a
parity should be maintained between them.
~ Is probable that any such extreme opin-
ions, are supported by only a few memsers
OF the exchange. Such a position is an ex-
ceedihgly dangerous one for members of
an exchange 10 assume.
In closing the letter to President Taft
which accompanied his report, Commits
sioner Smith again takes occasion to re-
prove the New York exchange He says:
After the publication Of the earlier parts
or this report the New Orleans and New
, ork cotton exchanges established special
committees instructed to consider the svs-
TENS OF their exchanges and TO cooperate
therein with the Commissioner o. Corpora
IONS Cc~ferences have been held by the
commissioned with both committees on
lhe part OF New Orleans. this cooperation
was very complete resulting in certain inn
pOftant improvements in the rules or that
exchange After more than a years in
exchange has not vet made any final report
or taken any substantial action.
The Commissioner touches on the ac-
tivities of the various organizations OF
cotton growers. all formed with a View
OF controlling both price and produc-
ton. He believes, however. that so nu-
merous are the factors OF supply and de-
mand in determining the price of cotton
that it is impossible To arrive at any
satisfactory conclusion as 10 the in
huence eXcrted by such organizations.