Atlanta semi-weekly journal. (Atlanta, Ga.) 1898-1920, 1909-12-07
COTTON EXCHANGES
SCORED IN REPORT
Commissioner of Corporations
Says They Injure Dealer and
Farmer-Dealing in Futures
Especially Injurious.

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 cotton ex-
changes Of the country.
This is the burden of Parts 4 and Of
The report of Commissioner of Corpora
tions Herbert Knox Smith on the conduct
ri such exchanges. The practice of deal
ing in futures as it is carried on at. pres
ent, is condemned, although the report
does not condemn the existence of the ex-
change.
The brief discussion of general specu-
Iation in this report" says Mr.. Smith,
recognizes the possibilities for good in
herent in a great central market 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 condemnatory
of the dealings in futures. branding this
form of speculation as pure gambling and
highly injurious to legitimate trade. In
quotations for future" deliveries of cot
ton, 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.
PLANTER is MISLED.
The effect of these fictitious quotations,
the report points out tends to mislead the
cotton planter as to the true value of his
crop, honestly grown. In addition, ii leads
brokers to play both sides of the mar
ket to protect themselves against loss in
such trades, with the result that the pro-
Queer is forced to pay in the end, while
the merchant 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 conducting the transactions in cotton
followed natural lines, the report draws
attention to the fact that it has been prov
ed that the abnormal depressions in the flu
ture price in New York were almost
wholly due to improper artificial condi-
tions now maintained by the New York
cotton exchange. BY maintaining them
the New FORK exchange is responsible
for a very real injury to the producer and
merchant"
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 Of this report the New Orleans and
| New York cotton exchanges established
| special committees instructed to consider
| the systems of their exchanges and to CO.
| operate therein with the commissioner OF
corporations. Conferences have been held
by the commissioner with both commit
tees. On the part of New Orleans this
cooperation was very complete, result
ing In certain important improvements in
the rules of that exchange. After more
| than years investigation the committee
of the New York exchange has not vet
made any final report or taken and sub
stantial action"
The commissioner touches on the activ-
tiles of the various organizations of cot
ton growers, all formed with a view of
controlling both price and production. He
believes, however, that so numerous are
the factors of supply and demand in de-
termining the price of cotton that 1t is i'm
possible to arrive at any satisfactory con
| clusion as to the extent of influence ex-
erted by such organizations.